Chico Real Estate

2010-10-28T15:11:00.000-07:00

Copy for Real Estate Guide Column for 11-5-10
REAL ESTATE PATTERNS
By Ken DuVall

PASSING THE TORCH

It’s been a great run doing this column which started when I became President of the Chico Assn. of REALTORS in 2001. It began as the “President’s Corner” and evolved into “Real Estate Patterns” over the years. I’ve enjoyed every moment… until lately. I feel it’s time to give it a rest. I’ve been in this business since 1963.

I just don’t care to go on dealing with press deadlines. My doctor told me to start relieving the daily stress and watch the cooking channel instead of the news! I’m not going to do that but I do plan to slow it down some. However, my office and website will remain active for your convenience. Feel free to call me anytime.

Therefore, my colleague and good bud Doug Love has agreed to take over this column spot for me. Doug entered our business at my urging some 20 years ago. He and I were roomies at Coldwell Banker DuFour Realty for 10 years. He is deserving of your support.

After a stint as Sales Manager at Century 21 Jeffries Lydon, Doug took over that spot a decade ago. He is one of the most knowledgeable and competent professionals around and a totally appropriate protégé/successor for me here. He is the essence of what a REALTOR should be.

I have no doubt that Doug will continue in my tradition and keep you informed. He has his finger on the pulse of our Chico housing community. It’s altogether fitting and proper for him to follow in my footsteps. Doug is just what the doctor ordered.

So ya’ll keep those cards and letters a’comin’! Love, and may God bless you all. Try and keep the Faith. Drop on by and I’ll bake you a cake!!

Ken

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-10-23T15:51:00.000-07:00

Copy for Real Estate Guide Column for 10-29-10

REAL ESTATE PATTERNS
By Ken DuVall

BUYING A HOME MAKES GOOD SENSE

Nearly 8 of 10 respondents believe buying a home is a good financial decision, despite ongoing challenges with the economy and housing market. That’s according to the 2010 National Housing Pulse Survey, an annual report released by the National Association of Realtors. The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in 8 years of sampling, with 70% of Americans saying that job layoffs and unemployment are a big problem in their area. So what else is new?!

“The real issue facing the nation’s economy right now is that many Americans can’t find meaningful work to support their families,” said NAR President Vicki Cox Golder. “While job recovery is what’s needed right now to get the economy and housing market back on the right track, owning a home continues to be part of the American Dream and one of the best long-term investments in your future.”

Despite economic uncertainty, 68% of those surveyed still believe now is a good time to buy a home. While that number is down from last year (75%), it’s up from 2008 (66%) and 2007 (59%). Lower home prices and record-low mortgage interest rates are attracting buyers. More than 25% of renters said they are thinking about buying a home than they were a year ago. Sixty-three percent of renter respondents said that owning a home is a priority in their future, and 40% said it was one of their highest priorities. Lower home prices have improved affordability. Demand never stops.

Despite improved affordability, 79% of respondents still consider having enough money for down payments and closing costs to be among the biggest obstacles to buying a home. Another is a lack of confidence in their ability to be approved for a loan, reported by 73% of respondents. It’s a real challenge to get a loan anymore.

The good news is that Americans are seeing more stability in the real estate market. Nearly 70% believe home values have stabilized in their area. The same number expects home sales to remain about the same through the end of the year. But there are still many issues in play here.
Thirty-six percent of respondents cite the recession, loss of jobs, and the poor economy as the main reason for the ongoing foreclosure dilemma. While 70% say it’s harder to sell a home in their area today than it was a year ago, it’s less of a concern from last year when the number was 10 percentage points higher, the result of somewhat lower home inventories now.

The 2010 National Housing Pulse Survey was conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program among 1,209 adults living in the 25 most populous metropolitan statistical areas. The study has a margin of error of plus or minus 3.1 percentage points. All things considered, I’d say we’re looking more good than bad at this point.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-10-15T15:42:00.000-07:00

Copy for Real Estate Guide Column for 10-22-10
REAL ESTATE PATTERNS
By Ken DuVall

CALIFORNIA ASSN. OF REALTORS HOUSING FORECAST

Not surprisingly, weaker-than-expected economic recovery will result in a projected decline in California home sales for 2010, although sales are expected to edge up slightly in 2011, according to C.A.R.’s Forecast released this week.

It says California home sales for 2011 are projected to increase 2% to 502,000 units compared with 492,000 units (projected) in 2010. After 2 consecutive years of record-setting price declines, the median home price in California will increase 2% in 2011 to $312,500, according to the forecast. So be it.

“As the U.S. economy continues its tepid recovery, we’ll see some improvement in California’s economy,” said C.A.R. Chief Economist Leslie Appleton-Young. “We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and a decrease in unemployment.” Amen to that. Our unfortunate construction workers represent a huge percentage of the jobless.

“A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited attractive financing will cause continued softness in the high end. There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties,” per Leslie.

“The wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of any economic recovery,” said Appleton-Young. “What is certain is that favorable home prices and historically low interest rates will continue to make California homeownership attractive for those who are in a position to buy.” Chico homes are a bargain today. There are a lot of distressed properties here too.

Foreclosed homes accounted for a heretofore incredible 24% of all residential sales in the second quarter of 2010, RealtyTrac reports. The average price of foreclosed properties was more than 26% less than the average price of non-foreclosures. Banks have foreclosed on 3 million U.S. homes since 2007.

Nevada, Arizona, and California posted the highest percentages of foreclosure sales in Q2.Foreclosures accounted for an enormous 43% of all sales in California, the third highest among the states. California pre-foreclosure sales (short sales) increased 8% from the previous quarter, but were down 4% from the second quarter of 2009.

California bank-owned sales increased 1% from the previous quarter but were down 45% from the second quarter of 2009. Lenders with foreclosure discrepancies nationwide, the latest shoe to drop in a growing fiasco, calls into question whether large financial institutions sufficiently documented the vital details surrounding repossessed properties. What a colossal nightmare.

Our already fragile housing market certainly didn’t need any more problems, and the full ramifications of this situation are not yet clear. What is clear is we still have a substantial backlog of foreclosed properties- with some 10 million more in the hopper- that may at some point hit the marketplace. Bottom line: The overall housing dilemma is not going be resolved for several years. As always: buy on bad news, sell on good.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-09-30T11:14:00.000-07:00

Copy for Real Estate Guide Column for 10-8-10
REAL ESTATE PATTERNS
By Ken DuVall

ENOUGH WITH THE DOOM AND GLOOM

Sure, there's more pain to come in the housing market. But when Time Magazine starts declaring "Owning a home may no longer make economic sense," I’m not buying it. It’s grim, but we’re not dead and buried yet.

At the peak of the bubble 5 years ago, Time had a different take. "Home Sweet Home," declared its cover as it celebrated the boom and asked: "Will your house make your rich?" But now’s not the time to give up the ship. Here’s some reasons why it's always good to own a home.

You can get a good deal now. It’s clearly a buyer's market. Many buyers vanished as the tax credits expired. We're 4 years into the biggest housing bust in modern history. Prices have dropped about 30% from their peak. You'll never catch the bottom, believe me. And it really doesn't matter over the long haul.

Mortgages are the cheapest in 50 years. You can get a 30-year loan for around 4%. Two years ago they were over 6%. That drop slashes your monthly payment by 20%! We may never see these rates again in our lifetimes.

Beat the IRS! You can deduct the mortgage interest and real estate taxes from income. And you'll get a tax break on capital gains when you sell, more valuable the more you earn, and the bigger your mortgage. Many people will find that these tax breaks mean owning costs them a lot less than renting.

It also offers inflation protection. History tells us that housing has beaten inflation by a couple of percentage points annually. That's important, especially if you think long term, the next 30 or 40 years. Real estate is not a get rich quick scheme. On the contrary, it’s a get rich slow scheme!

It's a forced savings plan. If you rent for $2,000 month vs. owning for $2,400 a month, renting may make sense. But will you then save that $400 difference for your future? Most people won't. Realize that the part of your mortgage payment going to principal repayment isn't actually a cost. It’s building equity, the difference between what you owe and market value. As a forced monthly saving, it sure beats rent down the drain. My Dad told me, “Pay yourself first every month and you’ll be fine.”

Yes, there’s a glut of homes today, which can work for you. The National Association of Realtors puts the current inventory at around 4 million homes, below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More foreclosures keep coming onto the market as jobs are lost, and banks continue unloading their unsold properties. But for those fortunately still employed buyers, that means great choices and great prices.

Sooner or later, the market and supply and demand will meet again. Our population is forecast to grow by more than 100 million people over the next 40 years, meaning some 40 million new households needing homes. Eventually, this housing glut will work itself out. Keep the Faith and take advantage of the Great American Dream while the getting is still good! Timing is everything.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-09-18T14:15:00.000-07:00

Copy for Real Estate Guide Column for 9-24-10
REAL ESTATE PATTERNS
By Ken DuVall

MORTGAGE FRAUD ON THE RISE

New data shows that mortgage fraud- which got tougher to pull off after the collapse of the housing market- is returning in a big way.

The Wall Street Journal reports research firm CoreLogic examined 7 million home loans made by hundreds of lenders showing losses from mortgage fraud, ranging from falsified credit reports to identity theft, rose 17% last year after declining 57% in the previous 2 years. In 2009, $14 billion in U.S. home loans were originated using fraudulent application data. The actual losses won't be known for several years until the banks become forced to write off the bogus loans.

The FBI in June indicted a Phoenix man for mail and wire fraud among other crimes when he tried to steal a house from his landlord! Also in June, federal prosecutors in New Jersey charged 29 defendants—including 12 real-estate agents, 4 mortgage consultants, an appraiser, a bank employee and a mortgage broker—with wire fraud in a scheme involving 17 properties in the state showing losses of $5.5 million.

In one common con, scammers recruit "straw buyers" accomplices with good credit to apply for "no-doc" loans, which require no documentation or proof of income, to “buy” their house. Good credit was required because lenders do at least check a borrower's credit score, even if they didn't require pay stubs or bank statements.

When the bank funded loans, the schemers and the fake buyers would split the profits and walk away, leaving the house to fall into foreclosure and the banks stuck with the losses. No-doc loans are a thing of the past. Lenders now require borrowers to furnish proof of employment, tax forms, credit reports, bank statements, etc.

But fraudsters have adapted to those new restrictions. With banks less apt to lend to borrowers with shaky finances, criminals rely more on falsifying documents, recruiting loan officers and other bank insiders to work for them, and stealing identities to get loans.

According to one federal indictment unsealed in June, while a Mr. Buencamino was renting a Mr. Weaver's house in Phoenix, he intercepted mail for Mr. Weaver, obtaining his social security number. He then got a driver's license in Mr. Weaver's name!

With the help of a friend working as a loan officer at a local Compass Bank branch, Mr. Buencamino obtained a $245,000 cash-out mortgage on the property. A homeowner using a cash-out mortgage refinances the loan for more than the current mortgage and pockets the difference in cash. Mr. Buencamino, not surprisingly, couldn't be located.

Fraud continues to be a pervasive issue, growing and escalating in complexity. Application fraud—in which borrowers falsify their names, where they live, how much money they earn, their employment, their debt or their assets—remains high, accounts for 59% of all mortgage fraud.

One of the defendants in a New Jersey FBI dragnet, a mortgage consultant, paid accomplices $15,000 apiece to steal the identities of local residents earning $90,000 or more and who had good credit ratings. She then used those identities to obtain 2nd mortgages on a number of homes in the Newark area. But since good credit ratings are no longer enough to get a mortgage, the defendant also needed insiders actually employed by the lenders to pull off the caper.

When the going gets rough, the rough turn crooked. Watch your back, people. Guard your identity.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-09-11T14:23:00.000-07:00

Copy for Real Estate Guide Column for 9-17-10
REAL ESTATE PATTERNS
By Ken DuVall

TRIAL BY FIRE

As the economy sputters and home buyers view the market with uncertainty- July home sales sank 26% from July 2009- there’s a growing sense of fatigue with all the government intervention. Many economists and analysts are now urging a dose of shock therapy. One of them is quoted as saying, “Let the housing market crash!” Is he serious? It already has crashed! Get real. We just need to return to the basics now in these difficult times.

With home prices as low as they are, same experts argue buyers should be pouring in, which the government envisioned with the billions they’ve already spent. Since October ’08 we’ve not been in your garden-variety recession. We are in the aftermath of a true financial crisis, the nastiest, most protracted kind of recession in many years.

“Housing needs to go back to even more reasonable levels” says Professor of Real Estate Finance at George Mason University. “If they continue trying to stimulate the market, that’s the definition of insanity.” In a nut shell, nothing we’ve done so far has had a long term positive effect. The administration bet that a rising economy would solve the housing problem, and now they’re out of chips. DC insiders secretly admit they are deeply worried and don’t really know what more to do.

Last spring’s housing tax credits cost taxpayers some $30 billion, much of which went to people who would have bought anyway. If the credits were supposed to bridge over a rough patch, it ended with a glimpse of an abyss. With a huge current inventory, homes now take many months to sell, with even more foreclosures- the “shadow inventory”- lurking in the background as job layoffs continue.

Says housing analyst Ivy Zelman, “We’ve had enough artificial support and now need to let the free market do its thing.” I agree. Last week Shaun Donavan, U.S. Housing Secretary, said, “The administration would go everywhere we can to help the housing market”, while other officials backpedaled and distanced themselves from his views. With all the different opinions out there, what’s a person to think?

I don’t see where anything has radically changed in home buying and selling since 1963 when I got in the business. To be sure, prices are unstable and weak now. Loans are tough to come by. But there’s never been any change in defining the term “true value”.

You combine a motivated seller, a qualified buyer, a willing lender, along with a righteous appraisal, and voila! There’s your true market value. No one is going to pay more than market value for any commodity. Prices go up or prices go down based on the marketplace at any given point in time. That’s always been the deal.

Yet people are going to need a roof over their heads, right? Kids keep being born; people need bigger or smaller homes; they move, etc. Life and houses will go on forever. It’s still a simple matter of supply and demand and haggling over price. There never was a better time to buy than right now.

In all honesty, I’ve got to say I’ve never seen people and things so gloomy before either, so you’re not alone feeling that way. But this is America. We shall endure. It’s just a different ballgame today. It’s time to take a 7th inning stretch!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-08-27T15:42:00.000-07:00

Copy for Real Estate Guide Column for 10-3-10
REAL ESTATE PATTERNS
By Ken DuVall

VACANT HOMES POSE INSURANCE RISKS

As the U.S. housing market struggles to rebound, many homeowners are stuck with hard-to-sell properties longer than expected. Some frustrated home sellers who must relocate for a new job opportunity, want to downsize, or simply want to buy a new place have left homes empty. Vacant or unoccupied homes can leave the homeowner exposed to loss and liability that may not be covered by their insurance.

In many cases, people who have been trying to sell their homes for awhile have moved forward with their plans regardless, leaving a vacant home on the market. Having an unoccupied home can create several insurance implications that typically are not covered under a standard homeowner’s policy.

Homeowners policies are meant to insure homes that are occupied, so they generally include exclusions for neglect or property abandonment on a home left vacant or unoccupied for a specified number of consecutive days.

In insurance terms, a vacant home is one the resident has moved out of and taken their belongings with them. An unoccupied home is one where the resident is not staying at the home, but the furniture and other belongings remain.

Because vacant and unoccupied homes pose a higher risk for damage than occupied homes, insurance companies insure these properties differently and usually at a higher price. These risks include:

Break-ins: When a home has been unoccupied for awhile, it can show signs that nobody is around - unkempt lawn, full mailbox, no lights on - that can tip off burglars to an easy target.

No emergency response: Without anyone home to call 911 or respond to emergencies such as a small electrical fire, can turn into a much larger, more costly disaster.

Property liability: There is no one present to prevent others from entering the property or to supervise activity, which could increase the likeliness of an accident on the premises or property damage.

To keep a vacant home properly insured the definition of vacancy and unoccupancy can vary from policy to policy. Some insurers may not pay claims if a home is vacant for 60 days or more. Some policies might automatically shift to a different amount of coverage (e.g. liability insurance only) after a specific number of days unoccupied.

Many homeowners’ policies have a "vacancy clause" that can be triggered if the homeowner is gone for an extended period of time and some or all of their coverage may not apply in the event of a loss. If your home will be vacant or unoccupied for a long period of time, talk to your insurance agent to learn how they define vacancy and unoccupancy, and whether the company will pay claims if a house is unoccupied.

Many insurance companies offer an endorsement that will provide coverage for a dwelling that is unoccupied for an extended period of time. Vacancy policies can also be purchased for different term lengths to cover a few months to a year, depending on your need.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-08-21T12:57:00.001-07:00

Copy for Real Estate Guide Column for 8-27-10
REAL ESTATE PATTERNS
By Ken DuVall

THE FANNIE/FREDDIE SAGA

Fannie Mae and Freddie Mac may be in effect insolvent, but they're backing over half of all U.S. mortgages. Naturally, some people are nervous. The two government owned/supported enterprises (GSEs) stood behind 62% of new home loans this year, compared to 27% of new loans in 2006. Add in Ginnie Mae and fully 90% mortgages are supported by the U.S. government.

Right now, the loan market is almost entirely dependent on Fannie, Freddie, and Ginnie. Why should you care? Since the government seized Fannie and Freddie in 2008, it essentially owns them. So far, the mortgage giants have cost taxpayers roughly $145 billion to cover their losses, with more losses looming. If a bailout becomes necessary, the cost would approach $1 trillion.

Clearly, it doesn't benefit the housing system overall- or the government- to have a mortgage market that is almost exclusively government-backed. We need a way to bring the private sector back into the mortgage market. But if the government pulls back too quickly, it could trigger another housing crash.

Many scenarios are in play. The agencies could be disbanded in favor of new entities, or be split into two pieces -- a "public" securitization function and a "private" mortgage investment portfolio. In the public-private scenario, the private component would become fully private over time, with the government slowly removing its support. Such a scenario seems likely at this point.

While many industry watchers believe altering the housing finance giants is necessary, and that the federal government shouldn't play so large a role in the mortgage market, they also agree that given how shaky the housing market is, any major changes won't come immediately. We need to give some consideration before we disturb what has been crucial support of the mortgage market.

Given that there isn't much of a private mortgage market, the likely thing that can be done now are small, incremental changes that will get us where we want to be in 5 to 10 years. For borrowers, that means any changes to Fannie and Freddie would likely materialize slowly. We don't want to do anything that makes things worse.

Although Freddie and Fannie are almost single-handily propping up the market, such government involvement in the securitization of mortgages isn't sustainable. But right now, there's not much choice, with investors still too jittery to trust paper that isn't backed by the federal government. There's not a lot of alternative credit out there. We're stuck with probably the 90% of mortgages now backstopped by the government over the next few years.

The irony is that if we're really concerned about the health of the housing market and want to see it recover, we should be making it easier to obtain credit. Unfortunately, we're doing just the opposite. We're actually slowing or stifling the housing recovery by restricting the flow of credit. It's the classic closing the barn door after the horses are gone. Meanwhile, if you can qualify for a loan, the 30-year fixed rate dropped to its lowest level since 1971 last week to as low as 4.25%.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-08-14T15:02:00.000-07:00

Copy for Real Estate Guide Column for 8-20-10

REAL ESTATE PATTERNS
By Ken DuVall

RELIEF IS ON ITS WAY

Main Street may be getting its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion.

The move would be a stunning political and economic bombshell. The key date is August 17 (which falls after my press deadline) when the Treasury Department holds their much-hyped meeting on the future of Fannie and Freddie.

Also, Congress just came up with an extra $1 billion to help people who can't pay their mortgage because of unemployment or a medical problem. Under this new “Emergency Mortgage Relief” program, eligible homeowners who are at least three months delinquent can get up to $50,000 in no-interest federal loans to pay their mortgages for as long as 24 months. They would need a good record of mortgage payments before their employment or medical condition changed. They would also have to demonstrate a "reasonable likelihood" of resuming mortgage payments within two years.

The money for this program came in the financial regulation bill signed last week and will be made available October 1 to the U.S. Department of Housing and Urban Development. This follows two other federal programs providing assistance to unemployed homeowners. The Treasury Department is providing $2.1 billion to struggling homeowners in what it calls the "hardest hit" states. The Treasury awarded $1.5 billion to five states in June and will award $600 million to five other states later.

Here at home, the California Housing Finance Agency got $700 million from the “Hardest Hit Fund” beginning Nov. 1 for its program, “Keep Your Home”. Low and moderate income people who are unemployed or owe more than their homes are worth could be eligible for payment subsidies, principal reduction, or relocation expenses. Homeowners can have their payments reduced or suspended under the Treasury's “Home Affordable Unemployment Program”. Homeowners can't be more than three months delinquent plus other requirements.

Sales of homes for less than the mortgage amount have tripled since 2008, particularly in California. Known as short sales, this increasingly common transaction for financially troubled homeowners is projected to balloon to 400,000 in 2010, according to Core Logic. Where a quarter of homeowners owe more on their property than it's worth, short sales are appealing to investors, banks, and owners as a cheaper way out than foreclosure.

The White House on Wednesday said it would spend an additional $3 billion to help distressed homeowners in the states with the highest jobless rates to pay their mortgages. This latest round of funding pushes the total federal commitment up to $4.1 billion to help homeowners modify existing mortgages or make their monthly payments. The White House is authorized to spend up to $50 billion under the “Troubled Asset Relief Program”.

So hope and help is out there. Talk to your lender for further details.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-08-07T14:06:00.000-07:00

Copy for Real Estate Guide Column for 8-13-10

REAL ESTATE PATTERNS
By Ken DuVall

BIG TIME HOUSES

The biggest house in America is in Windermere, Florida near Orlando and Disneyland Park. The home is listed for a cool $75 million. This 90,000 square foot gem sits on a 10 acre parcel in the same gated community down the street from Tiger Woods (there goes the neighborhood!). It has 13 bedrooms, 23 bathrooms, a banquet kitchen with 10 satellite kitchens, a 20-car garage, and a quarter-mile of shoreline on Lake Butler.

The home has 3 swimming pools (things are tough all over!), a 2-lane bowling alley, a 2-story movie theater, an indoor roller rink, a video arcade, a fitness center, and only a pitiful 2 tennis courts! For $75 million it’s “as-is” with an unfinished interior, or he’ll complete the project for $100 million price. Nicknamed “Versailles” for the French palace, it’s the largest home for sale in the U.S. and ties for the priciest.

Construction came screeching to a halt as billionaire owner David Siegal just ran out of money. He’s the CEO of Central Florida Investments who made his fortune in Florida’s timeshare resorts. Today’s poor economy just sunk him.

Someone will probably buy this unique mansion. It just likely won’t be an American these days. The word is it’s getting interest from Middle Eastern and Russian buyers. During the boom, everyone wanted bigger, better, and more expensive homes. Now it’s a different deal for most people.

On the California front, football star Tom Brady and his supermodel wife Gisele Bundchen are building their dream home in Brentwood. The 3-time Super Bowl winning quarterback and his wife are building a sprawling 22,000 square foot 8 bedroom palace. The 3.75 acre Brentwood (just west of Beverly Hills) lot is near Gov. Arnie’s house.

Amenities include a 6-car garage, a covered bridge connecting two parts of the house, a nursery for their infant son Benjamin, and a lagoon-shaped pool with spa. There are cardio and weight rooms to keep both spouses in shape for their respective careers, and an elevator to make getting around the enormous two-story home a little easier. The total cost of the Mediterranean-style mansion: some $20 million.

The New England Patriot’s All-Pro quarterback and his Brazilian-born wife can cover the tab. Brady is in the last season of a 6-year, $60 million contract. Gisele earned $25 million last year. The couple paid $11 million just for the lot. Hey- if you’ve got it, why not flaunt it?!

Lastly, the Bel-Air 17,000 square foot home on 1.26 acres that Michael Jackson rented for $100,000 a month just hit the market last week for $29 million. The price has been reduced from its first asking price of $38 million. The owner tried unsuccessfully to re-rent it after the King of Pop’s demise there last year for $200,000 a month. There were plans to turn it into a Jackson public museum which didn’t work out. The gated French Chateau boasts 7 bedrooms and 13 baths, as well as a gym, screening room, spa facilities, a 7-car garage, and a wine cellar.

Ah, for the lives of the rich and famous, right? Well, I wouldn’t trade mine!

P.S. Happy birthday today to my precious wife Alla! We’ll have been married for 47 years next month. Groucho Marx once quipped, “We were married by a judge. I should have asked for a jury!”

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-07-24T14:59:00.000-07:00

Copy for Real Estate Guide Column for 7-30-10
REAL ESTATE PATTERNS
By Ken DuVall

SALES AND DEFAULTS UPDATE

Even with loan rates at their lowest in 50 years- the 30-year fixed averaged 4.69% last week- we are witnessing the worst performance for new home sales in modern times, while existing home sales are relatively OK. Of course, it varies from market to market. For instance, in the Sacramento area new home sales are down some 50% from a year ago. Here in Chico new home sales are down too. As we know, they are important to our economy and the hundreds of jobs involved.

Economists and industry analysts tell us new home sales are now “abnormally low, pointing to a market correction as it seeks equilibrium.” But down is down, period. I’m looking at a graph of historic lows for housing starts and it looks exactly like a roller coaster in free fall, up and down, up and down, through the years from 1977, with 2010 being the lowest point. The number of mortgage-loan applications for home purchases dropped to its lowest level in 14 years last week. Refinance applications were almost 79% of all applications.

Don’t think the European financial turmoil with possible defaults on their debt obligations in Greece, etc., doesn’t affect us too. Global capital is now at-risk. The full impact won’t be clear for years. Our economic growth could be impacted. This is a big unknown as we rely to a degree on foreign funds.

And here’s something new: the richest among us have become the biggest segment of loan defaulters. The housing bust is now striking the upper class in many privileged enclaves such as Silicon Valley. More than 1 in 7 homeowners there with loans in excess of $1 million are seriously delinquent per data from CoreLogic.

In contrast, homeowners with less lavish housing are much more likely to be current on their loans. Only 1 in 12 mortgages under the $1 million are delinquent. This data suggest that many of the well-to-do are deliberately dumping their financially draining properties, just like they would with any sour investment. “The rich are different: they are more ruthless” says CoreLogic’s senior economist. Five properties in Los Altos were up for auction this month with the highest mortgage being $2.8 million!

The Cook County, Illinois sheriff is in big demand these days evicting foreclosed owners in their upscale suburbs. The same in Las Vegas. A high-end REALTOR there commented, “I’ve never seen the wealthy hit like this before.” In Los Altos, the median home price is $1.5 million, making it one of the most exclusive towns in America. One home there with a $1.3 loan is in foreclosure. The owners, who had lost their jobs, were moving in with relatives.

There are 130 million homes in the U.S. Of the 5.5 million borrowers who are at least 30 days delinquent, up to 11 million of them could make their payments- but won’t. Owners in some of the more expensive San Francisco areas are also beginning to head for the exit. There are 1 million foreclosures expected this year, vs. 900,000 last year per RealtyTrac. There used to be only 100,000 annual foreclosures. We’re not out of the woods yet.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-07-07T15:27:00.000-07:00

Copy for Real Estate Guide Column for 7-16-10
REAL ESTATE PATTERNS
By Ken DuVall

MORTGAGE TRIMMING AND FLIPPING

California is going to use Federal money to pay down the loans of struggling homeowners. The California Housing Finance Agency (CalHFA, known as “Chafa”)) has announced they will spend $420 million to trim individual mortgages by up to $50,000 each. Borrowers who owe more than their homes are now worth would qualify. Lenders will be asked to match the amount, a deal which could make thousands of existing mortgages newly affordable.

The program will launch November 1st and run on a first-come, first-served basis under CalHFA’s “Keep Your Home” initiative. Unfortunately, they expect much more demand than supply. Specifics on the selection process are still being worked out but they will exclusively fund applicants in the low to moderate income households.

Borrowers will have to be already delinquent or in imminent danger of defaulting, but must show adequate income to continue making their payments after getting the help. People who are currently struggling to make payments now shouldn’t wait for the program to start but should contact lenders and loan counselors now.

CalHFA, the State’s affordable housing bank, estimates this program will help 40,000 households avoid foreclosure over the next 3 years. In all, the agency received $700 million for relief programs, part of a $1.5 billion Federal initiative to curb foreclosures. Chafa is in hopes that the banks will match the $700 million. “We’re asking lenders to come to the table with us on this. We can’t force them to, but many have already indicated they will happy to cooperate.”

They could alternatively receive up to $15,000 to catch up on delinquent payments. And could also get $1500 month “unemployment” coverage while looking for work for 6 months to help make house payments. Finally, borrowers could receive up to $5000 for moving expenses if they can’t afford their mortgage under any of the above loan modification scenarios.

In another vein: Uncovering unexpected tax liens, finding major home components missing, and paying occupants $1000’s of dollars to vacate. This is the exiting new world of house flipping. Yet in the Sacramento region alone, some brave investors earned $1.4 million for less than a month’s work.

They buy severely discounted houses repossessed by banks at auction. Then, in less than a month, they resell them. Average gain: $40,000 per house. Homes with troubled histories get bought, repaired and resold, generating cash for them again and again. It’s something that has taken off in many markets.

You have to pay cash in full. You don’t get title insurance. You don’t get to inspect the house. You may have to evict the current occupant. You may be buying a big headache. That’s why these homes are being sold on the courthouse steps at huge discounts.

One investor discovered the prior owner was a drug dealer and had committed suicide in the home. Even though he sold it for more than he paid, he still lost money after clean up and an unexpected $12,000 tax lien. Not for the faint of heart, folks.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-06-26T13:38:00.000-07:00

Copy for Real Estate Guide Column for 7-2-10
REAL ESTATE PATTERNS
By Ken DuVall

ON THE FORECLOSURE FRONT

The mortgage crisis is creating a drag on the economic recovery as more homeowners fall behind on their payments. Analysts expect improvement soon, but the number of homeowners in default or at risk of foreclosure will have a lingering effect on the broader economy. I won’t sugar coat the issues facing us.

More than 10% of homeowners had missed at least 1 mortgage payment during the first quarter of 2010, reports the Mortgage Bankers Association (MBA). That's a record high, up from a year ago. This big jump in the number of borrowers who have missed 3 months of mortgage payments drove the increase. Fortunately, the number of homeowners just starting to show trouble is trending downward.

Around 4.3 million homeowners, or about 8% of all Americans with mortgages, are at risk of losing their homes, per the MBA. They have either missed at least 3 months of payments or are already in foreclosure. Nationally, although expected to rise, existing home sales fell 2.2% in May over April. More than 4.6% of homeowners were already in foreclosure, a record.

Should loan modification programs fail to help, those homes will go up for sale either as a foreclosure or short sale, when the bank agrees to sell the property for less than the loan amount. Analysts have forecast some area home prices could dip again as more of these homes, known as “shadow inventory”, hit the market at deeply discounted prices.

Federal tax credits boosted home sales this spring. But new home sales plunged 33%, the lowest on record, as the tax credit expired in April. However, the Senate last week voted to extend the deadline to September 30 and California’s credit is still in effect. New mortgage applications fell to the lowest level in 13 years last week even as 30-year loan rates are only 4.7%, the lowest since 1950.

The Obama administration's $75 billion foreclosure prevention program has barely dented the surface. Only about 25% of the 1.2 million homeowners who started the program had received loan modifications as of last month. Some 23% of those enrolled dropped out during a trial phase that lasted 3 months. Many are still in limbo due to government red tape.

Economic woes, unemployment, or reduced income are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. Surprisingly, homeowners with good credit who took out conventional, fixed-rate loans now represent the fastest growing segment of foreclosures. They made up nearly 37% of new foreclosures in the first quarter of the year, up from 29% a year earlier.

On the bright side, the median price of an existing, single-family detached home in California during May 2010 surged 23.2% to $324,430 from May 2009. And this May’s price increased another 5.9% over April’s. The risky subprime adjustable-rate loans that kicked off the crisis are thankfully making up a smaller share of new foreclosures, only 14% in the January-March period, down from 27% a year earlier. And Chico is again picking up a little steam too. So it’s not all dark and gloomy.

Lenders have returned to considering only solid borrowers. No more shoddy loans being made that could bring us to our knees again, perhaps putting a stake in the foreclosure monster’s heart. That’s the good news.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-06-19T14:34:00.000-07:00

Copy for Real Estate Guide Column for 6-25-10

REAL ESTATE PATTERNS
By Ken DuVall

WHAT’S AHEAD?

We should take a look at the U.S. economy this week since housing and the economy interact and affect each other in every way. It’s important to keep current events in mind to understand the big picture of where we may be headed. But for openers, there is still no short term housing or economic fix on the horizon by any stretch of the imagination.

The good news: There appears to be no likely relapse into recession or a depression foreseeable at this point in time. Odds are that concerns about Europe’s woes infecting the U.S. will recede by year-end as policymakers take steps to avoid a full-blown meltdown there. Yet regaining our own economic health will still take a few more years.

Figure on about a 3.5% gross domestic product (GDP) growth this year and next. Not too shabby considering, but still far from our more normal 6.3% growth. Meanwhile, rock-bottom interest rates will continue for now. With the Fed more worried about deflation than inflation, it should keep rates at record lows into next year, a good thing for real estate loans. Also rising consumer confidence is playing a role, with consumers finally recovering a renewed sense of wealth.

Wow stuff: There are now 4.7 million people in the U.S. classified as millionaires, a 15% increase over last year. Go figure! There are $20 trillion worth of homes in the U.S. We’ve lost 8.4 million jobs- so far- in this recession. American’s household net worth is up $3.5 trillion from a year ago, and $5.8 trillion from the recession’s low point.

In the last 5 years the national median home price has fallen 26%. Yet the California median home price is up nearly 21% over a year ago to $278,000 and up 9% just in April. High-end home sales are staring to move again too, up over 16% from a year ago. Here at home, the old Goodyear Tire store building on Cohasset below East Ave. was just purchased by Firestone Tire for $750,000. Notwithstanding the sad loss of Aero Union and Longfellow Lumber, we may be finally starting on the road to recovery.

Nagging problems: we’ve still got loads of idled resources; vacant homes and stores, assembly lines, and factories. Millions are still unemployed. The jobless rate won’t sink to the normal 5.5% rate from near 10% now for several more years. Housing and related industries account for 7% of the economy, making headway tough when they stall.

It will take many years to get back to the pre-recession highs in construction and home sales due to the artificially high peaks pumped up by shaky loans that were pre-destined to crumble. But there is a decent outlook for existing home sales of 5.3 million this year and 5.5 million next, nearing the pre-bubble level. Projections are also up for new home starts (in the pits for the moment) and sales, but still far below 2001’s 1.6 million units.

Attitude is everything. It’s a little thing that makes a huge difference. I’ve said it before: it’s your attitude, not your aptitude that determines your altitude! Keep the Faith. We shall endure.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-06-12T15:47:00.000-07:00

Copy for Real Estate Guide Column for 6-18-10

REAL ESTATE PATTERNS
By Ken DuVall

MARKETS EVEN OUT OVER TIME

Knowledgeable economists tell us that decisions about what to buy and when to buy inevitably lead to market fluctuations that can sometimes be forecast and sometimes not. Of course, an economist is an expert who will know tomorrow why what he predicted yesterday didn’t happen! But whatever, they’re the ones who inform us where it’s at any given point in time.

Over the long term, broad trends can smooth out short-term fluctuations. With 4 million births and 2 million deaths, plus 2 million newly arriving immigrants into the U.S. each year, it’s obvious that housing will remain in steady demand. Historically, the net number of homeowners continues to rise by 1 million every year. The 2 million weddings and the 1 million divorces each year also add to changes in living patterns.

Furthermore, home owners look for a new nest every 7 to 10 years. As a result, over the next 10 years, that equates to 50 to 70 million home sales. After 4 years of declining construction and sales, the painful housing slide seems to be ending. Kiplinger tells us we’ll finally begin to see an upturn this year, a start on the road to recovery. Again, nationally, existing home sales prices were up 6% and sales up 7.6% in April, the latest stats available.

But “it ain’t over ‘til it’s over”, per Yogi. We’ll see more casualties along the way. Expect a choppy, uneven period of a year to 18 months. On the upside, a big jump in new housing starts, 30% over last year, and overall home sales up to 5.8 million vs. 5.5 million in 2009. Compare to 8.4 million sales in 2006, at the peak of the boom. Also there are still some 10% of the nation’s 52 million mortgages over 90 days delinquent or in some stage of foreclosure, which ultimately will add to the existing inventory of 2 mil empty homes- huge. New home sales usually account for 15% of sales vs. 5% now.

With the primary elections over, maybe we’ll see some changes on the political front. Most things are still in major state of unrest. We’ll see as we go. California is bracing for another ferocious budget battle as we try to dig out of our $20 billion hole. The outcome matters to everybody. As the most populous state, we account for fully 13% of the U.S. gross domestic product. California could actually put a damper on the entire nationwide recovery. Meanwhile, back at the ranch, Sacramento politicians continue to squabble over raising taxes or reducing spending. So what else is new?!

Of course, demand is being hurt by high unemployment but the offset are the historically low current interest rates continue way below 5%. At the moment, the trail ahead looks to be heading up rather than down. Home prices continue going up in some areas of the country. Don’t pop the cork just yet, but after the past few nervous years, it’s cause for relief.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-06-05T14:46:00.000-07:00

Copy for Real Estate Guide Column for 6-11-10
REAL ESTATE PATTERNS
By Ken DuVall

GOOD NEWS FOR A CHANGE!

The partial housing recovery is real and sustainable despite recent volatility brought on mostly by on-again, off-again tax incentives for home buyers. There are some reasons to believe the recovery will continue. Prices comparably have again become very affordable. Nationally, pending sales were up 6% in April.

It now takes about 18% of the typical household income to meet payments on a single family home, which compares well with the long-term average of 26%. Consumer confidence is improving some. It doesn’t drive all purchases by consumers, but it does play a role in expensive, long-term commitments.

A recent survey by the Univ. of Mich. found that about three quarters of Americans believe that this is “a good time to buy.” The outlook may stay positive. And credit conditions continue their let-up. Many lenders are still waiting for assurances that home prices are stabilizing, but the consensus seems to be moving in that direction. Credit will flow more freely as a result with 30-year fixed rates now below 5%.

Europe’s sovereign debt crisis has a silver lining for U.S. motorists. Gasoline pump prices will fall along with oil prices, just in time for a vacation season that’s likely to see more Americans traveling than a year ago. A gallon of gas will cost $2.50, on average, by July 4th, vs. $2.74 now. The per-barrel price may hit $60 vs. $70+ lately. Strong demand may beef up the price to about $2.60 by Labor Day. So you can drive around looking for a house to buy at a lower gas cost!

The nation's housing inventory is cluttered with foreclosures, short sales, and home builders willing to make a deal. If you're in the market to buy a home today, you're likely weighing the benefits of each type of property available for purchase.

Don't be fooled. Not all bank-owned foreclosures are sold at deep discounts. Not all builders are slashing prices. Short sales can be a crapshoot, with some buyers enduring months of waiting and still not getting the property. Buyers are more educated these days. They have a good sense of what they're looking for.

Foreclosures reclaimed by the bank are many times sold at a discount. However, the size of the discount depends on the market you're in. A recent report found that the typical discount for bank-owned properties, compared with a traditionally sold home, averaged 20% to 30%. According to an online marketplace of foreclosure properties, the average discount on bank-owned properties was 34% in the first quarter on a national basis.

There is more than one reason why the selling price of a foreclosure is lower than a traditional home. The seller is typically a bank, and would like to move the property off the books as quickly as possible. Conversely, a traditional seller is interested in getting a certain price and is willing to stay in the market although listing price decreases are not uncommon in Chico these days.

The median price of an existing, single-family detached home in California during April 2010 was $306,230, a 21% increase from the $253,110 median for April 2009. The April 2010 median price increased 1.5% compared with March’s $301,790 median price. So far, so good, folks.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-05-22T16:58:00.000-07:00

Copy for Real Estate Guide Column for 5-28-10

REAL ESTATE PATTERNS
By Ken DuVall

LOW HOME APPRAISALS

A low appraisal can kill a home sale. It's one of the reasons that transactions fall apart these days. In a normal market, when an appraisal is lower than expected, it's up to the buyer and seller to cooperate, whether that means the buyer needs to put more cash into the deal or the seller needs to lower the price. Many sellers are selling for close to what they owe so there's not a lot of leeway. It can have a deal-killing impact, more than in years past when there was more wiggle room.

Current conditions in many markets also make an appraiser's job more challenging. For one, fewer home sales mean they have fewer comparable sales to consider when estimating market value. Also, sales that involve short sale properties will have a lower price than traditional sales. Short sales are when a borrower owes more on a home than it's currently worth, and the lender agrees to take less for the property than the loan balance.

Also, home prices in some areas are starting to stabilize or rise, while other areas are still struggling, so appraisers have to be very aware of local conditions. Plus there’s a new law that affects appraisers too, the Home Valuation Code of Conduct, which affects certain loans. The market now, unlike 2 or 3 years ago, is fluctuating, and difficult for them to read.

All of which is to say that today’s job of an appraiser is difficult, and they can simply make mistakes in estimating the value of a home. I feel sorry for them. It’s tough these days. When they're honestly faulty, consumers have the right to appeal.

Whether you're buying a home or refinancing a mortgage, read the appraisal. Make sure the appraiser made no mistakes that led to a low valuation. The document should stand on its own and largely speak to an appropriate estimate of value. Also, the lender should be able to talk you through it to ensure you understand it fully.

Don't be afraid to ask questions. It is an opinion of value, and I underscore 'opinion.' What you are getting is an appraiser's compilation of data and their interpretation of that data. It is not cast in stone. You pay for it. You’re entitled to a copy. Make sure all the facts about your home are correct. Also look for omissions, such as a recent addition or significant improvement that may have increased its value.

Make sure the comparable sales data is fair and accurate. If they use a nearby sale and you know it was a short sale or there were other motivations to sell over the typical seller, you and the appraiser should know that. Rely heavily on your REALTOR.

Be proactive. If you’re aware of a foreclosure down the street that is similar to yours, or say a divorce or relocation that would cause a sale to be low for high-pressure reasons, make the appraiser aware of that. And always request the lender use an appraiser from the same geographic area as the property being considered. But the lender isn't obligated to do that. It’s no fun at all anymore.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-05-10T14:23:00.000-07:00

Copy for Real Estate Guide Column for 5-14-10
REAL ESTATE PATTERNS
By Ken DuVall

PROPERTY TAX UPDATE

On April 23rd, I penned the column about property taxes. The ink had barely dried before I received an email from a local appraiser, gently taking me to task for much of what I had written. Most of the data therein was taken from a Wall Street Journal article with its national orientation. What follows are excerpts from an interview with Chip Meriam with the Glenn County Assessor’s Office:

Ken: “What did you find in my column that prompted your email?”

Chip: “You noted that many counties only reassess every 3 to 5 years with no incentive to move faster. As a result, more and more homeowners are appealing the valuations.

Ken: “Please set the record straight for us.”

Chip: “The trends and statistics in your column may be national averages but do not apply locally. In 1978, California voters passed Proposition 13, the main focus of which is elimination of periodic reassessments. Rather, a base year value is established when a homeowner acquires the property. Generally, the assessment cannot increase by more than 2% per year, compounded, until the property is sold again.”

Ken: “So our California properties aren’t automatically reassessed every 3 to 5 years?”

Chip: “Correct. I must note, though, that local assessors are reassessing thousands of properties now due to declines in value. These reassessments are not in response to appeals, but as a result of the assessors’ adherence to another property tax initiative, Proposition 8, which requires enrollment of the current fair market value or the Proposition 13 value, whichever is lower. The large value declines identified in your column have driven the fair market value of many homes below the 2%-per-year Proposition 13 assessment. We’ve been looking at these assessments for the past 3 years.”

Ken: “In other words, reassessments only occur when the market experiences substantial drops in value, but not when substantial increases occur?”

Chip: “That’s right, only with losses in value. What’s more, once a property is reviewed for a decline in value it will continue to be reviewed automatically every year until the values shift back the other way.”

Ken: “Then taxpayers need not hire representation as the reassessment takes place automatically?”

Chip: “This was loudly and effectively noted about 2 years ago by then Butte County Assessor, Ken Reimers. He used several venues to get the word out that local properties were already being reviewed, and without charge.”

Ken: “Chip, thank you for taking the time for this and for filling us in on the local scene. We all appreciate you chiming in here.”

In conclusion then, we’re far better off than the national picture painted in the WSJ article, and we’re fine as far as our local property tax valuations are concerned. I still learn something each and every day. So chalk one up for the good guys!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-05-01T14:34:00.000-07:00

Copy for Real Estate Guide Column for 5-7-10

REAL ESTATE PATTERNS
By Ken DuVall

DE JA VU ALL OVER AGAIN!

I read the “Landmarks Transplanted” article in the recent ‘American Profile’ insert in the E-R and boy, did it bring back memories. My first foray into real estate was in 1963 when a land development called Lake Havasu City on the Colorado River in Arizona started sales. That’s when I got my real estate license.

The sales force generated leads in L.A. and we would all fly down to Lake Havasu every weekend for the buyers to select lots to buy. We used ancient turboprop Lockheed Electras that rattled and rolled their way over to AZ. On take-offs, I remember stuff came rolling down the aisles under the seats from who knows what source! It was a thrill every time!

We were selling lots in the middle of the desert. The price was around $1500 a lot then. There was absolutely nothing there then, besides desert critters, but a big clubhouse to feed us and do transactions in. I found it amazing there are now some 50,000 people living there. I sold a lot I won in a sales contest several years later for $25,000! Plus a mini-TV too with a 3” screen that I have to this day. You really needed two of them so you could strap one to each eye!

Then the famous old London Bridge highlighted in the Profile article was purchased for $2.8 mil and moved to the site by the project owner of chain saw fame, Robert McCulloch. Sales and prices skyrocketed. Who would have ever imagined you could move that humungous bridge? Ten thousand tons of granite blocks were sailed across the Atlantic Ocean, through the Panama Canal and trucked from Long Beach to Havasu where it was totally rebuilt spanning the Colorado River! An amazing feat. It took 3 years to complete.

For the next 10 years I was involved in numerous other recreational developments: Tahoe Donner, a gated community at Truckee; Alta Sierra, also gated, out of Grass Valley; Klamath River Estates above Yreka; Mt. Shasta Forest 2½ acre parcels near McCloud at the very foot of Mt. Shasta. Another was the gated Bear Valley Springs project near Tehachapi which became a hit with the Hollywood elite. Acreage and extravagant homes became the place to hang out with the big guys. Nearly all the projects had golf courses.

In 1973 I ended up the So. Calif. Regional Mgr. on another project, our very own Paradise Pines, consisting of 16,000 lots which cost $3000 each then, a $48 million deal. Some of you may remember Sam Fortino, the original developer who sold out to Larwin, the big builder I was employed by. We did exactly the same thing except the airplanes were now 100 passenger charter jets. There was the obligatory clubhouse there then too. But at least there were trees! We flew a flight in every Saturday and Sunday.

After spending 3 years of weekends in beautiful Chico, Paradise Pines was sold out. My wife and I decided to move here from Hollywood with our then 12-year old son in 1977. You know the rest of the story. We’ve lived happily ever after. It’s been nothing but the good life since.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-04-16T13:12:00.000-07:00

Copy for Real Estate Guide Column for 4-23-10
REAL ESTATE PATTERNS
By Ken DuVall

OVERTAXED HOMEOWNERS FIGHT BACK

Now that the housing bubble has burst, up to 60% of the nation's taxable property may be over assessed, meaning owners are paying thousands of dollars more in property taxes than they need to. That is leading to a flood of appeals in many markets from homeowners eager to cut their taxes and speed the process of aligning tax valuations with reality.

On average, home prices have fallen by 30% since their 2007 peak. Many counties only reassess every 3 to 5 years and we all know they have little incentive to move faster, considering how important property taxes are to funding our local government operations.

So homeowners are increasingly appealing the valuations, although the number is still a tiny fraction of the total. The National Taxpayers Union (NTU) says everyone should have appealed more than once in the last 5 years or you may be paying too much. And I see many current listing home price decreases in our Chico MLS every day now to spur offers.

Those who appeal are getting mixed results. Only 20% to 40% of those who challenge their assessment walk away with a victory. “Appeals have become more difficult in the last 2 years now that municipalities are fighting tooth and nail for everything,” said Anthony Sarro, president of eTaxReductions.com, a company that represents people on property tax appeals.

Stuart Sendell, a retired mortgage banker living in Morristown, N.J. was ultimately successful but the process took 14 months. After reading a report that found the average assessed value of real estate there had increased by 5%, Sendell paid a visit to his local assessor’s office to examine the calculations.

“Everyone knew housing values were dropping. The report couldn't be right", said Sendell. He found that the local government included in its calculation a sample of lower-priced homes that dropped in price less severely than his, which the office estimated was worth $1.6 million. He decided to appeal after obtaining an appraisal showing his home was only worth $970,000.

Two months before his court date the lawyer for the county asked to strike a deal. Since New Jersey law gives assessors a 15% margin of error for assessments, Sendell accepted a 25% reduction. He was awarded a $5,400 tax refund.

Sendell's experience isn't unique. “There has been a ramp-up in requests that began well over a year ago,” said Peter Sepp, vice president of the NTU. “People are getting sticker shock over assessments that have yet to be adjusted to the realities of the currently depressed real estate market.”

Not surprisingly, a new industry has cropped up around the process with companies filing appeals on behalf of residents in exchange for a cut of the winnings. Most firms work on a contingency basis, taking about 50% of the savings for the first year. However, magistrates in a county will tend to be more lenient and understanding of a lay person than an attorney.

If you feel your property is overvalued by our county tax assessor, file an appeal. But if you bought it many years ago, you better not disturb the status quo. The county may come up with a higher value than you now have. Fair is fair. “In many cases, jurisdictions will have to raise taxes somewhere else,” said Sepp of NTU. “You may have to pay higher sales taxes.”

Property taxes on average account for about 45 cents of every general-revenue dollar collected by local governments, and if people pay less, municipalities have to make up the difference. As always, there’s no free lunch, folks. The money’s got to come from somewhere. How’s about blood from a turnip?

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-04-05T16:16:00.000-07:00

Copy for Real Estate Guide Column for 4-9-10

REAL ESTATE PATTERNS
By Ken DuVall

“WHISKEY’S FOR DRINKIN’, WATER’S FOR FIGHTIN.”

After spending the last century building one of the most elaborate water delivery systems on the planet, replete with giant pumps and thousands of miles of pipes and canals, California has become a water casualty. Revisit the 1974 movie “Chinatown” for the whole story.

The reasons are multiple and complex, but the bottom line is that our state’s world renowned plumbing is now perilously stressed. A 3-year drought has drained our reservoirs to the lowest levels in 20 years, forcing mandatory restrictions for many. The all-important snowpack in the Sierra Nevada, the largest storehouse of water in California, is shrinking.

The biggest and weakest link in the system is the Sacramento-San Joaquin Delta, a former 700,000 acre marsh that has been drained, diked into islands, and farmed for over 100 years. Much of this land has subsided and now sits some 20 feet below sea level.

Water flows in through the Sacramento and San Joaquin Rivers. It is then pumped south through two massive, manmade “rivers”: the Central Valley Project and the California Aqueduct. And therein lies a potential problem. Rising sea levels, severe storms, or a major earthquake could topple the weaker levees, inundating the lowest farmland and poisoning the big delta pumps with salt water from San Francisco Bay, slashing water supplies for 2/3 of Californians. Experts say it could take years to put our Humpty Dumpty hydraulics back together again if any of those events occurred.

Delta water exports to protect the salmon and smelt have left our Central Valley farmers high and dry and created rampant unemployment. The way the system now works is a disaster. The majority of water for the state’s economy is coming out of critical habitat for endangered species. There’s politics going on there too.

The Feather River watershed feeds our own Lake Oroville, California’s second largest (after Lake Shasta) which came to us with the State Water Project in the 1960’s. It flows into the 444 mile long California Aqueduct serving 23 million Californians. Drought and a small fish have combined to bring the State to its knees.

The newly formed State governing board charged with “fixing” the Delta is off to a rocky start with the appointment by then Assembly Speaker Karen Bass’ last day in office of Gloria Gray of Inglewood, who also is “coincidentally” a Metropolitan Water District of Southern California Board Member. The MWD and all Southern Californians depend largely on the Delta for its water supply. We’ll vote on an $11 billion water bond issue come November.

The Delta has become a huge bottleneck. A suite of new laws mandate water conservation and attempts to restore the Delta ecosystem and secure reliable water supplies for the entire state. It also resurrects a controversial proposal around for 30 years, the giant $10 billion ditch known as the Peripheral Canal that would bypass the Delta altogether. We Northern Californians have always seen that mammoth project as just one more water grab by Southern Californians as the key to their continued prosperity and survival.

If built, the Peripheral Canal would be the latest link in our ‘Rube Goldberg’ system of pumps, dams, tunnels and canals constructed over the past century that now feeds water to two-thirds of Californians and 8 million acres of our crop lands. It’s probably no coincidence that Goldberg, a cartoonist famous years ago for drawing his absurdly complex machines, began his career as a water and sewer engineer for the City of San Francisco!

The Sacramento-San Joaquin Delta sits just east of the Hayward Fault, one of America’s most dangerous earthquake faults. Let us pray these smart people fix all this before the next big one, which is forecast to have a two-out-of-three chance of hitting in the next 30 years. Whatever became of the El Nino forecast for this season? I remember in the 1995 El Nino year, Chico got 7” of rain in 5 days.

And we thought all we had to worry about was politicians and corruption!! Never forget how precious and dear our water is. Waste not, want not.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-03-24T14:49:00.000-07:00

Copy for Real Estate Guide Column for 4-2-10
REAL ESTATE PATTERNS
By Ken DuVall

LINGERING LOAN GHOSTS

Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars—and a collection agency is coming after them to get it.

That’s because lenders have been quietly selling 2nd mortgages and home equity lines left unpaid after foreclosures or short sales. The buyers are collection agencies. If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, or attach their wages. The only relief a consumer will have is by entering into a debt negotiating plan or filing for bankruptcy.

The phenomenon suggests an ominous, looming echo of today’s real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid home loans, renewed financial stresses on tens of thousands of consumers could dampen economic recovery. Just when you think you’re back on your feet they hit you with this.

You’ve got many thousands of people in California who have this hanging over their heads that don’t even know it. A new wave of bankruptcies might flatten people just starting to recover from losing their homes.

An entire industry is gearing up to buy their debt at deep discounts and collect what they can. It’s big business, very lucrative, and investors are coming out of the woodwork. Real estate insiders and financial players know it as “scratch and dent.” Boy, for every victim, there’s always some predator hovering out there, waiting to pounce on the unfortunate casualty.

No one knows for sure how much unpaid debt is on the line. People who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about. But borrowers may be vulnerable in years ahead, generally those who defaulted not only on their 1st mortgage but also on a 2nd mortgage.

In California’s trust deed “mortgages”, banks can’t collect from borrowers for primary, so-called “first-lien,” loans that go unpaid. No deficiency judgment is allowed unless the lender forecloses in a court proceeding. They dislike that process as they must wait a year for the money. When a house is foreclosed via a trustee’s sale or sold through a short sale, the lender of the 1st loan’s remedy is limited to getting the house back or the proceeds from another buyer.

But banks also made thousands of “second-lien” loans, including those used to finance 20% down payments during the housing boom, including home equity lines of credit. Nationally, about 3.4% of those loans are currently delinquent, a huge amount. Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt.

“Seek legal advice,” counsels Doug Robinson, spokesman for national nonprofit mortgage counselor Neighbor Works America. So do I. He says nonprofit counselors can help. Government forces are already moving to limit potential damage to millions now struggling with home loans. This ugly saga continues. The foreclosure beast has a long tail.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-03-24T14:33:00.000-07:00

Copy for Real Estate Guide Column for 4-2-10

REAL ESTATE PATTERNS
By Ken DuVall

LINGERING LOAN GHOSTS

Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars—and a collection agency is coming after them to get it.

That’s because lenders have been quietly selling 2nd mortgages and home equity lines left unpaid after foreclosures or short sales. The buyers are collection agencies. If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, or attach their wages. The only relief a consumer will have is by entering into a debt negotiating plan or filing for bankruptcy.

The phenomenon suggests an ominous, looming echo of today’s real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid home loans, renewed financial stresses on tens of thousands of consumers could dampen economic recovery. Just when you think you’re back on your feet they hit you with this.

You’ve got many thousands of people in California who have this hanging over their heads that don’t even know it. A new wave of bankruptcies might flatten people just starting to recover from losing their homes.

An entire industry is gearing up to buy their debt at deep discounts and collect what they can. It’s big business, very lucrative, and investors are coming out of the woodwork. Real estate insiders and financial players know it as “scratch and dent.” Boy, for every victim, there’s always some predator hovering out there, waiting to pounce on the unfortunate casualty.

No one knows for sure how much unpaid debt is on the line. People who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about. But borrowers may be vulnerable in years ahead, generally those who defaulted not only on their 1st mortgage but also on a 2nd mortgage.

In California’s trust deed “mortgages”, banks can’t collect from borrowers for primary, so-called “first-lien,” loans that go unpaid. No deficiency judgment is allowed unless the lender forecloses in a court proceeding. They dislike that process as they must wait a year for the money. When a house is foreclosed via a trustee’s sale or sold through a short sale, the lender of the 1st loan’s remedy is limited to getting the house back or the proceeds from another buyer.

But banks also made thousands of “second-lien” loans, including those used to finance 20% down payments during the housing boom, including home equity lines of credit. Nationally, about 3.4% of those loans are currently delinquent, a huge amount. Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt.

“Seek legal advice,” counsels Doug Robinson, spokesman for national nonprofit mortgage counselor Neighbor Works America. So do I. He says nonprofit counselors can help. Government forces are already moving to limit potential damage to millions now struggling with home loans. This ugly saga continues. The foreclosure beast has a long tail.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-03-20T14:31:00.000-07:00

Copy for Real Estate Guide Column for 3-26-10

REAL ESTATE PATTERNS
By Ken DuVall

LOANS TODAY

We now know lenders were focused on making a quick buck rather than acting responsibly, too many borrowers acted irresponsibly by taking on mortgages they couldn’t afford, and government regulators turned a blind eye to the problem.

Millions of resultant foreclosures coupled with high unemployment have created major challenges. The Fed recently announced a new $1.5 billion fund to help struggling borrowers. Five states—Arizona, California, Florida, Michigan and Nevada—have home prices that have fallen enough to qualify for the additional assistance.

State and local housing-finance agencies must submit proposals to the Treasury Department, which will evaluate and decide if they qualify. The funds are allocated from capital set aside from the $700 billion Troubled Asset Relief Program (TARP).

States where the average price for all homeowners in the state have fallen more than 20% from their peak are eligible to participate. The average price for all homeowners in Nevada, for example, has fallen more than 40% from the peak.

Three sorts of problems may be addressed with funding: unemployed borrowers, underwater borrowers, and those with second mortgages. This fund is going to help out-of-work homeowners avoid preventable foreclosures. It will help homeowners who owe more than their homes are worth find a way to pay their mortgages that works for both borrowers and lenders alike. The program is intended to encourage innovative approaches to limit still more foreclosures.

The program, known as the Home Affordable Modification Program (HAMP) seeks to aid borrowers by allowing them to modify their mortgages through any participating lender. Under this plan, the lender voluntarily lowers the interest rate, and the government provides subsidies to the lender and borrower. Don’t hold your breath on this one. Talk to your lender.

As we enter the spring home-buying season, buyers are motivated to take advantage of record low home prices, but lenders are still wary and determined to protect their interests in a fragile market. Financing is available to qualified borrowers- but the emphasis is on qualified. Would-be buyers are encouraged to see a lender before going out with a REALTOR to see homes to avoid thinking that they may qualify but don’t. There’s a lot new regs and lending criteria in play now.

You must show income, expenses, verify down payment cash available, and your credit history. Easy qualifier loans don’t exist anymore. Larger down payments may be required in areas that are still declining in value. Verifying income now involves digging deeper into tax returns. Side businesses showing a tax loss will count against your income now. Appraisals are a lot tougher anymore too.

The criteria for FICO scores have also gone up. Two years ago a 620 to 660 score was OK. Today buyers must score 720 or above to get the best loans. Conventional loans now require 5% to 10% down or more, no more zero down. FHA loans require 3.5% down. Closings take longer now too due to all the new regs designed to protect both the lender and borrower. Getting a loan used to be easy. It’s no fun anymore. I rather have a root canal than go for a new loan today!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-03-15T12:58:00.000-07:00

Copy for Real Estate Guide Column for 3-19-10

REAL ESTATE PATTERNS
By Ken DuVall

MORE ON THE LOAN UNDERWORLD

The data in this column is paraphrased by me from a recent article by an eminently qualified guy named George W. Mantor. He’s a nationally respected authority in all areas of real estate, author, and is frequently quoted in a wide range of publications. He is often a guest on Fox Business Network. He’s been involved with extensive consumer education efforts since 1978. He has served as a Director of the California Association of REALTORS.

If you are one of an estimated 50 to 60 million homeowners whose mortgage is part of a securitized pool, the law is on your side and more people are deciding to exercise their legal rights. Virtually all securitized private label loans are part of a massive and ongoing fraud upon both the borrower and the investor. And, the fraud continues as the “pretender lenders” force more defaults, stop making payments to the pools, collect on credit default swaps, and top it all off by seizing the underlying assets and keeping any proceeds for themselves.

What borrowers and investors agreed to and what they actually got are at odds and raise serious legal issues including Truth In Lending violations, Real Estate Settlement Procedures Act violations, fraud, bait and switch, illegal kickbacks involving the borrower, and outright fraud and conversion upon the investor. We are talking about a complex system of deceit by financial intermediaries that can turn modest home loans into millions of dollars in profit for them.

Suppose a buyer qualifies for a $300,000 fully amortized, fixed rate loan at 5%. But, right at the end of the process the underwriter tells your loan officer, “We’ve just had a change to our underwriting guidelines and we aren’t going to fund the loan.”

This is really funny because the loan is already funded. Now, it’s time to kick up the profits. Of course, your surprised loan officer asks “Why?” Underwriter: “His ratios. He needs a lower monthly payment. Resubmit in our new super-duper, magical flex loan with the built in implosion feature.” Now, before we run out and lynch a bunch of loan officers, it’s not their fault. They get pushed into these loans too.

The end loan product is determined by the underwriter who is able to “tweak” the loan to increase the Yield Spread Premium and the Service Release Premium, as well as increase the likelihood of collecting on the credit default swaps. That is the process of putting you into the most profitable loan possible. And, it is where the real predatory lending takes place.

By bumping our highly qualified borrower from 5% to say 8% not only increases the likelihood of default but they are able to extract an enormous undisclosed Service Release Premium and a Yield Spread Premium. The Yield Spread Premium is supposed to be disclosed, but often isn’t.

The Service Release Premium is where the real money is, and it’s hidden. The investor provides $480,000 to the financial intermediary in exchange for a 5% annual return of $24,000 plus a guaranteed return of principal.

The financial intermediary only loans our borrower $300,000, but when the rate adjusts to 8%, the investor has his $24,000 annual income, the financial intermediary pockets a $180,000 Service Release Premium, makes up the initial shortfall in the pool payments, and buys credit default swaps.

Bottom line: Intermediaries call themselves banks, but they aren’t banks. They did not lend you any money. They loaned you someone else’s money. If the investors recouped their losses from TARP funds, you no longer even owe them anything! Is this crazy or what?!

But there’s more: They may even owe you money. If you were the victim of predatory lending, your damages could be into the hundreds of thousands of dollars, plus legal expenses. They may have no legal right to foreclose on you. You have a legal right under the terms of your loan agreement and common law to raise the above issues with the true holder of the original note you signed.

Why? Because securitized loans presented an opportunity to commit fraud on both the true lender by skimming, and the borrower by convincing him he should accept a far more expensive loan than the one for which he qualified.

This is all very complex legal stuff. I don’t give legal advice. I’m just repeating what Mantor wrote because there are predators out there. Beware. We live, unfortunately, in an Age of Corruption.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-03-08T13:02:00.000-08:00

Copy for Real Estate Guide Column for 3-12-10

REAL ESTATE PATTERNS
By Ken DuVall

CASH IS KING

Buyers paying cash accounted for fully 25% of Sacramento home sales, becoming the dominant players in a distressed market, and squeezing out many first time buyers. Many (two-thirds) of these cash buyers are from the Bay Area. They are scoring houses way below list prices.

A Sunnyvale investor recently bought a Sac area bank repo for only $55,000 cash and never even saw the house first! Cash buys tell us there’s still plenty of money out there despite the bad economy, and it’s flowing into the housing market big time. Old line: Good goods will always sell, and anything will sell at a price.

Cash buyers can obtain discounts unavailable to borrowers, and their purchases rarely fall out of escrow. They push aside conventional new loan buyers who can’t compete. One REALTOR says his client made offers on several homes, even way over the list prices, only to hear from the seller, “Sorry. We already have a cash offer.”

Cash buyers around the North Valley accounted for 26.7% of last month’s sales, up to 32% for all of 2009, and fully 60% of all January 2010 sales in the under $100,000 category. Even with California’s 12% unemployment rate, on the bright side that means there’s still 88% of the work force that do have jobs and incomes and can buy houses. But cash is still king.

Meanwhile, we keep getting gloomy housing and economic news: housing starts and new home sales are down, commercial loan failures as stores continue to go out of business (when the rent stops, it’s hard for the landlord to make the payments); more banks face insolvency; home “shadow inventory” which are the huge number of foreclosures and delinquencies looming as even more workers lose their jobs, on and on. Fully half of the nation’s homeowners are up to 3 payments behind and/or already in foreclosure. All threaten recovery.

Even General Motors is folding their Hummer car division. And ABC media is laying off 400 people. Yet at the same time, many economists say that housing is on the path to recovery, albeit via a long, gradual process. It’s all true. But it’s also being said that we’re near to the beginning of the end of the housing down cycle. That’s the way I see it at this point in time too. Housing is not going to just dry up and die. You can’t shut down housing like it was Hummer.

Obama has allotted another $1.5 billion in financial rescue funds for California among other states to aid troubled borrowers including short sales which may help stave off a deluge of even more delinquencies and foreclosures. So far Chico is going along just fine. We’re in a relatively and seasonally normal sales and acceptable inventory pattern.

Guess what? A website where you can find foreclosed homes just filed for bankruptcy. They were having “severe cash flow” issues. The name? Foreclosure.com! Foreclosure.com goes broke. Now that is ironic!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-02-20T13:40:00.000-08:00

Copy for Real Estate Guide Column for 2-26-10

REAL ESTATE PATTERNS
By Ken DuVall

HOME VALUES STABILIZING!

A recent report shows that 20% of U.S. homeowners owed more on their mortgage than their home was worth in the 4th quarter. However, California’s housing market is bucking the national trend. Foreclosures and delinquencies around the country are slowing too, thank goodness, but there’s still many in the pipeline.

Although it states the percentage of American single-family homes with mortgages in negative equity and foreclosures rose in the 4th quarter, the report does not account for seasonal price changes. The traditional home-buying season is April through August. Historically, this is when home prices rise. In September, median home prices usually start a declining trend.

Unlike the national median home price, the month-over-month changes in California’s median home price for 2009 were stronger than the long-run average. Low interest rates and tax incentives led to a rise in the demand for housing. As a result, housing inventory was constrained, thereby creating upward pressure on prices.

California’s housing market has shown signs of stabilization since early 2009. Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009. In December, California’s median home price was 25% above the low for the current cycle.

In December, the median price of a California existing home rose to $306,820, an 8.4% rise year-over-year, the second consecutive year-over-year increase, and the 10th consecutive month-over-month increase, according to the California Assn. of REALTORS’s (CAR) latest sales and price report.

Although home buyers should not focus solely on future home price appreciation, homeowners who do purchase a house, live there for at least 5 years, and sell it at the then current median price, have averaged an annual rate of return of more than 11%, according to data collected by C.A.R. over the last 40 years. Time solves a multitude of sins.

More in the same vein: Syd Leibovitch, owner of Rodeo Realty in Los Angeles is doing what many real estate agents can only dream of lately: expanding. In the past 3 months, Leibovitch has hired more than 40 agents and is opening a new office on Hollywood’s Sunset Strip.

“My sales last year were 30% higher than 2006, which was our best year,” said Leibovitch. “A lot of my competition closed or went out of business entirely, and I picked up a lot of their agents.” He attributes some of his business improvement to buyers feeling more optimistic and sellers being more realistic with pricing. But declining inventory is also helping.

Chico is experiencing somewhat the same phenomena. I have lately gotten more and more would-be agents calling me about obtaining a real estate license. Still, despite some gloomy numbers and mixed reports in recent weeks, many economists see evidence that Western states like California, Arizona and Nevada—the hardest hit in the housing crisis—are showing signs of healing. Home prices in Los Angeles, Phoenix, San Diego and San Francisco have risen for 6 straight months. Don’t bet against the trend.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-02-13T15:59:00.000-08:00

Copy for Real Estate Guide Column for 2-19-10

REAL ESTATE PATTERNS
By Ken DuVall

LOOKIN’ MO’ BETTAH!

Buyers returned to the market for U.S. pre-owned homes in December after the federal tax credit was reinstated. The pending home sales index rose 1% in December after plunging 16.4% in November, with buyers reacting first to the expiration, and then to the return of the tax credit. The index was up 10.9% compared with December 2008.

The Commerce Department says housing vacancies remained near record levels in the 4th quarter with 2.1 million vacant homes for sale and 4.5 million for rent. The oversupply of housing should continue to depress prices and rents. Of all housing units built since 2000, 21% are vacant. Wow.

By the time Congress extended the federal tax credit and expanded it, the market had dried up. The newer tax credit gives $8,000 to qualified first-time buyers and $6,500 to qualified repeat buyers, who must now sign a contract by April 30 and close by June 30, to get the subsidy.

"These swings are masking the underlying trend, which is a broad improvement over year-ago levels," said Lawrence Yun, chief economist for the Nat’l Assn. of REALTORS (NAR). "December activity was the fifth highest in two years." He expects about 2.4 million buyers will take advantage of the tax credit this year. NAR’s economic outlook for 2010 and 2011, projects existing-home sales to rise from 5.19 million in 2009 to 5.66 million in 2010 and 5.7 million in 2011. Yun projects 2.4 million households will take advantage of the credit in 2010. All good so far.

In its latest national market forecast, NAR expects new home sales to rise from 375,000 in 2009 to 446,000 in 2010 and 637,000 in 2011, surpassing 2008's 485,000. They expect prices to rise in both 2010 and in 2011 with a 3.4% price increase for existing homes and a median home price of $179,800 in 2010, along with a 4.3% increase in 2011 to $187,500. Prices should rise even more for new homes, with a 3.7% increase this year to a median price of $221,300, and a 4.7% increase in 2011 to $231,700.

"For several months now we've been seeing stabilization in all of the home-price measures as inventory is pulled down," Yun said. "As a result, the housing wealth for many families has begun to stabilize. Expect existing home sales in 2010 to rise 9% and make up the vast majority of transactions.” Affordability is high and foreclosures are declining for the moment, thank goodness.

New home sales should also rise rapidly, up 18.8% in 2010 and up 42.9% in 2011. Residential construction is expected to gear up 27% in 2011 after a slim 3.2% increase in 2010. Housing starts are projected to increase a whopping 60.6% in 2011, after a 21% increase in 2010, equaling 1.07 million starts in 2011. The record high of 2.07 million units was in 2005. Expect 30-year fixed rate mortgages to rise from 5.1% in 2009 to 5.5% in 2010 and 6.2% in 2011, the highest level since 2008’s 6.1%.

Most important for us to realize is that our housing market will rebound like all others have in the past. The American Dream is alive and well. Owning a home is one of the biggest parts of that. P.S: Four years after home prices hit their peak in 2006, CNN Money looks at how 330 metro areas fared. Most important for us to realize is that our housing market will rebound like all others have in the past. The American Dream is alive and well. Owning a home is one of the biggest parts of that.

P.S: Four years after home prices hit their peak in 2006, CNN Money looks at how 330 metro areas fared. In 2006, Chico’s homes were 59% undervalued. They say we’ll still be 4.8% undervalued in 2010! We didn’t go crazy then. Chico’s always a bargain. The Good Life here is just a bonus!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-02-06T15:04:00.000-08:00

Copy for Real Estate Guide Column for 2-12-10
REAL ESTATE PATTERNS
By Ken DuVall

MIXED REVIEWS

Chief Economist Mark Zandi of Moody's predicts that the national market will level out in housing starts and that by the end of 2010 the numbers will return to 1 million units through 2011. Based on the ongoing stabilization of the banking industry and adjusted consumer spending, Zandi anticipates the current economic recession to end sometime this year. We’ll see.

As economists look into their crystal balls, it appears there is a consensus. The winds of change are blowing towards improvement in new single-family construction. Yet, home sales nationally tumbled 16.7% in December, the largest in more than 40 years. Sales of existing homes took their largest drop too, yet managed to end 2009 with the first annual gain in 4 years. Go figure.

Still, prices nationally plunged by more than 12% last year, the sharpest fall since the Great Depression. The drop for 2009, to a median of $173,500, showed the housing market remains too weak to help fuel a sustained economic recovery as hoped. Yet total sales for 2009 were up about 5% from 2008. Again, go figure.

Meanwhile, California’s home inventory shrunk to a 5-year low. The inventory of unsold homes on the market fell about 7% to 3.3 million. The unsold Inventory Index (UII), a closely watched index indicating the number of months needed to deplete the supply of homes on the market at the current sales rate, declined to 3.8 months in December, the lowest level in 5 years. A 6 month inventory is healthy, so we’re good there.

Some economists believe that California’s housing inventory is artificially low because many discretionary sellers—homeowners who do not have to sell their homes—are waiting on the sidelines until home prices rise. Others say more foreclosures are to come, as unemployment continues to rise. However, the California Assn. of REALTORS predicts that foreclosures will remain flat in 2010 compared with 2009, as lenders are listing properties for sale at a far more metered pace.

California’s housing market has shown signs of stabilization since early last year. Sales of existing, single-family homes bottomed out in August 2007, and the median price reached its trough in February 2009. In December, the median price of an existing home rose to $306,820, an 8.4% rise year-over-year, the second consecutive year-over-year increase, and the 10th straight month-over-month increase. That’s good news.

With affordability (due to distressed prices!) near-historic highs, low interest rates, and home buyer tax credits, many properties in California are receiving multiple offers and sparking bidding wars. A REALTOR colleague told me some Sacramento homes are selling for as low as $30,000! For perspective, sales are now up 21% from the bottom a year ago, but down 25% from the peak 4 years ago.

The median price of an existing home in California during December 2009 was $306,820, an 8.4% increase from a $283,060 median for December 2008. The December 2009 median price rose 0.8% compared with November’s $304,520 median price. Of course, the recovery will depend on whether the economy starts adding jobs in the second half of 2010. As always, housing shall endure. Chico is still so far, so good. Don’t be afraid. Keep the Faith.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-01-23T16:09:00.000-08:00

Copy for Real Estate Guide Column for 1-29-10

REAL ESTATE PATTERNS
By Ken DuVall

WHAT’S AHEAD FOR HOME PRICES?

California remains ahead of the nation in recovery with many first-time home buyers entering the market due to affordable home prices, low mortgage rates, and first-time home buyer tax credits from the state and federal governments. However, credit still is tight and unemployment remains high, which could hinder an immediate full market recovery.

Yet home sales in California hit bottom and the median home price of an existing single-family home has reached its trough, per the California Association of Realtors. In November, the state’s median home price rose in year-to-year comparisons for the first time since August 2007. C.A.R.’s closely watched "2010 California Housing Market Forecast,” projects that the median home price in California will rise 3.3% in 2010.

Although some economists are forecasting another surge of foreclosures in 2010, C.A.R.’s expect that foreclosures will remain flat this year compared with 2009. In 2008, many lenders flooded the market with foreclosures, and as a result, the state’s median price declined by historic levels. By comparison, in 2009, lenders listed properties for sale at a more measured pace, which helped moderate another home price decline.

Government efforts to maintain a low mortgage interest rate environment have somewhat stabilized the market for the moment, hovering around 5%. However, mortgage analysts predict that rates likely will rise to 5.5% by mid-2010.

Going to sell the house? Don't wait for 'spring' in February. The busiest season for home sales traditionally begins the day after the Super Bowl. Putting it off would probably be a mistake, experts say.

The Fed is expected to unveil a new program that will reimburse homeowners for up to half the cost of making their homes more efficient. Through the program, homeowners will receive the returns from simple upgrades like caulking windows, adding insulation, and changing incandescent light bulbs to those more energy-efficient ones.

To determine which energy-efficiency upgrades are best for their house, homeowners should obtain a home energy audit. You can hire a contractor licensed by the Building Performance Institute or the Residential Energy Services Network. These contractors first test your home to determine the amount of energy it is losing, and then makes suggestions on renovations.

California median home prices rose 5.8% before the Holidays while sales rose 4.7%. The median price of an existing home at the time was $304,520, an increase from $297,500 in October. The price has risen for 9 consecutive months and marked the first time it has risen in year-to-year comparisons since August 2007. Sales have risen 7.4% to the highest levels in 3 years.

More than 20,000 California homebuyers under the Governor’s new proposal, if approved, would allocate $200 million in tax credits up to $10,000 for new or existing home buyers- good news. There’s no income limit and it would provide up to $3333 off state taxes for each of the next 3 years. It could be combined with the Fed’s $8000 tax credit. So it’s not all bad news. Things look like they’re beginning to stabilize, at least for the near future.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-01-12T14:21:00.000-08:00

Copy for Real Estate Guide Column for 1-15-10

REAL ESTATE PATTERNS
By Ken DuVall

LATEST DATA GOOD NEWS FOR HOME BUYERS

Homes are now cheap. No, not everywhere in the country, and it's anyone's guess when they might turn around and start rising steadily again. But if you've been thinking of buying a home to live in, the current meltdown is a big opportunity.

You might not know it from the latest data. Too many, as usual, are focused on the trees instead of the forest. The composite indexes were unchanged between September and October. The numbers were lower than a year ago, but the rate of decline seems to have slowed. Two facts that are both obvious and practically useless. Indeed the latest survey contains a truckload of information for all those who prefer data to knowledge.

But long-term fundamentals are more important than the short-term noise. And it's generally a mistake to pay too much attention to doomsayers. Here are some truths: Real estate prices overall have now fallen by a stunning 20% to 30% from their 2005 peak. Nothing like it has been seen since the Great Depression and, according to some sources, not then either. Obviously for anyone who bought a home at the peak of the market, this has been a disaster. But for those thinking of buying a home now this is exceptionally good news.

And at the same time, mortgage rates have also plummeted. In 2006 you had to pay an average of about 6.4% on a 30-year fixed loan. Right now you can get deals for about 5%. Put the two together, and it's a winning combination. A home now is as reasonably priced as it was in the mid-1990s, when houses were an absolute steal.

Over many decades people have been choosing to spend more on housing, buying bigger and better homes. But the bubble, and subsequent collapse, still stands out clearly. Yet many median priced homes nationwide today are about as cheap as they were in the early 1990s. Yet back then mortgage rates were around 8, 9 or even 10%.

If you buy an average home today with a 30-year mortgage at 5%, the annual bill for interest and repayment of principal will come to about 19 times typical weekly earnings. If you get the $8,000 tax credit too, it drops below 18 times. (Note: if Arnie’s newly proposed California $10,000 first-time buyer tax credit goes through, that’ll just sweeten the pot). We haven't seen it that low since the early 1970s.

You can hear the objections. Doomsayers ask: What about these waves of mortgage resets coming in the next two years? What about all the unemployment? And the “shadow” foreclosures lurking in the background? And so on.

These are all valid arguments for not buying homes when they are expensive, or even averagely priced. But the whole point about markets is that they adjust. Prices now reflect the current bad news, and more. But if you have a stable income, can qualify for a loan, and are willing to drive a hard bargain on a home in this market, this is your time.

If an investment feels comfortable, it's should make you nervous. If it makes you really nervous, that's probably good. So feel good- buy a house! Right now, real estate is cheap. Timing is everything.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2010-01-11T14:12:00.000-08:00

Copy for Real Estate Guide Column for 1-8-10

REAL ESTATE PATTERNS
By Ken DuVall

Economic Outlook 2010

All this from various economic prognosticators across the country. Expect decent if not vigorous growth. As the federal government shuts down its emergency programs, the economy will face big challenges. 2010 will be one of transition and modest growth for a shaky U.S. economy. But we should be able to avoid a fundamental economic collapse as some doomsayers predict.
Federal aid will carry the economy into the 2nd half of the year as it struggles to overcome lingering challenges. For a while, unemployment will go up. Credit markets are not fully healed. Commercial real estate has problems.

The government will begin to carefully withdraw after pulling the economy back from the brink and spurring a recovery through massive intervention. Expect a very different landscape a year from now. Government will still be an active player, but look for the economy to stand more on its own.

Gone will be many of the emergency props put in place when fears of a depression reigned. Taking their place: More federal regulation, as Congress and the Administration increase oversight in hopes of preventing yet another financial crisis. Tepid growth is expected: a 3% gain in GDP for 2010 with a net gain of 1 million jobs. That will be a welcome change after 2 years of job losses. But the unemployment rate will remain close to 10%.

On the plus side, consumers will spend about 2% more in 2010, after cutting back by about 0.7% in a dismal 2009. Retail sales will gain a modest 3%. Exports are set to rise as foreign economies, especially in Asia and Latin America, keep growing. This will prompt firms to restock inventories. Count on inflation staying in check at about 2%.

Housing will also boost GDP a tad after dragging it down a percentage point in each of the last 3 years. The National Association of Realtors seasonally adjusted index of sales agreements fell 16% from October to November. It was the first decline following 9 straight months of gains and the lowest reading since June.

Look for housing starts to total 750,000 this year, up from 600,000 in 2009 but well below the pace seen in the 1990s of about 1.5 million annually. Fortunately, our neck of the woods just keeps on chugging along, relatively fine.

But, as the economy picks up and government pulls back, big challenges will still threaten a sustained recovery. The federal stimulus won’t be nearly as large. Parts of the two-year, $787-billion stimulus program will continue to help, but temporary boosts, tax breaks for home buyers, extended jobless benefits, subsidies that keep mortgage rates low, extra food stamps, etc., are set to expire in 2010.

State governments must cut back, struggling with budget shortfalls that total more than $25 billion. Deficit spending isn’t an option. Direct aid in the stimulus bill helped states limit layoffs, and more federal help -- up to $30 billion -- is likely soon, but it won’t be enough to avoid significant state austerity measures. As we all know, the Golden State is hurting, big time.
Despite the murky news, America, California, and Chico will prevail. Keep the Faith, my friends.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all his columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-12-12T14:43:00.000-08:00

Copy for Real Estate Guide Column for 12-18-09

REAL ESTATE PATTERNS
By Ken DuVall

A WONDERFUL CHRISTMAS MORNING!

Here’s my final column for this year. It’s wonderful touching story for your Holiday Pleasure:

Last Christmas I woke up with 6 hungry kids and just $10 in my pocket. Their father had gone. The boys ranged from 3 months to 7 years; their sister was 2. Their Dad had never been around much, although he did used to give me grocery money.

But when he finally left us, the food money stopped. I had to go get a job immediately. I scrubbed up the kids, put on my best homemade dress, loaded them all into my rusty old Chevy Nova and drove off to find a job.

We went to every place in town. The kids stayed crammed into the car and were quiet while I tried to convince whoever would listen that I was willing to learn anything or do anything. I had to have a job. No luck. The last place we went, just a few miles out of town, was the old Root Beer Barrel drive-in that had been converted into a truck stop now called the Big Wheel.

An old lady named Granny owned the place now. She peeked out of the window and saw all my kids. She said she could use me for the graveyard shift, 11 at night until 7 in the morning. The pay was minimum wage but I could start that night! So I raced home and called the teenager down the street that did baby-sitting.

I arranged for her to come and sleep on my sofa at night. She could arrive with her pajamas on and the kids would already be asleep. We made a deal. That night when the little ones and I knelt to say our prayers, we all thanked God for finding Mommy a job. And that’s how I started at the Big Wheel.

When I got home in the mornings I would wake the baby-sitter and send her home with several dollars of the tip money I got every night. The tires on my old Nova had long since lost all their tread and had slow leaks. I had to fill them with air nearly every day. It was no fun at all.

One bleak fall morning, I went to the car to go home from work and found 4 brand new tires in the back seat! I never locked the car because there was nothing to steal. New tires! There was no note, no nothing, just those 4 beautiful new tires. Had angels taken up residence here I wondered? I made a deal with a local service station. In exchange for mounting the new tires, I would clean his office. I remember it took me a lot longer to scrub his floor than it did for him to mount the tires.

I was now working 6 nights a week instead of 5 but it still wasn't enough. Christmas was coming and I knew there would be no money for toys for the kids. I found a spray can of red paint and started repairing and painting some old toys. I hid them in the basement so there would be something for Santa to deliver on Christmas morning. Clothes were a worry too. I was sewing patches on top of patches on the boy’s pants and soon they would be too far gone to repair.

On Christmas Eve the usual customers were drinking coffee in the Big Wheel. There were the truckers, Les, Frank, and Jim, and a state trooper named Joe. The usual musicians were hanging around after their gigs playing pinball. The regulars just sat around and talked through the wee hours of the morning before leaving to go home before the sun came up.

When it was time for me to leave on Christmas morning, to my amazement, my old battered Chevy was filled full to the top with boxes of all shapes and sizes! I opened the door and kneeled in the front facing the back seat. Reaching back, I pulled off the lid of the top box. Inside was a whole case of little blue jeans, sizes 2-10! I looked inside another box: It was full of shirts to go with the jeans!

Then I peeked in some of the other boxes. There was candy and nuts and bananas and bags of groceries. There was an enormous ham for baking, along with canned vegetables and potatoes. There was pudding, Jell-O, cookies, and pie filling and flour. There was a whole bag of laundry supplies and cleaning items. And there were 5 toy trucks and a beautiful little doll.

As I drove back through the empty streets as the sun rose on the most amazing Christmas Day of my life, I was sobbing with gratitude. And I will never forget the joy on the faces of my little ones that blessed Christmas morning.

Yes, angels had been there. And they all hung out at the Big Wheel truck stop!

See ya all next year. Happy Holidays everyone.

2009-12-05T14:37:00.000-08:00

Copy for Real Estate Guide Column for 12-11-09

REAL ESTATE PATTERNS
By Ken DuVall

WARNING SIGNS

Question from a Realtor: “In reviewing the buyer’s financials, I noticed that most of their accounts showed a number of large deposits over the previous 30 days from overseas- Taiwan, Hong Kong and China.”

Answer: They might want to report this to law enforcement authorities. There are no hard, fast statistics as to the extent criminals are using real estate to place their illegal gains into the financial mainstream. But the FBI suspects that money laundering in home purchases is becoming more common.

So much so that the Financial Crimes Enforcement Network, or FinCen, is considering a rule requiring Realtors, among other entities which don't have a direct financial interest in property sales, to file suspicious activity reports that lenders have to file when they smell something fishy.

While mortgage fraud and money laundering are often viewed as separate criminal enterprises, FinCen, a bureau within the U.S. Treasury department that collects and analyzes information about financial transactions in an effort to combat crime, has found they are often interconnected.

"Despite the relative illiquidity of most real estate assets," the agency says, "money launderers have used residential mortgage transactions- fraudulently, though legitimately structured- to mask the cash proceeds of crime."

Indeed, collusion between the bad guys and Realtors, builders or contractors, has been found to be rare. But it does happen. And either way, FinCen says the housing sector "may be vulnerable at all stages of the money laundering process."

‘Cleaners’ use many techniques but one of the most prevalent is the use of multiple straw buyers to secure home loans. The ploy is similar to one used by many who commit mortgage fraud. But once the loan is funded, the actions of the launderer diverge from those of the fraudster.

The fraudster, who generally employs a dishonest appraiser to inflate the value of the property and thereby the amount of the loan, takes the money, flips the property, and runs. The cleaner, on the other hand, will strive to project an image of normalcy by continuing to make regular loan payments.

In a process the authorities call "layering," the launderer will not only use illicit funds- from the illicit sale of pirated DVDs, or perhaps a string of robberies, etc.- as a down payment to secure the mortgage, but also will pocket the money from the inflated loan, and then use the ill-gotten gains to make payments.

There could be a good reason for the buyer’s rush to close, but if the buyer can't give one, your antenna should wiggle. Transactions involving persons residing in known off-shore tax havens often are funded by laundered money.

So are those involving someone who refuses to reveal a current address or lists it only as a P.O. Box. There are a lot of creative crooks out there anymore. Be careful. The FBI could even hold you in as an accomplice to their illegal activities! You gotta know which bridges to cross and which ones to burn.

2009-11-25T14:44:00.000-08:00

Copy for Real Estate Guide Column for 12-4-09

REAL ESTATE PATTERNS
By Ken DuVall

Housing Market to Stabilize in 2010

“Home sales are expected to rise about 15% next year, as buyers continue taking advantage of the home-buyer tax credit and housing prices stabilize,” said Lawrence Yun, the National Association of Realtor’s chief economist predicted at our annual conference in San Diego.

Yun is forecasting 5.69 million existing home sales in 2010, up from an anticipated 5 million this year. About 549,000 new-home sales are projected for next year, up from an estimated 397,000 this year. Sales of existing homes jumped by 10% in October to a seasonally-adjusted annual rate of 6 million units. Sales activity is currently at the highest pace since Feb. 2007. Hoorah!

"The fear factor will no longer be at play in 2010," said Yun. “Many consumers feared that home prices would continue to fall and decided to postpone their purchases. But next year, those who remained on the sidelines will believe prices have hit bottom. And they'll take action- if they have a job”, he said. Unemployment could hover around 10% during 2010, but it "will not deter those with jobs from making home-purchase decisions."

Realtors are celebrating the extended/expanded home buyer tax credit. With it, first-time buyers – 47% of sales in 2009- can still qualify for up to $8,000. Even those who currently own a home now qualify for a credit up to $6,500 for the purchase of a new principal residence. Realtors are optimistic that the "free money" being offered will generate more sales during December and January. To qualify for the credit, buyers need a binding contract in place by April 30, and close escrow by June 30.

The credit stimulus will continue to help draw down inventory and stabilize home prices and encourage a strong and sustainable housing recovery. The nation’s current inventory of existing homes dropped to a 7 month supply, down from an 8 month supply in September. New home sales took a 6% jump last month too.

"By June, the housing market will be back on track... and I believe that will be the situation as the tax credit ends," Yun said. He expects home values to then be showing consistent and sustainable increases.

Barring unforeseen major economic events, Yun projects home prices to rise between 3% and 5% next year, varying between markets. Foreclosures unfortunately will continue to pile up into next year, expected to peak by the 2nd quarter, but there is enough pent up demand to absorb the inventory quickly.

The bad news: 10.7 million households, or 23% of all mortgage holders, have loans that are higher than the value of their home. The good: Prices in the 20 city major metros are up more than 3% from the bottom in May. We have seen broad improvement in home prices for most of the past 6 months.

The 30-year fixed-rate mortgage, hitting an all-time low of 4.78% last week, should average around 5% +/- in the 4th quarter, and may rise only gradually by the end of 2010. Affordability is at an all-time 18-year peak. No ‘carbon credits’ needed!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-11-13T13:53:00.000-08:00

Copy for Real Estate Guide Column for 11-20-09

REAL ESTATE PATTERNS
By Ken DuVall

ENORMOUS WAGER ON CITY CENTER

Let’s this week gaze at the gleaming glass towers of City Center, the biggest thing to hit Las Vegas since the slot machine. Part destination resort, part urban enclave, the 67-acre complex, a city within a city, an architectural tour de force, and an $8.5-billion gamble on the economy, consumer confidence, and the appeal of Vegas itself. It’s also the largest privately funded construction project in America.

The bigger issue is will it draw new and returning visitors? Will it “cannibalize” bookings at existing properties and keep room prices at bargain-basement levels? Will the “new normal economy” prompt potential visitors to think more carefully before heading for that quick trip to Vegas?

Set to open next month, City Center is more than just another casino resort. The idea was born in 2004 when executives at MGM Mirage, City Center’s developer, began exploring ways to utilize their 67 acre parcel between its Monte Carlo and Bellagio resorts.

Clearly, that’s a lot to digest in a market that’s been on a year-long crash diet. It also explains why amazing room deals continue: $31 at Excalibur, $49 at Harrah’s and Bally’s, $129 at Vdara when it opens December 1. And with another 5,000 rooms expected to open next year, the stakes couldn’t be higher. Las Vegas room inventory continues to grow. Last year, the city’s hotels added another 7,600 rooms to 140,000.

In the middle of City Center is Aria, the 4,004 room hotel/casino/condos, their flagship property. The 61-story skyscraper rises above a 150,000 SF casino, 215,000 SF pool deck and 1,800-seat theater that will present a new Cirque du Soleil production (we saw it in 2004, the most incredible show of all time) dedicated to the life and music of Elvis Presley.

The result will be truly spectacular, especially when you add in the pocket parks with water features, sky bridges, and electric tram. City Center is unlike anything the Strip has ever seen. The first thing you see is Crystals, the project’s “retail district,” a stunning structure filled with stores offering the world’s most prestigious brands. Around it, 6 glass towers rise into the sky, a collection of hotels and high-rise condominiums designed by world-renowned architects.

International visitation is also increasing, now accounting for about 15% of Vegas’ take. Last week, British Airways started daily, non-stop service from London. XL Airways will start twice-weekly charter service from Paris. Las Vegas boosters remain convinced they can manage through the economic crisis. Witness the recent resurgence of the penny slot, which offers a deceptively low entry cost, yet provides a surprisingly good return to the house.

In the meantime, over on the City Center campus, the construction continues as thousands of construction workers race against next month’s openings. Vdara opens December 1; Crystals, December 3; Mandarin Oriental, December 4, and Aria, December 16. MGM Mirage CEO James Murren believes City Center will be a “must-see destination for a very long time.” It’s an $8.5 billion bet, huge even for Sin City.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-11-09T12:50:00.000-08:00

Copy for Real Estate Guide Column for 11-13-09

REAL ESTATE PATTERNS
By Ken DuVall

BIG REBOUND

U.S. existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking 7 gains in the past 8 months, and 9.2% higher than the pace in September 2008. Sales activity is at the highest level in over 2 years. It was the highest reading since December 2006 and more than 21% above a year ago. Distressed home sales accounted for 29% of transactions in September, which reduces unsold inventory. Buyers are enjoying affordability conditions the highest in 40 years.

Much of the momentum is from the first-time buyer tax credit, which is also freeing many sellers to buy a replacement home. The tax credit will be extended through April 2010. Not to worry about the Nov 30th cutoff now. Move-up buyers also got included in the new expanded bill. Meanwhile, Treasury and IRS agents have uncovered more tax credit fraud. Some 580 children as young as 4 have received $627,000 in first-time homebuyer credits, plus 187 criminal schemes have been identified with 107,000 investigations of civil violations now underway. A perfect example of how to bite the hand that feeds us.

The U.S. Unsold Housing Inventory Index in September fell 7.5%, representing a 7.8-month supply, down from a 9.3-month supply in August. Unsold inventory totals are 15% below a year ago. The index indicates the number of months to deplete the supply of homes on the market at the current sales pace. The current housing supply is the lowest in 2 1/2 years. If we continue to absorb inventory at this pace, prices will return to normal, with modest appreciation patterns next year. Let’s hear a big amen for that!

Meanwhile back at the ranch, California home sales increased 2.1% in September compared with the same period a year ago, while the median price of an existing home declined only 7.3%. Sales in September 2009 increased 0.6% compared with August. The September 2009 median price rose 1.1% compared with August’s $292,960 median price vs. $319,310 in September 2008. This marks a new milestone in September when several Calif. Assn. of Realtor’s regions reported positive year-to-year increases in the median price, the first since January 2008.

If that wasn’t enough, September also marked the 7th consecutive month of increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases. Efforts by the government to stimulate housing and the economy are favorably impacting the market. Sales have exceeded 500,000 homes for 13 consecutive months, and now are 33% higher compared with 2008 sales.

The Unsold Inventory Index for existing California single-family homes in September 2009 was 4.2 months, compared with 6.5 months for the same period a year ago. The number of days to sell was 33.6 days in September 2009, compared with 46.2 days for the same period a year ago. We are witnessing the sharpest turnaround in American home prices in 100 years. Don’t fret about Chico. We’re looking good too.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-10-31T15:24:00.000-07:00

Copy for Real Estate Guide Column for 11-6-09

REAL ESTATE PATTERNS
By Ken DuVall

THE TAX CREDIT SCENARIO

Congress is considering proposals to expand the soon-to-expire $8,000 tax credit for first-time homebuyers, potentially applying it to all but the wealthiest. Supporters say doing so would further boost home sales, stabilize housing prices, and generate jobs. The credit now can be claimed by anyone buying a home who has not owned one for 3 years and who closes the deal by Nov. 30. It’s too late unless you pay cash.

Beyond extending the deadline, some lawmakers want to make the credit available to all homebuyers who meet income eligibility requirements. And increase the amount of the credit to $15,000. Currently the first-time home buyer credit is available to individuals buying their primary residence earning $75,000 or less, $150,000 for joint filers. First time buyers accounted for fully 45% of all 2009 sales.

By the end of November, the credit is estimated to have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, so it was a good thing. The bad news is the program will cost the IRS over $10 billion in lost revenue. Lobbying is under way to extend the current credit until March, 2010.

Economists predict 2010 will be the first year since 2005 for housing to again contribute to the growth of the U.S. economy. After a steep 3 year decline, existing home prices in 20 metros have rebounded since February by almost 7%. Prices are expected to rise 2% next year, but forecasters don’t believe the increase in prices will discourage homebuyers. Over 80% of economists surveyed think the recession is over and recovery has begun, but they expect the expansion to be slow as continuing unemployment persists.

U.S. existing home sales in September posted their largest monthly gain in over 14 years as consumers rushed to take advantage of the tax credit, rising 9.4% to a 5.57 million home annual pace. The tax credit has induced buyers back into the market, helping to stabilize prices. The foundation for the eventual recovery in the U.S. housing market is now being laid. Meanwhile, new home sales fell 3.6%. But the median price was off only 9.1% compared to a year ago, a sign that we may be on the mend. Unsold inventory remained unchanged and acceptable, a good thing.

However, the tax credit has come under serious scrutiny as reports of widespread fraud have emerged. The crooks among us jump on any new program as soon as it hits the street. Just like Medicare fraud to the tune of a $90 billion annual rip off. It’s disgusting.

There is speculation as to whether the pace of home sales would drop if the program ends. Should sales slow substantially, as was the case with auto sales after the “Cash for Clunkers” program expired, it could cause new undermining of our fragile housing market. The debate will likely become more heated as a decision on this pivotal housing issue materializes in coming weeks. Stand by.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-10-24T15:32:00.000-07:00

Copy for Real Estate Guide Column for 10-30-09

REAL ESTATE PATTERNS
By Ken DuVall

YOU HAVE QUESTIONS?

"I'm waiting for more information to decide to buy now or in a couple years," said Dong, a renter who hopes to buy his first home for about $500,000. "Different experts give different perspectives. And if you listen to the National Association of Realtors, it's always a good time to buy? How can you believe them?"

The answer to that last question is a resounding yes. They do more enormous, conscientious, and valid real estate research than anyone else in the country. Integrity is the name of the game. I’ve been a Realtor since 1963. No one is going to stroke me at this late stage of the game.

I checked Business Week, etc., to take a crack at answering Dong's housing questions: Which direction are interest rates likely to move in the next year? Up. Why are homebuilders starting work again when they still have homes left to sell? So they can stay in business and have product to sell. What home improvements add the most value with the least investment? Remodeling baths and kitchens.

Declines for inflated home markets? Tom Stratton, a 26-year-old Purdue University PhD candidate, thinks the market as a whole has stabilized but wonders whether price declines are in store where values are still inflated compared with local incomes. Stratton is especially interested in Berkeley, Calif., where he plans to start his academic career. The median home value in Berkeley last month was $665,000, down 4% from a year earlier. And the median family income there was $93,297.

Existing residents can afford to live in Berkeley because many of them bought houses decades ago before home values reached stratospheric levels. As longtime residents leave (a likelihood as unemployment rises), prices could take a dive. Berkeley has the advantage of being home to the University of California. College jobs have been relatively recession-resistant.

Baby boomers' influence on prices: Wes Dumey, a 31-year-old software engineer with a graduate degree in economics, wonders how the aging baby boomers will determine future housing trends. Dumey's parents, now in their late 50s, recently told him they'd likely leave their 3 bedroom home and find a smaller condo when they retire. Dumey questions whether younger buyers will then step in to fill the larger homes the boomers vacate.

"From my personal experience, there's no way I would buy a large house like that," Dumey said, "when you factor in insurance, property taxes, utilities, and you can have a $400 or $500 electric bill for air-conditioning in the summer."

Burns expects that homes smaller than 3,000 SF will be in greater demand in the future. So-called ‘echo boomers’ prize energy efficiency, not only because it's good for the environment, but because it's cost-efficient.

"Baby boomers are going to be interested in downsizing because smaller homes are easier to maintain," Burns said. "Generation Y (Boomer’s offspring, echo boomers born mid-70’s to early 90’s) are much more interested in not spending their time on the freeway." Well, let’s hear a big OK. Chico, the easy off-ramp from the fast lane of life, is what you seek and we’re here for you!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-10-17T13:49:00.000-07:00

Copy for Real Estate Guide Column for 10-23-09

REAL ESTATE PATTERNS
By Ken DuVall

HOMES STILL A GOOD INVESTMENT

A flood of foreclosures early next year will dampen the housing recovery. The tidal wave is being held back this year as lenders struggle with the dilemma. But that finger will come out of the dike by year-end. Making matters worse…unemployment above 10% and a new surge of adjustable rate loans are due to increase monthly payments soon.

The housing market debacle led the country into recession. But it’ll lead us out too. My bet is the Fed not only extends- and adds more types of buyers- to the home buyer’s tax credit programs but increases the deduction. Some are proclaiming the recession is ending. We’ll see.

Sales of foreclosed homes will hit 1.9 million in 2010, up from 1.7 million this year, vs. a half-million a year until 2007 when the housing market collapsed. For all the doom and gloom about the housing market, it still generally pays to own a home. Of course, historical trends don't pay the mortgage. People who wade in and out of the housing market too often, or who buy at the wrong time or price and then need to sell quickly, can still get burned.

History suggests the American Dream is a pretty safe bet. Real estate is a leveraged investment. For easy math, a $10,000 down payment on a $100,000 home produces a 100% return on your cash if the home price only goes up $20,000 in value. That's like buying a $10 stock and watching it go to $20. But that little equation won’t help the 16 million homeowners who owe more today on their mortgage than their house is worth.

And there are other benefits: Owning a home provides a sense of independence, security and community. And you get to live in your investment. You can't do that with stock. You’ll always need a roof over your head. But if you own for a decade or more, price appreciation usually overcomes any slumps. In the late 1990s, home values started growing like stocks. For 5 years, they appreciated at 8% to 9% a year, or about 5 percentage points ahead of inflation.

Nationally, home prices today are down an average of 30% from their peak in 2006. Based on the median price of homes sold each year, prices have risen by about half a percent a year above inflation, or roughly 4%, since the 1940’s. Since the National Association of Realtors began compiling statistics in 1968, the median sales price has climbed 6% annually, from $20,100 that year, to $195,200 in August of 2009. That’s an 871% profit.

You won't find many skeptics among people who bought homes in the '90s and still live in them. Their homes may be worth tens of thousands of dollars less than at the peak, but they're still frequently worth twice what they paid. Specific example: One house in Ewing, N.J., that sold for $160,000 in 1996 was worth about $410,000 3 years ago. It's still worth $375,000 today. That’s a 134% return on the original $160,000 price.

Housing has proved a good investment if you stick with it. And with prices having already fallen so far, buying now could make it an even better one. Time cures a multitude of sins.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-10-05T12:08:00.000-07:00

Copy for Real Estate Guide Column for 10-9-09

REAL ESTATE PATTERNS
By Ken DuVall

TAKING STOCK

Adding to our current problems is the use by appraisers of foreclosed or distressed properties as comparable sales. Also, without adjusting for the run-down interior condition of some of these homes by doing just a drive-by inspection.

An inspection of one such home found that it would cost $200,000 to restore it to a livable condition. Before they vacated, the former owners “took everything out of the house”, including door knobs. For an appraiser, it seemed like a valid comp, until, and if, they had viewed the interior.

The new Home Valuation Code of Conduct (HVCC) is designed to keep appraisers from being influenced by those with a financial stake in the transaction. It has encouraged lender’s use of inexperienced out-of-town appraisers unfamiliar with local markets. The appraisal crisis has become so bad that sales are being lost because of appraisals coming in below the contract sales price. Not a good thing.

Another study compared homes in 300 U.S. markets for a “sample” 4 BR, 2 1/2 BA 2,200 SF home. In Grayling, Mich that home costs $112,000. There, residents paddle canoes right through town on the AuSable River, ride snowmobiles on forest trails, and take scenic walks among 150-year old trees at Hartwick Pines State Park.

At the other end of the spectrum lies the San Diego neighborhood of La Jolla, where the sample home costs $2.1 million. As always, location is everything. Buyers pay a premium for its proximity to a big city, easy access to the Pacific Ocean, and great weather. Other California markets like Beverly Hills and Palo Alto with similar qualities are also in the top 5 most expensive markets.

Not surprisingly, California claimed 8 of the top 10 most expensive U.S. housing markets. Completing the top 5 were Beverly Hills, $1,981,750; Greenwich, Conn., $1,519,250; Palo Alto, $1,489,726; and Santa Monica, $1,460,912. I’ll guess with you why Santa Barbara didn’t make the cut. The Golden State too had the largest difference between the most and least expensive markets: Lancaster (in the high desert north of L.A.), registered an average sales price of $165,205, $1.9 million lower than La Jolla.

The good news: The latest statistics show the national pending-home-sales index up 6.4% in August to its highest level since March, 2007. Residential construction spending has gone up at its fastest pace in 16 years. Also, existing home sales have risen for 7 straight months for the first time since the gauge was created in 2001.

Buyers are rushing to complete their purchases before Nov. 30th to qualify for the $8,000 1st time buyer’s Fed tax credit. It’s a good bet the Fed will extend the deadline as its clearly spurring sales. Plus, the average mortgage rate fell below 5% for 30-year fixed loans, and to a record-low 4.36% for a 15-year fixed last week. Fence sitting buyers are jumping in after seeing prices rise and rates fall for several months. Still, loan qualifying conditions remain very tight.

Chico, with some 567 homes sold worth $171,449,608 since 1-1-09 priced from $100,000 to $1.12 million, equates to an average price of $302,380 with a median of $275,000. Plus there’s another 159 homes in escrow. Sales here are going along just nicely, thank you very much.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-09-22T13:30:00.000-07:00

Copy for Real Estate Guide Column for 9-25-09

REAL ESTATE PATTERNS
By Ken DuVall

THE NEW DEAL

A year after the collapse of the housing market triggered the financial meltdown, lenders are demanding more money up front, higher credit scores, and full proof of income. Paperwork must be in perfect order. Patience and persistence are required. There’s a lot of red tape anymore.

It's like a return to the standards that emerged as the World War II generation bought their first homes: Buy only what you can afford. Figure on a 20% cash down payment, which was the only deal available then, period: a 30-year, 80% fixed-rate mortgage.

For sellers today, the standards are different too. Be patient, because the balance of power has swung strongly to buyers. And price is the key. "If you're not getting showings, you're overpriced," one Realtor says, “The record numbers of foreclosed homes on the market gives buyers more leverage. They can afford to wait." A seller says, "We don't feel like we went from boom to bust. We’ve gone from boom back to reality."

One borrower 3 years ago landed a mortgage with no down payment, with 2 foreclosures and a bankruptcy in his past. Now, lenders pore over bank statements, tax returns and job histories. The average mortgage application today is 3 times thicker than what it was at the start of the boom, and gets thicker as the process drags on. “He who hath the gold maketh the rules.”

Now, lenders want to know everything. It's once again a full underwriting process on each loan. Another category of risky loans, Alt-A mortgages, which required little or no documentation of the borrower's financial health, have plunged to $3 billion this year from $400 billion in 2005. Fuggedabout sub-prime loans! Appraisers have become stricter, or, some would say, more accurate. It's not uncommon nowadays for closings to take 60 days or more.

Dan Hunt, at our Chico Mid Valley Title & Escrow, reports we’re on the verge of a huge influx of REO (bank owned) properties in Butte County. In the past 8 months alone (Jan-Aug) there have been 1,492 Notice of Defaults filed, 596 Trustee’s Deeds (foreclosures) recorded and 219 sales of those were REO properties. Your local Chico title company is your best bet, an escrow officer who cares about you, and who’ll tackle any last minute surprises.

Nearly everyone in the real estate industry agrees on this much: Another dramatic boom-bust cycle isn't likely. Expect that a different consumer mindset will return real estate to its more traditional cycle over the next decade. There will be some ups and downs but in the long run, prices should move higher. The past is your best guide to the future. Bottom line: the U.S. is still growing. Everyone will always need a roof over their head. Homes are forever, as long as babies continue to be born.

P.S. An 8 BR 6000 SF home in Chicago is on the market for between $1 and $2.5 mil, list price as yet unannounced. The current owners paid $35,000 for it in 1973. President Obama lives just down the street. The block is barricaded 24/7 and you have to be screened by the Secret Service to even drive there. The owners can’t take the stress of it anymore. I’ll bet there are no burglaries in that neighborhood!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-09-14T14:20:00.000-07:00

Copy for Real Estate Guide Column for 9-18-09

REAL ESTATE PATTERNS
By Ken DuVall

LET THE DRUM ROLL CONTINUE!

In upscale Fort Myers, Fla., people were eagerly signing up for a free bus tour of foreclosed real estate—all with ocean views. The young bus driver volunteered that he had just bought his first house, paying $65,000 for a foreclosed property that last sold for over $250,000.

Recap: Last week we reported that the Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the 3 months ended June 30 over the three months ended May 31. The National Association of Realtors reported that existing homes sales rose 7.2% in July from June. And sales of new homes rose 9.6% in July compared with June.

In short, the data suggest that real-estate prices hit a bottom some time during the 2nd quarter, and have now begun to rise. There's no way to be certain this marks the end of the long, painful real-estate bubble correction, but clearly, prices are no longer in free-fall. That means to me if you've been sitting on the fence, it's time to act. And let’s not kid ourselves: there’s still a lot more foreclosures to come as the jobless ranks continue to swell. It ain’t over ‘til it’s over.

I've never tried to time the real-estate market before. I never had to- it was always going up! I understand why buyers have been cautious. No one wants to buy in a down market, just as stock buyers avoid bear markets. For most people, buying a house is a much bigger decision than buying a stock. But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, prices don’t seem likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can't imagine a better time in years to buy than now in Chico.

Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the reality of reduced prices. And with stricter standards, lenders aren't going to let buyers borrow more than they can afford which protects buyers and helps keep prices down.

There's a good reason homeownership has always been a central part of the American dream. It delivers security, pride of ownership, a sense of community, and decent investment returns. That bus driver in Florida represents the flip side of the foreclosure crisis. For every hardship story, others are realizing their dreams of home ownership, and getting what may turn out to be the deals of their lives. Once again, timing is everything.

Here in beautiful Chico, we’re now seeing constant multiple offers, available loans- despite lender’s reasonable concerns- righteous appraisals, and people living happily ever after with the American dream coming true once again. So be it.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-09-02T10:02:00.000-07:00

Copy for Real Estate Guide Column for 9-4-09

REAL ESTATE PATTERNS
By Ken DuVall

UP, UP & AWAY!

Nationally, existing home prices have risen for the 2nd month in a row, up 1.4% per Case-Schiller. Sales of existing homes are also up 5% from their year-ago levels. I don’t quote C-S often as they only use 20 metros (Chico is one of them), not the rest of America. But they report prices rising in 18 of the 20 cities in June. Robert Shiller’s the perennial pessimist. If he’s upbeat, it’s good news.

For the 2nd quarter overall, the C-S price index rose 2.9%, their very first quarterly increase in 3 years for a striking turnaround. Home prices have bottomed for the time being. Prices actually rose .5% in May over April, a very positive indicator. A lot of what follows has been in the news but here’s the big picture this week.

California existing home sales increased 12% in July compared with a year ago. Closed sales totaled 553,910 in July at a seasonally adjusted annualized rate. The July 2009 median price rose 4%. July marked the 6th consecutive month of median price increases. Clearly, our market is on the comeback trail. This was the first time in 5 years that existing home sales posted consecutive monthly increases, a significant factor. Sales are also up 5% from their year-ago levels, which is the first time since February 2006 that sales have not recorded an annual decline. Existing home sales increased 6.5% from last month.

More positive news: U.S. new home sales jumped 9.6% in July, for a 6th straight monthly gain, the longest streak on record. Existing home sales also rose 3.2%, which is 12% over July 2008. The Commerce Department reports home sales rose to a seasonally adjusted annual rate of 433,000, up from June’s rate of 395,000. By comparison, in 2008, 485,000 new homes sold. In 2007, it was a whopping 776,000. The median sales price of $210,100 was down just 11% from $237,300 a year earlier.

This July, the seasonally adjusted U.S. new home sales rate was the highest since last September. These consecutive monthly increases add to the growing body of evidence that the housing market is expanding again. July sales are up 31.6% from the January 2009 bottom.

Meanwhile, inventories of unsold U.S. new homes fell 3.2%, to the lowest in 16 years. On balance, builders have pulled back on new starts too. Yet, a 7 month supply at the July sales rate is the lowest in 2 years, which is good. At the current sales pace, there’s only a 9 months’ supply of existing homes on the market, the lowest level since last December. I think things are looking good. Timing and attitude are everything! Keep the Faith. See ya in 2 weeks.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-08-24T15:00:00.000-07:00

Copy for Real Estate Guide Column for 8-28-09

REAL ESTATE PATTERNS
By Ken DuVall

END OF THE TUNNEL

The deterioration in national housing values is finally showing signs of slowing. Home sales soared 7.2% in July as first-time buyers rushed to take advantage of the tax credit. It was the 4th straight monthly increase and the strongest month since August 2007. It was also the largest one- month gain in 10 years. Median home values shows that the year-over-year depreciation reversed itself during the 2nd quarter of 2009.

To be taken with a grain of salt, Fed Chair Bernanke said the U.S. economy is "leveling out" and that "the prospects for a return to growth in the near term appear good", an upbeat assessment of the nation's economy in light of rebounding equity prices and recent positive economic data. So the decline is finally reversing itself as we knew it ultimately must.

There are even some areas in the country where home prices have increased over the past 12 months. We may not be out of the woods yet, but we appear to be on the mend. Gag: Q: How far can a bear run into the woods? A: Half way. Then he’s running out!

After being blamed for inflating home values during the housing boom, the appraisal business is again coming under fire. If the appraisal is too high, buyers may overpay and lenders may over-lend. If they are too low, it’s hard to get a righteous loan amount. Some say the pendulum has now swung too far toward caution. The lowball foreclosure sales comps appraisers must use are not helping either. Appraisers and lenders have become nervous and cautious.

On the dark side, retail store vacancies won’t top out until at least mid-2010 per Kiplinger. About 150,000 stores across the U.S. will shutter their doors this year. Even strip malls are feeling the pain. Usually anchored with grocery and drugstores, strip malls typically weather economic downturns well. Not so this time. Overall vacancies are already at 10%. Just look around Chico.

On the bright side, American homeowners are much more realistic about their own homes’ values than they were a year ago and about the future values of their homes. Fully 81% of homeowners believe their own homes’ values will not decline in the next 6 months- the highest positive percentage since 2008. Remember: It’s your attitude, not your aptitude, that determines your altitude!

I just talked with a broker in Pismo Beach. They’re doing a land office business with 15 to 20 offers on EVERY new listing that comes online. I said, “Wait a minute. Are you in Pismo Beach or Chico?!” They just can’t keep up with it. He says he only gets maybe 10% of his offers accepted being beat out by competing bids.

Meanwhile in Chico, an older home in the Avenues just listed pulled more than 12 offers. Another one off E. 9th St. got 32 offers! Don’t tell me this isn’t a great time to buy. The vast majority of Chico listings are now bargain priced.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-08-17T15:14:00.000-07:00

Copy for Real Estate Guide Column for 8-21-09

REAL ESTATE PATTERNS
By Ken DuVall

NO QUICK RECOVERY IN SIGHT

You know I always try to find the bright side but I have to keep my reporting fair. So on balance, here’s a compilation of economic analyses from Wells Fargo, Moody’s, and RealtyTrac as reported last week, even though they don’t paint a very pretty picture. Millions of people have lost their homes or their jobs, or both. Meanwhile, millions of workers lucky enough to still have a job saw their savings plans decimated last year.

While the present housing market remains an excellent time to buy or sell, recent signs of a rebound mask larger problems. You’ve got to know where you’re at in the game. Nationally, prices may have an additional 5% to 8% drop before bottoming out at around 40% below the 2006 peak. It’ll be many years until prices fully recover to their pre-peak levels. Most of the price decline is behind us, but we’re likely to have a prolonged recovery.

Chico has already absorbed the bulk of that drop. Our inventory is low at only 281 homes with an average 131 days on the market to sell. Plus, sales prices are coming closer to list prices of late, and, we’re seeing homes sold-before-tour again, along with fewer foreclosures and short sales, all encouraging signs. Multiple offers are happening again.

But rising joblessness is only going to make matters worse, spurring more foreclosures and at the same time shrinking the pool of would-be buyers. Plus, we’re also seeing some sellers holding back until prices rise again, which they inevitably will, of course. Even renters are having it tough, some with poor credit and others asking for rent concessions.

By the end of next year, a record 1 in 6 mortgages will be in foreclosure, 3.2 million by year-end 2009, on top of an equal number in 2010, triple the typical annual rate. Perspective: in all of 2005, there were only half a million foreclosures. What’s more, about 30% of all borrowers- a record 15 million- remain upside down, owing more than their homes are worth. We’re not going to be back to typical times until the Fat Lady sings, period.

Still, the end IS in sight. As I pointed out last week, both sales and starts have clearly turned the corner. Builder confidence is up. By 2011, sales of new and existing homes will hit 6 million again, which is within the “normal” range. By 2012, new home starts will have climbed back to the 1.2 million a year level. Bottom line: we’ll be fine over the long run. We just went too far too fast. There’s no free lunch- ever- under any circumstances. This Law is immutable. Many pay for the transgressions of the few.

The reason Chico has no major problems now is because we didn’t go crazy as many other areas did. We’re doing just fine. We don’t do foolish in Chico. Prices and volume are close to normal. That’s why we live here. It’s normally normal- and amen to that!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-08-08T16:09:00.000-07:00

Copy for Real Estate Guide Column for 8-14-09

REAL ESTATE PATTERNS
By Ken DuVall

ASK AND YE SHALL RECEIVE!

Pending U.S. home sales rose in June for the 5th straight month, another encouraging sign of life in our embattled housing market. For June, the pending home sales index rose 3.6%. The last time there were 5 consecutive monthly gains was back in July 2003. The results were far “better than analysts expected”, which seems to be the new mass media mantra! Nevertheless, amen.

The jump in pending home sales coincides with other positive trends in the residential market. That market is healing and the patient is getting healthier at an accelerating pace according to most industry analysts.

For the first time in 5 years, home resales have risen for 3 months in a row, increasing almost 4% in June. Low prices, attractive mortgage rates, and the first-time homebuyers’ $8,000 tax credit (which is now expected to be extended) have kick-started sales.

Essentially, housing’s is so affordable now, coupled with the tax credit, have become bigger factors in influencing sales. Experts expect existing home sales to gradually rise over the balance of the year, with conditions varying around the country. But I anticipate an unpaved road along the way.

Losses shrank from the year-ago period, as builders across the country took smaller charges against the falling values of its land and unsold homes. More encouraging news: new-home orders picked up during the first half of the year. It appears home sales are on a sounder footing and inventory is gradually being absorbed.

The REALTORS Confidence Index measures the strength of the current housing market and future expectations. Using data from the survey of a panel of REALTORS, we respond to questions regarding current and expected demand, price of homes, and other economic conditions. Our answers are then used to create the index. The current month’s report uses responses of 2993 REALTORS from all over America. For the most part, we feel the indicators are encouraging.

It has been the worst housing recession anyone but us really old folks can remember. From the frenzied boom peak in 2005 to 2006 to the trough earlier this year, home resales fell 38% and new home sales tumbled 76% as construction skidded 79%. And for the first time in 40 years, home prices posted consecutive annual declines. A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.

Now take a deep breath. The worst- barring some extreme global event- for the moment is apparently over. By every measure, except for ongoing foreclosures and job losses, the housing market appears to have stabilized and in many areas is on the comeback trail. Nationwide, home resales in June are up 9% from January, and new home sales have climbed 17% in the same period. Construction has risen nearly 20% since the first of the year.

What more could we ask for at this point in time, without seeming like the “Fisherman’s Wife”?

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-07-27T11:19:00.000-07:00

Copy for Real Estate Guide Column for 7-31-09

REAL ESTATE PATTERNS
By Ken DuVall

LOW DOWN ON THE HIGH END

In affluent Bronxville, N.Y., 15 miles north of NYC in Westchester County where residents of million-dollar homes have an easy half-hour commute into Manhattan, selling a house has become a whole lot harder. Larry Brocchini put his four-bedroom Colonial on the market in late May, with a price tag of $969,000. He and his wife have hosted open houses and showed the home about 10 times, but no offers yet. Reason? Potential buyers looking to escape traffic and crowded schools in Manhattan are having trouble selling their own apartments and co-ops there.

In the Big Apple, the median sales price for an apartment priced in the top 10% of the market fell as much as 26% in the second quarter and the number of sales plunged 50% from last year. "People are just being a little more deliberative than they have been in the past," said Brocchini, a 44-year-old attorney. In the Chico area, we have some 37 homes listed from $750K to $2.8 mil. High-priced homes everywhere are languishing.

Nationally, at the current sales pace, there's about a 40-month supply of homes on the market for $750,000 and up. That's more than double the stock in mid-2007, before the credit crunch. By contrast, there is now less than a 10-month supply for all homes. The high end is currently the worst performing sector of the residential market, but we’re beginning to see some relief.

The recession and collateral damage in the stock markets have knocked many luxury buyers out of the game. Falling home prices coupled with unsympathetic new appraisal rules have scuttled many deals. And, lenders have jacked up interest rates and down payment levels for high-priced mortgages. Yet we do see some credit markets softening along with increased demand.

Since the credit crunch began in 2007, Fannie Mae and Freddie Mac are virtually the only new loan buyers left, but they cannot purchase mortgages above $729,500. That means any lender who makes a mortgage above that amount- a jumbo loan- will have to keep the loan on its books, which depletes the funds they can lend, and, causes your interest rate to increase.

On the flip side, there's some really unbelievable buys out there. Not all once wealthy people are still wealthy so some have to sell their homes- if they can- just to stay afloat. At the same time, banks are requiring hefty down payments even if the borrower has a golden credit history. Qualified buyers can score heavily in this environment.

To make up for falling values in Florida, Erik Lebsack is throwing in his $80,000 2007 Mercedes Benz. The home, appraised at $1.1 million in 2006, has been listed for $780,000 since December. "If people don't think they’re stealing the house, they feel like they're getting ripped off" Lebsack said. Welcome to the club, Erik.

The really good news of the week: U.S. home sales were up 11% in June, the highest amount in 9 years. Prices climbed almost 1% as well. Realtors all over are reporting their clients believe the worst is behind us. Public confidence is returning, a very good sign. Goldman Sachs analysts said Monday, “It’s becoming clear that prices may be close to bottoming.” Hallelujah!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-07-20T12:10:00.000-07:00

Copy for Real Estate Guide Column for 7-24-09

REAL ESTATE PATTERNS
By Ken DuVall

LOOKING BETTER

Pending home sales nationally rose in May for the fourth straight month, spurred by low prices and a first-time homebuyers tax credit, fresh evidence that the housing sector may be recovering. While the increase was small, it followed a 7.1% jump in April. The increase in April and the fact that May sustained this rise indicates that existing home sales are poised to rise in the coming months. From my lips to God’s ears!

New home construction expanded for the second straight month in June after hitting a record low in April, the highest level of starts since last November. The pending home sales index is now 6.7% higher than in 2008. The last time it increased for 4 straight months was in October 2004. Sounds good to me.

Completed home sales rose 2.4% from April to May, the third month-to-month increase this year. Building permits, a leading indicator of housing construction, rose 8.7%. Starts rose 3.6% in June. This is the highest level of permits since December. Better than a poke in the eye!

A Harris Poll found Realtors among the Top 12 Most Trusted Professionals in America. This was several notches below nurses, doctors and pharmacists, but comfortably above attorneys, stockbrokers and sales professionals in a number of other industries. In fact, while sales professionals as a whole rated somewhere midway on the “most trusted” scale, Realtors consistently garnered the top rating among the entire sales group. I’ll take it!

The California Assn. of Realtors is now offering a free supplemental insurance product for First Time Home Buyers who lose their jobs due to layoffs. Qualified buyers may be eligible to receive $1,500 per month, for up to six months, to help make their mortgage payments. Nice.

Falling prices, low rates are prodding California homebuyers. Favorable home prices, record-low interest rates, and the belief that rates will rise in the near future were the primary motivators leading home buyers to purchase. Sixty-eight percent of buyers said price decreases motivated them to buy while 39% reported low interest rates enabled them move to a better location. California’s median home price, up 7% in June, now $267,570, which 69% of first time buyers can now afford. That’s a good sign.

Housing affordability has improved dramatically in response to the decline in home prices along with historically low mortgage rates, creating a tremendous opportunity for home buyers in California. Home sales in California rebounded in late 2008 and early 2009, reflecting the combination of favorable prices, low mortgage rates, and home buyer tax credits, fueled primarily by sales of distressed properties that accounted for more than half of the state’s transactions.

Forty-nine percent of all buyers purchased a home through a traditional market sale, while 38% purchased a bank-owned property. Reflecting the difficulty in closing short sales--properties selling for less than the loan amount--only 13% of buyers purchased a short sale property. They should be called “long” sales!

There are now 19 million empty homes in this country. Low or inappropriate appraiser valuations are now rearing their ugly head, affected by distressed sale prices. Lenders are spooked. New loans are hard to come by. The foreclosure beast has a long tail.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-07-02T12:55:00.000-07:00

Copy for Real Estate Guide Column for 7-10-09

REAL ESTATE PATTERNS
By Ken DuVall

I’LL TAKE CHICO EVERY TIME!

We aren’t doing all that badly in Beautiful Downtown Chico. These are the Year-to-Year comparison stats for the periods of 1-1-08 to 6-30-08 vs. the 1-1-09 to 6-30-09 numbers. These data cover the Chico area MLS sales and listings for single family detached homes and condos.

Last year in the first half we had 407 sales for a sales volume of $133,771,540 with an average price of $328,667. This year to date we’ve had 372 sales for a volume of $106,379,676 with an average price of $285,967. Currently there’s 146 more pending in escrow as I write. This equates to a sales volume decrease of 20% and a 13% decrease in price. Not life threatening. My best guess: we’ll hit a true housing market bottom sometime around year end.

With distressed- foreclosures and short sales, accounting for about 25% of all volume- and the lowered prices needed to sell during the owner’s lifetime (!), Chico has not really fared too badly compared to the rest of the country. Of course, sales and prices have taken hits nearly everywhere over the last year. By the way, there are 372 metro areas in all, not just the 20 cities used by the rather insufficient Case-Schiller index.

On the listing side, year to date in 2008 we had 799 home and condo listings with the resulting sales after an average 77 days on market. This year to date there have been 663 listings with the resulting sales after 85 days on market. Compared to several other major metros, Chico is truly amazing. Why? Because Chico is a place where people really want to live- and people create values. That makes all the difference. Or would you rather live in L.A.?! You tell me!

Sad sign of the times: Angry, defaulting homeowners are lashing out. Windows and drywall are broken. The doors are off their hinges. Built-in fixtures and cabinets have been ripped out. What can be sold is. All that -- and much more -- describes many homes in foreclosure-wracked markets around the country. The destruction has been committed by former homeowners as a sort of toxic “parting gift” for the bank that foreclosed on them. Some bitter former owners can’t resist wreaking a little havoc before they are evicted from what had been their home.

I’m not preaching here but since the property technically belongs to the bank, those acts constitute vandalism and theft. It's clearly wrong to destroy private property, even if it was yours once upon a time and is now slipping through your fingers. In many ways, these are sad and desperate times. But as Abe Lincoln said: "Most folks are about as happy as they make up their minds to be." Lemme hear a big Amen to that! We shall endure.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-06-20T14:33:00.000-07:00

Copy for Real Estate Guide Column for 6-26-09
REAL ESTATE PATTERNS
By Ken DuVall

IT’S SAFE TO GO IN THE WATER AGAIN!

In the Sacramento Delta suburbs east of San Francisco, where prices soared and fell as wildly as anywhere in the country, a housing market rebound is excitedly underway. One new development to add to the mix: move-up buyers have all but disappeared. The distressed sellers have lost their equity to foreclosures and short sales resulting in them having no down payment for a replacement home. They’re renters now. But the bottom feeders are taking their place.

A 1,600 square foot home in Antioch listed for $179,000, after last selling for $425,000 in 2004, drew multiple offers selling for $210,000 cash, as many are these days. It was a "short sale" needing lender approval to sell for less than owed. Same thing is happening in Chico now with 20 or 30 competing offers not uncommon. Buyers wouldn't touch these just 3 months ago.

"Everyone was waiting for the bottom, and they waited too long, because the bottom has come and gone" commented the listing Realtor. Spurred by markdowns up to 80% from market highs, first-time buyers and investors, both American and foreign, have descended en masse in the last 3 months on San Francisco's and Sacramento’s hardest-hit areas as Wall Street and the economic climate improved somewhat.

They're picking clean the Delta region's banked-owned inventory as soon as properties hit the market in unprecedented bidding wars. The panic buying, fueled by buyers' fear they'll miss out on fire-sale prices, are belying the doom-and-gloom reports of recent rising mortgage delinquency rates and foreclosure activity. I see it as one of several signs the U.S. housing-market turnaround has started in some of the nation's hardest-hit markets.

After spending most of the 1990’s in the $250,000 range, the median-priced home that was sold in the San Francisco area, rose to a stunning $850,000 by its May 2007 peak. It since fell to a low of $399,000 in February, a 53% drop in just 21 months, before posting its first monthly gain in March.

The median is expected to continue rising at a healthy clip in months ahead since it's now at the pre-bubble level of 9 years ago. At roughly 22,000 units, Las Vegas- another hard hit area- inventory is not far off its recent record high, yet recent sales showed flourishing demand, the 4th best on record set during the height of the boom. That record is now expected to be broken this summer.

Pending sales of existing U.S. homes also took an upswing in April, rising 6.7% in the biggest monthly gain in over 7 years. Yet in another report that belies the first-quarter delinquency numbers, mortgages defaults fell 3% in April and were down 24% from a record 106,482 in February. This is a critical turnaround for us.

The main stream media only tells us what they want us to hear. I dig deeper. I’m quoting you these out of area stats to illustrate the overall housing market picture. Sales are still going well here in Chico.

Get this: a buyer in Boston’s upscale Back Bay section plunked down $300,000 (the highest on record) for a PARKING PLACE, driving the ask price up from the $250,000. Granted they are scarce, but $300,000? Wow! Supply and demand at work. The seller also has a 2 BR condo in the same building asking $2.5 mil.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-06-10T15:43:00.001-07:00

Copy for Real Estate Guide Column for 6-19-09

REAL ESTATE PATTERNS
By Ken DuVall

IT MAY NOT GET ANY WORSE

Ninety percent of the nation’s economists predict the recession will end in the 3rd quarter of this year, although the recovery will be bumpy. Ditto from Fed Chair Ben Bernanke. But he cautioned, “Unless we demonstrate”- even with the $1.8 trillion budget deficit this year- “a strong commitment to fiscal sustainability, we will have neither financial stability nor healthy economic growth.”

Pending U.S. home sales, up for 3 months in a row, rose 6.7 % in April after a 3.2% rise in March, the best in 7 years, signaling a housing market bottoming process is emerging. The California home median price has increased for 2 consecutive months for the first time in 2 years! California’s pending sales too were up 2%. The statewide existing home median price rose from $253,040 in March to $256,700 in April, a 1.4% gain after a 2.2% gain in March.

With sales of existing homes remaining above the 500,000 level for the 8th month in a row, California is being closely watched as a barometer of the overall economy. Sales of existing single family homes increased 49.2% in April compared with the same period a year ago. The state’s median price seems to be at or near the bottom, even as over 50% of the Sac areas comprise short sales. About 25% of all Chico listings in the $200K to $300K are shorts here too. They are being bid up like crazy too as multiple offers come in.

Sales of foreclosures too have sparked bidding wars. But the market for high end properties is at a virtual standstill as it’s difficult to obtain jumbo loans. Unfortunately unemployment will climb this year even as the economy rebounds, meaning still more foreclosures as the jobless cannot make their loan payments. The national median price was dragged down to $170,000 as foreclosures made up 45% of all recent U.S. sales.

Nationally, the number of unsold homes at the end of April rose 9% to 4 million, a 10 month supply- not good. But look for housing to set a faster pace as starts are expected to streak from about 500,000 this year to 825,000 in 2010, but still 45% below the long term trend of 1.5 million annual starts.

With the mounting demise of many retail and office tenants, look for more shrinkage in commercial and retail construction as we go. Vacancies are mounting swiftly. Corporate bankruptcies are on the rise, increasing to 55,000 this year. Times will remain tough well into next year but the frightening collapse of sales and corporate earnings is probably behind us now. I think that we can finally begin to breathe a sigh of relief.

Only for the Ultra Rich & Famous: you can now rent a house for the summer in the way upscale Hamptons on Long Island, NY for a mere $350,000! At the height of the market in 2007, a house that went for $12 million is now going for a piddling $8 mil! Even some of disgraced Ponzi scheme Bernie Madoff (he “made off” with their money- couldn’t resist that!) victims have had to sell their Hampton’s homes.

Commented Steven Gaines, local Hampton’s talk show host, “Those wannabe Hamptonites being flushed out of here is really a good thing. It keeps the elitism going.” Well, you can just kiss my royal class, Steven!!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-05-30T15:21:00.000-07:00

Copy for Real Estate Guide Column for 6-12-09

REAL ESTATE PATTERNS
By Ken DuVall

MY, HOW THINGS CHANGE

The California entry level housing affordability reached 69% in the 1st quarter of this year compared to 46% a year ago. The minimum household income needed to purchase an entry level median priced home this year was $38,090, based on an interest rate of 4.96% and a 10% down payment. And assuming you’re willing to pledge your first born in the deal! Loans are still very tough to get, especially sans a 20% down payment plus a stellar credit rating.

First time buyers typically purchase a home equal to 85% of the prevailing median price, which is now $215,000. The monthly payment including taxes and insurance would be $1270. At $38,090, the monthly qualifying income was 41% lower than a year ago when households needed $65,030 to qualify for that same entry level home. Recent decreases in home prices and loan rates are what brought affordability into better alignment with the typical California household income, currently $61,030. The California median home price last month was $253,000.

So, we win some, we lose some. It all balances out over the long run. The highest median price in the state is Santa Barbara, perennially at the top rung, even more than the Bay Area, now at $825,000. The Chico area median for our 330 active listings is $379,000 but that includes about 150 homes priced from a half a $1 mil to nearly $3 mil. There are some 156 pending Chico sales in escrow with an average 90 days on the market before selling.

If you kick those high-enders out, that would bring the median way down. Most of our available inventory is priced at and selling between $200,000 and $400,000. And it’s selling again of late. We’re starting to hear “sold before tour” again at our Wednesday Elks Club MLS Tour meetings. Hallelujah! Buyers are definitely getting off the fence. Better hurry as interest rates are rising.

Another positive sign: Single family home starts rose 2.8% in April while building permits increased by 3.6%. When you read the negative media reports saying housing starts are down 12.8%, that figure includes multifamily dwellings, which includes apartments. What with all the vacant homes for rent all over the country, what builder in their right mind would be constructing apartments?! But detached homes, that’s a whole other category. And existing home sales were up 3% in April, another good sign.

This month the National Assn. of Home Builders reported builder sentiment in May rose to its highest level since last fall. Economists continue to see the necessary characteristics for a housing bottom falling into place. What is likely happening is the single family segment is forming a floor while the multifamily segment reflects the impacts of credit market turmoil and the deep recession.

Economists said the fine points of the reports were better than the headlines. Many of them expect the housing sector to continue to improve in the near term. So there, all you sky-is-falling naysayers!! We’re on the comeback trail, folks! Take it from me. I’ve been there, done that, and got all the T-shirts now.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-05-15T12:45:00.000-07:00

Copy for Real Estate Guide Column for 5-22-09

REAL ESTATE PATTERNS
By Ken DuVall

HOW TO BUILD TRUE WEALTH IN THESE TROUBLED TIMES

There’s no question that America is in a tight spot. It’s not pretty out there. Most days we still get recession related bad news. But tune out the negative chatter for a moment and listen up. All our recent financial and housing crises have in fact led to opportunities for smart investors who want to get rich the right way. Real estate remains the original get rich slow scheme. Visit a casino if you want to gamble.

The reality is our economic collapses have actually created an exceptionally favorable environment for real estate. Some get the elevator, some the shaft! Interest rates are low, property values are depressed, and real estate is still a great long term investment. It’s a smart player that knows where he/she’s at in the game. Doing it the wrong way is what put us in our current jackpot. The right way will lead to great financial gains over the long term. I’ve been doing this since 1963. Nothing’s changed in almost half a century.

You might call this a class in “Real Estate 101”. First of all, you need a nest egg. If you haven’t already got one, save up. Cut every possible expense you can- as I’ve said many times, there’s no free lunch- to build up your savings. No pain, no gain. You will need some cash to close the deal. We got a “G.I.” (generous in-law!) loan for our first house.

Your credit rating must be in order. A low FICO score can cost you a bundle in higher loan costs, or even prevent you from getting a loan at all. The best deals are available to investors who have both cash and sparkling credit.

Buy only properties in the path of progress, where pride of ownership prevails. Those areas will continue to improve in desirability. Call your Realtor for the latest offerings. Look in areas where people really want to live. People make the values. Rentals in Chico are in greater demand than ever.

Look for underachieving properties that are ‘tired’ with deferred maintenance needed. You should be looking for properties that are not already in ‘silver platter’ condition. Why? Because the value added appreciation has already been taken by the current owner. You’re going to create your own new value. Remember: you want properties that need “TLC”- tons of loose cash!

After refurbishing, you will attract tenants who might not have wanted to live there before. And now the rent can be increased because it’s a more attractive place. At a certain point, you can afford to turn it over to professional management, let them deal with your tenants and maintenance while you sit back and enjoy appreciation, tax benefits, and the fruits of your labor.

Successful real estate investors tend to be diligent, conscientious, hard working individuals. They have vision, commitment, personal skills, and resources. You too can acquire unique properties with that all-important value-added potential often missed by others. Take advantage of this buyer’s market. Today’s depressed prices have nowhere to go but up over the long term. Find that diamond in the rough. Be a winner!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-05-11T13:00:00.000-07:00

Copy for Real Estate Guide Column for 5-15-09

REAL ESTATE PATTERNS
By Ken DuVall

THE OMAHA ORACLE SPEAKS

Berkshire Hathaway Chairman Warren Buffett said last week that he sees some signs of stabilization in housing markets. "In the last few months you've seen a real pickup in activity although at much lower prices," Buffett said, citing data from Berkshire's real estate brokerage business, one of the largest in the U.S. Now nearly every other commentator in the country is parroting his remarks. It looks like we are starting to see the beginning of the bottom of the slump.

Buffett has grown into a cult figure among investors who admire him as much for his homespun aphorisms as for his stock-picking savvy. Visitors from 43 countries filled the arena and the overflow rooms, and students from 45 universities watched from a ballroom in the Omaha Hilton across the street. Buffett’s definitely ‘The Man.’

Buffett spoke at the Berkshire Hathaway annual shareholders meeting in Omaha which drew an estimated huge 35,000 shareholders. In California, medium and lower priced homes have been selling more, although there hasn't been a bounce back in sale prices, Buffett explained. "We see something close to stability at these much-reduced prices in the medium to lower part of the market".

Roughly 1.3 million households are created each year in the U.S., while about 2 million homes were being built a year during the recent boom. At that rate, "You will run into trouble," Buffett said. Now housing starts are running at roughly 500,000 units a year, which means the excess inventory is being absorbed at a rate of about 700,000 to 800,000 units a year. "We're going to eat up existing inventory. That may take a couple of years. When it gets done, you will have stabilization in housing prices," Buffett predicted. "Then you will again have demand for more housing starts."

U.S. metro area home prices are still falling some. However, the rate of decline has slowed as the government tries to keep mortgage rates low to stimulate demand. The Federal Reserve has slashed interest rates and committed to buying hundreds of billions of dollars in mortgages backed by government-controlled housing finance giants like Fannie Mae. That's helped push mortgage rates to record lows, luring buyers and fueling a small refinance boom. A local appraiser told me he did 141 appraisals in April, a huge number comparatively, but many were re-fi’s’.

Buffett warned us about over-valued house prices well before the market collapsed. However, he still kept large stakes in banks such as Wells Fargo, which have huge housing market exposures. He also cautioned the commercial side of the real estate market may be the next to suffer as rising layoffs and corporate bankruptcies increase office vacancy rates along with declines in consumer spending crimp rental income generated by shopping malls. Without a doubt. I mentioned this last year. We will continue to see increasing mall tenant vacancies.

But yet, if he’s got faith, I’ve got faith. Buffett is one of the primary gurus in the world of finance and investments. If you’d invested $10,000 in his Berkshire Hathaway stock in 1965 it’d be worth millions today. I wouldn’t bet against this man. He’s got demonstrated vision, and he puts his money where his mouth is.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-05-04T13:42:00.000-07:00

Copy for Real Estate Guide Column for 5-8-09

REAL ESTATE PATTERNS
By Ken DuVall

THE PASSING PARADE

All the latest reports from my most trusted and reliable sources seem to indicate we may be on the verge of a return to prosperity once again. Yet the housing market may feel even worse in coming months as foreclosures keep rising and prices continue their downward slide. No doubt the patient is still ill, but there are some positive signs that indicate the fever is finally breaking.

First, prices are still soft but sales are strengthening and we Realtors are starting to see more buyer traffic, lured in part by the various tax credits, historically low interest rates, and other incentives. Two weeks ago in Chico we saw an astonishing 21 offers in 2 days on a short sale listed at $160,000 that ultimately went for $217,000! Investors are aggressively returning to the market, taking advantage of incredible bargains. But this time they’re not in it for the quick buck, buying and flipping homes. They see the solid positive rental cash flow in underpriced homes.

And that kind of activity sops up excess distressed property inventory like the ‘Shamwow’ on TV! The fact is the painful bloodletting is starting to rebalance the market. However, while foreclosures will keep pressure on prices for another year or so, the worst may be over in most places. Sales of existing homes rose for the 2nd month in a row. We will see sales of both existing and new homes pick up further by the end of summer. But the damper is we can count on both taxes and unemployment continuing to rise.

A note on taxes: Louis XIV’s finance minister said it in the 16th century: “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing”. It used to be that death and taxes alone were inevitable. In today’s world, there's now shipping and handling added!

Encouraged by record low interest rates and the continued decline in prices, motivated home buyers helped California (and Chico) sales improve for the fifth consecutive quarter since bottoming out in the fourth quarter of 2007. Statewide sales of existing single-family homes surged to 590,390 in the first quarter of 2009, an increase of 9.7 percent from the fourth quarter of 2008, and a jump of 82.7 percent from the first quarter of last year. The sales level was the highest since the third quarter of 2005 when sales reached a near-record of 634,090.

Meanwhile, the California median home price continued to decline even as deeply-discounted distressed sales remained at high levels in many parts of the state. The median price for existing home sales dropped 40% (Chico’s was more like 20%) from a year ago to $256,850 in the first quarter of 2009, reaching a level not seen since early 2001. Oh well. You can’t win ‘em all. But no matter. I see housing moving onward and upward little by little from here on out. It’s the key to recovery.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-04-21T09:56:00.000-07:00

Copy for Real Estate Guide Column for 4-24-09

REAL ESTATE PATTERNS
By Ken DuVall

GLIMMER OF HOPE

Yes, per Kiplinger, the economy is improving but don’t get carried away just yet. The gains are small and the recession will linger at least through midyear. First quarter GDP figures due out this month will be better but not by much. Sales of new and existing homes are higher, fueled by foreclosures, record low mortgages rates, and the first time home buyers tax credit.

The Labor Department reports initial jobless claims plunging by 53,000 to 610,000 last week, the lowest since January. However, the number of people collecting unemployment checks surged by 172,000 to 6.02 million, another record high. Sales of cars and light trucks rose in March, another positive sign. While the stimulus will bring more gains this summer, unfortunately, the job market will continue to suffer into 2011.

In sum: The economy hasn’t reached bottom yet, but it’s getting closer. The Fed has done about all it can to calm the markets. What’s needed now are clear signs that the recession is truly ending so investors start breathing easily again.

Unfortunately, legislation severely limiting mortgage options will slow housing’s recovery. It had to happen. Congress will make plain-vanilla 30-year fixed loans with 20% down the norm, restrictions which will all but eliminate risky loans. That will keep buyers who can’t afford the payments out of the market. But lenders agree that steps are needed to restore confidence in housing markets.

The dollar will stay strong through this year. Global investors will continue to view the greenback as the safest haven available. Look for it to hit multiyear highs against all other currencies over the next 6 months. The buck is up 15% from a year ago. Amen to that!

A new “industry” rears its ugly head. Squatters are brazenly moving into foreclosed homes all over the country in cahoots with numerous “advocacy” groups, some secretly, others openly, variously calling themselves “Take Back the Land”, “National Coalition for the Homeless”, “Coalition on Homelessness & Housing”, “Poor People’s Economic Human Rights Campaign”, “Welfare Rights Union”, “Task Force for the Homeless”, on and on.

The groups have been likened to a modern day underground railroad. Illegal squatters can last up to a year before being evicted. Neighbors with several vacant homes on their block are not objecting. The groups scout foreclosure lists to find the homes. The squatters agree to keep up the property but usually don’t, mostly leaving damaged and stripped homes behind.

There’s even competition between groups. One advocacy group director said, “We had a move-in scheduled for one morning and found another squatter had already taken over. We went to a different nearby home and someone had taken over that ‘squat’ too. We always change the locks but they had them changed again.”

And finally, now we’ve got Chinese drywall imports made with too much sulfur content that makes your home smell of rotten eggs and corrodes all metal- plumbing fixtures, wiring, door hinges, jewelry, silverware, etc. - in the house. Let’s just forget it and move to Somalia and be pirates!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-04-04T15:29:00.000-07:00

Copy for Real Estate Guide Column for 4-10-09

REAL ESTATE PATTERNS
By Ken DuVall

RICH & FAMOUS REVISITED

The stuff of dreams. Candy Spelling, 63, widow of TV mogul Aaron Spelling, last week listed “The Manor”, near Beverly Hills off Sunset Blvd., for a jaw-dropping $150 million It’s by far the most expensive home for sale in the U.S. Spelling, who died in 2006, produced such blockbusters as “Charlie’s Angels”, “Dynasty”, and “Beverly Hills 90210”. Candy has since bought a $47 million 2-story 16,500 SF condo penthouse in Century City. Just like a lot of people today, she’s cutting back. It’s part of the “War on Prosperity”!

The French chateau mansion has 56,500 SF situated on 4.6 acres. It’s the largest home in L.A. County. Neighbors include the prestigious L.A Country Club golf course, and Hugh Hefner’s Playboy Mansion. We’re talkin’ a MAJOR high rent district, folks! “Everything here is glamorous and luxurious. There is really nothing to compare”, says the Coldwell Banker listing agent.

Candy decided to let her terrier dog “Madison” help choose who would get the listing! She had her security people bring him into the room while she interviewed prospective Realtors. If Madison didn’t take to them, they didn’t get the deal! The 3-story mansion, built in 1991, is gated, and not even Candy knows how many rooms there are, estimated at over 100. She says, “I actually haven’t gone around and counted them.” Can you imagine NOT knowing how many rooms there are in YOUR house?!

There’s no shortage of them, including a gym, bowling alley, wine cellar with tasting room, a gift-wrapping room (how could you possibly live without one of those?!), a humidity-controlled silver storage room, china storage room, library, gym, media room, and a huge movie screening room. It features a movie projection system that comes up from the floor at the same time that shades cover the windows.

Candy says, “We had some really wonderful times entertaining there. I wanted Aaron to have the biggest and best projection room anyone had ever seen. We had to excavate a lot of dirt to get down that low for the special room that housed the screen and was totally dust free.”

The 17,000 SF finished attic has a barber shop and beauty salon. Of course, there’s a separate servant’s wing with kitchen, 7 bedrooms, 5 fireplaces and 4 wet bars. If things don’t get better soon in real estate, maybe I could get a job there!

Lavish features outside the house include a tennis court, fountains, pool and spa, pool house with kitchen, a reflection pool, and 16 car ports. There’s also an 18th century-style garden, a rooftop rose garden, and a citrus orchard. The winding motor court will accommodate over 100 cars for when you host those really big parties.

You’ll have to pardon me now while I go count the rooms in my house to make sure I know how many there are! There’ll be quiz on this topic for all of you later and the prizes will be fantastic! Unlike John McCain, at least I know how many houses I own! It’s a no-brainer: one.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-03-30T15:39:00.000-07:00

Copy for Real Estate Guide Column for 4-3-09
REAL ESTATE PATTERNS
By Ken DuVall

MO’ BETTAH NEWS, FOLKS!

Nationwide, February housing starts increased for the first time in 8 months, up over 22% compared with January, primarily due to an uptick in multifamily starts, according to the U.S. Dept. of Commerce. Let’s hear it for that! Sales too are up over 5% to 4.720 million units, primarily due to bargain foreclosures being snapped up by investors. I sure like hearing that word “Up” once again!

Meanwhile in California, existing home sales have nearly doubled from a year ago. Many sales, as they are in Chico, are coming closer to list price. Existing home sales increased 83% in February compared with a year ago, but the median price declined 40%, per the California Assn. of Realtors. All the foreclosures and distressed sales are primarily what’s pushed the sales volume up, brought prices down, along with appraised values as well.

Home sales in California continue to be considerably stronger than the nationwide figures but so is our share of low priced foreclosures. Closed sales of existing single-family homes totaled 620,410 in February at a seasonally adjusted annualized rate. Any way you cut it, there’s still a lot of deals happening. More good news: interest rates dropped below 5% last week, the lowest in 38 years.

Nationally, building permits in February, which can be an indicator of future building activity, rose 3% overall to a seasonally adjusted annual rate of 547,000 units. This reflected an 11% gain in single-family permits to 373,000 units with a 10% decline in multifamily permits to 174,000 units. There’s still a lot of inventory out there as foreclosures continue to flood the market in many areas. “It ain’t over ‘til it’s over” as Casey Stengel once put it.

Guess what: the Government is currently spending $1 billion AN HOUR! Staggering. Let’s play with some numbers: A stack of dollar bills 68 miles high is a $1 billion. A trillion is a thousand times that, a pile of greenbacks piled half way to the moon! Last year’s U.S. GDP was about $14 trillion. For that, imagine a belt of $100 bills placed end to end around the equator 540 times! Wow!

Be careful. California Attorney General Edmund G. Brown Jr. is warning consumers that scam artists are forging letterheads of major lenders to con Californians into paying $1000’s for non-existent loan modification services. "Californians should be deeply skeptical of anyone who demands money up front and makes extravagant promises that they can save their home," Brown said.

Nearly 80% of Americans believe it’s possible to improve their economic standing and remain optimistic that their family's economic circumstances will improve across generations, reports a new study by Pew's Economic Mobility Project. This is true across racial lines and even among lower-income, less-educated and unemployed people, according to Pew. It’s my pleasure to report something positive for a change. Attitude is everything.

Although the current economic crisis seems to be deepening each day and many families are feeling the pinch -- either through company layoffs, decreasing home values or loss of retirement savings -- Americans are now taking a longer-term view, said Pew. "We may be struggling in our daily lives, but Americans are confident in themselves and their ability to get ahead in the future." Amen. I was counting on that.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-03-24T11:53:00.000-07:00

Copy for Real Estate Guide Column for 3-27-09

REAL ESTATE PATTERNS
By Ken DuVall

HOW WE GOT HERE

This is not pretty stuff, people. As the U.S. financial crisis broadens and deepens, wiping out the wealth and savings of tens of millions, destroying hopes and dreams, history’s verdict on this generation will now be revealed. For how did this befall us, save through decisions that brushed aside the lessons history had taught? We simply ignored the old adage: ‘There’s no free lunch’.

It began with the distortion called sub-prime mortgages. Banks were morally pressured by politicians into making home loans to folks who could not even remotely qualify under standards set by decades of experience. Made by the millions, these loans were sold in vast quantities to Fannie Mae and Freddie Mac.

There they were packaged, converted into mortgage-backed securities, and sold to banks. They put scores of billions of dollars on their books and sold the rest to foreign banks anxious to acquire ‘Triple-A’ securities, backed by real estate in America's then ever-booming housing market.

Computer whizzes then devised exotic instruments called derivatives, which could soar in value, making instant multimillionaires, but could also plummet, based on dips in the underlying value of that paper. Came then the geniuses at AIG that insured banks against catastrophic losses should the U.S. housing market crash. Premiums were tiny. Payouts were beyond AIG's capacity.

At AIG, brainiacs created other exotic instruments, such as credit default swaps to guarantee losses and insure profits. To retain these wunderkinds at AIG, they received million-dollar retention bonuses. Angry mobs are now demanding vengeance on the scoundrels who wreaked havoc on them!

And who kept the game going? The Federal Reserve, by keeping interest rates low and money gushing into the economy, thereby creating the bubble that saw housing prices rise annually up to 20 percent.

As the economy grew, the Fed began to tighten up and raised interest rates. Mortgage terms became tougher. Housing prices stabilized. Homeowners with sub-prime mortgages then had to start paying down principal. People losing jobs began to walk away from their houses. Foreclosures soared.

Belatedly, folks awoke to the reality that housing prices could go south as well as north, and that paper spread all over the world was overvalued. Much of it became worthless. And the crash came and panic ensued. Who is to blame for the disaster that has befallen us?

Start with the politicians who bullied banks into making “entitlement” loans the banks knew were bad to begin with and would never have been made without the threats or promises of political favors. Don’t forget that den of thieves at Fannie and Freddie who massaged politicians with campaign contributions and walked away from the wreckage with $100’s of millions in purloined gains.

Then there were the idiot bankers who bought up those securities backed by sub-prime mortgages and were too dim-witted to inspect the toxic paper on their books. The ratings agencies, like Moody's and Standard & Poor's, declared it to be Grade A prime!

In short, this generation of political and financial elites has proven itself unfit. What we have is a systemic failure rooted in a societal failure. Behind the disaster lie the greed, corruption, stupidity and incompetence of the leadership of an entire generation. Tragic.

"Avarice and ambition," warned John Adams, our 2nd President, "would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution is made only for a moral and religious people. It is wholly inadequate to the government of any other."

In this deepening crisis, what is being tested is not simply the survival of capitalism, but the very character of our society. The long term U.S. budget deficit was just projected to be $9.3 TRILLION. But at least for this week, the financial and real estate news was all positive for a change. Count your blessings.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-03-17T10:52:00.001-07:00

Copy for Real Estate Guide Column for 3-20-09

REAL ESTATE PATTERNS
By Ken DuVall

WORDS OF WISDOM

There’s not much good news again, except for the stock market rally. I’m hoping, as we all do, for some decent news, but in the meantime here’s a nice anecdote for you this week instead. Enjoy.

From 2004, it’s called “The Builder”. An elderly carpenter came to his employer and told him he had decided to retire. He and his wife weren’t wealthy but they could get by OK. The boss was very sorry to see his good worker go. He asked him if he would build just one more home as a personal favor to him.

The employee agreed but you could see that his heart was not really in it. For the very first time in his life, he compromised his integrity, resorted to shoddy workmanship, and used inferior materials. It was indeed an unfortunate way in which to end his career. He would soon come to regret it for a long time.

When the carpenter finished the home and the builder came to inspect it, he unexpectedly handed him the door keys and said, “This now your home now, my friend. It’s my gift to you for your many years as my faithful and valued employee.” What a shock! What a shame! If only he had known that he was building his own home, he would have done it so differently. Now he and his wife would end up spending the rest of their lives in a home he had built none too well.

So it is with all of us. At important points in life we sometimes just don’t give the job our best efforts. Think of yourself as a carpenter, and your life as a home. Every day, you hammer a nail, place a board, or erect a wall in your life. These are troubled times. Do the right thing. Live with no regrets. Be proud to sign your name to everything you do. It’s the only life you will ever build.

Attitude and performance is everything. It’s the rent we pay to validate ourselves as occupants of Planet Earth. Without a doubt, life is a do-it-yourself project. It deserves to be lived with dignity and honor. Don’t cut any corners. They’ll just come back to haunt you. Pay your righteous dues. Choose wisely, build carefully, strive for excellence, and have a good life. So be it.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-03-10T13:38:00.000-07:00

Copy for Real Estate Guide Column for 3-13-09
REAL ESTATE PATTERNS
By Ken DuVall

WHERE TO GO FROM HERE

It’s nearly total chaos out there of late. But don’t give up hope yet. We’ll get through this debacle and shall emerge victorious once again. We always have, we always will. A friend of mine said to me, “Just don’t read email, newspapers, or watch TV anymore!” We need a break. All the poor jobless should be in our prayers as U.S. unemployment tops 12 million, and grows.

Obama is catching it from all sides. I wouldn’t want to be in his shoes. Nothing he’s doing seems to be working. In all fairness, we must give his programs a chance to work. With any luck, they might. Obama said, “The recovery plan won’t turn our economy around or solve every problem. All of this takes time and patience.” Do you have a better idea? I say, be of good faith during these troubled times.

Since there’s practically no good real estate news let’s focus on the economy, which affects every aspect of the market. Some lenders are in near lock down. The key to our credit problem lies with Congress. They’re going to have to go along with as much as an additional $1 trillion to deal with banks’ toxic assets, which are dragging down home loans, business loans, on and on. We’ve got to get the money moving again, period, or we’re never going to break this gridlock. I’d rather get a root canal than apply for a loan today!

Troubled banks will get a deal they can’t refuse. If they fail the upcoming government stress test, they’ll have to take the aid route. Geithner and company figure any banks teetering on the edge will have a strong incentive to sell to investors. Uncle Sam would prime the pump by giving low interest loans to private investors to buy bundles of their home, car, business, credit card, and student loans. That would free up reserves so banks could make new loans.

If that too unfortunately goes sour, Treasury will then take over those banks and investors would walk away. Economists say that’s a tough undertaking, and that the price of failure would be steep. But desperate measures are called for in desperate times. All we can do is hope for a favorable outcome.

Always give thanks for our Chico, which is in fairly good shape in comparison to the turmoil elsewhere. We are fortunate to be living in this blessed community. Clearly there is dark pessimism out there, and the risks are decidedly to the downside. But there is a scenario where things could turn out better than anticipated. Everything hinges on confidence, sentiment, business, consumers, and investors. Improvement in those areas could unexpectedly turn things around. It’s altogether possible bank rescues and stimulus spending will show progress by summer’s end. So be it.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-02-24T13:46:00.000-08:00

Copy for Real Estate Guide Column for 2-27-09
REAL ESTATE PATTERNS
By Ken DuVall

LET HE AMONG YOU WITHOUT SIN CAST THE FIRST STONE

A little chronology for you. I remember President Carter, 21% prime interest rates, 20% inflation, Paul Volker and his attempt to halt inflation by strangling the money supply which effectively reduced the purchasing power and the true value of the dollar forever.

Americans affectionately remember the 50s. Ike was president, America was loved, and the benefactor of the world. Life was simple. A man earning $10,000 annually was successful. A house cost maybe $13,000. A new Ford cost $2,300. Gas was 22 cents-a-gallon. I bought a brand new Cad in 1969 for $3000!

In the 70s and early 80’s Greenspan and the other gurus at the Federal Reserve told us that the rise of Merrill Lynch and Wall Street had replaced banks and savings and loans as purveyors of the American mortgage. The “Great Communicator” was elected in 1981. Houses were $150,000 up, and cars $15,000 by the end of that decade.

It was also then that “entitlement” lending initially reared its ugly head. The Community Reinvestment Act of 1977 was based on the irrational premise that bureaucrats and politicians knew best who should get home loans! More and more “creative” regulations issued over ensuing years were a formula for the financial disaster to follow. Quoting Thomas Sowell, “It was precisely government intervention that turned a thriving industry into a basket case.”

The savings and loan industry abandoned 50 years of sound banking practices. Qualifying for loans and down payments on homes all but disappeared. When the dust settled, there was no recognizable savings and loan industry left, and Wall Street had achieved their goal of displacing the community bank and becoming the “one stop shop” for all things financial. The vast majority of economists expect the trillions of dollars about to be pumped into the economy to bring inflation with it, along with a socialized environment. Bank nationalization remains to be seen.

Our new secretary of the Treasury is reportedly a brilliant man, perhaps a little forgetful about his taxes, but brilliant by all accounts. He will need every bit of that brilliance to help this great country of ours avert a total meltdown. We all fervently hope the administration will indeed accomplish that and we will eventually see a recovery, led in part by housing. It’s never smart to bet against the United States of America.

But when the money supply is increased by an amount equivalent to up to 30% of our Gross Domestic Product, inflation will result. That means that prices of all fixed assets- think real estate- will rise to keep pace with the currency devaluation. We’re in for a pretty exciting ride for a while, folks. Buckle your seatbelts.

Notwithstanding, interest rates may never hit this 50-year low again, or home prices either. This is the perfect storm. It is a great time to buy real estate, the safe haven amidst the chaos we’re experiencing. The first home we bought in Chico in 1977 cost us $80,000. It’s coincidentally on the market as I write for $595,000. You do the math.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-02-17T13:02:00.000-08:00

Copy for Real Estate Guide Column for 2-20-09

REAL ESTATE PATTERNS
By Ken DuVall

SIGN OF THE TIMES

And we thought China was in trouble. Well, guess again. In the news, Beijing lawyer Ying Guohua is heading here on a shopping trip, not for designer clothes or jewelry, but for a $1+ million home. Ying is part of a growing number of Chinese joining tours for investors who want to take advantage of slumping U.S. real estate prices.

"It's a great time to buy because of the financial crisis, and houses will definitely go up in a few years," Ying said. The home is an investment, but he's planning long-term: It’s for his 5-year old son to use when he goes to college here.

Chen Hang, China-born vice president of real estate at Fortune Group in Pittsburgh, PA, shows property to Chinese buyers. The tours are new, made attractive by still-rising Chinese income levels and falling American real estate prices. "The Chinese are going to seize the opportunity to take advantage of some great deals," Chen said.

Ying is one of 40 investors going to New York, California, Boston and Las Vegas on a Feb. 24-March 6 tour organized by Beijing-based SouFun Holdings Ltd. SouFun (don’t you love it? “So Fun”!) shows properties priced from $1 million to $2.5 million. "We never thought these tours would garner such interest, but we've had an overwhelming response," said SouFun CEO Richard Dai.

The home-buying opportunities mirror a larger trend. Cash-rich Chinese companies are buying resources suddenly made cheaper by the downturn or companies suffering under the global debt meltdown. Last Thursday, the Aluminum Corp. of China, the world's leading aluminum producer, invested $19.5 billion in the giant Rio Tinto Group, a debt-burdened global mining company.

While high-level incomes have continued to rise in China, which had the world's 5th largest population of millionaires in 2008 with 391,000, up 20 percent from the previous year, Chinese with money in the bank have few good investment options at home. Real estate prices have cooled and stock prices peaked in October 2007 after a two-year boom that saw shares rise six-fold in value.

After years of foreign money pouring into China to take advantage of their hot economy, tens of billions of dollars began leaving over the last 3 months as Chinese investors went bargain-hunting. Chinese buyers are looking at both commercial property and residential to rent out or use on business trips. And the U.S. has plenty of unsold homes to offer — 3.67 million as of December.

Trips are pricey. Ying paid $2,200, the equivalent of the annual income for many Chinese, plus airfare. Zeng, a real estate developer from Changsha, spent $3,500 for a 10-day trip. He bought a $1 million home in Silicon Valley where his 20-year old daughter will live while attending graduate school in the Bay Area. "The price is low now, but it's in a good neighborhood so it will definitely appreciate”, Zeng said. They’ve got the right idea: Buy on bad news, sell on good.

Come on in, China- we need you! Boy, how times change.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-02-09T14:54:00.000-08:00

Copy for Real Estate Guide Column for 2-13-09

REAL ESTATE PATTERNS
By Ken DuVall

WHISTLING IN THE DARK

We all know how scary and shaky it is out there, everywhere on the planet in every way. You read the news. It’s harsh times and we all know it. Instead, let’s keep our eyes on the horizon. We’re all in this for the long run. Real estate is not a get rich FAST scheme. It’s a get rich SLOW scheme.

California home sales increased 84.9 percent in December compared with the same period a year ago. Sales continue to be strong, exceeding 500,000 units for the fourth consecutive month. Year-to-date sales are nearly 27% above last year. An entry-level California home now costs $287,760.

Despite the “lame stream” media’s relentless negative drumbeat, the unadulterated bottom line for 2008 is in. The final figures as reported by the Nat’l Assn. of Realtors from across the nation - not just the 20 metro areas used by Case-Schiller- shows sales of existing homes fell by 13.1% following a 12.8% drop in 2007. They project a rise of 4.1% this year and another 6.3% in 2010. The housing slump will NOT go on forever, trust me there. You gotta have a roof over your head, period. Yet rising unemployment will continue to shrink the buyer pool and hike foreclosures.

The nationwide median price of a single family resale home fell by 9.3% to $175,400 in 2008 and is projected to dip only another 2.4% this year before rising 4.6% in 2010. New home prices fell an estimated 7% in 2008 and will by another 1.7% in 2009 before rising 4.8% in 2010. New home sales were off 37.8% in the same period, down the tubes big time. The 2009 projection is for another 30.4% drop before rising a whopping 44.9% in 2010. The expected increase in consumer confidence is the basis there. America WILL come out of this. Chico’s always OK. Ask your favorite Realtor.

Nationally, the pending sales index based on escrows opened last month increased 6.3%. The affordability index also rose 10.9% to 158.8, the highest on record. Of course. As prices go down, more buyers can afford to buy homes. Loan interest rates are the lowest in history but you better have A-1 credit and a decent cash down payment. Some really good news for us is included in the “Porkulus” stimulus bill.

The “silver bullet” is the juicy federal subsidy for home purchases made for a year if and from when the President signs the bill. Buyers will get 10% of the purchase price up to $15,000 applied to their income tax bill over the following 2 years. To discourage speculators, buyers must occupy the home for 2 years. This will help break the negative psychology that you should wait to buy a home because prices may go lower. A $15,000 income tax credit covers a multitude of sins.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-01-26T15:19:00.001-08:00

Copy for Real Estate Guide Column for 1-30-09

REAL ESTATE PATTERNS
By Ken DuVall

WHAT WILL CAUSE THE RECESSION TO END?

To understand, we must fully comprehend what created it. There were many elements, but the most visible was the unrestrained real estate boom. Its collapse nearly derailed the world. Then it was the sub-prime crisis where entitlement borrowers got loans they had no chance of repaying. The government indicated we would weather the crisis and the economy would withstand those catastrophes. Wrong. We did not weather the crises. We now know that as the real estate market goes, so goes the economy.

Talk about geese bringing down an airliner. We severely wounded our Golden Goose, the housing industry which directly or indirectly employs about 20% of Americans. That’s huge. We couldn’t possibly sustain that significant a weak link in the overall chain. Now the recession has spread around the globe, due to the importance of our economy to them. No entity is bulletproof. They’re dropping like flies everywhere.

So, when will it end? The conclusion of the weak real estate market will bring with it the end of the recession. Of course, the Big Question is: when will the real estate market become strong again? There are positive signs. Look at the cost of ownership vs. the cost of renting these days. At the height of the boom, the cost of owning was significantly higher than the cost of renting, though some costs were masked by easy lending standards and innovative products.

Obviously, housing prices are now down, as are loan rates, to the lowest on record. There are already areas of the country reporting that owning has become cheaper than renting, especially after taxes. You just have to know where you’re at in the game. Sacramento home sales are booming again with investors snapping up foreclosures and renting them out to people that can’t get loans. Chico’s foreclosure rate is a mere pittance compared to other areas.

As we attain this point in the majority of the country, expected by some experts by the end of this year, housing prices will stabilize. And as prices become stable, banks will be willing to lend again. This cycle will lead us out of the morass. Coolheaded house shopping now could land you in your dream home at a major reduction over what it cost 5 years ago.

To be sure, challenges remain, and unexpected events could yet turn negative over this year. But when the national economy improves, the Golden State remains well positioned to take advantage of the next surge. The politicians will not allow us to go down the tubes. Arnie and the Legislature will get their act together soon. So too will Chico and Butte County. After all is said and done, this could turn out to be the greatest home buyer’s market in history! Timing is everything.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-01-13T13:26:00.000-08:00

Copy for Real Estate Guide Column for 1-16-09

REAL ESTATE PATTERNS
By Ken DuVall

THE BEST OF TIMES!

We need hope in these difficult days. I’m a guy who believes there’s always a pony in the manure pile if you just dig deep enough. It depends on which news reports you read. Fortunately, we’ll start getting good news again after the inauguration next week when the media begins supporting “The Bamster”. We can sure use some.

There certainly isn't much to miss about 2008- other than our savings, our homes, our jobs, and our faith in our financial/political systems! And cynics say there isn't all that much to look forward to in upcoming months. I look forward to otherwise, as do some 70% of the top national money managers. Yet more tales of corruption, abuse, and fabrications from those in the halls of power seems inevitable. Does anyone remember the fall of the mighty Roman Empire 2000 years ago? Lesson: we better clean up our act fast.

Yet “Housing Markets Will Roar Back in 2009”, proclaims Alexis McGee, real estate expert, educator, and “Outlook” president based in Fair Oaks in their latest report. “The nation’s foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, finally pushing home prices back up and fueling a real estate recovery.” While optimistic, that remains to be seen. Encouraging: interest rates are at a 40-year low.
“Recovery is underway. Affordability is back in the housing market,” McGee continues. “In 2009, housing will not only recover, but we’ll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market. I can see prices rising again in 2009. California is a great example of what’s happening now and what lies ahead for the housing sector.” From his lips to God’s ears! Even stock brokers are saying this is the time to start buying again.
But if you think about it, this may in fact be the best of times. When in modern history could you have pointed to an economic bottom with such assuredness? I would guess we’re at it, or very close. Once you do hit bottom, there’s no way to go but up. We've cleaned the sewage system in the finance industry. We've purged the subprime loan debacle. We've exposed the biggest Ponzi scheme ever. We've discovered politicians' affairs, payoffs, bribes, and conflicts of interests. The price of liberty is eternal vigilance.

Other things we learned last year: Thou shalt not make “liar loans” lest ye topple the country! Real estate prices don't always increase every year. Financial records too good to be true probably are. Making products nobody wants doesn't make good business sense. We know we must care for our planet to protect ourselves and our future. The important thing in this world is not so much where we stand as in what direction we’re moving.

I say this could be the best of times simply because the worst of times may be behind us. We’ve had a major wake up call. Now we must counter the massive pessimism and paralysis out there, restore confidence, and hopefully live happily ever after. Miraculously, everything somehow gets handled. We will once again arise from the ashes. Amen.

P.S. On the lighter side, a true story in the news: a Chicago restaurant is now offering a “’Bleeping’ Blagojevich Burger” that comes with a slice of baloney, and- the price is negotiable!!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

2009-01-07T12:20:00.000-08:00

Copy for Real Estate Guide Column for 1-9-09

REAL ESTATE PATTERNS
By Ken DuVall

TRY AND HAVE A HAPPY NEW YEAR!

Ronald Reagan said it: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” He also said, “Politics is not a bad profession. If you succeed, there are many rewards. If you fail, you can always write a book.” I think we’ll be seeing a lot of books!

Way back when, the horse and buggy was king. They, along with thriving buggy whip companies, disappeared with the advent of gas engines, automobiles and tractors. Who ever thought that some new-fangled invention could ever replace thousands of years of horses for wagons, plows and trolleys? And now, Detroit itself is transforming. The UAW could end up owning the Big Three Automakers before it’s over. Some things change, but some don’t. U.S. railroad tracks are the same exact width that Roman chariot wheels were!

Lately, major economists are predicting that what is shaping up as the deepest and longest recession since the 1930’s will end later this New Year! The ongoing impact of $2 trillion in government stimulus along with pent-up demand and returning consumer confidence will finally lead us into a turnaround. Dr. Scott Anderson, senior economist for Wells Fargo, predicts the housing sector that led us into this morass is about to turn the corner and will lead the way out. So be it.

Chief investment strategist Dr. Jim Paulsen at Wells Fargo states that despite continuing job losses, the “fear mongering” by government officials and the liberal press have led to “economic paralysis”. Now “consumers who waited to buy a car or a home will definitely buy one.” As I always say, demand never stops. It just gets delayed sometimes. The national year-end home sales/price stats are totally dismal but I have faith we’ll pull out of it.

America ranks at the top of the pile: With the largest economy at $14 trillion, the U.S. dwarfs every other, triple that of Japan; the most broadly used currency; the biggest importer/exporter; the mightiest military; and by far the largest contributor to foreign aid. The U.S. is the world’s preeminent economy, even in the face of Treasury Bills now yielding close to zero percent. Global money still flocks to our safe haven. I believe America shall be reborn, stronger and better than ever.

As far as Beautiful Chico is concerned, we fared amazingly well in 2008 compared to 2007 with its 875 home sales, median price $325,000, 81 days on market. For 2008 we closed 755 homes, median $284,900, 75 days on market. The median price was down only 12.34% with sales off only 13.71%. Last week there were 101 more in escrow and a reasonable 360 active listings. Have a Great New Year.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-12-24T14:10:00.000-08:00

Copy for Real Estate Guide Column for 12-19-08

REAL ESTATE PATTERNS
By Ken DuVall

The Tablecloth

A little heartwarming story for your Seasonal pleasure this week.

It was October of 1975 when the new pastor and his wife, assigned their first ministry, were asked to re-open an old dilapidated church. It was very run down and needed a lot of work. They planned their first service for Christmas Eve. They had to repair the pews, plaster the walls, repaint nearly everything, on and on. By December 20th they were finished. But the very next day, a rainstorm hit. Afterwards, the pastor’s heart sank when he saw that a roof leak had caused a huge chunk of plaster to fall off the wall right behind the pulpit. He knew it couldn’t be repaired in time for Christmas Eve so he would have to cancel the service. As he sadly headed home, he happened to stop into a nearby business having a charity flea market sale.

He noticed an exquisite handmade tablecloth with a cross embroidered in the center of it. It looked like it was large enough to cover up the hole in the church wall. He bought it and headed back to the church. As he neared it he noticed an older woman trying to catch a bus but she missed it. He knew it would be 45 minutes until the next bus. Since it was a freezing cold day he invited her to wait inside the warm church. She sat in a pew as he climbed a ladder to hang the tablecloth like a tapestry over the hole. He could hardly believe how beautiful it looked there. And, it covered the entire hole just perfectly! Now they could have the Christmas Eve service after all!

The woman walked towards him, her face white as a sheet. “Pastor,” she asked, “where did you get that tablecloth?” The pastor explained. She asked him to look in the lower right corner of it to see if the initials RBG were crocheted into it. They were! Those were her initials! She had made this very tablecloth some 35 years before! The woman told him that before WWII she and her husband lived in Austria. When the Nazis invaded, they decided to get out. She left first, headed to a friend’s house. Her husband was to meet here there later that day. But on the way she was arrested by the Germans and sent to the Buchenwald concentration camp. She said she never saw her husband again. The pastor wanted to give her back her tablecloth but she asked him to keep it for the church as a blessing. The pastor insisted on driving her home as the least he could do.

What a wonderful service the new pastor had on Christmas Eve. The church was full. Afterwards, he noticed an older man still sitting there in a pew just staring up at the tablecloth. The pastor approached him and the man said it was identical to one his wife had made years ago. He explained that during WWII when the Nazis overran Austria, his wife fled for a friend’s home. He left later, but on the way the Germans arrested him and sent him to the Auschwitz concentration camp. With tears in his eyes, he said, “I never saw my wife again.”

The pastor asked him to take a little ride with him. They drove across town to where he’d taken the woman earlier and knocked on the door. When the couple saw each other, it was like the most incredible and miraculous Christmas present imaginable.

I wish you all a Very Merry Christmas and a Prosperous New Year.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-12-24T14:09:00.000-08:00

Copy for Real Estate Guide Column for 12-12-08

REAL ESTATE PATTERNS
By Ken DuVall

THEATER OF THE MIND

It’s in, out, up, down, or back and forth. You pick it. The finger pointing blame game is in full bloom. But America is and always has been a work in progress. We’re continually on the comeback trail one way or another. Even though it’s still gloomy, I’m beginning to see light at the end of the tunnel. If you don’t look for it, you won’t be able to see where we’re going.

The California Assn. of Realtors reports statewide sales now up an amazing 117% compared with a year ago. That’s an incredible stat. We don’t hear that from the bad news media. On balance, prices in the same period are down 40% due to the bulk of sales coming from foreclosure sales.

The equation is simple: good deals are out there and buyers are snapping them up. On an annualized basis, California will close 552,750 homes this year, up from 353,300 last year. Not too shabby in today’s market. We’re still doing a gang of deals. Chico’s slow, figuring the seasonal factor in too, but otherwise we’re doing just fine.

The 30-year fixed loan rate plummeted to 5.5%, the biggest weekly drop in 27 years. And still dropping. Each 1 percent decrease in interest rates translates roughly into a 10 percent increase in home buyer purchasing power, which can generate 500,000 additional home sales. Amen to that.

From the Wall Street Journal: Nationwide, home prices are down only 6.5% from their peak in 2007 in 241 of the 330 metropolitan areas. Compared with their long-term values, U.S. homes are now 3.8% undervalued. Loan applications last week jumped 117%, the biggest increase in 18 years.

Unfortunately, we’ve got yet another crisis looming in the commercial real estate market involving malls, hotels, storefronts, etc., all across the country. Those owners have loans too, and their default rate is expected to triple over the next year.

When businesses go dark (think Mervyn’s, Linen N’ Things, Blue Shield, McMahon’s, etc) not only are jobs lost, the rent they were paying stops- which was the mortgage payment money. Unlike 30-year home mortgages, commercial loans are written for a 5 or 10 year term with big balloon payments at the end. About $20 billion of those come due next year, higher yet in 2010-11.

Refinancing used to be an option but no more. Credit markets have seized up. Banks are reluctant to write new loans to those facing foreclosure. There’s going to be lot of pain and it’s not going to be pretty. But will savvy investors be out there jumping on bargain priced malls? You bet they will.

On the political light side: From “B.C.” in the comics: Q: What’s the difference between a monarchy and a democracy? A: In a monarchy you only have one liar to deal with. From “Get Fuzzy”: Q: How many Republicans does it take to change a light bulb? A: No one knows. They won’t release that information. How many Democrats does it take? First, they have to establish funding. But they never change anything. They just sit around and cry about the poor light bulb!

Maybe a benevolent dictator is what we need! But I’m sure we can still count on the “Big Repairman in the Sky” to fix things up. Keep the Faith.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-12-24T14:08:00.001-08:00

Copy for Real Estate Guide Column for 12-5-08

REAL ESTATE PATTERNS
By Ken DuVall

LIKE IT IS

A recent Letter to the Editor worth repeating quoted Sir Winston Churchill on his view of capitalism: “The vice of capitalism is that it stands for the unequal sharing of blessings; whereas the virtue of socialism is that it stands for the equal sharing of misery.” Profound. To those who are given great things, of them great things are expected. Again, best of luck to all our new leaders.

They’ll need it. We’re looking at the wreckage of the worst financial crisis in 80 years, with the parade of humiliating fiascoes on Wall Street, the bumbling extravagance in Congress- and the bailout parade continues through Washington. Hey, how come local builder Andy Meghdadi didn’t get a bailout?!

The number of housing starts- the lowest level in 49 years- continues to decline in response to slower demand. The good news: we’re reducing inventory, lowering prices, while affordability has doubled. Today, 53% of California households can afford the median priced home of $287,760 vs. only 24% last year. Remember: demand never stops. Housing overall is not nearly as bleak as the grim reaper media would have us believe.

Not nice: the DOW is off 40% from January. Equity losses are $9 trillion. Foreclosures are at all-time highs while unemployment is the highest in 26 years. Consumer debt is $2.5 trillion, the next area likely to experience a meltdown. The government just announced an $800 billion transfusion to unfreeze that market. There are 171 banks on the FDIC’s “troubled” list so far, up 50% in the last 3 months. Banks are folding like Thanksgiving flowers.

More not nice: we’re now officially in a recession. The federal deficit has hit a record $455 billion, more than double 2007’s. Some say it may even double again before this is all over. Bailouts now total a staggering $7 trillion. We’re into a full-blown, self-feeding downturn in an economy that’s already on life support. But don’t give up the ship just yet. It’s always the darkest before the dawn. Confidence will be restored in due course.

So, guess what? All this tells you it’s a great time to buy real estate! It’s immortal. There’s no good or bad time. There’s only good or bad deals. It’s a safe bet the economic picture will remain uncertain into 2009, yet there’s good reason to believe that housing has begun to stabilize. Just as it led us in, housing may very well lead us out of the economic downturn.

California home sales are up 64% from a year ago and up 5% in just the last month, because prices have come down 20% to 30% from a year ago. Sellers are motivated. Take advantage of great prices and the best loan deals in decades. True wealth is created from long-term ownership. It could be your salvation. Real estate seems to be the only show in town right now. Call your Realtor for the best seats!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-11-17T14:46:00.001-08:00

Copy for Real Estate Guide Column for 11-21-08

REAL ESTATE PATTERNS
By Ken DuVall

OUTLOOK THOUGHTS

There still doesn’t seem to be anything outside of financial and economic problems to talk about this week. While the world continues to reel in turmoil, everyone is uncertain about how all this will affect housing, my primary concern. Nearly every day we hear about another company going broke or thousands of more jobs gone. But the situation will improve- over the long term.

Our recent declines are in part due to the psychological impact of global market gyrations. While a true fiscal crisis is undeniable, one underlying inherent factor is the emotional and irrational gloom and doom involved. Most people are just plain spooked by all this upheaval, and rightly so. There’s pure panic in the streets right now.

Yet, people are still buying and selling homes all over America, just not at the frenzied levels of recent years. Financial market volatility is causing many home buyers and sellers to pause temporarily, while the truth is that market conditions are ideal for homes that are priced right, for first-time and move-up buyers, and investors. That’s as long as you can get a loan in these stricter qualifying days- and you still have a job!

Consumer confidence, which has taken the biggest hit today, will take time to rebuild. Consumer spending constitutes a massive 70% of our GDP. When we don’t go out and buy stuff, the GDP takes a big hit. But in the meantime it’s important to understand that advantageous market conditions currently exist for those who are motivated to buy or sell a home.

Our Chico home inventory is at reasonable levels and sales continue at an acceptable pace. Less than 20% of our listings are classified as distressed sales, small by comparison with some metros. We just keep on chugging along because we’re a special and desirable place to live, work, and raise our families. As always, we are somewhat insulated from the outside world.

Philosophy corner: “The budget should be balanced, the Treasury should be refilled. Public debt should be reduced. The arrogance of officialdom should be tempered and controlled. The assistance to foreign lands should be curtailed lest the country becomes bankrupt. People must again learn to work instead of living on public assistance.”

Who said that? The famed Roman statesman, Cicero, 2000 years ago in 55 BC! Nothing changes but the players. And there’s those “God Speaks” highway billboards around the country. One of them says, “Don’t make me come down there!” And another proclaims, “You think traffic is bad now?!” We better shape up fast, folks!

Consider ‘The Knight’s Oath’, as administered by King Arthur in the 6th century when he initiated a new member to his Roundtable. With his sword Excalibur on the shoulder of the kneeling recruit he said: “Be without fear in the face of your enemies. Be brave and upright that God may love thee. Speak the truth always, even though it may lead to your death. Safeguard the helpless. Do no wrong. Protect the people. That is your oath. Arise a Knight.” Wouldn’t it be wonderful if everyone- particularly politicians- were Knights of the Roundtable?

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-11-11T14:17:00.000-08:00

Copy for Real Estate Guide Column for 11-14-08
REAL ESTATE PATTERNS
By Ken DuVall

WHAT NOW?

This will be the most challenging presidential transition in history. Never before has a new president assumed control in the midst of two wars, a recession, and oversee a massive rescue of the entire financial sector. He talks real good but that ain’t gonna get it as Obama hits the trenches. Sounds like he is already signaling moderation. We should all be praying for him and our country.

Battling the recession and reigniting growth will dominate Obama’s first year, maybe even his entire term. Expect him to invoke presidential “Executive Orders”, meaning regulations can be made, changed, or revoked at will. Democrats will pass another up to $100 billion stimulus bill later this month. Ten million people are now unemployed and growing. Ten million homeowners owe more than their homes are worth.

Economics has a huge effect on housing. Washington has no magic bullet to fix it just like that. The best estimate is another year to put Humpty back together again. Still, home prices nationwide may take another 5% to 10% hit before it’s finally over. Good news: 70% of Americans are now homeowners. Bad news: nearly 1 million personal bankruptcies in the last year, a 40% increase.

Millions of homeowners with unmanageable loans will get a lifeline in the form of easier payments, reduced interest rates and principal amounts, stretching out the length of the loans, along with Gov’t loss guarantees to lenders. The two largest, Chase/Washington Mutual and Bank of America/Countrywide are cooperating big time.

The estimated cost is upwards of $50 million to help some 3 million homeowners facing foreclosure. Over half of foreclosures are being bought up for rentals. The blessed reality is that 97% of the some 100 million U.S. homes are not facing foreclosure.

Taking stock of the sobering expenditures: The Fed will borrow $550 billion before year end plus $368 billion more in the first 3 months next year. Plus the $700 billion housing bailout. And the auto guys need another $50 billion now too (word is Chrysler won’t survive). The AIG assist just zoomed from $85 billion to $150 billion (they need more luxury spa trips!). Then there’s the $1.4 trillion for the Wall Street bailout plus $250 billion to buy up to 7800 banks’ stock plus $5.5 million in fees to two NY law firms to “monitor” that. The Gov’t distributed the first $125 billion to the 9 largest banks last week.

All told: a whopping $2.7 trillion for these rescue programs. The federal budget deficit will hit $988 billion in the current fiscal year. Oh yeah: the IRS paid out $1 billion in fraudulent refunds because they “just couldn’t manage it.” Will someone give us break, please? And plug in the 42,000 Washington lobbyists lawmakers have to placate. All want money for their special interests. Too many people are taken in too much of the time. The Gov’t should learn to raise money like Obama has. Let’s hope he runs the country as well as he did his campaign.

President Reagan said it: “There is no weapon or arsenal in the world as formidable as the will of free men and women. If we ever forget we are one nation under God, then we will be a nation gone under.” I believe it. As always, we live on hope and the promises of others. We will get through this. We always have and we always will. It’s America’s style. Give thanks we live here. Kiss your kid and pet your dog. Give us this day, count your blessings, and keep the Faith. This is a test. There will be a pop quiz, and the prizes will be fantastic!!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-11-04T10:00:00.000-08:00

Copy for Real Estate Guide Column for 11-7-08

REAL ESTATE PATTERNS
By Ken DuVall

THE PROMISE OF TOMORROW

Housing price stats are always reported behind the curve. Housing prices today, are reaching the point where they’re a good deal again. Disregard the often quoted Case-Schiller Index that reports home prices down 16.6%. Their data considers only the 20 large metro areas, all overloaded with subprime loans and distressed sales. What about the vast majority of the rest of the country? By comparison, the California statewide home price decline for 2008 is forecast by NAR at 4%.

Per the Fitch Ratings, U.S. home prices doubled in the 1990’s and doubled again from 2001 to 2005 as home equity grew by $9.6 trillion. Since peaking in 2006, national home prices have fallen by only 22% If you bought or owned a home during the last decade, you’re way ahead of the game using anyone’s data.

We’re seeing an enormous amount of activity in the unfortunate foreclosure sales across the country. Those sales are happening at huge discounts, prices we won’t see again. Chico, fortunately, is not one of those areas. To be sure, we’ve got our share, but we didn’t go crazy during the boom years so we didn’t get hit as badly. With a high unsold inventory, builders have cut back sharply on new home production, helping lower inventory and stabilize prices, a good thing for the moment.

Once we hit true bottom, prices will start up again. Demand never stops and supply is always limited. Annual home appreciation has historically been 1% to 2% higher than the rate of inflation, historically 4% to 6%. If you put $20,000 in the bank at 4% interest, your annual return would be $800. But put that same $20,000 down on a $200,000 home, the same annual return of 4% on the house translates to $200,000 value X 4% equals $8000, a 40% profit on your cash. Not too shabby. That’s the principle of leverage.

All over the planet, things are changing exponentially. Just look at the extraordinary things we’ve witnessed in recent months. The panic and hysteria will continue to subside as balanced thinking returns. With all the new Gov’t entitlement and rescue programs, ask yourself if that “meek shall inherit the earth” thing- will it be a structured settlement or a lump-sum payment?! The only way to go wrong in today’s market is NOT to buy real estate. Real estate is forever. Ownership over the long-term is the key.

Staggering stats: Consider that in all of 2007 there were 2.7 billion Google searches conducted. This year there have already been 31 billion searches. There are now 1 trillion internet connections. We’ll get well as we go forward. Life goes on. We’ve got a new President and a new deal in store for us. Maybe we’ll even start hearing good news again! Maybe our U.S. Senators can even be trained to answer “present” instead of “not guilty” when there’s a roll call!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-10-27T15:42:00.000-07:00

Copy for Real Estate Guide Column for 10-31-08

REAL ESTATE PATTERNS
By Ken DuVall

ON THE BRIGHT SIDE!

The financial crisis has shaken the world to its core. After a decade of excessive borrowing and lax regulation, the economy is in the grip of a painful process. As usual, America’s obituary is fashionable in the liberal press. But U.S. home sales were up unexpectedly this week and it’s time to unemotionally and clearly reassess America’s prospects as quoted herein from a brand new Bank of America report. FACTS:

THE U.S. IS THE LARGEST AND MOST PRODUCTIVE ECONOMY IN THE WORLD. With just 4.5% of the world population, we account for 25% of the global gross product and produce more output a year (about $14 trillion) than the next four largest economies- Japan, China, Germany, and Great Britain- COMBINED.

THE U.S. IS THE WORLD’S LEADING MANUFACTURER OF GOODS. We are a manufacturing powerhouse, #1 in output. Our share of global manufacturing was 20.5% in 2006 (the latest data available), little changed from the 22% figure in 1990. China ranked a distant second, 13%. Our output exceeded that of Japan and Germany combined.

THE U.S. IS THE LARGEST EXPORTER OF GOODS AND SERVICES IN THE WORLD. Significant and often missed is the fact we are the world’s top exporter with combined exports of $1.4 trillion in 2007, or 9.4% of all global trade.

THE U.S. IS THE WORLD’S FAVORITE DESTINATION FOR FOREIGN INVESTMENT. Lost amid the chatter about outsourcing and jobs shipped overseas is this simple truth: we remain the most attractive market in the world for foreign investors. The allure includes our vast and wealthy market and large SKILLED (anyone bought anything from China or “talked” to a Bombay tech support person lately?!) labor force. Foreign investment here totaled $1.3 trillion between 2000 and 2007, compared to China’s of $483 billion, roughly 1/3 of ours.

THE U.S. IS HOME TO THE TOP GLOBAL BRANDS. More than HALF (52%) of the world’s top brands were AMERICAN in 2008. Of the top ten global brands, EIGHT were American, giving us an unequaled global footprint.

THE U.S. REMAINS THE WORLD’S TECHNOLOGY LEADER. We are still the world’s most innovative economy. America’s risk-taking entrepreneurial streak underpins our tech leadership that continues to attract and challenge the best and brightest from around the globe to live and work here.

THE TOP-RANKED UNIVERSITIES IN THE WORLD ARE IN THE U.S. Nearly 40% of the top 100 are here. American universities hosted 600,000 students- 20% of ALL international students- making the U.S. the top destination for foreign scholars.

THE DOLLAR IS STILL THE WORLD’S TOP RESERVE CURRENCY. It accounted for 65% of global bank reserves last year. The euro ranked a distant second with a 25% share. Granted our financial crisis has undermined foreign investor faith- but still the dollar remains king. There’s no substitute for the buck. China’s currency is not even convertible. Japan’s trade is still conducted in dollars.

There’s no denying some things are broken in this country. But America remains the most resilient and competitive economy on the planet and will continue to be far more dynamic than the pessimist media would lead us to believe. They do us all a major disservice. America will prevail and we shall endure. So be it.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-10-21T16:09:00.000-07:00

Copy for Real Estate Guide Column for 10-24-08
REAL ESTATE PATTERNS
By Ken DuVall

PANIC IN THE STREETS!

What we’re seeing now is a case of classic market panic. Uncle Sam’s steps will help the economy but not soon enough for scared investors and to ease the global mood of irrational gloom and doom. Fifteen cents of every dollar in this nation is spent on housing. We now know it’s the engine that runs this country, and we’ve severely maimed the Golden Goose. We mistakenly thought that anyone could own a home whether they were qualified or not. We were wrong and we’re paying the price. We’ve been betrayed by greed and charlatans. Revolting.

What’s next per Kiplinger and other experts? The economy and housing won’t grow for about a year. With all the government and financial measures now being undertaken, we will avoid another Great Depression. But all the king’s horses and all the king’s men cannot reverse the current cycle. Recessions must run their course. But the Gov’t will pump enough money into the banking system to revive lending, a critical factor in recovery. Appraisers are now using foreclosure prices- the latest sales- for their comparable sales data. See more below.

The good news is that Warren Buffett is buying into the stock market big time, $12 billion just last week. He says, “Fears about the long-term prosperity of the nation’s many sound companies makes no sense. I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either public sentiment or the economy turns up.”

“So if you wait for the robins, spring will be over. Buying now is better than trying to time markets and guess when a turnaround will happen.” Buffett is the nation’s richest individual with a net worth of $58 billion. Buffett quotes hockey great Wayne Gretzky: “I skate to where the puck is going to be, not to where it was.” On the flip side, billionaire Kirk Kerkorian this week bailed out of his shares in Ford Motors to the tune of a half billion dollar loss. I’ll guess with you.

But Uncle Sam’s plan is beginning to thaw our frozen credit markets and is easing this crisis, though calming a chaotic Wall Street may well take months. The dynamism and heft of the U.S. economy will be put to the test, but as it now appears, not defeated. Amen.

Meanwhile, Southern California home sales soared a record 65% in September from the same month last year. Reason: cut-rate foreclosure sales, accounting for half of all transactions, but which pulled the median home price down 33% year-over-year. The good news: we’re whittling down that glut of unsold inventory.

P.S. I’ve been in this business for 45 years. I’ve too have never seen anything like what’s happening now. But I can tell you this: after all is said and done, real estate will be a survivor.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-10-17T10:58:00.001-07:00

Copy for Real Estate Guide Column for 10-10-08

REAL ESTATE PATTERNS
By Ken DuVall

AMERICA HAS ALWAYS COME THROUGH!

We all live on hope and the promises of others. That’s the way it’s always been. It’s just that the whole world is in full-on freak out panic mode right now. Buy, sell, hold, punt, pray for salvation, on and on. Collectively, we really don’t know which way to turn right now. My Dad always said, “When in doubt… don’t!” It may be the wise choice but to do nothing as the dust settles around us.

It’s been said that politics is the conduct of public affairs for private advantage. Mark Twain said, “It could be shown… that there is no native American criminal class but for Congress.” A culture of corruption exists. But what’s done is done. What’s left is how we handle it. It’s also been said, “After the wars are over, there are many casualties, but the real estate is always left.” Hold that thought. It may be your salvation.

At least the FBI is now investigating 26 financial institutions and the people who ran them including Fannie and Freddie, whose collapse triggered the current meltdown. Outright fraud and “liar loans” put us in this jackpot. They packaged rotten loans and changed the name (to protect the guilty!) to “AAA rated” and re-sold the products as “riskless”. The Enron guys went to jail. Many unindicted felons are still walking around free. The whole mess is disgusting.

Make no mistake: the current global credit freeze is frightening. But we’ve feared the worst before. Remember ‘Black Wednesday’, 10-19-07; the S&L crisis of the early 90’s; and the Asian meltdown in ’97 when Koreans lined the streets of Seoul to donate jewelry to shore up their currency. In all cases, markets ultimately bounced back. According to the Int’l Monetary Fund, we’ve seen 124 worldwide banking crises in the last 25 years. The U.S. financial system survived every time. Amen.

Kiplinger says we’re probably now in a recession. Our economy won’t begin to pick up until the middle of next year, at best. Figure home prices nationally have 10% more to drop. New home sales probably won’t pick up until 2010. The Fed may cut their rate before Election Day in a bid to further aid our staggering economy.

The Fed Economic Recovery Act of 2008- the “bailout”- will help slow the descent in home prices. Word on the street is the Fed will actually MAKE money on the deal, purchasing those bad loans for pennies on the dollar and selling them for far more. BofA/Countrywide’s $8 billion agreement this week settled their deceptive loan practices lawsuit that will modify troubled loans to keep 400,000 borrowers from losing their homes.

On balance: This financial rescue is NOT the deepest intervention in our economy since FDR’s New Deal in the 40’s. It’s not even close to the dismantled market controls of the 70’s and 80’s. Then, deregulation STIMULATED free enterprise, competition, and economic growth. Thank goodness the election will be over next month. Depending on who wins, we may just start getting some GOOD news again from the media!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-09-23T14:57:00.000-07:00

Copy for Real Estate Guide Column for 9-26-08
REAL ESTATE PATTERNS
By Ken DuVall

LET THE FINGER POINTING BEGIN

Most of us are irate and indignant about this financial mess. But blaming the free enterprise system is preposterous. Blame well-intentioned, but as it turns out, disastrous Government intervention for upsetting the market economy. It all began as the result of "redlining", a term coined in the late 1960s by community activists in Chicago. The practice involved lenders actually drawing red lines on maps outlining blighted, usually inner city areas, as designated “no-loan” zones. In 1968 the Fair Housing Act was passed to prohibit redlining when the criteria were based on race, religion, gender, familial status, disability, or ethnic origin.

The Act mandated that ANYONE was entitled to a mortgage- even if they didn't qualify. Before that, if a buyer couldn’t come up with a 20% down payment, he didn’t get a loan, period. It had the ultimate effect over time of crippling the housing market, deteriorating values, and encouraging abandoned properties that survive to this day. It created a gigantic monster that threatens to consume the entire financial world. We messed with the essence of free market dynamics and now we’re paying the price.

In saner days, banks logically designated those areas where making a loan to any buyer, not just a minority, was not only chancy but a recipe for disaster. No banks in their right mind would make home loans in say Chicago ghettos or war torn South Central L.A back then. Suddenly banks were not permitted to be prudent but forced to be “politically correct”, which was completely appropriate and called for at that time. The flip side was that un-creditworthy borrowers then became legally entitled to get mortgages, and compelled lenders to write loans in objectionable neighborhoods.

Enter now those quasi-government banking institutions, Fannie Mae and Freddie Mac, which poured fresh money into the banking system by buying mortgages from banks so they could make more loans to anyone with a pulse. F & F bought billions of dollars worth of those risky mortgages banks had been forced to offer. Lenders now had no risk in the deal! The F & F scandal dwarfs the Enron debacle. With Enron, people went to jail. With F & F, many walked with millions. It’s disgusting.

For example, Franklin Delano Raines ran Fannie for 6 years and swung with $50 million based on overstated earnings. The Government suit against him to recover was settled last April for a paltry fine of under $3 mil. Yes, we now know that greed and corruption were also inherent elements of the meltdown. It is fervently hoped that this ugly episode results in a wake-up call for everyone.

But don’t sell America short. We can, must, and will fix the present run on the world banking system. That's the message I hope my readers take away from this column. Stock markets have plunged globally. Gold and oil prices have shot up. We're witnessing a desperate flight to safety. Investor confidence has vanished. The world is petrified. We’ll know more when the details of the gigantic government $700 billion to a possible $1 trillion bailout are fleshed out. Who would have ever thought home loans would bring us to our knees?

To really “fix” things up, maybe we should let the Government own everything in the country. Then we could all just hang out! For now, take an aspirin and call me in the morning.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-09-16T13:02:00.000-07:00

Copy for Real Estate Guide Column for 9-19-08
REAL ESTATE PATTERNS
By Ken DuVall

DODGING BULLETS AND TAKING ARROWS!

The only “good” news is the housing bust has spawned a new “industry”. Building contractors have found a new niche: boarding up foreclosed bank owned homes to protect them from squatters and vandalism! And bargain hunting investors are buying up lots from distressed developers, paying as little as 35 cents on the dollar, betting on big gains in a few more years. We hit “The Perfect Storm” this week, like the movie of the same name.

We just had a major financial meltdown. Like the bursting of the housing bubble destroyed hundreds of billions of dollars in phantom home equity built by the explosion of rogue lending, Wall Street is now suffering through its own evaporation of market value. But I think vultures will snap up the road kill before too long.

The spectacular collapse of the two gigantic financials, Merrill Lynch and Lehman Bros., on the heels of Bear Stearns, and now the scramble by AIG, the world’s largest insurance company that guarantees $60 billion in mortgages to lenders, has many wondering: Is this as bad as it gets?

The answer is: nobody knows. The reason being the true value of the investments held by banks and other financial institutions won’t be known until home prices and the job market stabilize. I guarantee you we haven’t seen the bottom yet. There’s a domino effect in play. More losses are inevitable.

The U.S. has gone from a $5 trillion surplus in 2000 to a crushing debt, now $9.6 trillion, increasing by $1.9 billion each and every day. The Afghanistan and Iraq conflicts cost $12 billion a month. Forget about the housing downturn. That’s small potatoes now. Worry about the very solvency of the country.

We have amassed huge, unfunded obligations and enormous liabilities that exceed our resources. The fundamental economy is not in good shape. One critical question remains: How many more banks face the ultimate penalty? The answer depends on two huge unknowns.

First: When will home prices stop falling? The value of trillions of dollars of assets held by the world’s investors is pegged to the underlying value of the real estate on which those assets are based. If home prices fall more, those assets will have to be further devalued. Who would have ever thought that housing would turn out to be such a gigantic lynch pin economic component?

Second: When will the foreclosure rate stop rising and stabilize? As of July 1st, some 9% of all Americans holding a mortgage were either late on their monthly payments or in foreclosure. Continuing foreclosures will add to the backlog of bank-owned properties putting further pressure on lender resources. More adjustable rate loans will reset next year so it’s not over yet.

With the collapse of these giant financial institutions, it’s clear some acted imprudently, now stuck with too much debt and not enough capital. Just like homeowners who took on mortgages they couldn’t afford, lenders that took the risk now face their own "foreclosure." When will we learn there’s just no free lunch? But if we play our cards right, we’ll emerge victorious once again. The harder the conflict, the more glorious the triumph.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-08-25T14:58:00.000-07:00

Copy for Real Estate Guide Column for 9-29-08

REAL ESTATE PATTERNS
By Ken DuVall

CHANGED MY MIND…

I’ve been in this business for 45 years now and I’m not going to give up the ship just yet! It’s been widely reported that Standard & Poor’s Case-Shiller (you know I’m not a fan of theirs) housing price index recorded a 14.1% decline year-over-year from March 2008 to 2009. It’s a “Poor” measure of home values because it excludes data from 13 states and includes only partial data from 29 others. That’s 42 states out of 50, folks. Values in their omitted areas have been considerably more resilient so their data are based on the markets most susceptible to dramatic swings. Not an accurate representation, susceptible to liberal media slant.

Also, Case-Shiller weights their price calculations by value. For instance, they give 8 times as much weight to an $800,000 home sale as they do to a $100,000 home sale, making it far more sensitive to the largest most expensive home areas. Again, not appropriate for the vast majority of our country’s real estate markets. Other respected value models predict that even as foreclosures continue their climb, home prices will only fall modestly or remain flat, but will not collapse. Even projecting an extreme worst case scenario, U.S. home prices are not expected to fall by much more over the next 2 years. I see Chico prices continuing to firm up as I write.

Therefore, our national average cumulative home price decline in this period should end up around 5% to 6% at the outside. Of course, those who had the misfortune to buy in the hottest markets at the peak of the boom do have significant paper losses. But the fact that prices will remain relatively stable in no way implies that the housing downturn has been or is trivial. Indeed, bad loans and poor judgment have clearly been reflected in lower sales and declining housing starts for over a year. These factors have actually slowed GDP growth, of which housing represents 5%. Developers and financial institutions have been badly hurt. That’s not over yet by a long shot. Lenders can expect to be indicted and regulated as we go.

Oh oh, women are wearing longer skirts, so we must be in a recession says Kiplinger, right? It’s theorized that skirt lengths and markets move in tandem. Hemlines rose in the Roaring ‘20’s when times were good, then fell in the Great Depression of the 30’s. Miniskirts were all the rage in the 60’s boom years. Now bohemian-style long skirts, popular in the 70’s, are on their way back. That period was known for its high oil prices, a sagging stock market, and inflation. Sound familiar?

Of course, many dismiss that notion. And today, women have more fashion options. They’re as apt to wear pants as worry about skirt lengths. What counts is that women keep buying clothes, which make up 66% of that $160 billion market. Women, you’ll love this: don’t stop buying clothes or the economy suffers! Remember you heard it here first! Be Patriotic, save America!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-08-18T15:15:00.000-07:00

Copy for Real Estate Guide Column for 8-22-08

REAL ESTATE PATTERNS
By Ken DuVall

AS THE DUST SETTLES

Turmoil in the housing market has led to fears that home prices will continue to drop precipitously, particularly if continuing foreclosures force large numbers of homes onto the market. But the projected losses have been wildly exaggerated. No matter what we’ve been fed by the hysterical media, most Americans have NOT experienced a significant decline in the value of their homes — nor are they likely to. It’s becoming clear now. But there’s far more to reflect on here.

Only four states — Arizona, California, Florida and Nevada — have had actual declines of more than 4% in home prices over the past year, according to the Office of Federal Housing Enterprise Oversight. In June, California escrows opened actually went up 5.3% with prices also up a meager 1.1%, but up, not down. Housing represents fully 5% of America’s Gross Domestic Product of $14 trillion, or some $700 billion. That’s a big deal.

The good news is home sales rose in areas where markets are now flooded with foreclosures, indicating buyers are taking advantage of steep discounts. Compared with last year, California sales were up 3.7% in June. Sacramento’s sales have increased 51% since the first of the year and their inventory is decreasing. Nationally, the median home sales price was down only 7.6% from a year ago, not a catastrophe considering housing’s inflated, irrational, and unsustainable 85% bump over the last decade.

We have some 750,000 foreclosed home in our national database equaling about 17% of the 4.5 million U.S. homes now for sale. We have a huge excess housing inventory with mortgage write-offs projected at $2 trillion, plus a possible Freddie Mac and Fannie Mae government write-off of $5 trillion, on top of a $3 trillion war cost and a $371 billion federal budget deficit. And lenders may simply put their riskiest loans into the new bailout programs. Borrowers could default anyway, leaving taxpayers on the hook for another $15 billion. All in all, not a pretty picture.

Some say America’s problems are not the economy, markets, or politics. The endless bickering is distracting us from facing our true long-term problems. Since 2000 we have seen a relentless, sickening overdose of bad news: stupidity, deceit, corruption and evil behavior. We are now suffering from post-traumatic shock syndrome! Something deep in our collective cosmic soul seems to cry out that we’ve lost our moral compass.

Why are more of us not outraged? Some feel America is broken and will take years to fix. Our monetary system and our tax base are running out. Like our overextended military, we are handicapped in our ability to face new threats, much like Rome and other great civilizations experienced. More on that in my next column. Buckle your seatbelts for that one!

Bottom line: Fears of a huge loss in home values for the majority of home owners across the United States and of overwhelming, crippling losses by financial institutions that would accompany them have been greatly overblown. I still think we’re turning the corner and headed for healthier times over the next year. So be it.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-08-02T14:38:00.000-07:00

Copy for Real Estate Guide Column for 8-8-08

REAL ESTATE PATTERNS
By Ken DuVall

CLOUD 8 JUST WHEN WE NEED IT!

As George Carlin once said: “Cloud 9 gets all the publicity, but Cloud 8 is actually cheaper, less crowded, and has a better view.” I’m going for that on 8-8-08! Real estate IS recovering, inch by inch, piece by piece, and day by day. Illusionist Criss Angel last week actually WALKED on the water at Lake Mead. And a 60-year Michigan golfer hit TWO holes-in-one on the SAME day, a 766 million-to-one shot. So maybe anything’s possible. We’re certainly not as bad off as Zimbabwe where their inflation rate is 2 million percent!

Housing is at the very heart of our economic woes. Its drag may hold 2008 economic growth to a meager 1.5%. Nationally, home foreclosures will approach 1.31 million by year end. Ten million homeowners owe more than their homes are worth. There’ll be 1 million bank-owned homes by year end, the highest since the 1930’s. If borrowers had a pulse, lenders made them loans. We’re all paying now. Some $3.5 trillion in homeowner equity has been wiped out since 2006. If you’ve got a problem with your loan, talk to your lender TODAY.

Ninety banks are in serious jeopardy. Some broke the rules going for that competitive edge. They mistakenly thought they could walk on the water too. With stiffer qualifying and increasing rates, loans are becoming harder to get. The new housing bail-out bill just passed. Keep your fingers crossed on that.

We are returning to the basics of sound banking. Lenders must verify income. Monthly payments shouldn’t exceed 35% of the borrower’s take-home pay. Borrowers should have some skin in the game. It hasn’t been that long since you had to come up with a genuine down payment or you didn’t get a loan. Sure, down payments exclude some from homeownership but it beats a devastating “exclusion by foreclosure”.

Meanwhile, there are many markets where prices are no longer falling and sales are doing well. The high-end sales are hurting, but otherwise, Chico is one of them. Fortunately Chico didn’t go crazy during the boom. Deals are going into escrow, some even sold before our Wednesday MLS Tours. We’re beginning to see prices firming up and multiple offers again. Chico is thankfully not overwhelmed with high inventory. That’s why I think, despite ongoing negative media reports, housing appears to be turning the corner.

I read recently about life on Rodeo Drive in Beverly Hills with all their outrageously expensive designer shops. It talked about trophy girls strutting around in tight jeans and low-cut tops. One held a small dog under her arm like a purse. The poor animal had a bow on its head and was wearing a poncho. He didn’t look happy. He seemed to be saying, “Dude, I’m just the dog. It’s the people that are crazy!”

In my opinion, that entire pretense has no significance. Who really needs a $150,000 watch? Gimme a break. Chico, just being here with our superior people, the good life, living in this blessed place- that’s priceless. We shall endure. Let the rest of the world go nuts as we enjoy our daily bread. Amen.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-07-21T16:24:00.000-07:00

Copy for Real Estate Guide Column for 7-25-08

REAL ESTATE PATTERNS
By Ken DuVall

HERE & THERE

First our heartfelt sympathy goes out to all the poor people that suffered in our tragic firestorm. It’s a local and national disaster, perhaps of all time, certainly for us. May God bless all the heroic firefighters. They went above and beyond the call of duty. They’re all brave heroes.

Oil, airlines, and truckers are dropping like flies. Thanks goodness the cost of oil went down last week. We needed a break. The U.S. is using 87 million barrels a day. The City of Chico’s annual budget is $200 million. There are $12 trillion in U.S. mortgages outstanding. California home prices plunged 29% in June over a year ago while sales picked up to a 10-month high as foreclosures drove the market. Forty one percent of homes sold in June were foreclosures. There are a lot of euro dollars, rupees, rubles, and yen buying up our real estate. A global redistribution of the wealth is happening, $700 billion a year just for our foreign oil cost.

Poor old Donald Trump finally sold his Palm Beach, FL 60,000 SF ocean front shack last week for a $100 mil. He paid $41 mil for it in 2004. A Russian fertilizer billionaire bought it. There are now 10 MILLION millionaires in the world, up 600,000 from last year! Their average wealth: $4 mil. Combined wealth: $41 TRILLION! India and China account for the largest increase to the ranks. They grew in India by 23%. Still, one in three are Americans. Perspective: Millionaires represent only one-fifth of one percent of the world’s population of 6.7 billion.

Prices may be down, foreclosures may be mushrooming and the blowback from the subprime mortgage crisis is threatening banks and secondary mortgage lenders, but there are some early signs the real estate market is trending in a more positive direction- although you may not know it if you rely on the mainstream media for your news.

Recent data suggest real estate market pessimism may be overblown. Even the liberal economist Karl Case admits many industry pundits and members of the media are ignoring key facts – as demonstrated by their focus on negative year-over-year price figures rather than more recent monthly data. Example: Home prices actually increased slightly in eight markets between March and April. Instead, the focus of most media reports was on year-over-year figures, which continue to support the notion that the market may not have hit bottom, let alone begun to improve.

As always, I’m trying to look on the bright side here. Transaction-related indexes may be skewed by a far larger than normal share of subprime-derived default and distress sales. In the Bay Area, more expensive homes, over $721,548, have dropped in price by only about 10.7 percent from their peak, compared with homes priced under $473,711, which have tumbled by 40.9 percent.

Even new housing construction numbers suggest an improvement according to Case who notes that national housing starts, falling to 975,000 in April from 2.27 million in January 2006, have fallen by similar percentages 3 times during the last 35 years. Each previous time the market has staged a surprising upturn within a quarter. Only a slide into a full-blown recession would temper his optimism about the potential for a similar recurrence of this trend. Keep the Faith.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-07-15T10:40:00.001-07:00

Copy for Real Estate Guide Column for 7-18-08
REAL ESTATE PATTERNS
By Ken DuVall

WE’RE NOT ALONE!

The Governator did a superior thing last week: he OK’d Senate Bill 1137, which takes effect immediately and prohibits lenders from filing a loan default on borrowers until 30 days AFTER they’ve made a good faith attempt to try and work things out. Tenants also benefit in that they now get 60 days notice to vacate once a property has been foreclosed. It’s certainly no fault of theirs the landlord failed to make payments.

This is an excellent, common sense move- not a bailout- that will help stem the tide of California foreclosures. Banks are now forced to work with borrowers in trouble with their loan payments BEFORE they commence foreclosure. It encourages both parties to explore alternatives that could avoid a costly repossession. The Bill passed with bipartisan support.

California has recorded over 116,000 foreclosures already this year. Its major grim. The Bill’s goal is to encourage meaningful loan modifications between borrower and lender. It also enables cities to impose fines of $1000 a day on property owners who do not maintain homes acquired in foreclosure, aimed at preventing blight and worse in hard hit neighborhoods.

When you’re invited to a poker game and look around the table for the “pigeon”, and can’t spot him, YOU may be the pigeon! Maybe you shouldn’t have gone for that “trick” loan in the first place. Maybe the lender misled you. Either way, this new law provides parties the chance to work things out to avoid legal proceedings. I’m on our Chico Assn. of Realtors Professional Standards panel where we judge conflicts between parties. It’s ALWAYS wiser to settle than to go legal.

Even celebrities are affected as values fall. The meltdown is hitting every socio-economic class. We’ve all heard about poor Ed McMahon, Johnny Carson’s 85-year old sidekick’s troubles. Ed’s been unable to work since he fell and broke his neck in 2006. He’s $644,000 behind on his payments on his Beverly Hills home in the same gated community where Britney Spears (there went the ‘hood!) moved. Ed’s been trying to sell it for 2 years. It started at $7.6 mil and is now down to $6.5.

Angela Bassett and Courtney Vance’s home in the gated old-money enclave in L.A.’s Hancock Park off Wilshire Blvd has dropped more than $2 mil in the past year. It’s now down to $3.9 mil from $6 mil. Don’t feel too sorry for them. They bought it 17 years ago for $1.8 mil and own it free and clear. Baseball’s Jose Canseco stopped making payments earlier this year on his $2.5 mil home in Encino in the San Fernando Valley.

The good news is that Newbies are back! Entry level homes are again affordable. Builders have slashed prices and are building far smaller homes. For instance: KB Home’s average sales price east of L.A. has dropped to $248,000 from $267,000 a year ago. Their old basic 3800 SF model once sold for $328,000. Today it’s half the size and goes for $220,000. So for the first time in 10 years tenants can buy a new home for what they’re paying in rent. Hooray! Bear in mind the key player in any housing recovery scenario is the first time buyer. There’s always a flip side.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-06-23T13:15:00.000-07:00

Copy for Real Estate Guide Column for 6-27-08

REAL ESTATE PATTERNS
By Ken DuVall

THERE’S ALWAYS HOPE!

The blistering real estate news we’ve been hearing for a year is tapering off, mostly a rehash now. Thankfully there are some bright spots here and there but let’s dwell on the broader economic components this week as they affect every aspect of our lives. Like oil, food, politics, and deficits.

Most states face a bleak economic period, the result of slower revenue growth. A major pension crisis looms. That’s why Vallejo filed bankruptcy: they couldn’t fund their retirees’ pensions. California accounts for fully half of the national shortfall. Look for Sacramento to up the sales tax by 1% to help narrow our $16 to $20 billion budget shortfall.

Chico is just a smaller edition of that scenario. We’re moving less real estate which equates to lower transfer and property tax income for us. Everywhere loan defaults, foreclosures, and short sales are up. Sales taxes are down. We’re still spending more than we’re taking in. As always, the superrich are feeling no pain. One Beverly Hills home just went for $5.25 mil, $500,000 over ask price. Another nearby listed for $4.75 mil, after multiple offers going for $5 mil- all cash! Yeah, well there’s one thing money can’t buy: poverty!

McCain argues increasing taxes is the worst thing for a weak economy. Obama says low taxes on the rich have failed to create jobs and growth. The usual politicking. The reality is the president has a very limited effect on the economy. And Congress- barring a Demo majority- could prevent either one from working his will on tax policy. Meanwhile, the National debt now stands at $9.4 TRILLION and grows by $1 BILLION A DAY. What if AMERICA filed bankruptcy??

So let’s just ask OPEC to lower oil prices! And Safeway’s food costs too while we’re at it. In your dreams! Blame the ethanol movement for the price of corn. And the Midwest floods will take a huge toll. Kiplinger expects gas will drop 50 cents a gallon and $25 a barrel by year end. Why? Demand is falling as it did in 1979-80 when pain at the pump slashed use by 5-6%.

And we’re switching to smaller more fuel efficient vehicles. Half any oil price drop will come from the commodity speculation froth subsiding. Big bets on oil will ebb amid U.S. regulatory probes and plunging demand. A strengthening dollar will help too, lessening the need for oil producers to maintain high prices. We need relief.

Quick facts: The U.S. has 2.3 TRILLION barrels of untapped oil reserves, though mostly in Federally protected areas. The U.S has more oil in the ground than the entire Middle East COMBINED. That’s a 30-year supply if we can resolve environmental concerns. There hasn’t been a significant offshore oil spill in nearly three decades. The Alaska Nat’l Wildlife Refuge (ANWR) is larger than 5 states combined (Mass., Conn., Rhode Island, New Jersey and Delaware) and drilling there would be confined to an area 1/6th the size of Washington’s Dulles Airport!

Maybe the “Drill here, drill now, pay less” crowd will prevail. Over one million have signed the petition so far. Even CHINA is drilling for oil off the Florida coast. Hope their oil is better than their toys!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-06-10T11:53:00.000-07:00

Copy for Real Estate Guide Column for 6-13-08

REAL ESTATE PATTERNS
By Ken DuVall

THE OUTLOOK

Long column, lots of news. While housing data shows the sales environment for both new and existing homes are still sluggish, a small increase in housing starts along with a rebound in building permits would suggest the worst of the housing downturn may just possibly be behind us. We haven’t reached the bottom by any means but as housing starts and new home sales unexpectedly rose, that represents a positive sign the market may have finally begun to at least stabilize.

The Office of Federal Housing tells us that nationally, home prices fell only an average of 7.7% over the past year, while some markets declined less, and some are even in positive territory. According to them Butte County home values have fallen a mere 11% since 2006 and that we’re the 2nd most affordable housing market in the state. I would say that’s fantastic in light of everything that’s happened.

The nation's gross domestic product increased at a 0.9% annual rate in the first three months of 2008, despite being held back by the biggest housing slump in 26 years. The GDP (housing accounts for fully 1/3 of it) also increased 0.6% in the 4th quarter of 2007. The economy has grown 2.5% overall in the past year. In other economic growth indicators, sales of big ticket goods (appliances, communication equipment, etc.), showed surprising strength by rising 2.5% in April, the biggest gain in 9 months. Business investment also rose by 4.2% in the same period. Don’t close the casket just yet.

Personal incomes grew significantly faster than anticipated. The economy was on firmer footing in the second quarter than would have possibly been imagined a month ago by the doomsday media. They’re still shaking their heads in disbelief and denial. April home sales- 366,720 of them-represented a 2.5 percent year-to-year gain compared with April 2007, ending a 30-month string of year-to-year percentage decreases that began in October 2005. While some reputable doomsayers are still predicting a crash and burn worldwide, we are not in a recession yet, despite the current tumultuous activity in commodities- oil in particular- and Wall Street.

In the neighborhoods that lost the most homes to foreclosure are now the ones posting the strongest sales. Caution: Expect the volume of foreclosures to keep rising. It isn’t likely to tail off anytime soon. But on the bright side, areas with the steepest price declines are likewise now experiencing the biggest sales gains. Anything will sell when the price gets low enough. Even the beleaguered Sacramento area’s sales increased 25% last month over a year ago. Interest rates below 6% have made it again possible to have a positive cash flow on a rental home purchased at today’s decreased prices. You win some, you lose some.

Chief Economist Lawrence Yun for the Nat’l Assn. of Realtors says it begins to look like home sales and prices throughout most of the country are poised for improvement in the 2nd half of 2008 and into 2009. As always, it will vary by market. He states several Middle America cities are likely to see price gains in the 20 to 30% range over the next 5 years, while Miami, Las Vegas and Phoenix could see prices up by as much as 50%. Chico is still doing just fine so far.

We now know the subprime mess caused the greater part of the downturn and softening of the housing market. “In fact”, Yun continues, “prices fell the most where subprime loans were prevalent. It’s important to keep things in context. While much of the media has focused on foreclosures… the fact is that only 2% of all U.S. homes are involved. The vast majority of homeowners are still making their loan payments on time.” It’s been a catastrophe for the few- but not for the many.

Now that the subprime market has dried up and traditional loans are making a comeback, housing markets will strengthen and prices are likely to again begin a steady uptick in the months ahead. The NAR supports legislation urging Washington to modernize and reform regulations of government-sponsored FHA, Freddie Mac, and Fannie Mae loan programs and to make the temporary loan amount increases permanent. These measures would help stabilize the housing market. But as politics are involved, who knows what will happen, if or when. About 1% or 800,000 U.S. homes are now bank owned with no end in sight.

My opinion: There’s every reason to take advantage of today’s market conditions: A plentiful supply of homes for sale at reasonable prices; interest rates near 40-year lows; coupled with a strong track record makes housing an exceptional long term investment. Conditions are ripe for buyers, plain and simple. No one can predict the future but I can tell you this for sure: You’re always going to need a roof over your head. That’ll never go out of style or demand. We need that just like we need gasoline or food. End of story.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-05-19T14:22:00.000-07:00

Copy for Real Estate Guide Column for 5-23-08

REAL ESTATE PATTERNS
By Ken DuVall

GREENER PASTURES

After hearing the near constant main stream media rants about how terrible our lives are in America: the economy in shambles, gloom and doom everywhere, on and on, I happened to hear a report on Paul Harvey radio published by the World Competitive Year Book. It says the U.S. economy has been the best in the world for the 15th straight year. They say America’s economy remains the world’s strongest, totally dominating all other countries.

We may not hear that anywhere else. The most important element about everything taking place today is not so much in where one stands, or what positions politicians and activists take. The important thing is in what direction we are moving. No matter what, take a stand for something or you’ll fall for anything! Onward and Upward, my friends.

In your dreams! Here’s another incredible world economy that’s absolutely beyond belief, almost like another planet: Dubai, capital of the United Arab Emirates on the Persian Gulf adjoining Saudi Arabia. In the last 30 years, Dubai has grown from an obscure pearl diving village of 100,000 inhabitants to a cosmopolitan megalopolis of 1.5 million. One new resident says, ‘We don’t even have to lock our doors. There’s no crime here.” Imagine that if you can. Maybe they still cut off thieves’ hands over there!

There are 5000 residential and commercial projects currently in the pipeline, gearing up for an expected population of 4 million new people over the next decade. Construction cranes are everywhere like giant birds reaching toward the sky. Sheikh Mohammed bin Rashid al-Maktoum, VP of the United Arab Emirates and absolute ruler of Dubai, sees his oil business vanishing, accounting for only 5% of their GDP, so the Emir- often referred to as “Sheikh Mo”- decreed that trade, finance, and real estate will be their future. What Mo says goes- he doesn’t do committees!

The spiraling Burj Dubai, now under construction, will be the world’s tallest skyscraper at 160 stories. Another world’s largest is will be the 6500 room Asia Hotel. How about an underwater hotel? They’ve got one. And a 5-star Ritz-Carlton Hotel opens soon. There’s an indoor ski resort (are you ready- a ski slope in the middle of the desert?!) A second one is in the works due to unprecedented demand. They’ve already constructed 300 private islands offshore in the Gulf known collectively as “The World”, shaped like a global map using sand reclaimed from the seabed. We’re talking a new global landmark, resembling some sci-fi interplanetary space station.

Islands are priced between $15 and $50 million each. The creation/dredging operation was monumental. Over half have already sold. The largest is the size of San Francisco! Search “Dubai” online for photos that’ll blow your mind. Of course there are condos. One with 7500 SF went for $6 mil recently. The first 4000 of the Palm Jumeirah’s properties were sold in 72 hours. They’ve tripled or more in value. One that sold for $700,000 in 2002 is worth $4 mil today. Among the true believers: The Donald. His 61-story condo/hotel opens in 2011. Then there’s the 1550 room Atlantis Resort now taking shape on the outer rim. Everything there is beyond belief and compare.

Despite a recent media blitz here about the moderate Arab city-state, Dubai remains a mystery to many Americans, but it may be the tantalizing new oasis investors have been waiting for. Some are saying, “I should have bought there a year ago.” We’ve all got 20/20 hindsight.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-05-12T10:47:00.000-07:00

Copy for Real Estate Guide Column for 5-16-08
REAL ESTATE PATTERNS
By Ken DuVall

WHAT RECESSION??

The facts just don’t add up. If you’re following the news these days, it seems indisputable that the U.S. is in recession. Some 90% of the public think so. The gloom merchants keep telling us so. But there’s just one problem: There’s little evidence that we’re either in a bear market or a recession. It’s not as bad as perceived. Unless the Dow Jones average falls below its March lows, we just ain’t in one yet! Thankfully, our economy still has a feeble pulse. I’m reporting all these economic and global elements as they weigh heavily on our real estate markets.

Treasury Secretary Henry Paulson just stated the worst of the credit crisis may have passed. Wachovia Chief Economist John Silva says, “While there’s no question the economy is struggling, just how anyone could confuse the current environment with the worst economy since the Great Depression is baffling to say the least.” There are some 8 million homeowners stuck with loans bigger than their house is worth. Many are tempted to simply walk away and mail the keys to their lender. But think about it: If you don’t sell, you don’t lose anything. Moral: Don’t panic.

Despite all the bad news, the subprime mortgage crisis and the wave of home foreclosures, domestic product growth was still in positive territory in the 1st quarter, albeit up an anemic 0.6%. It’s not worth breaking out the bubbly over, but it’s not a recession either. Jobless claims last week fell to 365,000, well below economist’s forecasts. Contrast that with the 2001 recession when they stayed above 500,000 for 2 years. We may hit that again but not yet.

Given all that’s happened, the housing bust, food prices figure to be up 5% this year and may stay high for years- blame the ethanol madness for the most part- crude oil over $125 a barrel and gas over $4 a gallon, it’s no wonder we’re all feeling besieged. In Latin America alone, some 16 million people face destitution. High food costs may push 100 million people into poverty. The threat of global food rioting is a valid concern. And then there’s the ongoing tragedy in Burma, plus the new devastating quake in China this week. It’s not a pretty picture.

Commodities are unsustainably high but that bubble may burst by summer according to Kiplinger. A number of factors could do it: A cut in worldwide commodity demand, big stock market gains, a more stable dollar or tamer inflation. Prices could drop by 30% if all these factors come into play. Kip says oil could slide back to $85 a barrel. So be it.

The credit markets are finally showing some hints of a thaw, repairing their balance sheets and retrenching, raising $212 billion and recouping recent losses. But it isn’t over yet. The market won’t pick up until 2009. Yet a $2 mil property on the corner of Esplanade & Eaton went into escrow this week. Also on this week’s hotsheet was the Black Crow building downtown listed at $2.3 mil. And a primo 5.64 acre commercial use parcel on the corner of Bruce Rd. and Cal Park Dr. hit the market at $3.5 mil. Another new listing set for residential use is the 1437 acres up Richardson Springs Rd. above the airport priced at $10.7 million. Life as we know it goes on in beautiful Chico.

While it might be tempting to view this unfolding crisis as someone else’s problem, the current situation is a mess that promises to touch everyone. The Nat’l Assn. of Realtors says the foreclosure rate will be rising through 2008, estimating the ultimate toll at close to 2 million. U.C. Berkley predicts that number could double by the end of 2009. While property values are always dictated by local market factors, the national median existing home value dipped by 1.4% in 2007, marking the first time we’ve seen a nationwide decline since the Great Depression. But we shall prevail in the long run. We have so far. “Give us this day…”

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-05-06T12:06:00.000-07:00

Copy for Real Estate Guide Column for 5-9-08

REAL ESTATE PATTERNS
By Ken DuVall

HOW FAR CAN YOU GO INTO THE WOODS?

The Answer: Half Way. Then you’re on your way out! That’s about where I see us today. We’re in the middle of the deep dark woods housing slump. The Big Question on everyone’s mind: when will this down cycle end? I figure at least another year. Many experts believe we’ve already reached bottom and are rebounding. If it’s any consolation, European housing is on a major downtrend too.

Last week our economy showed unexpected and welcome signs of a come-back as job losses slowed and the dollar gained strength. But you have to get a home equity loan to buy food and a tank of gas! The unemployment rate even dipped a tad from 5.1% to 5%. Factory output increased after 2 months of decline. Economists are now saying the downturn may not turn out to be as pronounced as once feared. Hallelujah, brothers and sisters!

As buyers and investors snap up thousands of bank foreclosures, multiple offers and sales at list price are back in various metros, including some in Chico. We’re putting 25 or 30 homes in escrow every week mostly in the $250,000 to $350,000 range. We’ve sold over 200 homes year-to-date. This week there were 170 deals in the hopper vs. 414 active listings, a nicely balanced ratio. We’re doing OK.

San Francisco is hot with 10 offers last week on one $10 million home going for $1 mil over price. A $1 mil condo there went for $1.2 mil after 22 offers. Most listings are selling within 30 days. One Realtor there said he’s never seen this volume of high-end buyers before. Go figure.

Las Vegas is strange. Unless homes have been built in the last 2 years, they’re considered “out of date”. New is the most important thing. One developer has homes near The Strip for sale up to $3 mil. Folks then move up to “be with their friends” every 5 to 7 years. Five thousand to 7000 SF used to be enough. Now 8000 to 10,000 SF is the new threshold. Last year some 900 homes sold for over $1 mil. There are now more than 22,000 homes for sale there with over half of them vacant.

Many foreclosures are still coming on the market, now constituting 1.5 million, equaling one-half of a percent of all U.S. homes. There are 18.6 million vacant homes in America. Foreclosures are a recipe for falling home values. It’s a vicious circle. Fortunately the vast majority of the subprime loan problems that triggered the meltdown have been addressed. The big interest rate resets leading to higher payments and foreclosures will be nearly over by year-end. Let’s hear a big amen for that!

Although we’re still in uncharted territory, I think we’re seeing the worst of it right now, shooting the rapids and hanging on for dear life. The hope is that by year-end the waters will calm down. The upturn will be long and slow but the seeds of rebirth are now germinating. The plummeting number of new home starts will trim the inventory, in part leading the way to healthy market conditions once again.

Bottom line: From 1997 to 2006 national home prices rose about 85%, the most monumental housing boom in history. We developed a speculative culture about housing never before seen on a national basis. Many became convinced that housing prices would perpetually increase 10%+ annually. Wrong. We’re paying the price now for that “irrational exuberance”. It’s like we partied too hard and got a nasty hangover. But we’ll get well in time.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-04-19T17:42:00.000-07:00

Copy for Real Estate Guide Column for 4-25-08

REAL ESTATE PATTERNS
By Ken DuVall

FIDO IN FORECLOSURE

Pet owners all over the country are being forced to abandon their loved ones. They’re stuck between a rock and a hard place. They’ve had to leave them in their backyards, some with their leashes still on. Neighbors hear their cries in the night. Shelters and animal rescue organizations are packed cage-to-cage with dogs, cats, and others that have been ditched or dropped off as scores of foreclosed-upon homeowners relocate. It’s yet another sign of these tough economic times. Call it collateral damage and it breaks my heart. It’s got to be breaking theirs too.

The Sacramento Society for the Prevention of Cruelty to Animals reports a large increase in the number of pet drop-offs attributed to foreclosures. The volume is up 20% over last year. They’ve identified foreclosures as the primary reason. Of those moving- and willing to talk about it- 25% say they had to leave their pets behind because they’re losing their home and relocating where pets aren’t allowed. The pain is real for those owners too, who’ve had to leave a beloved pet behind.

The Humane Society of the United States reports a sharp increase in the number of animals coming in. They care for some 8 million pets every year but their resources are tapped out due to the onslaught. Don’t forget that shelters and rescue centers rely on donations for their programs to function. The Society has also launched awareness programs to promote its food assistance and other foster programs.

The www.1.800.save-a-pet.com web site has set up an online database for people that can provide at least a temporary home for homeless pets. More than 5000 animal shelters post pets for adoption on that Save-A-Pet site. This wave of needy pets has gone largely unnoticed, compared to those left behind in New Orleans after Katrina. The Humane Society at www.humanesociety.org is offering grants up to $2000 to help pet shelters and rescue groups. Click on the “Through Thick and Thin” link on their home page.

The message about this situation hasn’t gotten out. After Katrina, we saw pets on TV being rescued by boat, dramatic, graphic images, clear and compelling. Our hearts went out to those poor animals. This tragedy, which continues unabated, is so far largely invisible. It’s a creeping flood, an imminent crisis pleading for action. And don’t forget that “dog” spelled backwards is “God”! Be the kind of person your dog thinks you are!! I always try to. There are all these poor sweet helpless and homeless critters out there in need. Let’s do what we can to lend them a helping hand here, people.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-04-12T15:36:00.000-07:00

Copy for Real Estate Guide Column for 4-18-08

REAL ESTATE PATTERNS
By Ken DuVall

JUST HOW BAD??

The definition of a recession calls for two consecutive quarters of negative economic growth. We’ve had one so far. Therefore we can’t confirm a true recession until July- but don’t bet the farm! Wall Street says even a dead cat will bounce if dropped from a high-enough point. Here’s the latest facts compiled from reliable sources. Some experts even assert the worst is over. Don’t hold your breath. That remains to be seen.

The upending of the housing and financial markets is very bad. When lenders get spooked and hoard their money as is now happening, the flow of money through the system slows down. Eventually the economy does likewise. Maybe the Fed has enough “plumbing tools” to clear the clog of bad mortgage paper choking financial markets. Maybe not. That script is still being written. But we’ve had these crunches before, and they all ended without devastation.

The plunge in home values, however, is a major cause for concern. This is not just your “normal” correction. Hundreds of billions of dollars worth of home equity has gone up in smoke. Consumers are gloomier than they’ve been in years. Some 70% of our economy is tied to consumer spending. If that stops, the vast bulk of our growth comes to a grinding halt. Firms, corporate earnings, and jobs are dropping like flies. Which airline will go belly up next week? However, the Government is hard at work to stabilize uneasy markets. How very comforting. Just gimme one of those government credit cards and I’ll fix everything!

I was a gleam in my father’s eye early in the “Big Depression” of the 1930’s. But I was here for the worst economic period of my lifetime: The 1970’s. Interest rates were on their way to 20%. Whenever I got a salary raise, inflation gobbled it up. Gasoline wasn’t even available some days due to shortages. There were long gas lines. Every month we struggled to come up with our then relatively huge home loan payment of $141. We were living on credit cards. Sound familiar? But we made it through.

Next came the run on Continental Bank in 1984; the $400 billion collapse of the savings & loan industry; the Crash of ’87; the housing crash/credit crunch of ’90-’91; then the dot-com crash of 2001 hit us. During each period, the media provided a steady supply of “expert’s” warnings of the “coming collapse” and that “the end was near.” They were wrong. We survived. The game didn’t end. Just the players changed.

Many say we’re at least a year out before getting back on an even keel. I agree. The loss of 80,000 U.S. jobs in March- the most in 1 month since 2003- fortunately signals yet another offsetting Fed rate cut this month. But fewer jobs will curtail consumer spending even more. Thank goodness new unemployment claims dropped last week. There’s still a lot of economic angst out there. But Chico real estate, insulated somewhat from the outside world, is chugging along somehow in spite of everything, although we obviously share common local budget challenges.

Bottom line: In each of the past “catastrophes”, the doomsayers were wrong. They overstated the downside risk, the “Chicken Little” syndrome. What we’re seeing now is the ugly flip side of what turns out was the insanity, greed, and outright fraud that propelled home prices to unsustainable levels over the last few years. As always, there’s no free lunch. Fear is as strong an emotion as greed. And that’s exactly where we find ourselves today: in an atmosphere of pervasive, paralyzing fear and uncertainty, one in which perception easily becomes reality. There are no bedtime stories to comfort us either.

It may be that we’re heading for an economic cataclysm the likes of which we’ve never seen. I doubt it, but I could be wrong. I was wrong once before when I thought I was mistaken but it turned out to be an error! Seriously, it’s impossible for anyone today to credibly project a meltdown like those of the past. Still, there are plenty of naysayers making that forecast. My own crystal ball is cloudy, but for the time being, I respectfully choose to disagree. Time will tell. Hang in there, people- and keep the Faith.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-04-11T14:47:00.000-07:00

Copy for Real Estate Guide Column for 4-11-08

REAL ESTATE PATTERNS
By Ken DuVall

The Jeff & Freedom Story

Still no good news to report again this week, so instead here’s a heartwarming first-person true story for you. You don’t need me to repeat the bad news for you here. You can read it for yourselves. In these bleak days, this is the kind of miraculous happening that makes all the turmoil worthwhile.

“Freedom and I have been together 10 years this summer. She came in as a baby in 1998 with two broken wings. Her left wing still doesn't open all the way even after surgery. It was broken in 4 places.

When Freedom came in she could not stand. She was emaciated and covered in lice. We made the decision to give her a chance at life, so I took her to the vet. From then on, I was always around her. We kept her in a huge dog carrier with the top off with shredded newspaper in the bottom to lie in. I used to sit and talk to her, urging her to live, to fight. She would lay there looking at me with those big brown eyes. We had to tube feed her for weeks.

After 6 weeks she still couldn't stand. The decision was made to euthanize her if she couldn't stand in another week. You know you don't want to cross that line between torture and rehab, and it looked like death was winning. She was going to be put down Friday. I came in on Thursday. I didn't want to go because I couldn't bear the thought of her being euthanized. But I went, and when I walked in everyone was grinning from ear to ear. I went back to her cage and there she was, standing on her own! She was ready to live. I was just about in tears by then.

That was a very good day. We knew she could never fly, so the director asked me to glove train her. I got her used to the glove, and then to jesses, and we started doing education programs for schools in western Washington. We wound up in the newspapers, on radio and some TV. Miracle Pets even did a show about us.

In the spring of 2000 I was diagnosed with non-Hodgkin’s lymphoma. I had stage 3, which is not good (one major organ plus everywhere), so I wound up doing 8 months of chemo. Lost my hair - the whole bit. I missed a lot of work. When I felt good enough, I would go to Sarvey and take Freedom out for walks. Freedom would also come to me in my dreams and help me fight the cancer. This happened time and time again.

In November 2000, the Friday after Thanksgiving, I went in for my last checkup. I was told that if the cancer was not gone after my 8 rounds of chemo that my last option was a stem cell transplant. They did the tests and I had to come back Monday for the results. I went in Monday, and I was told that all the cancer was gone!

The first thing I did was get up to Sarvey and take the big girl out for a walk. It was misty and cold. I went to her flight and jessed her up and we went out front to the top of the hill. I hadn't said a word to Freedom, but somehow she knew. She looked at me and wrapped both her wings around me to where I could feel them pressing in on my back (I was engulfed in eagle wings). She touched my nose with her beak and stared into my eyes, and we just stood there like that for I don't know how long. It was truly a magic moment. We are soul mates. She's my baby.

On a side note: I have had people who were sick come up to us when we are out, and Freedom has some kind of hold on them. I once had a guy who was terminal come up to us and I let him hold her. His knees just about buckled and he swore he could feel her power coarse through his body. I have so many stories like that.

I never forget the honor I have of being so close to such a magnificent spirit as Freedom’s.”

Jeff Guidry

Note: Contact Jeff and Freedom at Sarvey Wildlife Center, Arlington, WA: www.sarveywildlife.org

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-03-25T10:43:00.000-07:00

Copy for Real Estate Guide Column for 3-28-08

REAL ESTATE PATTERNS
By Ken DuVall

“FUGGEDABOUT IT!”

Now Kiplinger says we ARE in a recession after all with a mild contraction expected until year-end. Consumer confidence hit a new low. The dollar’s fall is not a reason to panic even as our budget deficit swelled to $400 billion. It now costs the Gov’t nearly 2 cents to make a penny! The Iraq war costs $9 billion a month that we borrow from China to fund! A heart bypass operation in India costs only $10,000 vs. $130,000 here. Last week in Walnut Creek they renamed the Easter Bunny the “Spring Bunny.” Home sales nationally enjoyed a 2.9% uptick last month, the result of falling prices, but try and get a new loan today. This constant drumbeat of downbeat news is giving me a headache so let’s take a breather this week.

Instead let’s visit some of the homes of the “Rich & Famous”. At least that’s not negative! Liz Taylor’s Palm Springs 10,000 SF home on 1.5 acres hit the market this week for $9.2 mil. Warren Buffett, 77, despite his $62 bil fortune, still lives in the humble home in Omaha he bought for $31,500 in 1958. Computer mogul Michael Dell’s 33,000 SF manse sits on 20 acres, a stone’s throw from Dell Headquarters in Austin, TX.

Oracle CEO Larry Ellison spent $100 mil for a 10-building villa on 23 acres in Woodside, plus another $20 mil snapping up a dozen properties in Malibu. Russian-Israeli diamond magnate Lev Leviev bought a 17,000 SF London manor for $65 mil which includes a bullet proof front door, gold plated pool, indoor cinema and hair salon. Steel magnate Lakshmi Mittal’s $120 mil 12 BR London spread includes Turkish baths and a 20-car garage. He sure won’t have to look for a parking place!

Microsoft’s Bill Gates 66,000 SF compound near Seattle has 84 steps leading up to the entrance or you can take the elevator instead. Star Wars director George Lucas’ Skywalker Ranch in Marin sits on 5156 acres and boasts its own fire brigade. Movie stars get in but not the public. “The Donald” occupies the penthouse triplex of his Manhattan Trump Tower. The $50 mil residence is a monument to gold and marble. His 5th child Little Barron, by his 3rd wife, Melania, has an entire floor to himself. Trump has only to hop on the elevator to get to his office, no matter how his hair is combed!

Finally, a marvelous election year anecdote: John the farmer was in the fertilized egg business. He had several hundred laying hens, called "pullets", and ten roosters whose job it was to fertilize the eggs. The farmer kept records. Any rooster that didn't perform went into the soup pot and was replaced. That took an awful lot of his time, so he bought a set of tiny bells and attached them to his roosters. Each bell had a different tone so John could tell from a distance which rooster was performing. Now he could just sit on his porch and fill out the efficiency report simply by listening to the bells.

The farmer's favorite rooster was old Butch, a very fine specimen. One morning John noticed old Butch's bell hadn't rung at all! John went to investigate. The other roosters were chasing pullets, bells-a-ringing. The pullets, hearing the roosters coming would run for cover. But to Farmer John's amazement, old Butch was cleverly holding his bell in his beak so it couldn't ring. He'd sneak up on a pullet, do his job, and walk on to the next one. John was so proud of old Butch he entered him in the County Fair. The judges were amazed. They not only awarded old Butch the No Bell Piece Prize but the Pullet Surprise as well.

Clearly, old Butch was a politician in the making: who else but a politician could figure out how to win two of the most highly coveted awards on the planet by being the best at sneaking up on the populace and doing you know what when they weren't paying attention! The moral: Vote carefully this year...the bells are not always audible.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-03-18T12:20:00.000-07:00

Copy for Real Estate Guide Column for 3-21-08

REAL ESTATE PATTERNS
By Ken DuVall

NO RECESSION?

The ultra-moderate UCLA Anderson Forecast released last week says they are sticking to their “no recession” prediction. Their reasoning: the housing market and mortgage lending industries, weak as they are, are simply too small in relation to the overall economy to cause a recession. Surprisingly, UCLA’s predictions are usually the worst doom and gloom we ever hear. May it go from their lips to God’s ears!

Though the economy is clearly slowing, a recession traditionally occurs within a year of a slowdown in housing. This time, though, housing has been in a slump for 2 years and there’s still no clear recession, a sign the nation may squeak by. Despite the hard-hit housing market, falling home prices, rising foreclosures, the subprime meltdown and credit crunch, avoiding a recession has always been based on a correlation between housing and the labor market. Hard to believe but we’ve seen the economy in much worse shape in the past. Perception sometimes becomes reality.

Presently the ongoing housing collapse has come without major job market problems. People are walking away from their homes- not because they lost their jobs- but because declining home prices have turned their net worth negative. When you owe more than the house is worth, many simply decide to give it back to the bank. It sounds like we’re going to have sluggish growth for awhile but maybe not a full-blown recession. And the $200 billion the Fed kicked in last week may help. On top of this week’s funds rate cut, more could come.

This is the scary stuff: the foreclosure crisis has resulted in a drop in municipal tax revenues, a spike in the crime rate, homelessness, and an increase in vacant properties. When no one’s watching the store, the critters creep in and take over. There’s urban looting, crime is on the rise, and no money for more cops. But as Kiplinger says, “There’s little reason to fear a collapse. The economy remains structurally sound, though slowed. In fact, a healthy rebound is certain, although not until year-end. Bottom line: the fall isn’t over, but there’s no need to panic.”

The notorious Rancho del Rio is again available for $22.5 million. Situated on 187 chaparral-covered acres, the 1930’s era Spanish hacienda has numerous guest rooms, a vineyard, lake, and a dozen scattered buildings including stables, caretakers’ quarters and barns. It’s peaceful, serene and gorgeous, a little piece of the 1800’s just 7 miles inland from San Juan Capistrano, the largest piece of residential acreage in Orange County.

It was once owned by the infamous Harvard University psychology Prof. Timothy Leary, who preached “Turn on, tune in, drop out” in the 60’s-70’s. It was initially used as his huge dope depot. There was a subterranean vault accessed through a hidden trapdoor in the barn where the tons of illegal drugs were stored. Later the Girl Scout Council bought it for $2.38 mil and used it as a Scout camp until 2000. The current caretaker believes there’s a satchel of money buried down in the vault somewhere. He says, “I’m still looking for it.”

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

2008-02-23T15:16:00.000-08:00

Copy for Real Estate Guide Column for 2-29-08

REAL ESTATE PATTERNS
By Ken DuVall

THE FAITHFUL SHALL BE REWARDED!

Long column, lot to say. I know I’m sounding like a broken record, but why when there’s bad news the headline is always “As expected by analysts”? When there’s good news, it’s “What a surprise!” The U.S. housing market has taken a brutal beating in the press this past year. While a market shift has certainly occurred, the entire story is just not being told.

The “Surprise!” media reports are that the ranks of the unemployed are down. So is the U.S. trade deficit down- only a mere $58 billion- but down, not up. Other under-reported facts: January housing starts actually up 0.8%. Industrial production up- again. Retail sales up- again. Included in that category: taser guns- sales up 65%. Sign of the times.

Billionaire investor legend Warren Buffett said this month, “I’m a huge bull on the American economy. It’s not a smart thing to sell the U.S. short over the years. The world gets better. People get more productive. More human capacity is unleashed over time. The banks are not permanently crippled by all those subprime loans. The financial institutions that got wrapped up in sour mortgage loans can and will sort out those bad investments even without a government-led bailout or stimulus package.” And he puts his money where his mouth is too.

Buffett continues, “A recession is looming but we’ve overcome worse and come out ahead. I went through 1982 (so did I) when the interest rate was 21%. This is not a tough period.” Remember his famous line, “My favorite holding period is forever.” Another good line some Texas oil tycoon said, “The meek shall inherit the earth- but not the mineral rights!”

I’m not going around with blinders on. I know things are going to get worse before we get our act back together. But there’s always that pony in the manure pile if you dig deep enough. It depends where your focus is. It’s your attitude, not your aptitude, that determines your altitude.

The media concentrates on poorly chosen facts that we must dispel because they’re not telling us the whole story. While sales of existing homes are off from their high, 2007 was still the 5th best year on record for existing-home sales. As for plummeting home prices, the nation is still within 2% of the all-time high median existing-home price set in 2006. The media has painted housing as a bad investment, but any investment can have a bad year. As always, perspective is critical.

The new conforming loan limits bill, increasing Federally insured loans up to $729,750 in high cost areas, means lower rates for borrowers if the brass ever gets it all worked out. Chico’s max should be determined next month. We’ve needed this for a long time. California officials will yield to emboldened Indian gambling interests creating new tax revenues along with the largest casinos in the world down in Southern Cal.

“Project Lifeline” was also approved by the six largest lenders, who control fully half of all mortgages in the country, to put the foreclosure process on hold for 30 days while homeowners work out ways to make their loans more affordable. The wise course is not to destroy those who have already secured some success but to create conditions enabling them to be even more successful. It costs lenders far more to foreclose than to forbear.

Homebuyers in for the long haul always come out ahead. The average return on a down payment over 10 years is historically 3 to 5 times greater than stock market returns. But a home is not a stock. It’s first and foremost a place to live and raise a family. Even when prices are falling, homeowners who kept to a buy and hold strategy for at least 5 years have always come out ahead.

Home values in California have increased an average of 9% annually for the last 38 years. Sellers have controlled the market over the past 6 years. Right now is a great opportunity for buyers to stake out the home of their dreams.

P.S. A 138-acre parcel near the famous Hollywoodland sign high above Hollywood & Vine where I lived, once owned by Howard Hughes, sold 6 years ago for $2 mil. It’s again available for $22 mil! Worth every penny too, folks. And finally, if that 92-year old legally blind golfer in Florida can make a 110-yard hole-in-one as he did this month, there’s hope for all of us!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.