Marin home sales are up - but down big from last year
By Jim Staats
Staff Writer, Marin IJ
Article Launched: 06/18/2008 11:11:05 AM PDT

Homes sales continued to plunge across the Bay Area in May, though Marin remained an anomaly as the only county with a median price increase.

The median price of a single-family home in Marin last month was $1,102,000, up 19 percent from the $925,000 figure a year earlier, and just 178 single-family homes were sold - down from 287 in May 2007, DataQuick Information Systems of La Jolla reported Wednesday.

In April, the median single-family home price in Marin was $935,000, and 165 single-family homes were sold.

Corina Rollins, senior real estate instructor at the College of Marin for more than 20 years, wasn't surprised by the price jump.

"Marin had only the lowest end of the market involved in subprime (loan) sales, and most of the homes that were selling were outside of that range," she said. "The typical seller in Marin, they can wait."

Rollins would do the same if she had a property to sell.

"Why would I put it on (the market) if I don't have to sell, in order to take less than I possibly could get by sitting around and waiting another year?" she said.

May statistics included total sales of 226 single-family homes and condominiums in Marin, down from 359 in May 2007 - but an increase from 216 sales in April.

Across the Bay Area, 6,216 homes and condos were sold, down 1.5 percent from the 6,310 sales in April and down 23.1 percent from 8,080 sales in May 2007. Last month was the slowest May in DataQuick's statistics, which go back to 1988.

The median price for a Bay Area home was $517,000 last month, nearly the same as the $518,000 figure in April, but down 21.7 percent from $660,000 in May last year.

DataQuick analyst Andrew LePage said May figures highlight a statewide trend of inland markets hit hardest by foreclosures and falling prices being the most likely to post higher sales over last year.

"It's much different in the more expensive coastal markets" including Marin, he said. "Prices are off their peaks but typically haven't fallen as much."

Levi Swift, president of the Marin Association of Realtors, said of the price jump, "We are cautiously optimistic and hoping that's a trend."

He said though multiple offers have slowed from the past two months, open houses still attract groups in double-digits.

"Buyers are very, very cautious about value, and they're not going to over-buy," Swift said.

Foreclosure property resales continued to play a steady role, accounting for 25.6 percent of last month's Bay Area market, down from 26 percent in April but up from 3.3 percent a year ago. In Marin, foreclosure properties accounted for just 4.5 percent of the market.

A snapshot of Marin's foreclosure picture this week, based on statistics provided by Discovery Bay-based ForeclosureRadar.com, indicated 670 properties in various stages of foreclosure within the past 120 days. Nearly half of those - 320 -  were in Novato. 

Andy Falk, a Realtor with Bradley Real Estate in San Rafael, said although the figures "appear daunting," he has noticed buyer activity in niche markets including bank-owned properties.

"We aren't out of the woods yet, but there are rays of light shining through the trees," he said.

Swift said county inventory of 1,187 single-family homes for sale is comparable to 1,169 properties of the same category on the market one year ago.

Forum aims to help people keep homes
By Paul Jones
Staff Writer, Novato Advance
Wednesday, May 14, 2008 2:09 PM PDT

Mortgage and bankruptcy experts spoke about how to avoid foreclosures to a crowd of Novatans at the Novato Unified School District office on Monday. The event,  “Preventing Foreclosures” was sponsored by the Novato Chamber of Commerce, and was moved from its a smaller room at the school district office to the board room to accommodate the number of people attending.

“Clearly, the housing issue … has a severe impact on the economy of Novato, and the economy of Novato is very important to us,” said Coy Smith, CEO of the chamber. “We have a great panel here to help you out. If we feel the need, we will do this again.”

Novato has been one of the cities hardest-hit by foreclosures in Marin County.

Paul Cohen of Legal Aid of Marin, an organization that advocates for homeowners’ rights, said people at risk of —or facing—foreclosure should be aware of the sequence of events leading to home loss, and opportunities people had to take action along the way.

“We want to focus on the time period where it’s possible to stave off foreclosure. Sometimes the timeline can be used to your advantage,” said Cohen. “The seventh month (after the first failure to pay) is generally when the notice of foreclosure, generally speaking, will fall. (Are you unable) save your house after the 10th month? No. There’s always, until the very last moment, and even after the fact, sometimes, (time) to go back to the lender and figure things out.”

Cohen also said former owners and tenants facing eviction had certain occupancy rights, and urged people to contact agencies such as Legal Aid for help.

Andy Falk of Bradley Real Estate said that taking responsibility for dealing with a foreclosure situation was the best option, especially because most cases were unique.

“There are a lot of options (for people facing foreclosure),” said Falk. “What you want to do is go to the bank and find out what is going on with your loan. It’s important to try and talk with (someone) in the mitigation department. If you’re considering selling, you want to talk to at least one realtor.”

Falk said short-selling was one option for people to minimize credit damage, but said other alternatives existed.

“Whether it’s loan modification, refinancing, or forbearance, there’s all kinds of options available,” said Falk.

Peter Richmond of Pacific Union GMAC Real Estate office in Novato, who will shortly be publishing a book on the subject of foreclosures, said people were not alone, but had to be proactive to find available help.

“Go looking for help. Pick up the phone, and call the bank, immediately,” said Richmond. “Keep pestering them. And if you don’t want to talk with the bank, there are scads of governmental and nongovernmental agencies counseling services available.”

Paul Hickman, president of California Land Title’s San Rafael office, said short-selling was an increasingly available option to people unable or uninterested in keeping their home.

“I’m going to read a few quotes from the Wall Street Journal. There are some things in here really worth keeping in mind,” said Hickman. “‘Short sales … can also be a good way for lenders and investors to minimize losses. They typically result in losses of 19 percent of the loan amount, compared with an average loss of 40 percent for homes that are sold in foreclosure.’”

The upshot, according to Hickman, is that many banks and lenders will be willing to negotiate with debtors over short-selling, which is preferable to foreclosure or bankruptcy, which often take a heavy toll on the loan holder’s credit.

“Don’t be put off by these numbers that you see and think that the short-sale (process) is an insurmountable thing,” said Hickman. “I recently closed escrow on a piece of property in Novato. The lenders wrote off $300,000 worth of loans at the close.”

Dave Ball from the Marin County District Attorney’s Office of Consumer Protection said the county was also working to inform people of legal options in the event of foreclosure proceedings.

“We have referred people to (Housing and Urban Development)-certified counselors,  who basically have agreements with lenders to negotiate better deals for you,” said Ball. “You are not alone.”

Ball also added that people who think they have been victims of predatory lending practices could benefit from calling the A.G.’s office.

 
Wealth Decimation
03/06/08
by: Andy Falk

Warning: do not read the following article if you would like to continue living with delusions of housing grandeur.  Not to be confused with wealth creation, in the past few years many home owning Americans have experienced a decimation of wealth.  Here is an example. 

I recently agreed to sell a local property for a bank.  Investors are debating about the price even as I write this.  There is a comparable property on the market for $200,000.  Two years ago the property I’m going to be selling sold for $405,000.  There are 400 units in the complex.  If each unit on average has lost $200,000, this one complex in the Canal section of San Rafael has lost $80,000,000.  That’s right, $80 million dollars of wealth are now gone, which was half the value at the peak of the market.  That’s one development, in one American city.

What does it do to an economy when we see this type of activity?  I’m dealing with foreclosures on a daily basis.  I’m referring client to bankruptcy attorneys.  People can no longer make ends meet and they are forced to change their lifestyles dramatically.

With all that money created by the housing market, either through sales before the market started to turn or refinancing, Americans were on a spending high!  They bought cars and boats and all sorts of luxury items.  Many disposed of their disposal income, thinking that the market was just going to keep going up and up.

The market will go up again.  Historically real estate has proven itself to be one of the best investments possible.  Of course in the short run of history, from 2005 until today, it’s earned a place among some of the worst.  The one lesson in all this seems clear to me.  People should never buy something they can’t afford.  If homes had remained affordable and their values had not gone through the roof in the first place, values would not have needed to come down.

Then again there are areas in Marin County such as Tiburon which continue to defy economic gravity.  When will the clock strike midnight in Tiburon?  It has already for one bank owned condo that was purchased in 2006 for $750,000 and is now on the market with no takers at $550,000.  A well written and executed offer strategy currently could yield a $500,000 purchase price.  This is an isolated case.  Hopefully it will stay that way.

What I know is that those homeowners most vulnerable are those who could least afford when they first bought in the past few years.  Logically it’s the condos and starter homes in Tiburon that are vulnerable, just as they are in other areas of the county and in fact the country.  There are also those who were living off of refinancing their homes.  They were using their houses as credit cards, and I know of no homes are made of plastic.

It’s time for a paradigm shift.  The average person should not look at a home as a short term investment.  It’s a place to live.  It’s got four walls and a roof.  It’s part of Maslow’s hierarchy.  Shelter is essentially, and we essentially need to be able to afford whatever shelter we seek.

New options available to avoid foreclosure
By Paul Jones
Staff Writer, Novato Advance
Wednesday, February 20, 2008 6:26 PM PST

A seminar exploring new options available to homeowners facing rate hikes and foreclosure was held at the Novato branch of the Redwood Credit Union Feb. 13. Speaking to an audience that included city staff, business professionals, and private homeowners, speaker Paul Cohen of Legal Aid of Marin, along with attorney Vincent DeMartini, Barbara Kob, manager of Marin County Mediation Services, and Bradley Realtors Peter Harris and Andy Falk explained how action by the government and private financial institutions allowed previously hopeless cases a chance for borrowers to salvage their credit and their homes.

One option emphasized by speakers was the possibility people with adjustable mortgages could negotiate with lenders to extend their current rate.

“Circumstances have changed,” said DeMartini. “There are a group of lenders that have created a policy to evaluate and restructure loans … (banks) want to continue their loans … they’ve got a lot of (unsold foreclosed homes) they don’t want.”

Falk said many lenders had set up systems specifically to help people stabilize their mortgages. In addition to financial institutions’ interest in avoiding revenue loss, Falk said government measures were also offering new hope to homeowners.

“They have processes where you can speak to the loss mitigation department … what you can do is, if you’re facing an adjustable rate mortgage, and you’re rate is going to jump up, you can have them take it to the initial rate so it doesn’t jump up,” he said. “They’re supposed to do that for the next three years (according to the federal plan) … I’ve had a client that did that in October (2007). She wasn’t going to be able to stay in her place because her mortgage was going to jump up $2,000 … Now, she’s able to stay.”

Requirements for such readjustments depend on whether or not people have missed payments, and how far along in the foreclosure process they were, said Cohen.

“Even though you get your notice of default after the third month (a homeowner misses payments), there is a (fourth) month where potentially you may be able to negotiate,” he said.

A recent development in the measures being taken to deal with the foreclosure crisis is “Project Lifeline,” a program supported by the United States Treasury Department, and an alliance of lenders, that would freeze foreclosure proceedings in order to facilitate negotiations between lenders and homeowners.

But the opportunity isn’t open to everyone. The federal government’s current plan requires that homeowners be able to continue paying their current mortgage rates to negotiate against rate increases.

“My understanding is (this option is available) only in a situation where the refinance is feasible,” said Cohen.

For people who don’t qualify for renegotiations, who are facing an eventual foreclosure scenario, there are other ways to protect against bankruptcy and bad credit, however. A “short sale” may be the best option for some people, said DeMartini. A short sale is a debt-relief agreement between the homeowner and lenders, where the house is sold to pay for the loan, and the difference between the house’s original value, and the lower sale price, is forgiven by the lenders.

DeMartini said heavy federal taxes no longer applied to the difference between the loan and sale amounts.

“Before, you’d be taxed on a percentage … if you had a $500,000 loan, and you agreed to sell (the house) with the bank for $400,000, you would be taxed on that $100,000 savings. They’re no longer taxing that phantom profit,” he said.

But short sales aren’t necessarily the best option.

“(It’s) a long process, and you don’t know at the end of it if it’s going to go through,” said DeMartini. “(For people with multiple loans,) the first lender might say, ‘Fine, you sell your $500,000 (house) for $400,000,’ but the second lender might (have different requirements), and then there’s a push and shove, and the thing might fall apart.”

And people who haven’t refinanced or taken out equity loans shouldn’t worry about short-selling at all, said Cohen. That’s because purchase loans, or first loans, are only leveraged against the property they’re taken out to purchase.

“Bankruptcy is never really a problem with a purchase money loan,” said Cohen. “There's no personal liability. It’s only the house that the bank can go after.”

“If I (refinance for) a better interest rate, or take out money on equity, then, in taking out (subsequent loans), I become personally responsible,” said DeMartini.

A short sale agreement can help protect a person’s assets in the latter case, said DeMartini.

But even for people not facing bankruptcy, short-selling can be a good idea for the long run.

“Look at your future creditor,” said Harris. “He has two guys, one walked away from a loan, the other guy paid in part. One guy took control of the situation, was proactive and made a deal. The other one just walked away. When they come back two years later, wanting a loan, who are you going to loan money too? It’s just common sense.”

For others, however, it may simply be more advisable to walk, said Cohen.

“In this circumstance, when people are three months behind, and there’s absolutely no way they’re going to be able to pay … there is a piece of advice to be given, not to spend good money after bad, and to hold onto that money (you would pay) if you’re going to walk (anyway).”

Whatever options work best in a given situation, however, all the speakers urged people to take action as soon as possible, and to contact banks, realtors, or other professionals, instead of not paying the mortgage and waiting for the bank to contact them later on.

“Talk to a realtor that’s knowledgeable about short sales,” said DeMartini.

“(For negotiations) ask for the (bank) supervisor,” said Kob. “Don’t give up with the first ‘No.’”



Tiburon Condos Under $1.0 Million - Best Opportunities to Sell in 2008
01/08/08
by: Andy Falk

2007 Condo sellers on the Tiburon market in the under $1.0 million price category had an arguably difficult time, as the macro data suggests.  At first glance one might assume there would be more of the same in 2008.  However a look at the micro data reveals definitive seasonal windows of opportunity, as well as some stabilizing factors.  Furthermore, the data demonstrates the actual opening and shutting of the sales window in 2007.

In 2007 there were only 17 condo sales in this Tiburon price category.  14 more condos became cancelled, expired or withdrawn listings.  With a ratio like that one would assume the market to be difficult right now.  However, more telling is the average days on the market for listings that sold: 66, which is not a bad number.  Significantly better is the median of 38.  The units that are selling aren’t sitting around for extensive periods of time, and they have been moving.

In fact sales of these condos only dipped from 20 in 2006, to last year’s 17.  This would suggest a fairly steady demand level through the two years and possibly a simple oversupply (2005 levels) of inventory in 2007.  In the heyday of 2005 31 such units sold, however the sources of that demand are what I consider suspect. 

Demand three years ago was on steroids, taken in the form of 100% financing options, cash back for closing costs, low interest rates and of course lower lending standards.   While the people buying property in Tiburon weren’t necessarily part of the so called ensuing sub-prime meltdown, they were doubtlessly influenced by the hysteria of rising prices and seemingly limitless demand.  At one point in certain segments of the market there were literally packs of ravenous home buyers.  The wave of demand brought more buying activity across the board.

Why not panic on the Titanic of the real estate market?  There are no icebergs in Tiburon.  More specifically, a look other numbers reveals some stabilization through key months in 2007.  May 1^st to June 30^th, a traditional buying season, saw 7 transactions.  Doing the math backward, in case you are a 2008 seller following at home, subtract two months prior to May 1^st and have your condo ready by March 1^st if you want to hit the window as it opens (figuring in the average of two months on the market).  That means launching a strategic marketing campaign in February: only 3 weeks away.

The window was only open a crack in the summer.  7/1 – 9/30 there was 1 sale in 2007.  During the same period 5 similar condo listings expired, cancelled or withdrew from the market.  Project out, and don’t expect to sell your condo this coming summer after the 4th of July holiday.

Buying season picked up again by October 2007 with six more sales through December, roughly 1 closing every two weeks.  During the same period an equal amount, six condos didn’t sell and were removed from the market.  The 50/50 success to failure ratio basically purged the remaining 2007 inventory, leaving the market with only four units available.  The window was open in the last few months of the year, and while some sellers were able to execute transactions, others closed shop and will likely come back on in the spring.  Those sellers might be well advised to try selling at a lower price level this next time out.   They tried overpricing once in a market with an opportunity window open. 

Best And Worst School Districts For The Buck
Christina Settimi 07.05.07
Forbes.com
Marin County Schools #1 in Nation