Santa Cruz Real Estate Experts Team Sedenquist

We are about to close another year and we wanted to wish all of you a joyous holiday season. We look forward to a healthy and prosperous 2012.

The Real Estate News. . .

Negative Equity Declining
A report by CoreLogic shows a slight decline in the negative equity position of all residential properties with a mortgage of .4 percent in the last quarter. Additionally, 2.4 million borrowers had less than 5 percent equity, referred to as near-negative equity, in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 27.1 percent of all residential properties with a mortgage nationwide in the third quarter, down from 27.5 in the previous quarter.

"Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness. The nearly $700 billion mortgage debt overhang has touched many corners of the market, and this overhang is holding back the recovery of the housing market and broader economy," said Mark Fleming, chief economist with CoreLogic.

Nevada has the highest negative equity percentage with 58 percent of all of its mortgaged properties underwater, followed by Arizona, 47 percent; Florida, 44 percent; Michigan, 35 percent; and Georgia, 30 percent. This is the first quarter that Georgia entered the top five, surpassing California which had been in the top five since tracking began in 2009.

Every bit of bad real estate news has a silver lining, however. There are opportunities in this market for smart investors who want to get into buying foreclosed homes, refurbishing and flipping them, and for investors looking to acquire rental properties. If you have cash, few investments beat owning real estate.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan and Lyn
Dec 2011

Another Halloween has passed and Grandma Lynette performed her usual Halloween magic and made costumes for our two grandkids. Here is one very proud Astronaut and a very cute tiger.

The Real Estate News. . .

Interesting Home Buyers Survey Results

In the Zillow survey, prospective home buyers were asked basic questions about the home-buying process. Despite the unrealistic expectations about home value appreciation, respondents seem fairly knowledgeable about the home-buying process, answering 65 percent of questions correctly.

However, several important parts of the process confused them. Two in five (41 percent) buyers think they are required to buy private mortgage insurance (PMI) regardless of the amount of their down payment. Additionally, more than half of prospective home buyers who were polled confuse appraisals and inspections. Fifty-six percent said the purpose of an appraisal was to determine if the home is in good condition, when in fact, that is the purpose of an inspection.

Additional Survey Findings:

• More than one-third (37 percent) of prospective home buyer respondents believe buying homeowner's insurance is optional.
• Nearly half of polled prospective home buyers in the study do not understand when they will actually own the home they intend to buy. Forty-seven percent said a prospective buyer owns a home after the purchase contract is signed.
• The majority (87 percent) of polled prospective home buyers know that closing costs are negotiable and can vary by bank and lender.
• 42 percent of prospective home buyers believe home values typically appreciate by 7 percent a year. Historically, home values in a normal market tend to appreciate by 2-5 percent annually.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan and Lyn
Nov 2011

We're starting to get that Fall chill in the night air along with the warm, beautiful, fog-free days. Santa Cruz Fall weather is the best!

The Real Estate News. . .
Lower Mortgage Rates Down the Road?

The Federal Reserve announced it's changing its investment strategy, which could translate into lower mortgage rates down the road, market watchers say.

Simply put, "They're changing the composition of their balance sheet," said Lea, a past chief economist of mortgage giant Freddie Mac. "They're reinvesting, not injecting more money into the economy." Officials are basically selling off shorter-term Treasury holdings for longer-term ones and mortgage-backed securities.

The decision could push down long-term interest rates, and in turn, mortgage rates.

Why is this needed when home-loan rates are historically low?

"Mortgage rates are not the problem," Lea said. At issue, is weak demand for mortgages because of income uncertainty and unemployment coupled with tight lending guidelines.

California Landlords Get Smoking Ban Law

A new California law gives landlords the authority to ban smoking tobacco in rental units, expanding the availability of smoke-free housing in the state.

Gov. Jerry Brown signed the measure, sponsored by Sen. Alex Padilla (D-Pacoima,) earlier this month and it goes into effect Jan. 1.

"While more than 86 percent of Californians do not smoke, there is currently very little smoke-free housing in California," Padilla said in a statement. "Living in multifamily housing should not compromise the health of renters or their children. This new law will provide tenants with healthier choices."

Right now, a landlord has control of rental-agreement terms on pets, noise and furniture, such as waterbeds -- but not smoking. The new law would change that.

Padilla said secondhand smoke, which can be dangerous to one's health, can move out of open windows and doors, and shared ventilation systems.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan and Lyn
Oct 2011

It’s Labor Day Weekend and the official end of Summer. Lynette and I are really looking forward to the end of our ‘fog season’ here on the Monterey Bay... I hope you’ve found time to enjoy the summer days and lazy evenings of the season. One of our favorite summertime evening rituals is making Smores with the grandkids around the backyard chimneria.

The Real Estate News. . .
Downgrade of U.S. Debt and the Impact on Mortgage Rates

Here is another layer of questions for the housing market in particular. Where are mortgage rates headed? Standard & Poor’s downgraded the U.S. Treasury and Fannie and Freddie (GSEs) which caused financial market up’s and down’s across the board, however, the other two rating agencies, Moody's and Fitch, have not made any changes to their credit rating of the U.S. Treasury or the GSEs. While some have reported the downgrade is likely to lead to a bump in interest rates, the fact is the yield on the 10-year Treasury, to which most mortgage rates are tied, has hit recent lows because of what is going on in the global financial marketplace.

Interest rates generally react to future expectations of economic conditions, as well as other risk factors such as repayment risk and default risk. If investors feel uncertain about the stock market or other more risky assets, they would turn to a relatively safer investment. At this point, U.S. Treasuries are a safe haven (regardless of their rating) compared to Europe and elsewhere where debt troubles are more widespread and mounting. Any instrument backed by the full faith credit of the United States government is a relatively safe investment, and markets are proving that to be true as investors flock to that safety. Increased demand for these safe haven instruments has caused yields, thus, mortgage rates to fall.

Because the downgrading of U.S. debt instruments is an unprecedented event, it is still unknown what or how large of an impact this will have on the long-term direction of interest rates. However, moving forward the biggest threat to the housing market is the lack of confidence in the economy in the days, weeks, and months ahead. If we can get over this hump, the markets can recover from the current financial crisis and move back into a recovery mode.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan & Lyn
Sept 2011

Here we are, the first of August and we have trees in our yard that are turning color already. We just harvested our first tomatoes last week and it seems like summer is just beginning! Is it a time warp or is climate change accelerating?

The Real Estate News...

Current Loan Limits at Stake
There's been a lot of talk about the current loan limits changing. Back when home prices were increasing, the loan limits for conforming home loans were increased to keep up with the pace of the increasing value of homes. However, with the decrease in home values, and the fragility of the government agencies that buy and guarantee loans, the conforming loan limits may be decreasing when the current limits expire on Sept 30, 2011.

What does this mean? Conforming loan amounts generally have lower interest rates and down payments. If the loan amount needed to purchase or refinance your home is above the conforming loan limits, you’ll be paying higher interest rates and larger down payments will be required. This will cause additional erosion in home values as loans become more expensive to obtain.

The conforming loan limit determines the maximum mortgage amount the Federal Housing Administration, Fannie Mae and Freddie Mac can buy or guarantee. Without congressional action, the limit will drop to $625,500 from $729,950 for the majority of counties nationwide on Oct. 1.

These three agencies currently fund 95% of the mortgage market, and housing finance reformers point to lowering this limit as a first step to usher in private capital.

However, according to the California Assoc. of Realtors (CAR), more than 30,000 Californian homeowners will face higher down payments, higher mortgage rates and stricter loan qualification requirements when the limits drop.

Some counties are being harder hit by this change than other counties. CAR analyzed the effect of dropping the limit across several specific counties in California. In Monterey County, for instance, the government-sponsored enterprise limit will drop a total of $246,750, followed by a $151,250 drop in San Diego, and $141,550 in Sonoma County.

The FHA conforming loan limit will fall $201,450 in Merced County and $164,650 in Riverside.

"By reducing the conforming loan limit, thousands of California homebuyers will be shut out of homeownership," CAR President Beth Peerce said. "The higher mortgage loan limits are critical to providing liquidity in today's housing market and are essential to our housing recovery. We urge Congress to maintain the current limits and make them permanent to provide homeowners and homebuyers with affordable financing and help stabilize local housing markets."

Despite the Obama administration claiming it will support a one-year extension of the current loan limits, Bank of America has already lowered their loan limits for new loans, and others will follow suit.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan and Lyn
Aug 2011

Happy 4th of July Everyone!! I hope you enjoyed a safe weekend full of family, friends and great food!

The Real Estate News. . .

A few quick facts. . .

Home prices increase for first time in eight months
According to the S&P/Case-Shiller Home Price Indices, as of April 2011, average home prices nationwide are back to the same levels as in the summer of 2003.

California Median Home Price (Source: C.A.R.):
May 2011: $291,760
Calif. highest median home price by region/county May 2011: San Mateo: $810,000
Calif. lowest median home price by region/county May 2011: Merced $113,000

California Pending Home Sales Index (Source: C.A.R.):
May 2011: 118.3, an increase of 1.6 percent compared with prior month.

California First-Time Buyer Affordability Index (Source: C.A.R.):
First quarter 2011: 53 percent

Mortgage Rates (Source: Freddie Mac):
Week ending 6/23/2011 30-yr. fixed: 4.50 fees/points: 0.8% 15-yr. fixed: 3.69 fees/points: 0.7% 1-yr. adjustable: 2.99% Fees/points: 0.5%

IRS increases mileage rate
The IRS recently announced an increase in the optional standard mileage rates for the final six months of 2011. The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan and Lyn
July 2011

Finally, the garden has been planted. Tomatoes, green beans, potatoes forever ;-), summer squash, zucchini, 3 different peppers, asparagus, raspberries, strawberries, basil, cilantro, parsley and onions. Now all we need is the tomatillos! That was fun, now we're enjoying rain and that's nice! And...the baby fawns have finally arrived in the yard again. It must be springtime.

The Real Estate News. . .

Home improvements that boost resale value
When deciding which home improvements to make, homeowners consider the amount of resale value the improvement may or may not make and compare that against the cost of the renovation. Homeowners concerned with making home improvements that will pay off when it's time to sell the property, should consider the following tips.

• The first improvement/repair homeowners should consider are those that impact the home's basic structures and systems. Potential home buyers generally do not want to face expensive repairs, and if items such as the foundation, roof, air conditioning, water heater, or other basic structure need to be fixed, the property will be considered a fixer-upper and its market price will be discounted accordingly.
• Some minor replacements will produce big results for minimal cost. Replacing and coordinating bathroom and kitchen hardware and fixtures are generally inexpensive, but tend to make a big difference. The same can be said for getting rid of any dated finishes, such as old wallpaper and brass light fixtures.
• Homeowners who don't know when or even if they will be able to sell their home are advised to choose home improvement projects carefully. Unless the home is located in an upscale neighborhood and the property already is immaculate, owners can skip expensive upgrades - such as remodeled bathrooms - and focus on the fundamentals.

Exterior

• Power washing the home's exterior, driveway and sidewalks
• Cleaning the windows
• Mowing and edging the lawn
• Pulling weeds
• Pruning hedges and other decorative plants
• Adding some new plants, even in pots, to make your property look vibrant and inviting

Entry
Now that you've drawn prospective purchasers out of their cars, make sure your home's entryway is appealing both outside and inside. If your front door is ugly or damaged, replace it. At a minimum, you should clean and/or paint your existing door. Also tend to all the details surrounding the door.

• Sweep the porch
• Get rid of the cobwebs
• Replace the entry mat
• Clean or replace the doorbell and light fixtures
• Add potted plants and flowers

Match the inviting exterior entryway with an inviting interior entryway. There should be absolutely no clutter when potential buyers step into the home, and the entryway should be defined as a distinct space. If you don't have a formal entryway, you can create a defined space with the right furnishings, like a rug, a framed mirror and a console table.

Speaking of clutter, one of the best "improvements" you can make to improve the resale value of your home is to put away your stuff. If you have lots of stuff, you may need to put some of it in storage. Buyers should get the impression that your home is spacious and will easily hold all of their furniture and other belongings. You also don't want your junk to distract from your home's unique features and selling points, nor do you want to have personal items around that make it more difficult for buyers to picture their new lives in your old space.

Don't hide everything in the closets, either - buyers will be investigating those areas, so they should also look spacious and organized. A good scrubbing can really improve your home's overall appearance as well.

We know that getting a home ready for sale can be a little overwhelming. Make a home improvement plan of action and take it one step at a time. It will be well worth the effort.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan and Lyn
June 2011

Are you getting ready for the summer fun? I think a nice garden with lots of organic veggies is first on my list. Dan and I always enjoy having a summer garden with lots of organic veggies. Even though we had another good frost yesterday morning, it is time to get the new plants in the ground and kick off Spring officially.

The Real Estate News. . .

California share of distressed properties, pending sales decline in March
In California, the percentage of distressed homes sold in March declined to 51 percent, down from 56 percent in February. Interesting however, this figure is unchanged from 51 percent a year ago in March 2010, according to reports from C.A.R. Meanwhile, the share of non-distressed sales rose to 49 percent in March, up from 44 percent in February, but again, unchanged from 49 percent a year ago in March 2010. The statewide share of short sales also dropped in March to 20 percent, down from 23 percent in February but up from 19 percent a year ago in March 2010.

This is an interesting tidbit, but we’re not surprised. The median price of homes sold in the state varied dramatically depending on the property type, with non-distressed properties selling for much higher prices than short sales and foreclosures.

Price differences across short sales, REOs and non-distressed properties reflect variances in the condition of the property, with REOs typically being in worse condition than short sales and non-distressed properties. A seller’s circumstance, such as needing to sell under duress, also plays a factor.

The statewide median price of non-distressed properties sold in March was $386,500, $111,800 or 41 percent higher than the short sale median price of $274,700 recorded in March, and $181,500 or 88 percent higher than the March REO median price of $205,000.

We are ready to help you through the process of buying or selling your home. Call or email us anytime with any questions about our market or about the real estate process. We look forward to working with you.

Dan and Lyn
May 2011

I don’t know about you, but here in Aptos, it feels more like Feb/Mar with all the rain and cold weather, however, the last few days have been warm, days really are longer and I see flowers blooming!  Maybe it really is Spring!!  I think we’re close to starting the vegetable garden!

The Real Estate News. . .

Tax Time and Homeownership
Owning a home offers many benefits throughout the year, but some of the financial advantages of home ownership are most apparent at tax time and the benefits that can come from owning a home can be a welcome relief.

A number of tax deductions and credits are still available for home owners; these include deductions for mortgage interest, capital gains on home sales, and credits for certain energy-efficient home improvements. Even with these benefits, home owners pay 80-90 percent of all U.S. federal income taxes.

It’s been suggested that many of today’s tax incentives for home ownership primarily benefit wealthy individuals, but that’s simply not true.  As the public debate continues about what home ownership means for families, communities, and the nation’s economy, there’s no question that for many, owning a home is still the best way to begin building wealth.

Ninety-one percent of home owners who claim the mortgage interest deduction earn less than $200,000 a year, and the ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home in 2010 with a relatively small $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year.  The more you borrow, the more you can save on your taxes.

Preserve, Protect, & Defend the Mortgage Interest Deduction
As part of the Fiscal Year 2011 budget, the Obama administration has proposed limiting the value of the Mortgage Interest Deduction. 

Like most real estate practitioners, Dan and I believe the current law governing the Mortgage Interest Deduction rules must be retained. To restrict this current law in any way would undermine progress in the still-fragile housing recovery.

Please show your support of a stable housing policy by sending your representatives a message that we need Congress to remain committed to the housing recovery.

We are ready to help you through the process of buying or selling your home.  Call or email us anytime with any questions about our market or about the real estate process.  We look forward to working with you.

Dan and Lyn
April 2011