California Real Estate Update from Bruce Norris

Just out today is The Norris Group Quarterly Newsletter… a Must Read for experienced and aspiring California Real Estate Investors.

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Click Here for the Newsletter Download Link
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Bruce Norris is perhaps the voice of god when it come to investing in California real estate and I have benefited greatly from following his advice over the years. I a crowded marketplace of so called Guru’s you have my word that Bruce Norris and his team actually do have your best interest at heart when it comes to the world of real estate and investing. This is not an endorsement I make often or take lightly.

Invest the 15 minutes or so it’s going to take to read this newsletter and even considering signing up for a few of the classes Bruce and his team are offering. It will be money and time well invested… in YOU.

The end of 2009 and into 2010 will really be an amazing buying opportunity for Southern California Real Estate. We have a ridiculous amount of foreclosures about to hit the market, some 900,000 Californian’s are NOT making their payments, SAD – but True.

I would love to see all my clients and friends be in the position to retire from a Job and pursue your life’s dreams as a result of having the predictable monthly cash flow that quality rental properties can bring your way. Yes, there are other means to getting this cash flow as well and I am a HUGE fan of developing Multiple Streams of Income to ensure the end result.

Please let me know how we can Mastermind your future success and create a plan for Financial Freedom. Although real estate is not the only method for creating wealth… the opportunity for amassing a secure future with cash-flow rentals in California is actually upon us. Five years ago did you ever think that we’d be in a position in Southern California to buy cash flow properties out of the gate? I sure didn’t think we’d see it like this. Is this the buying opportunity of a lifetime? Maybe… What do you think? Is it time to Buy San Diego Real Estate?

So, get to it… read this newsletter;

The Norris Group Newsletter – July 2009 – PDF

and Many Happy Returns… On Investment.

Travis.

San Diego Foreclosure Inventory – Where Are You?

Ok, I just got this email from Jason Gilbert of  SOCALCIA which was sent to him by the one and only Bruce Norris of The Norris Group.

From: Bruce Norris
Sent: Thursday, June 11, 2009 7:04 AM
To: Jason Gilbert
Subject: RE: Contrarian Activity Charted

Hi Jason,

What’s about to hit California will be very damaging. There are 240,000 properties currently in some stage of foreclosure process, 900,000 owners have stopped making their payments and 3 million California homeowners are under water. The next 18 months will see the sale of a lifetime on California real estate.

We have one student who is concentrating on condos. At the peak, this condo built in 2005, went for $300,000. He just bought it for $31,000. It rents for $1,100.

Bruce

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INVESTORS:  You HEARD Bruce . . . If you don’t act NOW, you will miss out on the “Sale of a lifetime on CA real estate”! The BEST place to get these deals will be revealed at our next meeting, so for details visit www.socalcia.com

So… I went on ForeclosureRadar.com and checked out the Bank Owned inventory. Here are the Maps for San Diego Bank Owned Foreclosures and for North County Bank Owned Foreclosures. They show a total of 3748.

To get through this San Diego Real Estate Fiasco we need to purge the system of this “shadow inventory” of foreclosed homes. The California Foreclosure Prevention Act that was signed last Feburary by Gov. Schwarzenegger was supposed to slow things down even further, but it seems that many of the “major player” banks have received immuity from this new moratorium on foreclosing. Click Here for a good article from the SacBee on this topic.

The time is coming for a landslide of killer deals on California and San Diego Real Estate.

You need a seasoned real estate team that will help you cash in on the opportunities as they appear.

Contact Us Today.

Pricey neighborhoods seeing more defaults

For months, San Diego County’s housing market has been ravaged by thousands of foreclosures in low-priced neighborhoods, where families saw their American dreams vanish as their subprime loans went bad.

Now, according to figures released yesterday, the pain is lessening in those areas while becoming more acute in high-priced neighborhoods.

MDA DataQuick reported 985 foreclosure sales in San Diego County last month, up 9.1 percent from April but off 36.7 percent from year-ago levels. Notices of default, the first step in the foreclosure process, totaled 3,059, a drop of 9.3 percent from April and 2.5 percent from May 2008.

But in certain expensive areas, there were record levels of defaults.

Point Loma, Solana Beach and Rancho Santa Fe and other expensive areas reported numbers several times the level seen a year ago, a sign that the trend may continue upward.

For example, in Carmel Valley, where the median sale price this year is $676,500, there were 44 default notices in May, up from 14 in May 2008. May sales in the coastal community east of Del Mar totaled 54.

“There’s more distress in the high end, and we’ll just have to watch to see if it continues to build,” DataQuick analyst Andrew LePage said.

He and other observers said high-end owners once had the resources to resist defaults and foreclosures, but the recession is reducing their income and investments.

As the middle and upper tier of the market sees more sales of distressed homes, even at a discount, the overall county median price is likely to go up as these properties offset sales at the bottom end, LePage said.

“I think we will see more pain and more foreclosures in the upper end,” said San Diego real estate broker Gary Kent. “Some neighborhoods like La Jolla and Del Mar were almost unaffected by foreclosures, but now there will be some effect.”

read more from the San Diego Union Tribune…
By Roger Showley, Union-Tribune Staff Writer

Step 1: How to buy a home in San Diego

Deciding to Own

Understand the financial benefits of owning and evaluate down payment options to make the best use of leverage.

How Much House Can You Afford?
How much you can afford really depends on a number of factors. One factor is how much of a loan you can qualify for with a reputable lender. This takes into account your credit history, how much of a down payment you can accumulate and your debt to income ratio. Lenders generally allow for about a third of your income to be applied to your housing payment. Other factors you’ll take into account before choosing a home are location, size, condition, age, amenities and view.

Benefits of Home Ownership
The tax benefits associated with owning your home truly make it a taxpayer’s dream come true. Please consult your tax professional to make sure you take advantage of all the benefits you’re entitled to. Also, statistics show how communities improve in relation to the rate of homeownership as well as children obtaining better grades in school.

Quite possibly our favorite benefit is the use of leverage or OPM (Other Peoples Money). To buy stock worth $500,000 you’d need to actually have $500,000 to purchase the stock. Conversely, to buy a home or condo worth the same amount, $500,000, you have options. You can pay an initial down payment of 5 to 15% or possibly finance the entire amount. Either way your ROI (Return on Investment) significantly increases as your home goes up in value. We’d love the opportunity to show you how to put the power of leverage to work and gain lasting financial freedom.

Down Payment
Home buyers usually believe that saving enough money for a down payment is the biggest hurdle to owning a piece of paradise here in San Diego. So how much down payment does it take to own you may be asking. Great question. Your decision will be dictated by your financial circumstances, the type of loan you choose, and your risk tolerance. If you’re financially secure, you may want to go ahead and put 10% to 20% down. On the other hand, you may want to leverage yourself, putting down as little as possible, that way you’ll have more liquid cash to invest.

Market Conditions
What is our San Diego real estate market doing right now? Think Economics 101, Supply vs. Demand. Are there more buyers buying than sellers selling? Are prices shooting up at 20% with multiple offers on homes that sell within 48 hours? If so, we are experiencing a seller’s market. However, if more sellers are selling than buyer’s buying we may be in a buyer’s market. In a buyer’s market the supply of listed homes exceeds buyer demand. Between these two extremes are more balanced market conditions. It is advantageous to check the pulse of the market with an experienced agent and lender. Market conditions fluctuate consistently and we pride ourselves on keeping you informed and empowered with up to date analysis and statistics on current market conditions.

Own vs. Rent
Are you tired of paying rent with nothing to show for it? The benefits to owning your own home are numerous and rewarding. The money you spend on rent every month could be put towards gaining long term financial security and stability. Log onto www.ginniemae.gov and use their Buy vs. Rent calculator to check the numbers for yourself.

Frequently Asked Questions about Loans & Refinancing in San Diego

What is the difference between a regular & an FHA loan ?
FHA is an loan insured by the Federal Housing Administration, and is therefore issued through a lender using  FHA’s guidelines.  A conventional loan is issued based on the lender’s guidelines.
What are the advantages of an FHA loan vs a regular loan ?
That depends on the lending environment at the time.  As of today the biggest advantage is a lower down payment.
WHat are the drawbacks ?
Again it depends on the lending environment at the time, but as of today the drawback I see is that you will pay both upfront mortgage insurance AND monthly mortgage insurance for the first 5 years of the loan regardless of LTV (loan to value), and the rate is higher.
Is there a situation where a regular loan would be better than an FHA loan ?
Yes, and again these answers all depend on what is available on the conventional market at the time.  Today, the upside of conventional is that if you can put down enough money to qualify for the conventional loan on the 4 unit complex (which is 25 to 30% down) you have a lower rate, no upfront M.I. (mortgage insurance) and no monthly MI. This is a big savings over the life of the loan.

Put simply if you have the cash to close conventional it saves you a lot of money on interest and MI. FHA is only a better option when  you can’t come up with the required down payment for the conventional option.
What are all the requirements to qualify & be approved for an FHA loan ?
You have to meet there Debt to Income Ratios (generally 43%) including all expenses for the property you are buying. Plus you have to make the minimum down payment,  pay upfront MI of 1.75% of the loan amount, and closing costs.
What is the required down payment % amount for an FHA loan ?
At present for 4 units: 10 to 15% down.  This is where the FHA advantage is since conventional is asking for 25 to 30% down.

Contact Joy Houston for any additional questions about Loans and Refinancing.
Mortgage Broker | Loan Officer
Joy@WestoftheFive.com

Is San Diego Real Estate Undervalued?

Report says S.D. prices are 21% below norms

By Roger Showley, Union-Tribune Staff Writer
2:00 a.m. June 4, 2009

San Diego County used to be one of the nation’s most overpriced real estate markets, as much as 40 percent above historic norms, according to the IHS Global Insight financial analysis company.

Yesterday, in a dramatic turnaround, Global Insight said housing prices in San Diego are 21.2 percent undervalued.

“It’s definitely coming back from the boom,” said Global Insight economist Jeannine Cataldi.

The median price for a single-family home was $327,300 in the first quarter, the company said. Based on historic trends for household income, affordability and appreciation, the “normal” value should have been $415,300.

That contrasts with the peak of the boom market, in the third quarter of 2005, when Global Insight found the median price of $506,500 was above the norm by $144,100, or 40 percent.

From the peak, local housing prices have fallen 35.4 percent, back to a level last seen in the fourth quarter of 2002, the company said.

This was the fourth consecutive quarter that San Diego housing prices were below what the company considers to be the normal price. It was the biggest gap since the second quarter of 1999, when the median price of $190,400 was $53,400, or 21.9 percent, below the theoretical norm.

And as economists well know, San Diego wasn’t alone as the housing bubble inflated and then deflated in many markets.

Read the Entire Article Here.

As for San Diego, whose normalized median price since 1985 has risen without pause, according to Global Insight’s model, Miller said environmental and zoning rules will probably remain in place to constrain supply and thus push up prices.

“So it does make sense in the long run that we will adjust back on the other (upward) direction,” he said.

Financial Incentives and Uniform Process for San Diego Short Sales

This just in…

Obama Administration Announces Financial Incentives and Uniform Process for Short Sales
National Association of REALTORS® Government Affairs Division, 500 New Jersey Avenue, NW, Washington DC, 20001

Responding to the call ofthe National Association of REALTORS@, on May 14, 2009, the Obama Administration announced incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP). For borrowers who are unable to retain their home under the Making Home Affordable Loan Modification Program, the servicer may consider a short sale or, if that is not successful, a deed-in-Iieu of foreclosure. Participating servicers must comply with program requirements so long as they do not conflict with contractual agreements with investors.

• Borrowers (Homeowners). Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
• Incentives. Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed in lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).
• Standardized Documents. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.
• Property Valuation by Appraisal or BPO. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.
• Timeline. In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.
• Commissions. The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to
negotiate a lower commission after an offer has been received.
• No Borrower Fees. Servicers may not charge fees to borrowers/homeowners for participating in the FAP.
• Program Expiration. The program is in effect through 2012.
• Deed-in-lieu of Foreclosure Option. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

Need Help with a San Diego Short Sale?

Contact Us Today – We are your San Diego Short Sale Experts.

Travis Houston | REALTOR, e-PRO
West of the Five Real Estate Services
Cell: (858) 232-2008
Fax: (858) 408-3212
Travis@WestoftheFive.com

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San Diego Real Estate House Value Market Update

In a recent article from the San Diego Union Tribune on Real Estate:

San Diego County housing prices continue to decline but at a slowing rate, the widely watched Standard & Poor’s/Case-Shiller Home Price Index showed yesterday.

In the index that measures paired prices paid for the same single-family homes over time, March prices in San Diego County were down 22.04 percent from year-ago levels. That’s a slight improvement from the 22.86 percent year-over-year slide in February and from the peak decline of 26.68 percent in October.

“Well, that’s good news,” said Leonard Baron, a part-time lecturer on real estate investment at San Diego State University.

Baron said the slowing slide reflects continuing demand for low-cost distressed properties.

For the second straight month, San Diego ranked as the eighth worst of 20 major U.S. markets in terms of price declines. In January, the region had the sixth worst year-over-year decline.

San Diego prices have dropped 42.3 percent from their peak in November 2005 and are back to where they were in July 2002, according to the Case-Shiller data. But they are still 45 percent above their level in January 2000.

The biggest year-over-year drop reported yesterday was in Phoenix, where the Case-Shiller index was down 36 percent. Denver had the smallest decline, at 5.5 percent. Los Angeles dropped 22.3 percent and San Francisco was off 30.1 percent over the same period.

Meanwhile, the national price index for the first quarter was down a record 19.1 percent from year-ago levels.

But for the second straight month, the overall decline for 20 metro areas tracked by Case-Shiller did not set a record. Yet that was insufficient evidence for many analysts to declare a national turnaround.

Read the Full Article Here.

UCLA Anderson Forecast’s Outlook for San Diego County: Recession for Most of 2009 with a Recovery in Housing Market

LOS ANGELES–(BUSINESS WIRE)–The UCLA Anderson Forecast today released its annual economic forecast for San Diego County. The Forecast states the official end month for the national recession is likely to be early in the second half of 2009, and the worst of the problems for San Diego will then be over. The unemployment rate for the nation and San Diego is likely to continue to elevate until growth becomes strong enough to absorb new entrants into the labor market.

“As the U.S. and California economies continue to contract, San Diego’s unemployment rate will grow to 10.3% in 2009. The deterioration in the local economy is led by growing layoffs in non-residential construction, manufacturing and retail jobs,” said Jerry Nickelsburg, senior economist, UCLA Anderson Forecast. “But there is light at the end of the tunnel. A forecast turnaround in the U.S. and California economies later this year should begin the recovery process in San Diego by the end of the year.”

Because 2009 will be a rough year for California, which has larger intrinsic problems than the nation, the San Diego County economy will remain weak. The commercial real estate markets have softened along with the labor markets, and more problems with refinancing this year could weaken the office market even further.

Residential real estate is poised to recover in 2009. Sales of homes have soared in the county and values appear to have stabilized. Both new inventory of homes and foreclosure inventory are currently on the decline.

“As long as homeowner distress does not rebound and recent federal government programs designed to avert foreclosure have some success, a more conventional recovery in the residential sector should be underway this year,” said Mark Schniepp, author of the San Diego forecast report. “By mid to late 2010, the recovery of the broader San Diego County economy should be more convincing and 2011 will be a year of above average economic growth including job and income creation.”

About UCLA Anderson Forecast

UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state’s rebound since 1993. More recently, the Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001. Visit UCLA Anderson Forecast on the Web at http://uclaforecast.com.

About UCLA Anderson School of Management

UCLA Anderson School of Management, established in 1935, is regarded among the leading business schools in the world. UCLA Anderson faculty members are renowned for their teaching excellence and research in advancing management thinking. Each year, UCLA Anderson provides management education to more than 1,700 students enrolled in MBA, Executive MBA, Fully-Employed MBA and doctoral programs, and to more than 2,000 professional managers through executive education programs. Combining highly selective admissions, varied and innovative learning programs, and a world-wide network of 36,000 alumni, UCLA Anderson develops and prepares global leaders.

Bruce Norris – California Real Estate Econonic Update

For me, Bruce Norris is the most trusted source of Real Estate Investing Information in California and I am an avid reader and listener of his newsletters and radio shows.  The Norris Group is releasing this very lengthy newsletter as the TNG Economic Newsletter and the TNG Investor Quarterly combined.  Once you start reading, you’ll understand why.

Here is the latest Newsletter Link:  http://www.thenorrisgroup.com/2009EconomicUpdate.pdf

Also, Bruce will be a featured speaker several times in the coming months at local investor, Realtor, and appraiser associations. He’ll also be teaching his one-day intensive in San Diego. Dates are below;

May 12th
Six Proven Steps to Become a Real Estate Multi-Millionaire… in the Next 24 Months
San Diego Creative Investors Association (SDCIA)
Scottish Rite Center,
1895 Camino del Rio South,
San Diego CA, 92108
http://www.sdcia.com/

Jun 6th
California Only Investor Intensive
San Diego Creative Investors Association (SDCIA)
Hojel Hall of the Americas Auditorium
International Lane
10111 N. Torrey Pines Rd
UCSD Campus International Lane
La Jolla, CA
Register at: http://www.thenorrisgroup.com/sdcia.html