Advice from www.Trulia.com on Credit Reports!

This is a recent article from www.Trulia.com regarding credit report errors.  This is VERY important right now if you want to buy a home, or even if you want to rent! Read on for great wisdom on tracking your credit progress...

"In a recent study, 19 percent of American consumers who reported finding an error in their credit reports opted not to dispute the error, even when they were offered $5 to file the dispute!  Why not?  Well, some said they thought the error was too minor to impact their score, while others said the dispute process seemed too difficult to tackle.

The fact is, when you’re trying to qualify for a home loan, some of the items on your credit report that can pose a threat to your home finance plans might surprise you. Here are 5 surprising credit report entries you absolutely must fix, especially when you are in the process of buying or refinancing a home.

1.     Account balances you recently paid down or off. If you’ve just finished paying a bill down or off, you might not dispute the elevated balance that remains on your credit report because it’s not actually an error, per se.  But the whole point of paying the balance down was to bring down your credit utilization ratio, which is a heavily weighted factor in your overall credit score.  

Correcting the actual balances of your outstanding bills downward to account for your recent pay-down efforts poses such a large potential improvement impact for your credit score that it might even be worth paying your mortgage professional the $30 to $50 it will cost for them to initiate a Rapid Rescore, which can update your reports to reflect your slimmed-down balances in about 72 hours, compared with the 30 to 60 days you’d expect to wait to see results from a traditional dispute or update.

2.     Incorrect former addresses. Of the 19 percent of consumers who spotted an error on their report in the study, nearly 40 percent of those errors were in what the credit bureaus call “header data," things like the consumer's previous street address. Many elected not to dispute these sorts of line items because the error doesn't seem like it would impact their credit score.  While an inaccurate address might not have much to do with your score, it can still wave a red flag, signaling issues that can foul-up your mortgage application.

A misspelling in an otherwise correct street name should not cause you grave concern.  But if the previous addresses listed are in the wrong city or state, or otherwise come out of nowhere, they might signal that someone has used your name and/or social security number to obtain credit at a different address.  Credit card fraud and identity theft are difficult to unravel when you’re not seeking credit; they are much more complicated to resolve when the credit stakes are high and the underwriter as picky as they are in the course of applying for a mortgage.   

Also, current and previous addresses that conflict with where you’ve told the lender you live(d) can raise suspicion that you might be buying a second or rental home, rather than the owner-occupied home you say you’re trying to buy; thatcan provoke a lender to demand that you ante up more down payment dough, make you jump through greater hoops to prove your true address or even stop you from qualifying for the loan altogether.

3.     Bills that were never yours in the first place. As with completely bizarre former addresses, accounts listed on your credit report that you never opened in the first place can be a red flag that tips you to the fact that someone else might have stolen your identity and opened a credit card or account in your name.  If you find one of these items on one credit bureau report, but it’s currently closed or has a zero balance, you might be tempted to let it slide, thinking it can’t move the needle on your credit score.  In reality, though, if someone is using your identity to obtain credit and you fail to dispute that the bills belong to you, they might continue to use it, which can cause you real problems.  Of course, if the bills weren’t paid on time or have been placed in collection, disputing the accounts’ presence on your credit report is a must.  

If they were paid on time every time, though, the analysis might be different.  Unfortunately, instituting a fraud-based credit freeze or fraud alert on your credit reports at the same time as you’re applying for a mortgage can complicate your own loan qualification process significantly.  If you find yourself in this situation, carefully scrutinize the rest of your report and the credit reports you receive from the other bureaus to detect whether other fraudulent accounts exist, then consult with your mortgage professional on exactly when and how you should go about disputing the accounts which weren’t actually yours.

4.     Limits listed as lower than they really are. As with closed accounts that were never yours in the first place, accounts that are listed on your credit report as having limits that are lower than they really are might seem like a battle not worth fighting.  But the fact is that only two inputs go into the credit utilization ratio that comprises about 30 percent of your FICO score: how much credit you have available, and how much credit you have used.  So, if you have account balances that show up on your credit reports as lower than they actually are (i.e., that you have less credit available to use), that inaccuracy can skew your credit score and screw up your mortgage qualifying efforts. Big time.

5.    Derogatory items that should have aged off. Very few of us are perfect, and you might have worked hard to pay your bills on time in an effort to overcome a credit ding from back in the days.  Although the impact a derogatory item has on your credit score wanes over time, it’s still your right (and your responsibility) to make sure negative items disappear from your credit report when they are supposed to – that’s 7 years for a late payment, 10 years for a bankruptcy.  If you are still seeing credit dings on your report after more than the relevant time frame has elapsed, dispute them and claim the rehabbed credit (and score) you’ve since earned.

It’s not very common that credit report disputes cause dramatic changes in credit score, but again, many borrowers aren’t disputing these sorts of items they don’t realize could make a difference in their homebuying or refinancing prospect.  

Beyond that, if you’re close to a credit tier cutoff, like 620-640 or 740-760, depending on your loan type, even a few points’ difference can be the difference in qualifying for a home or not, or paying a higher mortgage interest rate for the life of your loan.  For these reasons, it behooves every potential borrower to be proactive in spotting and correcting these 5 must-dispute errors."

Appraiser Frustrations! Plus, Green Horizons

A DYING INDUSTRY?

So, it's come to the point now where the types of problems that are popping up in the appraisal industry force me to question my own sanity in being an appraiser. The bank account is almost drained, but I'm still spending countless hours on appraisals I am clearly not getting paid enough for (what with the myriad of changes/requests/alterations that come in after the appraisal is done).  I'm working hard but hardly paid. This is not a good sign for the industry. But there's more.

COMPUTERS VS. HUMAN CRITICAL THINKING

Today, I had an underwriter (from a certain bank that rhymes with pace) tell me that the statistic of a loss of $0.15 per square foot per day was not a rate. That a rate should only be expressed as a percentage in a report. Essentially, informing me that the nicely worked regression technique I employed to guide me in estimating declining values in this market was not valid.  This is a technique not only used by other appraisers, but at the core of the scientific world as well, and one that I used for years in graduate school and actually taught in genetics courses. Their lack of understanding of basic statistical analysis paints a very poor picture of what is going on in lending today. If the underwriter does not understand basic statistics, then how is she/he making the ultimate determination in funding a loan? Has the system become so automated that no one really understands what they are doing anymore?  Loans are then being funded by computers, not people? This points to a system that is so over-automated that humans are no longer in control of what is going on. I would much rather have a human, skilled in critical thinking and analysis, reading appraisal reports and following my own path of analysis.  A computer and a "screening" system does not respond to the nuances of an analysis and doesn't even register a comment with unmatched parameters. So be it. I believe the signs of the appraisal apocalypse are here!  It is time to move on.

NEW SAN FRANCISCO INTERNATIONAL TERMINAL

On a good note, the San Francisco Airport is forging ahead in the green movement, with a $383 million green overhaul of the International Terminal, featuring "building systems that exceed energy reductions demanded by California code by 15 percent; water-saving measures and fixtures that cut consumption by an average of 40 percent; a design that bathes the facility in natural light; decor that's more akin to the hospitality industry than commercial travel; and shops, restaurants and other diversions that can be found at an upscale mall."

Read more: http://www.greenbiz.com/blog/2011/04/07/sf-airport-reopens-iconic-terminal-383m-green-showcase#ixzz1Jv77Nptx

Message? The time right now is to move forward into areas of Progress, not areas of Regress. Unfortunately, appraising appears to be in a huge backward movement....and I'm determined not to get stuck in that rip tide! I'm heading ashore, onto greener pastures.

Long Time No Blog!

Readers of EBREU, I mournfully apologize for the lack of blog posts since February. I have certainly been remiss. However, it is not without reason. I regret to say, my house was broken into and I lost all my computers, including my blogs and blog material. As I slowly work my way back up from my losses, I figure it is time to reconnect and perhaps give some wisdom based on my recent experience.

1. Alarms are important, if you do not have one, get one!
2. No matter what time of day it is, do not leave the alarm off. Even if you are only going out for a few: Turn. On. The. Alarm.
3. Rental insurance is cheap and can really help recoup losses. We found ours through Geico for only $16 per month.
4. Always check your doors and windows before you leave or go to bed.
5. Stay in touch with neighbors. Let them know when you are leaving for extended time period and make a "neighborhood safety watch" agreement to look out for each other.
6. Label/engrave all important items so they can be easily recognized if stolen.
7. Keep a safe in the house for high-value small items. Keep the safe locked and the key hidden in another room.
8. In the horrible event that a burglary does occur, take note that burglaries are not important enough for police response in Oakland, so plan on filing a report online. Take note of everything that was lost, when/how it happened and timeline.
9. Look for lost items on Ebay and at pawn shops. Immediately spread word to friends to keep their eyes out. Announce via email and social networks to get as many people aware as possible.
10. File an immediate Alert on Experien, TransUnion and Equifax.  This will trigger them to notify you if anyone is trying to open accounts in your name.   You may also order a Freeze if you have your police report, which will freeze all credit under your name.  Be aware this may cause complications if you are trying to use credit.
11. Have a back-up plan for filing with the 3 credit bureaus in the event your computer was stolen. Keep their phone numbers filed nearby and/or be able to go to a friend's or family member's house to file online.
12. Maintain tabs on all credit and identity theft situations over the next year or so.Thieves often hold off on using personal information until you have "cooled off" and are unsuspecting.
13. Finally, remember that stuff is just stuff and sometimes it is better to move on than to dwell in pain over losses.

Any other helpful information is greated appreciated, please share! And with that, I shall endeavor to produce some more positive blog posts in the future and will try my darndest to avoid any more personal tragedy. Please stay tuned!

What Type of Home Do You Have?

As an appraiser, I see a lot of people’s homes both inside and out.  What type of home they have, how they live in their home, and the state of their home demonstrate many things to me regarding them as homeowners.  Although these things don’t always impact the value of a home (for example, having some mess due to raising children is to be expected – no judgements here!), some lifestyles can actually impact the value of the home in the long run.  The most loved, cared-for homes will always sell better, regardless of the current market.  Even if you aren’t planning on selling your home, or even if you are a renter and don’t own at all, how you live can affect you and your home in the long term. (According to some sources, it can actually affect you psychologically and emotionally, contributing to your overall happiness or discontent….but that’s for a future blog.)

The types of homes that stand out in my job:

• The Perfect Estate Home:  This home is indelibly neat, with the highest end finishes representing luxury living. These houses don’t even seem lived in!  The vibe of the house is what I call “sterile beauty”, not so much for comfort as for creating a beautiful environment. And, actually, the homeowner is either not there when I inspect or he/she is telecommuting on the phone.  These people tend to be very, very busy.  These homes are beautiful; they show well and sell well.
• The Kids-Run-Amok Home:  This home is nice and well-maintained with clean, updated finishes and good maintenance on the roof, etc.  The house has an overall homey vibe and usually smells like vanilla candles.  Everything is great except for the toys, toys, toys randomly strewn about as well as kiddie clothes, kiddie bibs, kiddie everything scattered about the house.  There is usually a mom at home, looking like someone had recently electrocuted her.  She opens the door and says; “Hi! Welcome, please help yourself! Oh, Danny – no honey, DROP THAT RIGHT NOW!...” As she scurries off, I go about my business, actively avoiding rogue toys that wait in the shadows to trip me. These homes are nice but don’t show well with the kids around.
•  The Green Home:  In the past, these homes have been reserved for only the most forward-thinking people. They also can be rather costly. But the green home is gaining fanatical popularity and will definitely get buyers interest these days.  These homes have been revamped with the latest in heating/cooling design and technology as well as lighting and water usage.  They are often more comfortable, as well, since they are more thermo-regulated. They are modern, clean and efficient – perfect for the Ikea-lover in you.
• The Vintage Home: Some of my favorites, these homes have vintage-everything! From the architecture (Craftsman, Victorians, Tudors, etc) to the furnishings and even the fixtures, these homes tell stories of years-gone-by.  They are often lovingly maintained, although not the perfect sterile Estate Home.  These homes are warmer and feel lived-in. Walking through them, you can almost picture the generations of people that have lived there.  Sometimes these houses have been neglected, but they are often easy to bring back to health since the “bones” are so good. Very popular homes in the Bay Area. 
• The Spiritual Home: This is the house where as soon as I enter it, a sort of quiet calm surrounds me and I wonder:  why can’t my home be like this?  These homes are usually beautifully and serenely decorated, well-maintained and very simple.  They are sanctuaries, often with calming water features and gardens that belong in magazines. They smell like heaven, seriously.  And they are always clean and uncluttered. This is the living environment that nurtures the soul.
•  The Animal Home:  These homes are not usually a pleasant experience, although there are wonderful exceptions.  This home can range from a ranch (usually very nice) to an apartment, condo or bungalow with waaaaay too many animals (and people) living under one roof. Thus, although many responsible owners have no trouble keeping their home clean in the presence of their animals, for others this can be a very bad situation. First thing is, obviously, the smell. This will deter someone right away.  Second is the hair everywhere, you won’t be able to get this house off your clothes for a while.  Not a good thing. Third, is the feces in the yard.  Again, often everywhere.  I am forced to try to avoid this feces while measuring the outside of the house. This is rather revolting. The individuals are usually very nice people, although they don’t seem to realize that the wear-and-tear on their home from these pets is often irreversible and will lead to thousands of dollars lost in repairs and/or market value.  Even worse is when the owner doesn’t live there and now you have a potentially ugly situation with the tenants.  Yikes.
• The “What is going on here?” Home:  Yep, this is the hoarder home or in some cases the squat home.  These homes have been vacant foreclosures 100% of the time I’ve appraised them.  They are horrendous, to the point where you cannot imagine how someone lived like this.  In these cases, the homes have been so badly damaged with dirt, filth, feces, urine and rot that they will have to be torn down and rebuilt completely.  These are not homes for the faint-of-heart!

Whether your home fits one of these categories or is a combination of them, one thing is for sure: how you live reflects YOU.  Think about this when you are deciding how to decorate, clean, maintain and set up your living environment. There are many ways to transform your space from chaos into comfort – but that’s for a future blog ;)

Ridiculous and Ridiculouser: Celebrity Homes Gone Cuckoo!

OK, I was going to write some more informative material on serious issues this week, but then I found this HGTV CELEBRITY HOMES FOR SALE article. All I can say is….uhm, wow!  I had to share.  I’m wondering how they even find each other in these places. Or maybe they don’t want to.

10. J.K. SIMMONS:

OK, this house isn’t too ridiculous so I gave it number 10.  I actually am not that familiar with this celebrity but his house is a reasonable 4,000 square foot home offered for $1.775 million (*note:  still four times larger than mine) in the Hollywood Hills.  It’s next door to Pussycat Dolls singer Nicole Scherzinger.  Yep. Location, location, location.

9. RON WHITE:

Ron White’s home has views near San Ysidro Ranch. Lots of views.  And it’s Spanish-style. No kidding.  I really have nothing bad to say about Ron’s house except it’s a THREE bedroom home priced at $3,595,000 which seems pretty ridiculous.  He gets a 9 for that.

8. BARRY MANILOW

Barry has the primo location in Malibu on the beach.  That seems about right!  One can lounge anywhere on the beach or overlook the ocean from his living room, all while listening to “Copacabana”. He’s selling for $10.9 million, down from $12.6 million.  Downside, this house only has four bedrooms….so you’re paying thousands a day for the views. Kind of ridiculous and comes in at an 8 because it’s in Malibu.

7. RYAN CABRERA (AKA ASHLEY SIMPSON’S EX)

All I can say here is, poor kid! Sounds like he got himself into a right mess.  He’s short-selling his house for $1.1 million. This is an example of young people making ridiculous decisions.  He’s desperate to get out after painting all the rooms a different garish color. The house boasts a pink living room, black bedroom, blue music room…it’s like a teenager went nuts in there. He has a cool outdoor kitchen though, which will be handy if they lock him out of the house, I guess.

6. JOAN RIVERS

Joan Rivers has good taste! (Not class mind you. Taste. They are different.) But that's why we love her. Hers is a prewar penthouse in New York City.  It’s a “classical revivalist” design completely restored by Joan to its original glory. That’s actually a nice change these days.  It’s 5,190 Square Feet (humungous for a penthouse!!) and of course has great style, views and location.  For $25 million. That’s a really ridiculous big penthouse.

5. LANCE ARMSTRONG

First off, Lance Armstrong has a 447 acre ranch with trails outside of Austin, TX.  So, that already makes a completely different impression since Lance’s house is really about the land and the lake of clean, private water he has access to.  Apparently, Lance is a smart guy and has figured out that clean water is important. Whoever buys this is making a very wise investment indeed.  The house is a nice, reasonable 5 bedroom. And it has great views and features.  But 447 acres is still pretty ridiculous for one person. He’s selling for $12 million which actually seems logical for a 447 acre ranch with a private lake.

4. RICKY MARTIN:

Ricky actually sold his house three years ago for a cool $15 million. Now it’s back-on-market for $26.9 million.  Go figure, I thought housing prices had declined!  This was originally a 9,000 square foot (!) house owned by an heiress and then by Michael Caine.  The 9,000 Square Foot home was demolished and rebuilt with 12 bathrooms, gym and tennis courts. Twelve bathrooms….wow, that’s a lot of mirrors. 

3. BEN STILLER:

Ben Stiller has THREE HOUSES on his lot that he is trying to sell.  OK, one is a guest house. But still, c'mon guys. He originally bought his home as a six-bedroom house, then bought two more adjacent lots and put two more houses on them. I suppose he was hoping to house all of LA’s migrant workers here?  The price is mentioned on Zillow.com as $12.5 million.

2. MEL GIBSON

Mel can’t sell! Mel’s comes in as the second most ridiculous house. He started his price out at $39 MILLION!!! Oh, now it’s down to $29.75 Million. What a bargain.  Actually, not to knock the house as it’s a Tudor-inspired mansion custom built in 1926.  But, it’s still ridiculous at 15,800 Square Feet with 15 bedrooms and 18 baths, great halls, gallery, and a “walk-in fireplace” (what??).  It has its own maze and a log cabin. Kind of appropriate, yeah? I don’t need to say anything about the “staff houses” on the property…

1. 50 CENT:

AND THE NUMBER ONE RIDICULOUS HOUSE GOES TO 50 CENT. He listed this for $18.5 million in 2007 and now it’s at $10.9 million. He rarely uses it, although he felt the need to change the house number to 50 of course.  OK, here’s the scoop: 21 bedrooms, 25 bathrooms, private lake with gazebo, indoor/outdoor pool, gym and theater in 48,000 SQUARE FEET OF LIVING SPACE!!!  That deserves….a big fat “I’M SHOCKED” GASP.   You could fit 48 homes in his house.  Forty-eight!!

Well, there you have it: The top ten celebrity homes for sale, in order of ridiculousness.  After reading something like this, it may be wise to just turn off the E! network for a while….and try not to think too much about what we just saw. 

Furnaces are OUT. Passive Homes are IN.

"5&1/2 lightbulbs!" 

What a great name for a recent presentation by James Bill of Zero Impact Architecture at a Build It Green East Bay Guild meeting.  The presentation brought some really wonderful insight into the "Passive House" which I would like to share with you here.  A "Passive House" is a house that does not require a furnace and uses the saved heat from occupants and appliances to heat the home. Yup. No furnace. Of course, it was the Germans who came up with the concept (who else?) and the European Union has already built 20,000 of these homes. We have about a dozen. That gets slightly embarrassing so, moving on...

The 5&1/2 lightbulbs is basically a metaphor for the amount of energy required to heat this passive house on a very cold day. Like, the coldest day of the year. It equates to about 545 watts heating 750 square foot house.  Context?  The standard amount is 10 watts per square foot to heat a standard home (see heat calculator). So that would be more like 7,500 watts to heat this home using traditional methods (yikes, and that's a fairly small space).  That's almost a 14-fold difference!

Just to note, the average home in America is about 1,500 square feet in size. So, yeah, that would be 15,000 watts. Remember, this is just to heat the house on a very cold day, not for the entire month. Which is why PG&E actually details bills with kilo-watts as the numbers just get too darn big.  

Even more amazing is this passive homes requires 0 watts if the sun has been shining (stores that energy up in those solar panels).  Beat that, space heater.

So, how did they do it?

First and foremost, with green building it is all about SEALING. Gotta seal up all those gaps - you know, the gaps between boards and such where all those bursts of cold air come seeping through. You would be amazed at how much energy is wasted simply because homes aren't properly sealed and insulated.

Second, they designed and constructed the house very carefully so that cold air isn't seeping in via rooftop or foundation either; adding in extra layers for insulation on all sides.

Side note: ***Even though you are sealing up a house really well you also have to make sure that the house is well-ventilated otherwise you get air-quality issues and pressure problems. The balance between the two is tricky and requires good knowledge of design and systems. It is also paramount to comfort.***

Third, add in your awesome technology: the integrated solar-mechanical system. This requires extensive modeling of systems, climate and other factors to arrive at a functioning integration which will not only harvest and store solar energy properly but will also allow for proper distribution and usage. Not for the faint-of-heart or the mathematically-challenged!  This system heats up the water which can then contribute to heating the house itself. Yeah, we do need the hot water still. Yummy, precious hot water.

Finally, they added in all other green elements (which are a given now in green homes) such as sustainably-harvested wood (this is know as FSC lumber or Forest Stewardship Council-certified), fly ash instead of concrete, radon elimination, recycled content and no-to-low VOC adhesives, and water conservation functions to use less water and utilize gray water.  All those acronyms can be disconcerting and I will cover these concepts more in later blogs. For now, just know these types of construction methods are important for the health of the environment as well as you. Trust me. <wink>

Now, this is not to say that they didn't run into some obstacles in this project but overall the point is that this is the type of work that is needed to drive a future in green homes.  I'm happy to see that the SF Bay Area is really taking a LEED (get it?) on manifesting the green movement in the U.S.  I now leave you with a mind-blowing concept of living with no heater and a very bad pun. Happy heating!

Why is Value so Volatile? An Appraiser's Perspective.

First Concept: Cost

$510,000
$2,300
$436.17
$150

What do these numbers have in common?  They all have to do with "cost of living". 

• $510,000 is the price someone paid for that vintage bungalow in North Berkeley. 
• $2,300 is the standard rental rate for a 3 to 4 bedroom home in the Bay Area.
• $436.17 covers the monthly food expenses for a typical college student
• $150 is the monthly amount paid for a daily Starbucks indulgence.

These are what we call costs.

Second Concept: Value

But what is the value of something? To appraisers, value is typically determined by "the market".  This is accomplished by analyzing recent sales of arms-length transactions, which in laypersons terms means "how much regular people have been paying for similar houses".  This very concept of value is the foundation of what has been so chaotic in the housing market in recent years.  Since 2002, housing values have been volatile. First, housing values soared unpredictably, spurred by late 90s and post-911 relaxation in lending regulations combined with increased demand for home-ownership. Then, housing values crashed (unpredictably for some, not-so-much for others), spurred by the fact that people had bought homes they simply couldn't afford. Extreme value volatility is unusual, especially in the housing market. Market values are supposed to increase gradually over time, after years of work in paying mortgages and sinking money into maintenance and upgrades.  They should rarely decrease, given that there are always more people than available houses in a growing population. But, nowadays, the whole concept of value is changing as people are realizing that nothing is impervious to upheaval.

DUST

So, while value itself may be unclear right now, let's look at what value is not:

• value is not the cost of something.
• value is not always what you would pay for it.
• value is not permanent.
• value is not independent.

While the first three concepts are fairly obvious, the last might be a little mysterious to some.  What do I mean by that?  Well, in appraiser-speak there are actually four components of value (Yes, here is it, the secret code of appraisers.): DUST.

Really?

Yes.  DUST.  Dust is Demand, Utility, Scarcity and Transferability. These are the things that inherently make up value. They must be known and appreciated for they govern all that we see in our economic world!  They are the Four Sisters of Economic Fate.  Demand must exist to create value, obviously, and with it purchasing power (this is called effective demand). If the price is so high that no one can afford it, it essentially removes value. Yes! This is exactly what happened when people caught on that there was no way their entry-level office job salary was going to pay for a $6,000 a month mortgage! 

When the smoke cleared after the financing magical act, there was basically no purchasing power for these overpriced homes. This removed the demand component and led to this crash as we now see it.  Utility has remained essentially the same, houses are still used mainly for shelter or for income.  Transferability simply means whether the title can change hands or not.  This is usually not a problem unless the title is clouded with liens or intricate ownership chains. Scarcity, however, changed as a result of decreased demand. Suddenly, there was no buyers for properties and houses were foreclosing at a shocking rate. The market was flooded and there was no scarcity anymore. In fact, the foreclosures really pushed values down further than ever due simply to bringing so many more available houses onto the market.

Perpetual Volatility?

So, what is keeping the housing market so volatile still?  Values crashed, so shouldn't there be demand again?  Well, yes. And, actually, demand did increase and helped to bring some stablity to the market in 2009-2010.  This demand was fueled by low prices, investor purchases of "fixer-uppers" and also by government tax credits which really lit a fire under people to buy a home. Although low prices and investors still exist, the tax credits do not and their absence has led to a lot less activity over the past six months.  So, demand really isn't where it should be yet.  People are still scared of value volatility.  They are no longer seduced by tax credits. And, most importantly, there is still a lack of effective demand due to high levels of unemployment and much, much stricter lending regulations. And, there are still foreclosures coming onto the market which isn't helping increase scarcity. Yes, the four sisters of economic fate are continuing to cut old patterns in our system.

Silver Linings Are Priceless

However, there are definitely silver linings out there for new potential home owners. And there are beautiful homes just waiting for these loving new owners.  Even though financing is strict, there are many creative ways to buy homes as more people are buying with friends and/or family and taking advantage of community programs (here is HUD's list for California).  I will be assembling more information on home-buying tips and programs in future blogs. In the meantime, think about what you value most in a home, or just in life, and start saving for it.  It doesn't take a credit card company to tell you that some things are priceless.

The Economy: A Big Nasty Financial Smoothie!

2011. Yep. 2011.  So far, I have to say I don't have a lot of great news about 2011.  I know it's only been three weeks, but in those three weeks, here is some of the information that has come my way:

• Another decline in housing prices. Which pushes us past the Great Depression. Ugh.
• Stiff unemployment likely to remain through the year.
• American companies are hiring more outside the country (see above).
• My own industry is screaming at me: Get out of lending!! No work ahead!!
• On the other hand, they are also telling me appraisers are going to become hourly-paid stat-jockeys. So, I'd better run out and get that new certification if I want to catch this wave! (For only $699.99!)
• They might be right, I've had only a trickle of work this month.....err. I really don't want them to be right. 
• Turns out I may just be in denial though, because they were right the last time this happened.

This makes me feel sort of like.....

Yeah, you get the picture!!  SO, right now what I am looking for is GOOD NEWS.  Has anyone actually recently bought a home? Tell me about it!  Are you thinking about it?  Tell me!  Have you moved recently to a place you really love (rent or own)?  Yes, tell me! Are you thinking of moving?  What is it you really want in your home? Your neighborhood?  Have you recently found a new job?  What are you looking for in your work environment? In your life?

American values are changing, quickly.  After so much loss over the past few years, I think we are reassessing what we really cherish in life. As I venture forward in this great chaotic economic blender I hope to gain a sense of what the good things are. I dare to put these messages into a bottle and send it out into that sea.

Yeah, I want some good news!

Housing Market and Jobs in 2011, What’s in Store?

With all the recent talk about U.S. unemployment rates and an unhealthy job market, there’s definitely some speculation on how high unemployment will impact the housing market in 2011.  Recently, the Economic Policy Institute released a piece discussing how the labor force is actually smaller than when the recession started, despite population growth.  They published the following graph which illustrates the trends in job losses and gains in all post-war recessions (yes, we are the Big Red Line called the Great Recession):

Below  are the California median housing prices for the same years from DQNews.com.  Coincidence?  I think not. There is a definite link between housing prices and job growth and it seems that until Americans have some cash in hand they are going to maintain some difficulty in buying properties. 

The question is whether or not this problem with job growth will continue. Several articles have discussed the impact of corporations sending jobs overseas.  Again, The Economic Policy Institute shows that American companies have created 1.4 million jobs OVERSEAS this year, compared with less than 1 million in the U.S.  Those 1.4 million jobs would have more than doubled our hires, and lowered the U.S. unemployment rate to 8.9 percent. 

With all but 4 of the top 500 companies reporting profits this year and the stock market close to its highest point since the 2008 meltdown, Americans should be seeing plenty of paychecks. But, we’re not. According to David Wyss of Standard and Poor, half of the revenue for companies in the S&P 500 in the last couple years has come from outside the U.S.!  Yes, that’s one-half, kids.

This is one factor affecting homebuyer purchase power.  There are several others, including foreclosure rates, credit and lending restrictions, and the actions of the Federal Reserve on interest rates (I’m crossing fingers on that one!), etc.  At this point, it appears we may be playing a waiting game.

In the meantime, housing prices are dropping again over the winter so for you potential homeowners this Spring may indeed be the time to get out there and take a look at what’s on the market. With a buyer’s market and low interest rates saving you thousands over the loan, buyers have immense bargaining power.  One thing I am noticing this winter is the absence of active listings here in the East Bay - so do not expect a flood of houses to choose from! What to look for when buying? Well, now, that’s for a future blog.

Through the Looking Glass I Go!

Ready! Set! Go! Ok.....wait, slow down....um....wait....stop...? 

It seems like the world of real estate in this new decade is one of  the Unsure.  We are unsure if we want to buy, unsure if we'll sell, unsure if we'll get that loan, unsure if we'll be working in this field a year from now....it's just so muddy!  Well, hopefully by sticking together we can create a bit more security for ourselves in this crazy world!  Just maybe, we can create a sense of stability and comfort from knowledge and information.  Just maybe, we can create some community. 

Welcome to my blog. In this resource, I fully intend to distribute/criticize/apprehend/comprehend/question the information that is relevant to us as professionals, home owners, realists and dreamers.  In this particular blog, expect:

• local real estate news
• local and non-local financial news that impacts real estate
• market and niche market info, from an appraiser perspective
• stories about my appraising experiences, trials and tribulations
• some graphs, yes, definitely some graphs because I "am" an analyst after all
• probably some interesting science bits here and there, since I have an extensive background in the biological sciences
• various other distributions for you, some entertaining and light, others more serious

I am a relative newbie social networker, so please be patient and gentle with me.  I really appreciate any of the following:

• questions! questions! questions!
• comments (criticism is good, but please be constructive!)
• helpful tips
• informative links
• your business (hint: my email is tyoung@futurefocusappraisal.com please let me know if you are in need of my services)
• cookies & cupcakes
• networking opportunities
• more cupcakes

And there you have it! Welcome! You may also find me on LinkedIn and Twitter. I hope to be of service to my friends, my family and my community. Let's do this!