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Serving the Santa Barbara Area

Monday, August 25, 2008

(Articles are presented here to better inform the professionals who subscribe to the Haves & Needs. Clients or potential clients may come across this information on their own. Real estate professionals aware of the information contained in this article or ones like it may be able to use it to their advantage.)

July Existing-Home Sales Show Gain

WASHINGTON, August 25, 2008

Existing-home sales rose in July to the highest level in five months, although sales have hovered in a relatively narrow range over the past 11 months, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent to a seasonally adjusted annual rate of 5.00 million units in July from a downwardly revised level of 4.85 million in June, but are 13.2 percent lower than the 5.76 million-unit pace in July 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the up-and-down pattern may break soon. “We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead,” he said. “Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives. Given some of the inventory on the market, we also strongly encourage buyers to get a professional home inspection.”

The national median existing-home price for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.

Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase. “Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time,” he said. “Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”

Analysis of NAR price data since 1968 shows home prices normally rise 1 to 2 percentage points above the overall rate of inflation, building wealth over the typical period of homeownership.

Total housing inventory at the end of July rose 3.9 percent to 4.67 million existing homes available for sale, which represents an 11.2.-month supply at the current sales pace, up from a 11.1-month supply in June. The rise in supply results from a sharp increase in condominium inventory; the single family supply declined.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.43 percent in July from 6.32 percent in June; the rate was 6.70 percent in July 2007.

Single-family home sales rose 3.1 percent to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June, but are 12.4 percent below the 5.01 million-unit level a year ago. The median existing single-family home price was $210,900 in July, down 7.7 percent from July 2007.

Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in July from 590,000 in June, but are 18.6 percent below the 749,000-unit pace in July 2007. The median existing condo price4 was $223,400 in July, which is 2.7 percent below a year ago.

Regionally, existing-home sales in the West jumped 9.7 percent in July to a level of 1.13 million and are 0.9 percent higher than July 2007. The median price in the West was $273,200, down 22.2 percent from a year ago.

Source: NAR

Book review: "Houseonomics: Why Owning a Home Is Still a Great Investment," by Gary N. Smith and Margaret H. Smith

Owning instead of renting, even in the current climate, pays a financial dividend, the authors explain.

By Patrick S. Duffy, Special to The Times

August 23, 2008

With home prices continuing to fall -- and expected by many experts to decline further before finding a bottom -- it's very easy to play that "woulda, shoulda, coulda" game and envision how life might have been different had you sold that home back in 2005 and run off with the profit to Tahiti.

But in their new book "Houseonomics: Why Owning a Home Is Still a Great Investment," authors Gary N. Smith and Margaret H. Smith would argue against that type of thinking entirely, because it ignores what they call the "home dividend."

In fact, they contend that for most people in most places, now is a good time to own a home. In some areas of the country -- such as Indianapolis, Atlanta and New Orleans -- homes can even provide double-digit after-tax returns.

How can this be? Gary Smith and Margaret Smith, who hold doctorate degrees in economics from Yale and business economics from Harvard, respectively, said the home dividend was the amount homeowners saved by investing in their own homes instead of renting. This dividend is calculated by determining the market rent for the same type of home, subtracting costs for mortgage payments, property taxes, insurance and maintenance or homeowners association fees, and then adding in any tax savings.

If saved and invested like income from a stock portfolio, any positive balance could then fund future expenses for vacations, college tuition or even a more comfortable retirement. Even better, the unique tax advantages provided by the government for homeownership -- including mortgage interest deductions and generous tax exemptions on profits for most owner-occupied home sales -- have, according to the book, helped homeowners amass an average net worth of nearly $200,000 versus less than $5,000 for renters. Since homeowners have just twice the annual income of renters, the authors conclude that most of that additional net worth is due to homeownership.

Although it might seem odd timing to release such a book during the current phase of this housing cycle, the Smiths assert that many financial experts and housing doomsayers overlook housing's current investment benefits by focusing too much on short- and medium-term swings in prices. They strongly advise against flipping homes as speculators, using home equity for purchases that don't improve a dwelling or even buying income property unless the resulting home dividend is comparable to other non-housing investments -- much like a stock.

Gary Smith, who teaches economics at Pomona College in Claremont, argues that most comparisons of home prices to incomes generally ignore the effect of interest rates and potential cash flow. "Everyone's got to live somewhere, so do you want to pay by renting or buying?" he asks. "That's the crucial question."

Fortunately, the book not only provides the basic steps to calculate home dividends for owner-occupied and investment properties but also provides comprehensive advice with chapters covering when to buy, finding the right home, taking on appropriate levels of debt, selecting the right mortgage, when to refinance or tap a home-equity line, remodeling, the pros and cons of owning investment and vacation homes, viewing a home as an important part of a retirement portfolio and the steps to take when eventually selling.

Appendixes provide examples on how to calculate home dividends for real-world examples of owner- and renter-occupied houses cited earlier in the book, so readers can plug in their own figures matched to their individual circumstances. For example, although buying a rental home in Indianapolis might seem like a great idea to Southern Californians because of the relatively low sale prices and decent rents, the potential home dividend is gradually eroded when factoring in the costs of traveling to and managing an out-of-state property. The Houseonomics website, at www.houseonomics.com, provides online calculators.

Of course, there is another crucial step to creating long-term wealth, since a small negative dividend in the first few years will slowly rise as rents increase with inflation and the savings from not renting grow over time. That step is called patience.

Source: Los Angeles Times

LISTINGS

Submissions are limited to twice per week unless there is substantial change in the terms (price, financing, etc.) of the submission.

<<PRICE REDUCTION>> 2716 Stow Street, Los Olivos. MAP 3-bedroom/3-bath home located on a quiet street in the heart of Wine Country. Wonderful large backyard beautifully landscaped with huge gazebo, pond, waterfall, redwood trees, pathways and many fruit trees. Consider this property for a vacation rental - $400 to $500 per night. Price now $909,000. Both Santa Ynez Valley and Santa Barbara lockboxes on property. Call first, show and then bring an offer! MLS #08-1349.

Bunny DeLorie 570-9181

CONTACT: Bunny DeLorie, Prudential California Realty, 570-9181 (( SUPER SUPPORTER )) or Jamie Jo Sim, 689-5799.

<<PRICE REDUCTION>> Prominent Cape Cod, meticulously situated on one of the “best lots in Summerland.” 2-stories featuring 3-bedrooms/2½-baths plus den. BIG unobstructed ocean views from almost every room. Tucked on .20± acre, on one of the highest no-thru-traffic streets in Summerland, landscaped from the top of the driveway to the park-like setting on the ocean side of the house, makes this property almost as pretty outside as it is inside. You’ll find it’s filled with warmth, quality, and beauty—ideal for a very special and discerning buyer! Offered at $2,150,000 with 2.75% to the buyer's agent. Very easy to show.

CONTACT: Sandy Lipowski, Sotheby's International Realty, 403-3844 or sandy.lipowski@sothebysrealty.com. (( SUPER SUPPORTER ))

<<PRICE REDUCTION>> Oceanfront on the Sand. 3,000+ square foot beach home! Rarely available and much sought-after location. This is a single-level gated beach home with the master suite just steps from the sand. Featuring 3-bedrooms/2½-baths and huge rooms including a gigantic kitchen with walk-in panty (truly a chef's heaven). All rooms have either ocean or mountain views. Offered at $6,390,250 with 3% to the buyer's agent. Very easy to show.

CONTACT: Sandy Lipowski, Sotheby's International Realty, 403-3844 or sandy.lipowski@sothebysrealty.com. (( SUPER SUPPORTER ))

NOT IN MLS:: San Roque 2-story Colonial. Truly a unique find in the midst of some smaller scale surrounding homes. It features 3-bedrooms/2½-baths, a formal living room with fireplace, formal dining room with connecting French doors to the vine-covered backyard patio, a recently remodeled great room with stainless steel kitchen appliances, a downstairs den/office, and attached 2-car garage. This is an attractive home inside and out including much curb appeal. Offered at $1,350,000 with 3% to the buyer's agent. Very easy to show.

CONTACT: Sandy Lipowski, Sotheby's International Realty, 403-3844 or sandy.lipowski@sothebysrealty.com. (( SUPER SUPPORTER ))

HAVE:: 910 VISTA DE LEJOS Drive. MAP Mediterranean-style 2-story home of approximately 2,800-sqft home with 3-bedrooms/3½-baths at the end of a cul-de-sac. Master bedroom downstairs with 2-bedrooms/2-baths upstairs. Three fireplaces. Living room, family room, dining room, and large open kitchen with breakfast area. 3-car garage. Fenced backyard with spa and great mountain views. Vista La Cumbre is a gated community in More Mesa with swimming pool and tennis court. Off Puente and Mockingbird Lane. Price adjusted to $1,395,000. Easy to show with lockbox.

CONTACT: Randy Freed, Village Properties, 895-1799. (( SUPER SUPPORTER ))

HAVE:: 4857 Vieja Drive. MAP UNBELIEVABLE VALUE. New home in 5-home community overlooking 300 acres of open space. Dramatic, new 2-story home with living room and dining room separated by a two-way fireplace providing warmth to both rooms, butler’s pantry with beverage center, gourmet kitchen with off-white cabinets, granite countertops, walk-in pantry, pot-filler and Viking appliances. The family room features a stone fireplace with rustic wood mantle. There are two downstairs bedrooms with a bath between and the master suite and 4^th-bedroom with private bath are upstairs. Approximately 3,190 square feet. Offered at $1,995,000. MLS #08-2215.

CONTACT: Kathi Hopkins, Investec Properties, 895-6004. (( SERIOUS SUPPORTER ))

HAVE:: 883 San Antonio Creek Road. MAP Custom-built in 2005 Mediterranean home with 3-bedrooms/2½-baths. Wonderful open floorplan with five entertaining or relaxing decks and patios. The home has a gourmet kitchen, cherry wood and stone floors, faux finished throughout. Located on 1.24 private acres, this property is SOLAR and makes it's own electricity - cost about $10 per month. Also $60 per month covers all the water you need for household and grounds. Over 90 avocado trees on the property. Listed for $2,285,000. Vacant, staged and shown by appointment.

CONTACT: Bunny DeLorie, Prudential California Realty, 570-9181 (( SUPER SUPPORTER )) or John Sween 448-9171 .

HAVE:: 3040 HIDDEN VALLEY LANE, Montecito. MAP Panoramic views of the ocean and mountains and located at the end of a private road, this unique home consists of three separate levels. Top level offers hardwood floors, living room with fireplace, kitchenette, dining area and bedroom and bath. Main level features master bedroom, kitchen, living room with fireplace, family room and dining area. Lower level offers game room, exercise room or office, and kitchenette. Approximately 3,600-sqft including garage, according to seller. Offered at $2,495,000. MLS #08-2958.

CONTACT: Randy Freed, Village Properties, 895-1799 (( SUPER SUPPORTER )) or TIFFANY HALLER, 698-6694 (( SUPER SUPPORTER )).

HAVE:: 3060 HIDDEN VALLEY LANE. MAP Situated on nearly 3½-acres, this multi-level, 3-bedroom/3½-bath home built in 1987, offers 3,370± sqft. Wonderful tranquil setting and incredible panoramic views of the islands and harbor. This spacious home rests behind a gated entrance and features, an updated kitchen, vaulted beam ceilings, hardwood floors, Saltillo tile, three fireplaces, formal dining room, family room, living room and amazing view decks on all levels. Additionally, this property offers separate electrical and water meters, which would allow for a second residence or guesthouse. Offered at $2,495,000. Brochures available. MLS #07-4808.

CONTACT: Randy Freed, Village Properties, 895-1799 (( SUPER SUPPORTER )) or TIFFANY HALLER, 698-6694 (( SUPER SUPPORTER )).

HAVE:: 990 MARIPOSA LANE. MAP Views of the entire coastline! Discover this elegant estate on almost three ocean and mountain view acres. Grand rooms with high ceilings. Walnut paneled library. 4-bedrooms/5½-baths including detached guest or staff quarters. Quality and attention to detail throughout. Olive orchard, mature trees, Montecito water plus private well. Marble and granite hardscape, classic garden gazebo, fountains, loggia, and expansive motor court. Montecito Union School. Offered at $8,500,000.

CONTACT: Marcel Fraser, 969-3943, 895-2288 or MarcelFraser.RebeccaFraser@cox.net. (( SUPER SUPPORTER ))

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