Bob's North San Diego County and beyond Blog

Everyone wants a great deal....and a great deal on a home is even better...here's a little story about how to be exceptionally happy about the money you save when buying a home.

Just a few months after I graduated High School I had a job, rented a nice apartment...and felt pretty good about myself....I was paying the princely sum of $215 a month for a furnished one-bedroom place in a decent part of town. 

Things were going great until I came back to my parents house and was talking with my dad....that's when I learned that he was paying $160 a month for a house payment on an 1800+ sf ranch style home with a pool, and a a view to die for!!!

It was hard to accept that he could get so much more for so much less....how did that happen??? 

The answer is absolutely simple...12 years...and a lot of inflation....which sounds a lot like what is about to happen once again...just a little word to the wise!

My dad bought his home in 1966...I moved out in 1978...in the twelve intervening years there were two recessions and two periods of high inflation...the house payment that was all he could afford in 1966 became almost a utility bill in 1978.

This whole scenario is about to play itself out one more time....If you're renting right now please think about this.,...there really is a way to pay pennies on the dollar for real estate....it's called buy and hold!

Not too sexy...Not too exciting...but just about guaranteed to work

Don't let the doom and gloomer's get you down...everyone wants to live indoors.,.and always will...it may be difficult to buy right now...but the long term rewards are GREAT!!...sacrifices you make today pay huge dividends in a few years!

How do you measure the growth of a local housing market?

When things are going crazy how much should you offer?

One great indicator is the ratio of the sale price to the list price...higher numbers mean more competition from buyers and a rising market...and that is certainly true here in Valley Center and Escondido!

This afternoon I took a careful look at our local markets...and found that the numbers reported from many news outlets really don't tell the entire story!

Everyone reports the "average" numbers...but we all know there is no such thing as an "Average Home"...each one is different...and every town has different quality homes...and they sell at different rates!

So...how do you make any sense out of it all?

Here in Escondido...and especially in Valley Center...the homes that are attracting all the attention are priced at or below the median sale price for a given area....so here is the trick!

First...determine sale to list price ratios for all homes sold.....Second...do the same thing for homes priced below the median sale price...

Then....graph it all out so you can see what's happening!

To save you all a little time here is what I found for our area....but this will be true for all of North San Diego County...and probably for every other metro area in the country!

Here is the data from this summer for Valley Center, Ca.:

And here is the data from the East Escondido Ca. zip code 92027 area:

Just look at the increasing ratios....we are definitely seeing some nice price appreciation...and the volume is up too!!

This all translates into some great price appreciation for buyers....so don't let the media naysayers make you miss the boat!

If you want more detailed information about Escondido, CA or Valley Center, CA....just ask! 

This afternoon I took a look at the foreclosure and pre-foreclosure information in the San Diego County Assessor's database....the numbers are almost unbelievable!

We hear stories about the "Shadow Inventory" of foreclosures out there...the "Foreclosure Tsunami" waiting to break...unfortunately those stories may just be TRUE!

San Diego County is one of the locations you could call "Ground Zero" for foreclosures....and there is no other part of this town that is any harder hit than the Escondido area...and my home town...Valley Center...so I picked these zip codes to illustrate how things are changing in a hard-hit area.

These Charts are my own research...straight from the Assessor's database...I pulled all of these numbers today...to calculate the monthly sales volume for each zip code I took the past three months worth of sold data for all housing types...and divided by three...pretty tricky eh?

Now...you have to promise me something...promise you will READ the comments below the charts...they are IMPORTANT...but won't make sense without the chart data.

First...here is a comparison of homes in each local zip code that are in some stage of the foreclosure process...Escondido has four zip codes, 92025 through 92029...Valley Center is 92082:

The sheer number of present and upcoming foreclosures is staggering...More than 90% of these homes are going to hit the resale market...with a HUGE impact.

Let's look at that in the context of the number of sales in an average month here...I took the past three months of sales and averaged that to a single-month average number of sales...and compared this "Shadow Inventory" to the present sales:

These Foreclosed or "about to be Foreclosed" homes represent on average OVER A YEAR of sales inventory!

Ask yourselves two questions:

• Do we think that unemployment is going to increase the number of foreclosures?
• How deep is the "Pool of Buyers" for these homes?

In the North San Diego County area we're seeing over a 1% per month price appreciation for the average home...many first time buyers were again priced out of the market this fall

This data shows me that we should have downward pressure on prices at some point...and those folks need to be ready to STRIKE when the prices drop!  It won't happen a third time!

The elimination of Federal Mark-toMarket rules have allowed banks to hold LOTS of homes off the market...but how long can they keep that up?:

a.) Six more months

b.) Eight more months

c.) Twelve more months

d.) For Ever

If I get to grade this little test there will be no points given for "d" as the correct answer....

Just like the earlier bubble...what goes up will come down...right now bank inventories are up...OK...for now...but the savvy buyers will be READY when the inventories start to come down!

Hope this was helpful...if you ever have questions or referrals for Escondido or Valley Center I'm here to serve you!

5% per year...50% in ten years...sounds like some pretty good numbers right?

That's the truth in San Diego...but no one is talking about it!

The latest Case-Schiller report is out...read all the details in a WSJ article from yesterday...everything is referenced to 2000 prices...and good ol' San Diego is there with a 153 rating...Our homes prices are more than 50% higher than the 2000 average...you would think that would be good news!

I work a lot in the Valley Center and Escondido areas...this was ground zero for foreclosures...but we're seeing the same thing here...prices are coming back and the overall numbers for a 10-year period are still great.

Real Estate is supposed to be a long-term investment....and this report really puts things in a better perspective.

Most of the metro areas are up....even Phoenix and Las Vegas are over 100...New York is over 170....that is huge!

This is powerful stuff...what a great tool to educate our clients about the long term nature of this business...we can go through the worst crash in Real Estate History, and still be up over a 10 year span!

I know my clients are going to hear about this!!

It's that time of the year again...Santa Ana Season!

This morning when I woke up at my home in Valley Center, I heard the Santa Ana winds whipping the trees around in my back yard...this is the way it always starts...wind in the morning.  Valley Center is a little higher in elevation...and a little further east...than most towns in North San Diego County....so we see the wind first.

As a kid I really enjoyed the hot strong winds...a last blast from summer on it's way out....but after several years of wildfires most of the fun has gone right out of this season!

A few weeks ago I wrote a blog post with some insider tips for anyone facing wind-driven wildfire conditions...scroll back in my blog to read that one...but there was one thing I didn't mention...what is your plan to get back together with your family?

Many times these fires flare-up in the afternoon....and with the commute situation on the freeways it's pretty easy for families to get seperated.  Add to that the terrible air quality and general panic and things that are not too stressful in good times suddenly get a lot more tense.

We have a plan that as soon as fires start we stay in regular communication...someone sticks a little closer to home to be ready to evacuate kids. valuables, and animals...and depending on the situation we pick a spot far from the action to get together.

It's important to plan...roads are closed pretty quickly now...and you don't want your kids to be seperated for too long!

It looks like Our Favorite Uncle has done it again!

There is a great article in the Wall Street Journal today that quotes a Goldman Sachs source who states that the Federal first time buyer tax credit boosted sales by over 200,000 units...that's a whole 'lotta homes!

Unfortunately, in the process of boosting sales Washington caused shortages of affordable homes and drove prices up about 5%...that's my government at work!!!

And, the huge FED purchases of mortgages have driven the average mortgage rate down about 0.3% below where it would be expected...and that purchase program will end next spring...so expect a half-point rebound in mortgage rates...these folks are just full of good news!

The article also goes into the problems with Loan Modifications and the glut of foreclosed homes that are still out there in "Real Estate Limbo"...there is also a Must Read section on proposed legislation to slow or stop foreclosures.

While the sales increases are nice and prices have stabilized in some areas...here is San Diego County there are plenty of the ugly "Bidding Wars" we all know about and they mention in this article.  The author goes on to say the long term outlook is for an additional 5% to 10% decline in average prices through next year.

Unfortunately the article doesn't state any specific areas for the price declines...it certainly doesn't look like declines are coming in the North San Diego County area....especially in Valley Center or Escondido...we were the first area into the mess and have average declines here over 40% from the peak...great for buyers...so we are seeing home mortgage payments at less than rent...hard to believe that prices can fall much past the "less than rent" point...we will see!

So...if we can believe these WSJ folks this really is a great time to buy...again proving the old saying, "It's an ill wind indeed that doesn't blow at least a little good"

Just a quick tip this morning about a way to get your VA buyers into a great deal

In the San Diego area...and just about everywhere in California...there is a "feeding-frenzy" going on with first time buyers...and the folks that are using VA loans seem to be at the bottom of the ladder when it comes to REO sales.

Now, don't get me started about how folks that served our country aren't getting a fair shake...

But...I think I found a way to get them good deals and take advantage of the short sale situation to create a positive solution for everyone.

Here's the strategy:

1. Have your buyers as completely pre-approved as possible...Everything in to the lender and DU if possible
2. Target short sales where the buyers can make a great offer...and look carefully for sellers who had previous buyers walk away
3. Carefully evaluate the short sale...is this priced at a point where it will meet recent comps?  Is this a lender with a good record of sale approvals?  Is this really a seller hardship?
4. Communicate with the listing agent...let them know you have a VA buyer...and tell them this is the solution to all of their problems
5. VA buyers...at least in this area...aren't going to get any other type of deal...they are about the only buyers that will still be there when the approval comes down
6. Why would the listing agent waste their time on other buyers that will walk away?
7. Offer to open escrow once the seller accepts...even if you are still waiting on lender approval...buyers with a deposit in escrow are more invested in the home...and you are proving that to the seller
8. Stay in close contact with the selling side and your clients...I mean twice a week at least...not being a pest...but friendly and cordial...the more you communicate the more folks stay on board
9. Have everything ready to roll the moment you get a sale authorization from the lender
10. Parlay your now great relationship with the listing agent...remember you saved this person TONS of extra work...to network and get more deals for your other VA or FHA clients!

OK...this has worked and is now working for me...if you have any tips or tactics please share!

What does it really take to become an "Expert" on any given local Real Estate Market?

We see statistics from the National Association of Realtors...and other groups...that say over 80% of all buyers start looking on the internet...way over half of all buyers find their homes through an internet search...and the percentages are growing all the time...

With all the data available on the Internet why do buyers need a Realtor?

This is a serious question...because you can bet that there are PLENTY of folks asking buyers and sellers that same question....just look at all of the "Discount" and "Rebate" brokerages out there.

I know I bring a lot to a transaction that my clients could not learn in one month...or six months...or even six years of reading what other folks say and not doing the daily work of full time Real Estate...but how do we communicate that to our clients?  How do I prove that I am relevant to the buying and selling process?

We walk a fine line here...a little too much ego and we look like used car salesmen

And too little communication and we look like...well, you figure it out!

Professionalism and leadership are two quantities you expect from Doctors, Lawyers, Accountants...should our clients expect any less?

Here are a few things I try to include in my "toolkit" that let clients know why my services are valuable:

• In depth and current knowledge of the local market.  Lots of information is available...but what does it MEAN?
• In depth knowledge of market trends...can you tell clients which areas are appreciating...and use exact numbers?  How many homes were sold in any given zip code the past month?
• Personal knowledge of the inventory...active and sold...Sure that picture of the house on Hale Street looks good...but do your clients know it was just across the street from the Sewer Plant (true story!)
• Facts and figures from my past transactions that show buyers how professional advice can save folks just like them from mistakes...costly mistakes!
• Involvement in local Realtor Organizations...I'm not just along for the ride...I try to make a difference
• Competence in ALL the technology that we have available...just like the dinosaurs...we have a choice...be good or be gone

Over the next five years we will see huge changes in the Real Estate markets.  The banks and other large lenders are looking at the market...and they are moving in for the kill.

I would hate to see my clients reduced to using some live-chat line to help them buy a home because I didn't do what was necessary to stay in business...Remember Sears in the 1970's...they were a one-stop-shop for everything from frying pans to life insurance...look at Wal Mart today...how many Mon-n-Pop's are gone because of that corporation?  Can that happen to us...You Betcha'

We really are a service industry...we need to serve...and serve WAY better than any corporate entity...And...we need to be RELEVANT...there is that "R" word again...the more we educate our clients the more we gain the opportunity to serve more of their friends and family...and that is a good thing!

OK...soapbox time is over for today...and I appreciate your feedback and insights about how you communicate your relevance to your clients!

Do you ever stop to think about why you live where you live?

This morning I'm working from my home office in Valley Center, Ca., and as I was looking out my window it hit me... this is a pretty nice place to live.

How do we choose the places we call home?

Is it a default thing?...we grew up here, so we live here?...probably true for many folks....but a lot of us have a choice, and it's interesting to think about why we made our choices...what factors came into the equation.

If you have kids the local schools are important...most buyers I work with want to know about the school quality ratings...and the schools here in Valley Center are good places for learning...but there's more to it than just schools.

Commute times make a big difference for many buyers...when times were flush folks didn't seem to mind driving a little more so they could live in a quiet, countryside area...then things pulled back for a while with $4.50/gallon gas...but they're starting to swing again toward country areas that offer an escape from city pressures.

I think there's a another force at work here...something more than just practicality considerations...something so big that we can't even see it...but it affects our collective thoughts across America.

We're in a time of great change...in the U.S. in general, and also here in the places we live...and that causes us to evaluate our lives.

Every day this week I've had different people saying almost the same things to me...they're ready to move back to a simpler life...the consumerism of the 2000-2006 years is giving way to a more careful evaluation of life...Hummers are giving way to Prius...spending to saving...and big McMansion homes are being exchanged for a comfortable ranch and a quiet garden.

San Diego county has the full spectrum...from downtown high-rise condos looking over the San Diego Bay...to the suburbs...to Million dollar homes in Del Mar...to country homes in Valley Center...but I see a trend across the entire area.

Folks here are taking a little time to step back and think about what really matters in their lives...and that is a good thing...

What are you seeing in your area? 

Here is a tough question

Do the Days on Market statistics really mean anything today?

Just a week ago we received the latest stats for market time in the Valley Center, California,  and Escondido, California areas.  When I saw that data it looked all wrong...the market times were WAAAAYYY too long...so I did a little detective work on my own....and the REAL STORY was a lot more interesting than the stats put out by the media outlets.

We've all heard the saying, "Garbage In, Garbage Out".  If you're not comparing like quantities...all truth goes out the window. 

Think of it this way...if you sold four homes last month...two sold in one day and the other two took 100 days to sell....and you averaged that you would get a 50-day average market time...would that number really tell you anything about the market?  Probably not!!

  So...I did a little in-depth snooping...I live here and know the market in this area...so I took the past six months of sold data for detached homes in the Valley Center and Escondido areas...looked at all homes sold under $400K....which is the majority of the market here...and classified them into "Properly Priced" and "Improperly Priced or Short Sales".

Why does this matter?

We really have two different markets going on here at the same time...if homes are properly priced they sell in days...if they are short-sales or improperly priced they can take months to sell...and these sales are really not representative of the market that most buyers see.  I wanted everyone to see what is really happening for the majority of first-time home buyers.

The Pictures tell the whole story

Here are the two charts...look at the Days on Market (DOM) for each area...

Escondido has a much faster-paced market...but even Valley Center shows the same trend...homes that are really "Available for Sale" sell in days...the rest take months....

If you have any questions about Local Market Statistics in the North San Diego County areas...or even East San Diego County please let me know...I am here to serve you!