Getting your home ready for Autumn

We know it is getting that time of year to put up those summer clothes and get out the jackets and long pants. One thing you must remember is that your home also needs some changes and checks before autumn begins. It is now time to check your appliances and other home systems so you do not have to repair these items when you need them the most.

American Home Shield has prepared a list of tips to help families prepare their homes for autumn and winter, which includes maintaining your heating unit and plumbing system before those temperatures drop down to freezing.

To get your heating system ready:

Your heating system should be inspected and cleaned by a professional
If you have furniture over the vents in the floor, it is time to move them so you can receive clear air flow.
Check your air filters, clean or change as needed.
Before doing any type of maintenance, read the manufacturer’s recommendations. If you do not have the owners guide any longer, you can always find it online.
Do a test run. Do not wait until the temperature is cold outside, do a test run. Turn on the heat and let it run for thirty minutes and listen for strange or unusual sounds or noises while making sure it is working correctly.

To get the plumbing system ready:
Insulate all pipes that may be prone to freezing like those that are close to an outside wall, exposed pipes such as an outside faucet, or any pipes that are found in unheated areas of your home.
Make sure your water meter box’s lid is closed to stop the meter from freezing.
Know where the master shut off valve is located so you can turn off the water in the event of a leak or if a water line breaks.
Use electric heat tape or even insulation on any pipes in crawl spaces or outdoors to stop them from freezing.

Dave Quandt, Senior VP of Field Services for American Home Shield stated, “Plumbing and heating systems are like any other machinery; they require some basic maintenance to keep them functioning properly.”

“Unfortunately, if regular maintenance doesn’t take place and a system or appliance fails, it’s usually at the time of need and you’re left with a crisis which can require a quick and more expensive decision.”

Copyright© 2011 RISMedia, the Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Short Sales Growing in Popularity

Short Sales can save borrowers that are underwater as long as everyone agrees. Short sales are for homeowners that want to avoid foreclosure or for those looking for a great bargain, if all goes to plan.

Short sales are transactions in which borrowers owe more on their mortgages than their homes are worth, known as underwater, where the lending company agrees to a discounted payoff. In San Diego County 18.7% of the home resale market for the month in June was short sales, which is up from 2% we saw five years ago, states local real estate tracker DataQuick.

Short sales are growing, however, the process of the closing take time, is uncertain, and changes all the time, which can hinder interested parties.

Kurt Wannebo, a San Diego broker that has over 6 years of experience in short sales stated, “Short sales are changing all the time,” and went on to say, “The banks change their processes all the time … and there are new laws and new short-sale government programs.”

A new state law that was signed in July is meant to help protect short sellers may make the process even longer, more uncertain, and cost the seller more.

Who should use a short sell?

In most cases, those that opt for a short sell are ones that can no longer afford their mortgage and want to walk away as their investment is no longer there.

Shelia Brady and her husband purchased a condo in Rolando for $285,000 in 2004; the condo is now in escrow being sold as a short sale for $120,000. The couple not only lost value but also was behind on their house payment due to surgery that stopped her from working for 2 ½ months while her husband has been unemployed for 2 years.

Why would this couple use a short sell instead of letting the foreclosure process take over?

“You have such a strong moral obligation toward your mortgage,” Brady said. “You sign a document saying, ‘I will do this.’ ”

Greg Ives, 33, purchased a downtown San Diego condo at the Hard Rock Hotel to be used as a rental investment for $405,000. The value on the property depreciated and the amount he could charge for rent depreciated. Once he paid his mortgage, he found he was $1,000 under for several months. He filed for a secure loan modification but was denied, he then decided on a short sale. After five long months, the deal closed. He still owes the lending company and will have to pay $340 per month for the next ten years. He stated that his best option was a short sale. “I’m grateful to be done with it,” Ives said.

For any questions regarding selling your property via a short sale or if you are interested in a buying a short sale property, contact one of our expert real estate agents in the San Diego area.

La Mesa Real Estate Market Improving

Everyone is looking forward to the day when the real estate market starts improving. According to Jeanne Koopman a real estate with Pacific Sotheby with 13 years experience stated, “I have to say, I’ve seen prices coming up a little more, especially in my neighborhood in the last year and a half.” Ms. Koopman lives close by the Village, which offers quite a bit for buyers with amenities within walking distance such as post office, farmers market, restaurants, library, and banks. This is why she personally moved to the area six years ago.

She stated, “When you have an open house in La Mesa, you have a lot of people coming by, but it has to be priced right. People are still looking for a deal. Many of the people looking, grew up here, now have families and want to come back.”

Homes close by the Village are selling faster than other areas but to many this is not a huge surprise. The homes are normally smaller and when it comes to price, they are in the first tier. Aaron M. Kerper, a La Mesa Realtor with Prudential California Realty, as well as the current president of the East San Diego County Board of Realtors stated this signifies a “seller’s market.”

Those are certainly words we have not heard in a long time. Aaron Kerper explains the reason he is stating it is a sellers market after going over the graphs, charts, and statistics.

Kerper explanation, “With respect to La Mesa (zip codes 91941 and 91942), we actually have several different markets operating within those zip codes, depending on the price-point and the type of home being offered.” “Looking at the last two years, it’s a seller’s market in the under $400K market. Homes are selling at close to asking price—with prices up 5.1% in June over the same month two years ago, up 1.6% year over year.” “Lenders are now agreeing to do short sales and banks are putting their homes on the market. There are 25% more homes on the market, 65% more in escrow and 70% more sold than two years ago. Property is moving through the pipeline at this price point.”

One house that is being held open by Jeanne Koopman in North Mesa is one of the largest in the community at 2550 square feet. The home has been on the market for one hundred days listed for $375,000. This is a traditional sale. The home owners selling the home are in the middle of a divorce and are motivated sellers. Koopman believes the home will sell, but it will take more time. The home needs a few repairs and is the largest home in the area.

When you have six months of inventory on the market is it considered a “market in the balance.” At the price range there are 2.6 months of inventory which definitely shows a sellers market.

Kerper teaches real estate courses at Grossmont/Cuyamaca and Southwestern Colleges takes a different look at the stats a more academic view. “Looking at the history is very important. Unlike the stock market, you have to be willing to look it at over a span of time. There are more properties on the market in the last few months than there were two years ago. Two years ago, there was a lot of uncertainty or fear. People were hunkering down and people in distress couldn’t get their properties on the market.” Basically,” Kerper stated, “the market has corrected itself. Sellers are putting their homes on the market at realistic prices.”

In the La Mesa area, more homes are coming to the market in the $400K to $800K price range. Banks are working with buyers for foreclosures and short sales. However, with more than 6 months of inventory and a large difference between the list prices and the selling price it makes the area a buyers market in this price range.

“This has been a very hard-hit group. There are not first-time buyers in this price range. These buyers are more particular—looking for a “wow” factor—their move is more a “want” than a “need.” But what’s important for sellers to know is that the market is still moving,”

A restored historic Craftsman home listed by Jill Smith of Leonard Smith Associates one block from the Village is listed for $449,000, which is the low end of the tier. This home has been on the market two months. The home owners have been renting the home out for the last year. As soon as the tenants gave notice, they were moving the home owners but the home on the market. The home is in excellent condition with a separate workshop and parking in the alley.

“There are definitely more people out there looking,” he says. “But it’s the banks that are holding us up.”

Kerper added, “Availability of credit is important. As you go up in price, the market tightens. If jumbo loans are not available or offered only at high interest rates, that means significant down payments are being required. So it’s a different picture for homes in the $400K to $800K price point.”

Across the hill, a traditional sale listed by Peg and Tom Keeley of Keller Williams with homeowners that really do not wish to move but are looking to downsize. The homeowners are wanting to not only downside but also move closer to their daughter living in North County.

She explains the downstairs could be converted to a “granny flat.” It is a basement that has a separate entrance, private bath, along with fireplace. The value range is $619,900 to $639,900, which is in the 2nd tier pricing. The home has been on the market a little over 2 months.

“More buyers are coming out, but the sales are still pretty stagnant. He points out that the maximum amount FHA will loan is coming down to $540K in October. This could help spur the sale of this home.”

Mark and Joy Berner, real estate agents with Century 21 Award, have a home listing with a prominent Russell Road address on Mt. Helix for $995,000. The floor plan was created by the owners with entertaining guests in mind. A few of the furnishings are a bit dated since it was built in 1962 however, the floor-to-ceiling windows offer breath taking views.

“At the upper end, things are still pretty slow,” Joy Berner stated. During open houses, the home is getting quite a bit of traffic. If this home had been on the market a few years back it would have been a bidding war. Today, the home has been on the market close to 100 days and has been in escrow once, but it fell through.

Aaron Kerper corroborates the depressed state seen at the higher end of the market with homes in the price of $800K to $1.5 million.

“There was a period three months earlier this year when no homes in this price point sold. There has been a tremendous fluctuation in home prices at this end of the market. Currently there is a one-year inventory of these homes, and even though that is less than last year, it most certainly is a ‘buyer’s market’ in this price range. If you compare it to 2004-05, prices between $1.5 million and $3 million don’t exist anymore.”

Attached homes in La Mesa are mainly priced around $50K to $249K, and according to Kerper priced at this lower price point, which represents a “seller’s market.” The number of attached homes that are for sale, pending, and sold increased last month. The number of units on the market increase by 155 percent over 2009 but there is only 3.8% inventory. “People gravitate towards these because they’re affordable,” says Kerper.

The real estate market in La Mesa may not be coming back strong, but we are seeing a sellers market in two different segments, which are under-$400K single-family homes and attached homes. Sales are still slow and prices more open to discussion in the $500K+ range.

Kerper stated, “I am a third-generation real estate broker. When my family came here, La Mesa was the first place they settled. My grandfather built his first home here. One of my grandmothers still lives here on Severin Drive. Although I work all over, I concentrate my business in East County. I’ve been with the Prudential office in La Mesa for 11 years.” “La Mesa remains a place that people seek out and find desirable—East County’s finest community.”

Retail Sales Decreased

As reported by the ISCS-Goldman Sachs Index, retail sales dropped for the week that ended on July 30. On a year over year basis, retailers enjoyed an increase in sales of 4 percent.

The monthly composite index of manufacturing activity report from the Institute for Supply Management showed a fall to 50.9 in the month of July after seeing a 55.3 reading in the month of June. Any reading that is above 50 shows expansion. This was the 24th month in a row of expansion.

The monthly composite index of non-manufacturing activity as reported by the Institute for Supply Management decreased to 52.7 in the month of July from the figure of 53.3 seen in the month of June. This was the 19th month in a row for seeing expansion in the services sector.

An increase in total construction rose 0.2 percent to bring the amount to $772.3 billion in the month of June, after seeing a gain of 0.3 percent in the month of May. Economists believed there would an increase of 0.1 percent in the month of June.

Factory orders dropped 0.8 percent in the month June to a seasonally adjusted $440.7 billion, after seeing a 0.6 percent increase in the month of May. Not including the volatile transportation sector, orders increased 0.1 percent in the month of June.

The seasonally adjusted composite index of mortgage applications according to the Mortgage Bankers Association increased 7.1 percent for the week that ended on July 29, refinancing applications rose 7.8 percent, and purchase volume increased 5.1 percent.

First claims for unemployment benefits decreased by 1,000 to 400,000 for the week that ended on July 30, continuing claims for the week that ended on July 23 increased by 10,000 to 3.7 million. The monthly unemployment rate decreased to 9.1 percent in the month of July from the figure of 9.2 percent in the month of June.

Forward Look at the Economic Calendar
August 10 – wholesale trade on August 10
August 11 – international trade
August 12 – retail sales

Ups and Downs on the Dow

The markets are still swinging in all directions, which put investors wondering if this volatility is going to be normal for the next few weeks on Wall Street. During the last week, the Dow had wild ups and downs – On Monday it dropped 634 points and on Wednesday it fell 519 points – Tuesday it went the other way up 429 points the same on Thursday with a rise of 423 points. At the end of Friday, the stocks had seen a gain and were holding on.

These swings are making investors quite leery, with the Chicago Board Options Exchange’s Market Volatility Index (VIX) also showing irregular shifts throughout the week. At the close on Monday, the VIX saw a two-year high of 48, however, on Tuesday it fell 27 percent, then Wednesday it made a come back to 32.99. Fear is at the top of the list when it comes to market today.

Adam Sussman, director of research at financial data firm Tabb Group, told the Los Angeles Times stated, “People are afraid of things that could happen rather than things that have already occurred”.

Productivity in the labor sector for the second quarter showed a slightly different story as reported by the Bureau of Labor Statistics.

The Bureau, reported that non-farm business sector labor productivity fell at a 0.3% annual rate during the second quarter, while output increased 1.8% and hours worked increased 2.0%.

If you look at the long term, productivity is on the rise. For the second quarter of 2010 to the second quarter of 2011, output rose 2.5% and hours increased 1.6%, providing an increase in productivity of 0.8%.

Manufacturing was hit hard, with the sector showing a productivity decrease of 2.0% during the second quarter of 2011, while output increased 0.6% and hours rose 2.6%. Durable goods manufacturing saw productivity drop 3.5%. During the second quarter, this sector saw a 5.1% rise in hours outpace a 1.4% rise in output. Nondurable goods manufacturing productivity rose 1.2% while hours fell quicker than output.

Sales for merchant wholesalers in the month of June, not including branches and sales offices, rose 0.6% from May and 15.4% from June of 2010 hitting $395.8 billion as reported by the Census Bureau. Prominent performances were durable goods, up 1.6% and motor vehicles up 8.7%.

Wholesale inventories were also up 0.6% from what was seen in the month of May, putting the months’ total value at $459.7 billion. June’s inventories were up 15.8% from what was seen in the month of June 2010. Durable goods and motor vehicles were the prominent sectors, with inventories for both durable goods up 1.3 % and motor vehicles up 4.3%.

Robert Brusca, president of Fact & Opinion Economics, during a public statement explained, “Inventories are likely desired at a much lower level so they’re probably excessive given new expected future economic growth,” and went on to say, “That’s one of the reason we’re seeing the manufacturing industry wind down.”

As reported by the Employment and Training Administration, first claims for unemployment benefits for the week that ended on August 6 fell to 395,000, which is a decrease of 7,000 from the prior week’s figure of 402,000. The four-week moving average was 405,000, a fall of 3,250 from the prior week’s average of 408,250.

The total number of insured unemployed workers during the week that ended on July 30 was 3,688,000, which is a decrease of 60,000 from the prior week’s figure of 3,748,000. The four-week moving average was 3,718,750, a fall of 15,250 from the prior week’s average of 3,734,000.

Upcoming Economic Reports
Housing construction starts
Housing construction permits
Export and import prices for July
Industrial production and capacity utilization data
July’s producer price index
The consumer price index for July
First unemployment claims for the week
Existing home sales totals for July
Leading economic indicators for July