Facing Foreclosure? A New California Law AB2424 Could Give You More Time to Sell Your Home...

During the years of the Great Recession, the vast majority of my Sacramento area listings between 2007 - 2012 were with home sellers in some sort of distress or default. And, often I would receive panicked calls from homeowners toward the end of the foreclosure process -- days before the foreclosure was to take place -- asking to list and sell their home asap. And that scenario was extremely difficult to work though, because many mortgage companies would not delay a foreclosure to allow the homeowner to sell. I fought tooth and nail -- sometimes with success and we were allowed to delay the foreclosure and given time to list/sell the home, and other times the home was foreclosed out from underneath the homeowner. 

I am sure you can imagine how devastating that would be.

Well -- thanks to a new law passed in 2024, if you are a homeowner who is facing imminent foreclosure of your home, AB2424 may give you some extra time to sell your home before it is foreclosed out from under you. 

I so wish this had been the law back in the day! Better now than never...Here’s what you need to know in simple terms and how the new rules from AB2424 may be able to help you:

First and foremost -- under the new law, homeowners facing foreclosure should be provided 45 days to sell their home. Of course there is a process to follow, and if followed correctly, you should have ample time to sell your home before foreclosure. If you are staring down the barrel of a foreclosure (also known in California as a "Trustee Sale"), and decide to list your home for sale with a licensed real estate agent, you can request a delay in the foreclosure. If you sign a listing agreement with a real estate agent at least 5 business days before the foreclosure sale date, the foreclosure may be postponed for 45 days. This will provide time to market your home, find a buyer, and close the sale...so you may be able to pay off your delinquent mortgage, sell your home, take your net proceeds (or complete a "short sale" if you have no equity), and avoid foreclosure of your home. 

Have an accepted offer on your home? If you find a buyer for your home and sign a purchase agreement (an accepted offer), you can ask for another delay. As long as your real estate agent follows the correct process, submits the signed purchase agreement 5 business days before the new sale date, the foreclosure may be pushed back for yet another 45 days. This means that as long as you’re actively working to sell your home, the AB2424 gives you a couple different opportunities to delay foreclosure and potentially walk away with your home equity as cash in your bank account.

Peeps, this is a huge deal. I can't even tell you how many more homeowners I could have helped to avoid during the recession if this had been the law back then!

If you are a Sacramento homeowner facing foreclosure and want to list your home for sale -- do not hesitate to reach out to me. I welcome your call at 916-342-1372 or email me at erin@erinstumpf.com.

Erin, where are all the homes that should be for sale in Sacramento?

I was quoted in a Sacramento Bee article last week, that among other things discussed the imbalance of supply of homes for sale and demand to purchase homes. I was quoted in the article saying "At some point there is going to be this backlog of sellers who have forgone selling. We are going to see those people put their houses on the market."

BUT WHEN?

That is a fabulous question. I thought I'd take a minute to describe some of the things I have been hearing from my clients, as well as some of the bottlenecks and challenges sellers have in this environment. At some point the trickle of new listings will be a little more steady, but we have some things to work through in our Sacramento real estate market.

(1) Some sellers still do not feel safe having buyers in their homes. Some homeowners who want to sell have a higher or lower risk tolerance than others. While the COVID19 vaccine has recently become more widely available, it will still be several months before the majority of the population in our region has been fully vaccinated. And cautious sellers who fear catching COVID19 have been staying put. I have conversations with would-be sellers in this category all the time. It does seem like there is a light at the end of the tunnel, but every would-be seller will have a different comfort-level here.

(2) The court systems have been backed up. You may not realize how many transactions are dependent on court orders or other legal processes. For example the probate court system, which governs who will manage the estate of a deceased person, was closed for a few months. There is a tremendous case backlog, and those who will ultimately decide if and when to sell a home that was owned by someone who died are not able to manage the estate affairs without a court order. I have one client who filed for probate back in the summer 2020 who was just recently finally granted authority to handle his father's estate. Courts also often weigh in on the sale of homes in divorce/family law and bankruptcy cases too.

(3) There is an eviction moratorium and various "just cause" ordinances in place preventing landlords from displacing tenants. While I feel for the plight of tenants who face a COVID19-related hardship, there are property owners who would love to sell if they were able to end the tenancy of their current renters. It is often challenging to sell a home with tenants for a variety of reasons. I was contacted by a single-family homeowner last year who had a non-paying tenant, and ultimately they were advised by their attorney that they could not evict the tenants and should not try to sell until the tenants were either paying rent or move out. 

(4) There is a moratorium on foreclosures. While we have been in an increasing price market for a while in Sacramento and distressed property listings (short sales and foreclosures) account for a very small fraction of listings, these listings are not coming on the market as quickly. (4b) Homeowners who are unemployed or under-employed are propped up by federal stimulus, additional pandemic unemployment insurance income, and loan forbearance. At some point, some of these homeowners will sell when the federal assistance expires.

(5) It can be a little more difficult to prepare a home for sale. I have spoken to many contractors are reluctant to work on occupied homes. For those that do, their schedules tend to be booked out for weeks or months. Some organizations have stopped taking certain donated items, so clearing out the house can take longer. Many building materials, supplies, and appliances have become scarce and can be difficult or expensive to obtain. (I personally am still waiting for delivery of a new cooktop I ordered in early March. I will be lucky to have it by the end of May according to the supplier. No it is not stuck on the Ever Given!)

(6) Where will the seller move once they sell? In this low inventory environment for both purchasing AND renting homes, sellers often express concern that if they sell their home they may not be able to purchase or rent something else. Not every seller has an easy move-out plan. I easily have 8 would-be sellers who would list tomorrow if they were confident in finding a replacement property. There are still plenty of ways to work through this, but some of the options can be a little stressful for risk-averse sellers/buyers.

So hopefully this is informative. And as I was quoted in the Sacramento Bee article -- at some point sellers who have not listed their homes WILL sell. I have a queue of many people who very much want to sell. And at some point we will see those homes come to market. There are ways to work within many of these challenges with a little creativity and determination. I am still listing plenty of homes...

The good news is I am seeing a little more inventory as we inch more into the spring. This is the time of year when we normally see more listing inventory...and I can only hope it takes some of the upward pressure off the market for home buyers, as the current trajectory of the market is not sustainable for the long term. but we all know there is less that is the normal we are all used to. 

Quoted in a Sacbee article about the 2019 Sacramento real estate market forecast...

I was quoted in a Sacramento Bee article this weekend - Tony Bizjak interviewed a panel of Sacramento real estate experts including myself, appraiser Ryan Lundquist, and a few others to get our thoughts on the 2018 market and what we foresee for 2019.

I was not surprised to see that our answers were all fairly similar. And none of us predict that our market is in a "bubble" right now. That seems to be a popular question right now after increasing home prices for the last several years, since the bottom of the market in 2011.

I hate being asked the "are we in a bubble" question because I think most people associate the word bubble with what happened in the real estate market back in 2005-2007 when the real estate market literally exploded and the bottom dropped out of home prices. I do not believe we will experience a situation similar to that era anytime soon. The longer answer is a little more complicated. 

I think psychologically, a lot of people see that home values are approaching where they were in 2005 and fear a bubble. While it seems like yesterday, that was over 13 years ago! According to Trendgraphix, Sacramento County's median home price at the peak of the market in August 2005 reached $395,000. December 2018's Sacramento County median home price is $365,000. The reality is that the value of money changes over time, and when adjusted for CPI inflation, Sacramento's median home price would have to be approximately $507,000 today to be equivalent to the 2005 peak. When I earned my masters degree in public policy, the concept of adjusting for inflation and making values equal in today's dollars to be able to compare apples to apples was really beaten into us. I think this idea is absent a lot of analyses that I see.

Part of the run-up in prices from the previous peak was fueled by bad lending products like stated-income (non-qualifying) zero-down, interest only, or negative amortization loans. Those previous buyers hyper-extended themselves and could not actually afford those homes, and when the market declined many had to short sell or were foreclosed. We actually do not have those artificial lending products anymore, and buyers have to qualify for loans. Your average buyer today can not get a loan without verification of income, assets (for a 3-5% downpayment at a minimum), good credit, income and/or employment. Generally with unemployment rates low, interest rates still relatively low (and having dipped a little in the last month), and home prices still relatively affordable for California, I just do not foresee a bubble. And when the market does eventually decline -- because prices can not go up forever, and someday it will -- we will not have the same hyper-extension and level of buyer default that added gas to the fire before.

What I think we do need to be aware of is that incomes have not risen commensurately with sales prices, and we are likely approaching a saturation point where affordability becomes an issue. I believe that this is what will lead to stagnation of home values in Sacramento. But not a bursting bubble. There was an article this week in Comstock's Magazine that is a pretty good read that reviews the history of past real estate cycles. It is interesting to note that in past market cycles, the bottom did not drop out of prices the way it did during the Great Recession. Anyway, I am off to a super busy 2019 and I look forward to a solid year of helping both home buyers and sellers.

New Listing - 7780 Reenel Way, Sacramento, CA 95832

This 3 bedroom, 2 bathroom, 1148sf  Meadowview fixer home is an excellent value and the perfect blank canvas for your extensive renovation. Nice layout, cute kitchen with pantry, formal dining area, spacious bedrooms, and huge approx .37ac parcel which is a great place for outdoor fun. Close to public transportation, shopping, and more. Bank repo. Offered at $163,500. For more photos and detail please visit 7780 Reenel Way, Sacramento, CA 95832. MLS# 18025616

Short sales in Sacramento are descreasing but not extinct...

Earlier this year in February, I posted statistics about the decreasing numbers of short sales in our Sacramento real estate market. The numbers of short sales had lessened significantly since the peak of distressed property sales activity, which came in late 2010/early 2011. Just as an update, here is a current snapshot of the short sale activity as of this last month, October 2016. You can see the downward trend even since my last blog post in February. Short sale activity is now approximately 2/3 of what it was earlier in the year. To see a short sale market snapshot from 2009 - 2016, click here.

My own short sale listing activity reflects the bigger market as well. In the heyday of short sales during the bottom of the Sacramento real estate market, more than 75% of my transactions where short sales. Now, this year, short sales represent less than 10% of my transactions...I am still doing them though. Some sellers in certain circumstances still have the need to do short sales. Short sales are not extinct, and I doubt they ever will be...

Short Sales are still selling in Sacramento, but they are a significantly smaller piece of the puzzle than before...

I met with a new buyer client last week, and during the course of our appointment, she asked me my thoughts about the possibility of  purchasing a short sale home. I explained that short sales, foreclosures, and "distressed properties" generally were far less prevalent in the Sacramento real estate market today than they were a few years ago.

Just the pure ratio of short sales to other types of listings in the market is low, so I suppose statistically buyers these days are less likely to purchase a short sale. Last quarter (November, December, January) there were 381 short sales in Sacramento County out of 5597 total homes for sale. That's less than 7% of all inventory.

This graph above portrays the market for short sale listings only in Sacramento County over the last 6 years. I remember there was a time about 5-6 years ago when ALL of my listings were short sales. All of them. 100% of them. That was a chaotic time in the market. An a chaotic time to be a short sale listing agent. I had many active listings, all of them short sales at varying stages of negotiation, and had to wake at 5am to start calling banks with loss mitigation departments on the east coast to negotiate payoffs. And most of my listings had both a first loan, and a second loan or home equity line of credit (HELOC), not to mention a few that had 3rd loans, or maybe IRS or FTB tax liens. Eh, I've done it all.

In 2015, only 20% of my listings were short sales. That is significantly fewer than 5-6 years ago, though proportionately more than double of the market in general. Considering I cultivated a deep skill set in negotiating short sales, it makes sense that while they are a tiny piece of the overall Sacramento real estate market right now, that I am still closing a fair number of them.

Sacramento Real Estate Statistics for December 2015

Years from now, I will look back on Sacramento real estate in 2015 and probably think, "wow, what a nice enjoyable year." I say this because from my perspective, 2015 was the year that things seemed more or less normal.

What do I mean by normal anyway? Isn't complete and total chaos normal?

Gosh, it doesn't have to be. Have you ever been in a totally volatile personal relationship, and after a while the craziness just becomes status quo? Yeah. We all have, whether it has been a significant other, friend, acquaintance, child, fill-in-the-blank-in-law, or someone else. Then, the time that follows the once that toxic person has been extricated from your life can only be described as one thing: nirvana. And not the kind that smells like teen spirit. I mean heaven.

The last several years of Sacramento real estate have been so volatile, the local economy so precarious, that 2015 by comparison was nirvana. At least for me. Sure, certain transactions were stressful, but the market conditions were such that there was no unnecessary external chaos.

So back to real estate statistics for Sacramento. Aside from the bounce back from a slight dip in value that ended 2014, values were nice and steady with a slight value appreciation. This is nice and sustainable. No wild value swings up, no wild value swings down. Despite the Federal Reserve Board announcement that they would raise the short term rate for the first time in 9 years, this action did not really increase mortgage rates much, and those 30 year fixed mortgage rates are hovering in the low 4% range right now. The number of short sale and foreclosure continue to decline. The number of homeowners with equity in their homes is increasing.

I think we will see more of the same in 2016, and with that I am hopeful that at the end of the coming year I can describe 2016 much the same way.

Need to list your Sacramento home quickly? Here are a few tips to get it ready in a short amount of time...

I tour a lot of homes. A LOT. And not just in the course of showing a lot of homes to buyers. I make a weekly habit of looking at properties for the sake of reference, to know and be familiar with what is on the market in certain Sacramento area neighborhoods. This helps me help both my buyers AND my sellers.

One thing I see frequently is a complete and total lack of preparation of a home for sale. As in this photo here to the left in a Land Park home I toured - this home seller covered a big mess of stuff with some blankets. And it looked crappy. Take a few minutes and box that stuff up...WHY would a seller not want to present a home in the best possible light? And that leads me to wonder why on earth would a seller choose a listing agent who doesn't help them or suggest ways to get the house ready to sell?

I do sometimes get calls from folks who want to list their home right away...and with RIGHT AWAY comes a time crunch to get a home presentable for showings. Perhaps it's a short sale situation and there is a risk of foreclosure looming? Maybe it is a divorce situation and there is a court order to sell? Perhaps they found another house they want to buy and need their existing home on the market now? Whatever the case, it happens. Here are a few quick ideas for home sellers who want to have their home on the market asap...

First and foremost - clean your home. If you do not have the time to clean it yourself, please hire a professional. It is really important that your home smell clean, the bathrooms be free of the ring around the toilet, the shower enclosure be free of scum, the kitchen appliances and fixtures are free from grease, and the floors are clean. Added bonus if you can have your carpets professionally cleaned and your windows professionally washed.

Mow the lawns. At least the front lawn, even if you do not have time for the back yard. Blow leaves and tidy up planter beds. If you have kids, put them to work pulling weeds or scooping dog poop. Most buyers form their impression of a home within seconds of seeing the exterior. If the exterior looks uncared for, that's usually an indication of what the interior will look like. Added bonus if you can power wash your driveway and front walkways.

De-clutter as much as it's possible to. If this means your have to cram stuff into your closets or garage, then by all means do it. You will have to pack for moving anyway. Grab a few boxes and start thinning things out - put some of the knick knacks away, put away the unfolded laundry, box up your DVD collection, maybe pack-up the winter or summer clothes (depending on what time of year it is). If you have kids and their toys are everywhere, get a Rubbermaid tote that you can throw all of the toys into for showings. Added bonus if you can do something simple like set your dining room table with clean linens with a pretty, fragrant vase of flowers in the center.

These are the basics to maximizing your home's appeal with time constraints...of course if you have more time to prepare, that's ideal. Because taking some time, when you have it, to truly prepare a home for sale can yield a higher selling price in a shorter time on the market. But that's another article I wrote...

Hoping to purchase a Sacramento home after completing a short sale? Fannie Mae is extending the waiting time period...

Hoping to purchase a home after completing a short sale of your prior home? -- this is important! Fannie Mae has announced some BIG changes for home buyers who want to purchase a home after a short sale. These changes take affect on August 16th, 2014 and will have a significant impact on the required wait time to purchase another home.

For the last several years, a home buyer with a past short sale could finance another property purchase using a 20%+ downpayment after just two years from the closing date of their short sale. This was great for many people, and I have worked with clients who fell into that segment...I sold their home as a short sale, and 2 years later, their financial circumstances had improved and they'd saved enough for the 20% downpayment.

After August 16th, 2014, Fannie Mae will no longer allow this, and the waiting period will be FOUR YEARS. Ouch! If you are a buyer and this applies to you -- either accelerate your home search asap, or figure out "Plan B" for your financing. You do not have to close your purchase by August 16th, however you DO have to be in contract for the home you are purchasing by that date, AND have your lender submit your loan file through the automated underwriting system. To be safe, you should probably be in contract on or before August 13th so your loan officer has time to get this done for you.

You are probably thinking, "What are the Plan B options if I'm not in contract to purchase a house in Sacramento before the cut-off?"

Well, if you have more than 20% down, then you may be able to find other lenders with "portfolio" loans (aka, loans that do not have to conform to Fannie Mae standards) that may be willing to do your loan. I know of one lender who work with buyers just months after a short sale with 30% down, however the interest rates are going to be a little higher than conventional rates, and you will probably not be able to do a 30-year fixed loan. It would be a 5 or 7 year ARM (fixed rate for the first 5 - 7 years and then adjustable after that).

Another option if you are 3 years past the anniversary of your short sale is an FHA loan. FHA loans require a minimum of 3.5% downpayment which is far less than 20% down, however these loans come with a string attached that a buyer would not have to deal with on a 20% down conventional loan: mortgage insurance. This can add costs to the transaction and to the monthly mortgage payment.

Neither one of the Plan B lending scenarios are the end of the world, however they'd either require a longer wait or more money down.

So buyers, if this describes your scenario -- do some strategic planning with your loan officer and Realtor! And do it today.

Sacramento Median Home Price February 2014

Well there you have it. After a slower January for sales volume and price (which is pretty typical if you look at trends over the last decade), Sacramento's median home price for February 2014 bounced back up to $260,000. This does not surprise me at all, and February was a brisk month for my business. I'm guessing March will be brisk too with lots of closings given there's a high number of pending sales...I'm not anticipating a huge upswing in price for next month, and expect things to continue with some modest price appreciation this year. Our current median home price is still FAR below the median from the peak of Sacramento's real estate market in the summer of 2005 (which was just a touch under $400,000). But it's nice to say that it's also FAR above the median home price at the bottom of the Sacramento market in winter 2011 (about $160,000). A trend that I am continuing to notice for the last several months is folks who purchased a home at the bottom of the market in 2009-2011 are calling wanting to sell their home and purchase a larger one (or smaller one, relocate to a different neighborhood, etc). If you purchased a Sacramento home during that timeframe, there's a good chance your home has increased in value in the range of 20%-35% depending on when you bought and where your home is located...so it's a great time to do sell and purchase another home. Of course if you would like me to provide you an estimate of your home's value, I'm happy to do that. Just email me.

Quoted in a Bloomberg Article about the shifting dynamics of the real estate market...

If you read Business Week or Bloomberg News, or follow me on Facebook or Twitter, then you may have noticed that one of my clients and I were quoted extensively in an article about the real estate market. Our real estate market here in Sacramento is interesting and has changed a lot over the last 12 months. 

Right now, we have just over 2 months of listing inventory, but that's more than double what we had on the market here in the spring -- for example, as you can see in the chart above in March 2013 - May 2013 there was 1 month of inventory in Sacramento County. Two months of inventory is still wildly low inventory, but that's a lot more than we have been used to for the last year. Inventory, in real estate terms, is basically the number of homes available on the market will be absorbed by buyers in a given month. If 5,700 homes are active on the market in a given month, and 1,500 homes sold in that given month, then that month would reflect an inventory of 3.8 months. In real estate, a market with about 6 months of inventory is said to have equilibrium between buyers and sellers. 

The increase in inventory in Sacramento, combined with the big cash investors slowing their purchasing here as prices have increased, has shifted the dynamics of the market to one that's a bit more friendly to "normal" buyers just looking for a home. It's a nice change.

FHA Shortens the Waiting Period for new loans after Short Sale, Foreclosure, Deed-in-Lieu of Foreclosure, or Bankruptcy...

Well, I will be emailing many of my past short sale seller clients shortly. Last week, FHA issued Mortgagee Letter 2013-26, which in a nutshell, shortens the waiting period to get a new mortgage loan for folks who did a short sale, deed-in-lieu of foreclosure, foreclosure of bankruptcy. This waiting period to obtain a new FHA loan for a purchase for these folks has generally been about 3 years after a foreclosure or short sale. Now, for potential buyers who had a "defined Economic Event" can get a new FHA loan for a purchase as soon as 12 months after a short sale, deed-in-lieu of foreclosure, foreclosure, or bankruptcy. This create a huge opportunity for folks who suffered hardship during the recession.

To quote part of Mortgagee Letter 2013-26 directly:
"As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage. 

To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that: 

• certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;
• the borrower has demonstrated full recovery from the event; and,
• the borrower has completed housing counseling.

Housing counseling is an important resource for both first-time home buyers and repeat home owners. Housing counseling enables borrowers to better understand their loan options and obligations, and assists borrowers in the creation and assessment of their household budget, accessing reliable information and resources, avoiding scams, and being better prepared for future financial shocks, among other benefits to the borrower."

So what does this mean? A Sacramento borrower who can now qualify for an FHA loan under this Mortgagee Letter STILL must meet other standards of credit-worthiness. You must have solid income, no recent delinquent (late) payments, meet the "debt-to-income ratio" requirements, etc. BUT if you did a short sale, deed-in-lieu of foreclosure, foreclosure, or filed bankruptcy 12+ months ago you may now qualify much sooner for a new mortgage.

Some examples of "defined Economic Events" include things like loss of employment (layoff, company closed,  for you or a spouse, ex-spouse, etc), loss of household income (like in the case of a furlough, reduction of hours for you or a spouse, ex-spouse, etc.), and others.  You will need to prove you had good credit before the economic event took place, and you will need to document this.

One thing I will point out, is lenders may not be super quick to adopt the new guidelines in this Mortgagee Letter...so if you call your favorite lender right this very minute, they may not be prepared to give you a loan right away. These new guidelines were just released on August 15, 2013 -- so it may take weeks or months for lenders to start actually lending based on these guidelines. If you need a referral to a good loan officer who can help you navigate this, email me and I am happy to point you in the right direction.

The Sacramento median home price continues to rise in July 2013...

Sacramento home values are still on the rise this month. The median home sale price was $250,000 for July 2013 in Sacramento County. This is starkly different from just a year ago as you can probably tell from the graphic here. In July I closed a personal record number of transactions, and my these transactions were on par with this trend -- selling for substantially higher prices than what these homes would have fetched last year in 2012. Compared to the home values in Sacramento County in August 2005 (the peak of the market) at $395,000, our current values are still a great bargain, and in general home affordability is really high among median wage earners in Sacramento. Is this level of appreciation sustainable? NO. But this has allowed many home sellers who were in short sale territory just a year ago to get out from under their homes and sell with equity! I have also noticed that many of the big cash investors who were purchasing homes at a fevered pace last year and early this year have slowed down -- but this is GREAT if you are a regular person trying to buy a Sacramento home in that you don't have to compete with those guys. Interest rates remain low, have definitely increased from earlier this spring. Given that we are entering a time of year when typically most folks seek to buy or sell homes, the next couple months should continue to be interesting.

Quoted in today's San Francisco Chronicle about the Fannie Mae, Freddie Mac, and HUD "First Look" and "Priority Listing Periods" for owner occupant home buyers...

A client and I were quoted in today's San Francisco Chronicle. The article was on the front page of the business section and was about the Fannie Mae and Freddie Mac "First Look" period and HUD's "Priority Listing Period." If you have never heard of these programs, you aren't alone.

The "First Look" and "Priority Listing Programs" are in place to allow owner-occupant home buyers (folks looking to buy a primary residence) the first crack at purchasing certain bank repo foreclosure homes that are being sold by Fannie Mae, Freddie Mac, or HUD. For Fannie Mae and Freddie Mac homes -- owner occupants get the first shot at making offers on homes for the first 15 days a home is listed. That time clock restarts if there is a price reduction. Investor offers are not considered during that time. With HUD properties (FHA loans that were foreclosed), generally their "Priority Listing Period" is for the first 30 days.

In today's competitive market, many buyers are frequently outbid by all cash investors. These listings present a good opportunity for buyers to have an edge over investors during their home purchase. You can search for these home listings specifically in Sacramento (or other areas) here or on my website:

HUD Listings -- http://www.hudhomestore.com
Fannie Mae -- http://www.homepath.com
Freddie Mac -- http://www.homesteps.com

Keep in mind that your agent must be registered with HUD, Fannie Mae and Freddie Mac to make offers on these homes. I am registered...and in fact my client quoted in the article was able to make an offer on a HUD 4 bedroom, 2 bathroom, 1,851sf West Sacramento home that was accepted during this initial period. Keep in mind there are several nuances involved in working with these entities and you will need an experienced agent AND lender to navigate them with you.

April 2013 Sacramento Median Home Price -- values on the rise...

WOW...do my eyes deceive me? This graph, courtesy of Trendgraphix (which pulls local MLS data), illustrates the median home price in Sacramento County for the last 15 months. Our median price is now at $220,000 for April 2013. That is a 31% increase since April of 2012! This level of appreciation is not sustainable for the long term, but I do think that this increasing trend is the result of a market that over-corrected itself. The bottom of our market was basically too low...and basically at the beginning of 2012, with low rates and amazing affordability -- everyone decided it was time to buy. There are still many short sales and foreclosure properties in our marketplace, and those will be here to say for a while, but I am also encouraged by the number of traditional equity sales I am seeing right now! Interest rates for mortgage loans are still under 4% for most conventional and government-backed loans. We shall see how this progresses. I suspect that when rates increase this frenzy will cool down a little.

Sacramento Real Estate Market -- Evolution from the Spring of 2012...

If you happened to see the Masters Club section in this weekend's Sacramento Bee, along with lots of photos of Sacramento's top producing Realtors and photos of Masters Club events, you may have noticed an article I wrote that appeared in the section. I wrote this as a follow-up to the article I wrote that was published in the same section of the newspaper last year in 2012 -- just when the market was really showing signs that the market hit the bottom.

A year later, the market is radically different. Prices have climbed more than 20% in Sacramento county in the last 12 months. Homes are met with multiple offers from buyers that extend well beyond the listing price. In fact, the listing I mention in this article is closing this coming week for substantially more than the "high end" of the price range I noted. The seller is obviously thrilled, and so is the buyer...the buyer's agent told me that he made literally 30 offers on homes before having his accepted.

It will be interesting to see what the Sacramento Real Estate market looks like at this time next year.

How far off the mark is Zillow for Sacramento home values?

If you have been reading my blog for a while, then you probably already know that I usually get a chill down my spine when one of my clients mentions "the Z word." What's the Z word? Zillow. What is Zillow? Zillow.com is a website that, among other things, provides information about neighborhoods and properties.

Zillow is a neat website. I have an agent profile on Zillow. I have clients who have found me using Zillow. However, my general thought about Zillow is that while it's a fun consumer tool that provides property information to people looking to buy or sell (or even rent property now), the vast majority of the time, the "Zestimate" (aka, the value that the website dreams up for a certain property), is usually not close to the market value of a Sacramento area property, and the homes listed for sale on the website are not current.

Let's take my last few closed transactions. I closed 4 transactions last week (all equity sales), and February was a pretty busy month for me. So this information is CURRENT as of today, March 8, 2013.

1804 2nd Avenue, Sacramento, CA 95818; this was a home I listed in Land Park. The original listing price was $279,900, and this sold on 2/26/13 for $285,000 -- 1.82% above it's listing price. Zillow's Zestimate: $271,690 -- approximately 4.89% below it's selling price.

8020 Walerga Road #1016, Antelope, CA 95843; this was a condo I listed in Antelope near Walerga and Elverta. The original listing price was $109,900, and this sold on 2/26/13 for $123,000 -- 11.83% above it's listing price. Zillow's Zestimate: $102,815 -- approximately 19.63% below it's selling price.

5674 La Campana Way, Sacramento, CA 95822; this was a home I listed near Mangan Park, a neighborhood just to the south of Hollywood Park. The original listing price was $129,999, and this sold on 3/1/13 for $142,000 -- 9.23% above the listing price. Zillow's Zestimate: $116,692 -- approximately 21.69% below it's selling price.

7910 Walerga Road #601, Antelope, CA 95843; this was a condo I listed in Antelope near Walerga and Elverta (different community from the other one above). The original listing price was $129,900, and this sold on 3/1/13 for $140,000 -- 7.78% above it's listing price. Zillow's Zestimate: $103,987 -- approximately 34.63% below it's selling price.

My friend and appraiser, Ryan Lundquist, just wrote a blog recently on a similar topic -- comparing Zillow values to some of his recent appraisals. You can view that post here. I think two conclusions can be drawn from the information above. First, Zestimates are generally not accurate. They don't take into consideration property features that can not be quantified. Is it on a main street, is it near a park, was the kitchen remodeled, have unique architectural features...? Second, our dynamic Sacramento area real estate market is now increasing in value, and Zillow has a long way to go to catch up to pricing these trends and factoring them into their mathematical equations that determine these values.

Oh right!...not everyone is from Sacramento and paid attention to the real estate market for the last decade!

I received a call this week from a family thinking about making a home purchase in the Sacramento area. They had relocated here recently from another state in the Midwest and were currently renting a home in Carmichael. As we discussed price trends here, it occurred to me that they had no historical perspective regarding the rise, the fall, and rise again of our Sacramento real estate market.

The state these buyers were from, Indiana, definitely had it's own real estate peak -- but it came in 2007, and they described real estate values there to have declined less than 10% overall. They had no idea that Sacramento's market peaked much earlier in September 2005, it has been plagued with short sales and foreclosures, and that our median price in Sacramento County at that time was nearly $400,000...and now our Sacramento County median price is approximately HALF of that peak, just under $200,000 -- and had bumped along the bottom until about the last 12 months or so. In 2012 we had several consecutive months of rising prices, and 2013 appears to be off to a similar start.

Also this week I spoke to a recent college graduate who was from Sacramento, 22 years old, and looking to buy his first house. He was 14 years old in 2005, and not keenly aware of the real estate market at that time. It was only recently he started paying attention to home prices, and the media hoopla surrounding Sacramento real estate...and while he heard from what his parents, peers, and professors that now is a good time to buy, he did not know the history of Sacramento real estate for the last decade.

So in light of those conversations -- I thought I would post a statistical graph showing a little history.

Rent vs Buy a home in Sacramento...what makes the most financial sense?

The last couple of years around this time I have written blog posts detailing the monthly mortgage payments vs. average rent payments in certain neighborhoods in Sacramento. I thought I would start 2013 with a similar post, updated with today's interest rates, average Sacramento home prices, and average rents.

My phone has been ringing off the hook for the last few weeks. Who has been calling me? Prospective home buyers who finally have decided that now is the time to buy a home in Sacramento. In many areas, it is currently more affordable to buy a home in Sacramento than rent a home. Or in a similar vein, because renting is more expensive than owning -- some calls are from investors looking for cashflowing income properties. I have also received calls from several potential sellers who see this uptick in the market as a sign that it is an opportune time to sell and buy a larger home. Prices are slightly up from last year -- but still extremely low as compared to the market peak, and rents seem to have increased. If you don't believe me -- just compare this data to a similar post from around this time last year.

When you take into consideration the average home price and probable monthly mortgage payment in particular Sacramento neighborhoods vs. the average rent, often times the mortgage payment is less. Plus often times the 'average' home that is purchased is much larger or nicer than the 'average' home rented. Let's take a look at a few different areas...just for the sake of citing my information sources, for average home price (used to calculate mortgage payment scenarios) I am using most recent December 2012 Trendgraphix data, which is taken directly from MLS, and for average rent I am using the most recent Q4 2012 Homepointe Quarterly Residential Rental Survey. For my mortgage payment calculations, I am basing it on a 3.75% interest rate (which is actually slightly above today's average market interest rates), and including the full PITI - loan principle, interest, monthly property taxes, and monthly homeowner's insurance (and mortgage insurance where applicable).

Natomas - 95833, 95834, 95835
Average single family home sale price: $221,000
Average rent for a 3 bedroom home: $1,319
30-Year Fixed VA Loan (Zero downpayment): $1,340
30-Year Fixed FHA Loan (3.5% downpayment): $1,521
30-Year Fixed Conventional Loan (10% downpayment): $1,318
30-Year Fixed Conventional Loan (20% downpayment): $1,113

Elk Grove / Laguna - 95757, 95758
Average single family home sale price: $254,000
Average rent for a 3 bedroom home: $1,432
30-Year Fixed VA Loan (Zero downpayment): $1,540
30-Year Fixed FHA Loan (3.5% downpayment): $1,748
30-Year Fixed Conventional Loan (10% downpayment): $1,515
30-Year Fixed Conventional Loan (20% downpayment): $1,279

Rosemont / College Greens - 95826, 95827
Average single family home sale price: $181,000
Average rent for a 3 bedroom home: $1,235
30-Year Fixed VA Loan (Zero downpayment): $1,097
30-Year Fixed FHA Loan (3.5% downpayment): $1,246
30-Year Fixed Conventional Loan (10% downpayment): $1,079
30-Year Fixed Conventional Loan (20% downpayment): $912

Arden - 95821, 95825, 95864
Average single family home sale price: $257,000
Average rent for a 3 bedroom home: $1,308
30-Year Fixed VA Loan (Zero downpayment): $1,558
30-Year Fixed FHA Loan (3.5% downpayment): $1,769
30-Year Fixed Conventional Loan (10% downpayment): $1,533
30-Year Fixed Conventional Loan (20% downpayment): $1,294

Carmichael, Fair Oaks - 95608, 95628
Average single family home sale price: $283,000
Average rent for a 3 bedroom home: $1,478
30-Year Fixed VA Loan (Zero downpayment): $1,716
30-Year Fixed FHA Loan (3.5% downpayment): $1,948
30-Year Fixed Conventional Loan (10% downpayment): $1,688
30-Year Fixed Conventional Loan (20% downpayment): $1,425

Citrus Heights, Orangevale - 95610, 95621, 95662
Average single family home sale price: $197,000
Average rent for a 3 bedroom home: $1,305
30-Year Fixed VA Loan (Zero downpayment): $1,194
30-Year Fixed FHA Loan (3.5% downpayment): $1,356
30-Year Fixed Conventional Loan (10% downpayment): $1,175
30-Year Fixed Conventional Loan (20% downpayment): $922

South Land Park, Pocket / Greenhaven - 95822, 95831
Average single family home sale price: $222,000
Average rent for a 3 bedroom home: $1,318
30-Year Fixed VA Loan (Zero downpayment): $1,346
30-Year Fixed FHA Loan (3.5% downpayment): $1,528
30-Year Fixed Conventional Loan (10% downpayment): $1,324
30-Year Fixed Conventional Loan (20% downpayment): $1,118

Obviously there are other tangible and intangible benefits to home ownership as well...for example, a tangible benefit is the fact you can write-off your mortgage interest on your income taxes, and also deduct some other related expenses each year. An intangible benefit might be that as a homeowner, you have the freedom to paint the walls, decorate, plant a garden, remodel, etc.

So clearly these numbers are just a baseline to give you an idea of housing affordability in certain areas. You definitely need to consult a loan officer to see what type of financing is the best fit for you, and ultimately just how much you can afford - and there are several variables that will affect your interest rate and terms. You should also speak with a CPA or qualified tax professional regarding the mortgage interest and other tax deductions to see how it will affect your particular situation. If you need a good referral to either one, feel free to contact me and I can put you in touch.

FannieMae and FreddieMac announce a few changes involving buyers and sellers of short sales...

Fannie Mae and Freddie Mac have announced the following key changes for all parties involved in a short sale. These changes apply to all Fannie Mae and Freddie Mac short sales, with an offer and without an offer. (To find out if you have a loan backed by Fannie Mae or Freddie Mac, click here. No matter which mortgage company(s) you make your payments to, your odds of having either a Fannie Mae or Freddie Mac-backed loan are pretty high.)

Title Transfer requirement change:

• The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the deed.
• After a 30 day period, and until 90 days from the date of the deed, the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price.

This applies to ANY buyer, not just an all-cash investor buyers. And the restrictions will run with the property. So investors looking to flip property -- there will be a deed restriction that pops up on your preliminary title report when you go to sell. You will not be able to get around this...so if you want to flip these properties for a profit of more than 20% you will have to wait until day 91 after the change of ownership to enter into contract to sell.

Here is their example on how to calculate the 120%:
-Purchase Price is $100,000.00
-120% of the purchase price would be $100,000.00 x 1.2 = $120,000.00

Relocation Assistance changes: The borrower/seller may be entitled to an incentive payment of $3,000 from Fannie Mae / Freddie Mac to assist with relocation expenses following successful completion of a short sale unless:

• The borrower/seller is required to contribute funds or execute a promissory note (this would be HIGHLY unlikely in California since legislation has prohibited that practice).
• The borrower has Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other government relocation assistance.
• The servicer has knowledge that the borrower is receiving relocation assistance from another source other than the servicer. If the borrower receives relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer, the difference in the relocation assistance amount up to the $3,000 incentive maximum may be provided. If the borrower will receive relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer and the amount is equal to or greater than $3,000, no relocation incentive will be provided.

Big fun in the ever-changing world of short sales! As an agent who lists a lot of Sacramento short sales, I keep up with all of these changes...