1) Prices decline!
The Lake Tahoe South Shore California market has experienced a continued decline in prices since May of 2006. The decline from the peak is about 18.5 % per the South Tahoe Assoc of Realtors (STAOR) (end of Feb stats) for sfd homes. This is paltry compared to the statewide average of reported price declines of 50% as per the CA Assoc. of Realtors (C.A.R.) (as of early Mar).

The price declines in the South Shore market place have lessened to a 8.4% decline this past month as compared to the previous month and is verging on a lessening of the decline trend. We look for any bright news.  The decline while not a steep as many other markets, is attributable to the toxic loans that have generated foreclosure san short sales, yes even in our resort market trend.
 
2) Sales Increase!
Finally a ray of bright news in this dismal economy, albeit a small up tick we have experienced an increase in sale year over year of 5.5% increase in homes sold (same geographic range of south shore California, STAR reporting area). Median home price is just under $400,000.00. The market below median drives the sales units, the moderate range market above $500,000.00 is maintaining its unit sold (year over year) but the high end " luxury" market (above $1M) has suffered a 50% decline in units sold , but has experienced only modest declines in price.
 
3) Time to buy? Pending sales are up dramatically
The Impact of low prices and low interest rates is bringing out the buyers. But to move your property today it must be priced at or below the competition in order to get the attention and the offer. Pending sales have been increasing (year over year) for the past 12 month cycle and has finally translated into an increase (modest) in sales.
Interestingly the stats indicate that while distressed sales (foreclosures and short sales) make up a minority of the listing inventory, it dominates the pending and sold units of the past year.
 
4) Supply and Demand-
We have approx. 400 sfd units (inventory) on the market which has been tracking slightly less than previous periods (year over year). This is an indicator that the serious sellers are on the market and that the inventory is starting to move. However the absorption rate, units available "supply"  and units in escrow "demand”, is still high at about 10 months and 15 months for units on the market vs sold units in Feb. per STAR stats. As the distressed inventory decreases the prices will stop dropping.
 
5) When is the market correction going to end and the turn around begin?-
What are the factors that will create a balanced market (something we in the industry look forward to)?  Is it off in the foreseeable future and will it be affected by the number of buyers entering the market?
If the attraction of the low prices (we're back at early 2005 and late 2004 pricing at the time of this writing) continues to drive the market.
Polishing off my crystal ball ... I anticipate a market turn around this fall and here's why.
a) Supply and demand is driving the inventory increase in sales and I anticipate this will continue exponentially though summer, which is typically our peak months.
b) As buyers recognize the investment value as well as the intrinsic benefits of property owners, particularly in the Lake Tahoe area, the sales will increase, fueled by the fact that the,
c) Values are hovering below the cost of construction and,
d) The cost of homeownership rivals rent payments and rental roi, gross multipliers and cap rates make sense.
e) They ain't making any more...Thank you TRPA, buildable land is in scarcity and will continue to be so due to the environmental constraints. A goal everyone has here in Lake Tahoe.
 
6) Stimulus Plan- is it stimulating?
At the time of this writing, the flow of money is just entering the pipeline. Credit available to the banks who in turn will lend to consumers to remedy the sins of the sub-prime through mortgage mods and new purchase money, is critical to stopping the escalation of foreclosures and short sales. Hopefully the impact will be to keep homeowners in their homes and attract new homeowners into the home buying market. The key piece is of course creating homeowners with realistic payments and purchase prices.
The tax credit is also attractive, and many states have their own tax credits too.
For more information on this go to my web site at www.realtordeb.com and see the home page articles and links.
 
Look forward to hearing from you with any questions or comments.
Here's to a healthy economy and real estate market.
 
 
 
Best Wishes,
Deb Howard
NV/CA Broker Owner CRS, RSPS, EPRO
Deb Howard & Company
Lake Tahoe's Real Estate Resource
866-542-2912 toll free
530-542-8657 fax
deb@realtordeb.com
www.realtordeb.com
3599 Lake Tahoe Blvd. Ste A
South Lake Tahoe, CA 96150

Originally Posted by Michelle Keck
on 3/25/2008 12:48:39 PM

I received this information from Norm Hansen of AmWest Mortgage on Monday, March 24th, 2008.  It contains valuable information about the local Tahoe market and the lending industry.  I hope you find it useful!

Good Morning,

The Federal Reserve has been discussing the possibility of buying mortgage backed securities to add liquidity to the markets.  My sources suggest that this will not happen because it will set a dangerous precedent. Instead, the Feds are going to lend money to banks using these mortgage backed securities as collateral, a much more conservative approach.  This added liquidity will surely improve rates.

So far today, Mortgage Bonds are getting battered down lower, as Stocks surge higher.  One reason Stocks are moving higher is the expectation that the buyout price of beleaguered Bear Stearns will likely be raised from $2 per share to $10. This is an overall boost to the financial sector, which has been the hardest hit area in the latest Stock market downturn.

Today brings some encouraging news for the housing market. Existing Home Sales for February came in better than expected. Potential home buyers should take note that this is a strong sign that we may have reached or are very close to the bottom for home prices. This surprisingly decent read on housing is also helping Stocks move higher and pressuring Bonds lower still. 

However, with Mortgage Bonds trading above an important level of support, I recommend cautiously floating.

Please call me with your questions.

Best regards,

Norm

Tips for purchasing a home

Originally Posted by Shannon Witt
on 3/25/2008 11:33:49 AM

10 Ways to Prepare for Homeownership  

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements. 8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal. 9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process. 
 
    
7 Reasons to Own Your Home  

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.  
 
Tax Benefits of Homeownership  

The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership. Here’s how it works. Assume: $9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
______

$12,577 = Total deduction Then, multiply your total deduction by your tax rate. For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56 $3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.
Loan Types to Consider  

Brush up on these mortgage basics to help you determine the loan that will best suit your needs.
Mortgage terms. Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.
Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that your loan’s interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. These types of mortgages are a good choice when fixed interest rates are high or when you expect your income to grow significantly in the coming years.
Balloon mortgages. These mortgages offer very low interest rates for a short period of time — often three to seven years. Payments usually cover only the interest so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
Government-backed loans. These loans are sponsored by agencies such as the Federal Housing Administration or the Department of Veterans Affairs and offer special terms, including lower down payments or reduced interest rates to qualified buyers.

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. For help in determining how much your monthly payment will be for various loan amounts, use Fannie Mae’s online mortgage calculators.
 
 
6 Creative Ways to Afford a Home

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, www.getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, www.hud.gov.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors' names are usually on the mortgage. Companies are available that can help you find such an investor, if your family can’t participate.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you’re in good financial standing, with a strong income and little other debt. Lender Checklist: What You Need for a Mortgage  

W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.
Copies of at least one pay stub for each person signing the loan.
Account numbers of all your credit cards and the amounts for any outstanding balances.
Copies of two to four months of bank or credit union statements for both checking and savings accounts.
Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
Addresses where you’ve lived for the last five to seven years, with names of landlords if appropriate.
Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
Copies of your most recent 401(k) or other retirement account statement.
Documentation to verify additional income, such as child support or a pension.
Copies of personal tax forms for the last two to three years.
   How Big of a Mortgage Can I Afford?  

Not only does owning a home give you a haven for yourself and your family, it also makes great financial sense because of the tax benefits — which you can’t take advantage of when paying rent.

The following calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too. Based on your current rent, use this calculation to figure out how much mortgage you can afford.

Rent: _________________________

Multiplier: x 1.32

Mortgage payment: _________________________

Because of tax deductions, you can make a mortgage payment — including taxes and insurance — that is approximately one-third larger than your current rent payment and end up with the same amount of income.

For more help, use Fannie Mae’s online mortgage calculators. 
 
Please call me if you need further assistance choosing the right loan program for you. I look forward to helping you find the perfect home in Lake Tahoe.

Shannon Witt