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Archive for May, 2012

As the majority of real estate markets throughout the United States and especially the West Coast was pummeled by the housing downturn, our local market was torpedoed, but we did not sink. Davis, California real estate by the numbers would indicate a model of consistent stability over the last three and a half years. By no means were we not affected by the housing crash, just to a lesser degree than most communities. Many of our neighbors in Northern California saw over a fifty percent drop in housing prices, Davis had a twenty percent decrease during that same period. The average sales price was $484,857 in 2009 and an average price per square foot of $279. In 2010 the average sales price was $485,172 with a $277 price per square foot. The average sales price for 2011 was $476,533 and the average price per square foot was $259. That’s less than a two percent change in prices in that three-year window. Here’s the sales breakdown for Davis through May 24th for the year 2012.

Central Davis:Sold- 22 Avg. Square Footage- 1786 Avg. Sales Price- $541,141

North Davis: Sold- 39 Avg. Square Footage- 1579 Avg. Sales Price- $372,988

East Davis: Sold- 38 Avg. Square Footage-1676 Avg. Sales Price- $424,571

West Davis:Sold- 32 Avg. Square Footage- 1749 Avg. Sales Price- $440,289

South Davis:Sold- 25 Avg. Square Footage- 2326 Avg. Sales Price- $581,900

Projecting those numbers for the entire year, Davis would have a six percent increase in the number of sold homes and a slight drop in home prices. We do expect the sales prices to fall more in line with the last three years, that would make a four-year run in housing stability at the end of 2012. That’s a stunning feat when you consider the affordability aspect. You can purchase two homes in most neighboring communities for the price you might pay for one home in Davis. Many of those homes outside of Davis are bank-owned and short sales, where as the majority of properties that are sold in Davis are the traditional seller and buyer transaction. The supply of homes on the market are well below the normal seasonal inventory and that has created a supply and demand factor that have favored the seller. The consistently low mortgage rates have kept the demand high. We would certainly prefer an increase in housing prices, but stability is a nice alternative to the downturn that affected our local housing market prior to 2009. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and our surrounding communities.

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The old saying, “If it seems too good to be true…it probably is” can apply to the asking price of some of these short sales on the market. Pricing a short sale that makes sense is imperative and increases the chances of actually getting the property sold. Most buyers might assume making a full price offer on a short sale guarantees you gold at the end of the rainbow, so to speak. Short sales are a completely different animal than the traditional buyer and seller transaction. As a buyer, the first hurdle is rather simple, get the seller to acknowledge and agree to the terms of your proposal. That will not be difficult since the sellers goal is to get an offer to the bank as quickly as possible.

You’ll probably need a Pole vault pole for the second hurdle, negotiating with the bank. The bank and sellers goals are counterintuitive, the owners are attempting to disencumber themselves of their home that’s underwater and the bank wants to minimize their losses as much as possible. Just as a buyer needs an appraisal to justify the price for their loan, the short sale bank will also require justification of value through their own appraisal. They will not blindly accept that offer that has been agreed to by the seller.

The agreement between seller and buyer are nothing more than a gesture. Everything from the price to the terms will be scrutinized by the bank. They will then make their own alterations to the agreement. They will normally not accept an offer that is not in line with their assessment of value. Buyers that have assumed they’re getting this great value could be shocked after the bank has rendered their decision. The home they thought they were buying for $25,000 under market value was nothing more than a facade.

That’s the reason short sales seem so appealing, those prices can’t be beat. Home buyers should remember the aim of the seller and bank are polar opposite of each other. If the intent is to purchase a short sale, you can avoid this possible dilemma by having your real estate representative provide an accurate analysis of the value and make an offer based on reality. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.

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How important are appraisers in todays real estate? Without an adequate appraisal, your chances of obtaining a loan and buying that home are greatly diminished. Since the recent downturn in real estate that began in 2006, more homes have been lost to insufficient appraisals than ever before. During the boom, it was common for an appraiser to drive by and justify values without even viewing the interior. Homes that were being bid up by five or ten percent had no problem when it came to estimating the value. Those were the days, we thought they’d never end. Lenders were lax with their lending practices during the boom and they wanted the same from the appraisers they chose.

As the housing market tumbled, lenders were given a whole new set of stringent guidelines to follow. One of the most substantial changes were not being able to hand pick their own preferred appraiser. In the heyday, appraisers had no clout and were considered nothing more than a formality. As a matter of fact, if they accidentally came back with anything less than a full price appraisal, they could be out of work for a while. Appraisers are now chosen for the lenders and this has created its own set of problems.

Home appraisals have become an obstacle now because the subject property and appraisers might be in different towns. The familiarity and knowledge of the local market could be foreign for that appraiser to the subject property. Most realtors are now meeting the appraiser at the property with comparable sales to help substantiate the price paid for the home. Appraisers are not being penalized by the lenders for not legitimizing the value and therefore can give their honest opinion on the value, regardless of how unreasonable everyone else involved feels that appraisal might be.

When an appraiser has rendered their verdict on the value, it seems easier winning the lottery than changing their minds. Lenders will not increase the loan amount after a failed appraisal and buyers will normally not pay a higher amount than the appraised estimate. If the seller lowers their expectations and agrees to the lower price, the deal between seller and buyer continues. If the seller reneges on the adjustment, the buyer is out looking for another home and the seller is searching for another buyer. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view local area homes for sale in Davis, California and the surrounding communities.

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More good news on the national housing front for April compared to the same month last year, nearly four percent more homes sold and prices increased by ten percent.  There is one verifiable truth with condo ownership, when housing prices decline, condo values plummet. On the other side, as home prices increase, condo prices move up at a much slower pace. Condos in Davis, California dropped in value by fifty percent in some cases as the overall market only had a twenty percent change during the downturn. That makes owning a condo a long-term commitment. There are certain categorical facts when it comes to owning a condo. The diverse group of buyers that purchase condominiums range from first-time buyers to senior citizens that are downsizing to parents purchasing for their college age kids.

The selling points that attract some buyers to a condo are the same factors that sway many buyers from a condo purchase. Owning a home has no restrictions, you can paint when you want, alter the landscaping as you please and no fear of noisy neighbors above or below your home. With a condo comes a Home Owners Association that enforces codes throughout the developement and collects dues that normally maintains the grounds and exterior of each unit. Some owners like the strict guidelines that come with an HOA. No yard work or concerns with a leaky roof are appealing to that senior couple planning their next vacation or a busy owner with no time to deal with outside issues. Those HOA dues can increase as projects like re-paving the roads or replacing the roofs become necessary.

The other consideration is the difficulty with the resale of a condo. We have a condominium complex in Davis that has a high percentage of non owner-occupied units that make it impossible to obtain financing as an investor. Buyers that intend to occupy in this complex can obtain conventional financing with a minimum of twenty percent down. Those attractive FHA loans with small down payments are not possible in some condominiums based on the risk lenders take with the low owner-occupancy ratios. Condos can be a wonderful opportunity for some buyers that want affordable housing and don’t mind those pesky restrictions. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs, join my professional networks on Twitter and LinkedIn and easy access to view local area homes for sale in Davis, California and the surrounding communities.

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A good percentage of homes in any community are owned by out-of-towners. This is especially true in any college town in America, where properties are purchased by parents with kids attending school. Many of these homes are bought as long-term investments, but the initial purpose was to neutralize the expenses of paying off someone elses mortgage. It just makes sense to buy a property that can generate enough rent every month to possibly pay the monthly mortgage payment. It doesn’t take a rocket scientist to see the positives outweigh the negatives in owning investment properties.

What happens when investors decide they want to sell that steady source of income. Hopefully they have owned it long enough to have built up equity. The first professional to contact should be a realtor in the town where the investment is located to get an estimate of the value. This local real estate agent can evaluate the market and give the owner his professional opinion if this is the right time to sell or not. If the decision is to sell, the next call should be an accountant that can determine the tax ramifications and the best avenue to travel to alleviate the capital gains blow.You can bite the bullet and pay the taxes on the gain or you can avoid the capital gains with a 1031 Exchange. This is a viable way to keep all of your money from the sale of your investment. This is a solution to defer taxes from the sale. Many owners from out-of-town want to continue being investors, but just not far away investors. The 1031 Exchange works perfectly for those buyers that want to own a property that would be in the same town they reside in.

Sell Your Investment Property: It’s important to notify all parties concerned that you will be engaging in a 1031 Exchange in the sales contract before closing. You must have a Qualified Intermediary receive the net proceeds at close and hold the money until you close on the replacement property. If you close escrow without doing both of these things, you will not be able to do a 1031 Exchange.

Identify The Replacement Property: The replacement investment must be identified within 45 days following the sale of the relinquished property. You can identify up to three replacement properties. Not identifying multiple replacement properties is one of the most common reasons an Exchange blows up. The intention is to purchase just one of the investments, but keep the other two in the hip pocket, just in case the first one does not work out.

Obtaining The Property: You must close escrow on the replacement property within 180 days after the sale of the relinquished property. One of the most important stipulations for deferring your taxes with an Exchange is the replacement investment must be of equal or greater value than the relinquished property. It’s important to work with professionals that have the knowledge of the process from the realtor to the intermediary. Tres Equity in Davis, California meets the criteria and is an exceptional intermediary. Just a few years ago, 1031 Exchanges were a foreign term for investors, but today it is an idea solution for deferring those money-draining capital gains taxes. Please visit my website at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view local area homes for sale in Davis, California.

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It’s always interesting after collecting data to see what the makeup of a particular town or city might be. The U.S Census Bureau started a full-scale home to home count in 2010 of every person living in this country. This is as close to scientific as we can expect. The 2010 census found 74,334 residents living in Davis. The age group between 15-24 had 38.2 percent of the total population or 27,767 people in that age group. UC Davis is obviously the main reason for the substantial number with upwards of 30,000 students.The age group from newborn to 14 makeup only 12.8 percent of the total population in Davis. Now I know why the parks and playgrounds seem sparse of youngsters. No ones having babies.The 25 to 39 age group are 17.3 percent of the demographics and ages 40 to 54 were 14.5 percent of the population. The 55-64 group made up 9.7 percent and the 65 and older were 7.4 percent of the total.

Married couples appear more congenial in Davis than the rest of California with the average divorce rate for males was 4.4 percent and the female divorce rate was 7.5 percent.This compares to a statewide divorce rate of 7.9 percent for males and 11 percent for females. The census found 29,954 Davis residents living in owner-occupied properties with an average household size of 2.57 people compared to 39,029 people living in rentals and an average household size of 2.53 people.

The biggest surprise of the census was finding out Davis was one of the ten most densely populated urbanized areas in the entire country. Who would have ever thought Davis would compare to Los Angeles, San Francisco and New York City, but we do in density. We rank sixth in that category. Our neighbors to the north in Woodland rank ninth in population density. Hard to believe we have two towns in Yolo County that are two of the most densely populated in the Untied States.

The data indicates Davis is made up of 58 percent whites, 25.2 percent are Asian, 12.5 percent are Hispanic and 3.3 percent are African-American. With Davis being a university town it should be no surprise that Davis is made up of academic achievers. A whopping 95.7 percent of Davis residents age 25 and higher are high school graduates. The census found 80.7 of California residents above the age of 25 were high school graduates.

We pride ourselves in Davis with the proclamation of being the bicycle capital and 18.2 percent of Davis residents commute to work by that method of transportation. Another 4.9 percent actually walk to work. We find out many fun facts about communities through the census and Davis certainly has many qualities that make our small town so unique. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view local area homes for sale in Davis, California.

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Would it not be great as a homeowner to know how much leeway you have during negotiations with the home buyer. All sellers have a bottom line and the anxiety of not knowing what issues might arise during the buyers investigative period can be nerve-racking.There is a solution to this potential problem. For that peace-of-mind, perform inspections before you start marketing your home. This resolves two concerns right upfront, the first being the unknown that every owner will eventually have to face, what repairs are needed and how much will it cost. The other more important purpose is simply giving the owner a better idea on how much flexibility they have on negotiating the price when they receive an offer.

Homeowners in many cases are losing thousands of dollars by waiting to find a buyer and then keeping their fingers crossed that nothing comes up during the buyers inspections. Buyers would be more prone to migrate to properties that have all of the necessary inspections. You have two kinds of buyers on the market, some with a lot of money and most with little money. You attract more buyers and your home becomes more sellable using this approach. Here are a few inspections that make a difference.

Whole House Inspection This inspector goes through a property with a fine-tooth comb looking for any defects. This is the most vital inspection because they cover the entire home. These inspectors are a jack-of-all-trades, but a master of none. By that I mean, they can locate the problem but can’t diagnose the exact cause. An example, the air conditioner is not performing to the fullest capacity. Under those circumstances a local central heat & air specialist would be called for a thorough diagnoses. The cost for a whole house inspection ranges from $350 to $500.

Roof Inspection: Roofs are one of the biggest reasons why deals fail. If your roof is more than five years old, it’s strongly advised to have an inspection of the roof. Knowing that a roofer has certified that roof makes the buyer and buyers lender happy. Yes lenders are apprehensive about loaning money on a property with roof issues. The cost for inspection ranges from $120 to $175.

Heat And Air: Depending on the age of both units, the heater and air conditioner should be inspected. If they had been replaced in the last five years, but serviced on a yearly basis, you might be able to forego this inspection. The best analogy why these inspections are so important would be two similar properties are on the market at the same price. One’s had all of the inspections and the other has not. Which home do you think is more attractive to a buyer? Cost of inspection $100-$150

There are other inspections that are essential based on the community you live. For instance in Davis, California we have a city ordinance that requires an owner to have a city resale inspection. They are looking for any permit, code or safety violations. Other communities might have comparable obligations. The combined cost of these inspections are under $1,000. The money you might save in the long run could be much higher than that amount. Please visit my website  at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes in Davis, California and our surrounding neighbors.

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