Cedar Spring Trail

Taming the rock beast

I couldn't resist sitting on this rock pile that looks very much like a petrified tortoise. We discovered this on the Pacific Crest Trail near the Cedar Spring Trail. The trail itself was uninteresting, switchbacking 1600 feet up a hill with only scrub brush for cover. The hill was south-facing, so even today, December 30th, I was hiking without a shirt as the temperature hit 60 degrees. Once on top, there was a terrific view of the entire Coachella Valley, from Palm Springs to the Salton Sea. Here's a glimpse for you, but it doesn't compare to actually being there.
One of the things I love about living in San Diego is that you can be at the beach, or the mountains, or the desert within 2 hours. We'll be hiking again tomorrow as we continue trying to burn off Thanksgiving and Christmas fat!

Merry Christmas!

Christmas was at my son's place in Oceanside this year. He and his wife Jaclyn are very successful photographers, they have done 50 weddings this year! He has his own blog so you can check out his award-winning style!

http://homepage.mac.com/imageisfound/iblog/

We had tons of food so we took a walk on the Oceanside pier to shake off the lethargy. It's crazy to be walking over the ocean on Christmas day in a short sleeve shirt. For this back-east boy, something about that just doesn't seem right, and it's hard sometimes to have it feel like Christmas. But back at the house there are family and friends, good food, and presents under the Christmas tree. And I remind myself of the greatest present of all, God sending his only Son to save me from my sins. That's the true meaning of Christmas, no matter if it is warm or cold outside.

But for those of you who find yourselves in colder climates, I offer you this picture to help chase the chill away. Merry Christmas!

Markets that will rise in 2007

I ran across this article from Fortune that predicts where real estate prices will go in 2007 and 2008 for 100 markets in the country.

http://money.cnn.com/2006/12/20/magazines/fortune/bestmarkets.fortune/index.htm?postversion=2006122106

Be sure to check out the interactive map, it's very well done. You can link to it from the article, or take this direct link:

http://money.cnn.com/popups/2006/fortune/invguide_realestate/index.html

Mortgage Rate Outlook

Disappointing economic news pressed underlying interest rates down to their lowest levels of 2006, and mortgage rates will follow them, according to the nation's deepest poll of mortgage rates and terms. The average 30-year fixed rate mortgage (FRM) shed three basis points (.03%) to close the week's survey at 6.27%, and seems likely to fall below the 2006 low of 6.23% set on January 20 next week. Hybrid five-one ARMs lost four basis points, closing the week at an average at 6.08%.

Although most indicators remain in pretty fair territory, it seems fairly clear that the slowdown in the second and third quarters of this year is persisting into the fourth quarter, and perhaps intensifying somewhat. As home sales have tanked, economic slowness does seem to be spreading to a greater degree.

Sales of less-costly existing homes managed to move higher for October, with annualized sales rising to 6.24 million for the month. Despite the rise, sales remain well below peaks, and inventory levels of homes for sale remain quite high at 7.4 months. Prices for new homes have been slipping, and the National Association of Realtors noted that on a year-ago basis, prices have fallen for three consecutive months.

Sharply rising prices created an affordability crisis where home price increases far outstripped increases in incomes. That ever-widening gap was filled by employing the euphemistically named "affordability mortgages," primarily option-style ARMs or those loans with interest-only payments or very long repayment terms, or some combination. The combined effects of higher short-term interest rates, discussions of the risks of non- or negatively amortizing loans, tighter regulations for the riskiest products, and steadying home prices have made these choices less desirable, and unsurprisingly, borrowers have stepped away. In turn, that dearth of demand puts downward pressure on prices, as the most motivated sellers (including speculators) become more 'motivated' to sell. Whether or not this situation will continue into a housing rout is unknown, but easing prices and stable-to-falling mortgage rates should provide at least some support for home sales as we turn into 2007.

Chapman University’s California Economic Forecast for 2007

After four consecutive years of robust demand for housing and double-digit home price appreciation, the housing market is showing a sharp decline in sales activity and price appreciation.

Looking forward, the pace of job growth is slowing, the inventory of resale housing units is high, housing affordability is low, mortgage rates, particularly popular adjustable rate mortgages, have increased, and regulators are warning lenders to curtail easy lending practices. More importantly, expectations about future home price increases have turned negative. All of the above suggest that the housing market's adjustment process is gathering steam. Our model points to a decline of 6.7 percent in the median resale single-family detached home prices.

The building industry is responding to the new market paradigm by drawing fewer permits. We are forecasting a decrease of 12.4 percent in total number of residential permits in 2007. This will mark three consecutive years of decline in the total number of permits issued since the peak of 213,000 units in 2004. In spite of relatively strong nonresidential construction activity, weakness in the residential sector will lead to 13,500 job losses in the construction sector in 2007.

Overall, our forecast calls for net job creation of 139,000 in 2007 — a rate of increase of only 0.9 percent. Most of the net new jobs will be in the services sector. The most rapid growth is forecasted to take place in the professional & business sector increasing 2.1 percent, followed by growth of 1.8 percent in both leisure & hospitality and education & health services sectors.

The slowdown in California job growth in 2007 will be the major factor leading to a slowing in personal income growth from an estimated 6.4 percent in 2006 to 5.5 percent in 2007. Weak real income growth, a sharp reduction in cash-out refinancing activity and weakening of home price appreciation will negatively affect taxable sales activities. Our forecast calls for total taxable sales to increase by 4.7 percent in 2007, compared to an estimated growth rate of 6.6 percent in 2006. Spending growth on furniture and appliances, building materials and service stations are forecasted below the average growth rate of 4.7 percent.

Home Prices Up In November

After dropping five months in a row, the median price for re-sale single-family homes in San Diego County rose 0.9% to $555,000 from October. Year-over-year, the median price is down 7.2%. This is five months in a row the median price has been lower than the year before.

The average price for homes gained 3.1% to $702,982, month-over-month, while losing 3% compared to last year.

Home sales reversed course again in November, dropping 11.8% from October. Year-over-year, sales were down 25.7%.

Year-to-date home sales are off 26.5%, while condo sales are off 29.6%.

The median price for condos fell 5.4% to $349,900, month-over-month, off 10.7% compared to last November. The average price fell 6.1% to $411,435, off 9.6% year-over-year. Condo sales fell 5.5% from October and were off 24.9% compared to last year.

The sales price to list price for single-family homes fell 0.1 of a point to 95.1%. The ratio for condos rose 0.1 of a point to 96%.

My advice? For buyers, mortgage rates have dropped to their lowest level of the year. The latest Anderson School forecast calls for the market to be slow for the next year and then turnaround the end of 2007. This could be a good time to buy, but, you need to make offers to find out the seller's bottom line.

For sellers, prices are soft. If you really want to sell now, you have to entice some offers and then be willing to negotiate.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or for an evaluation of your home's worth, call me.

Adventures in Indio

Yes, real estate investing does have its ups and downs, even when you know what you're doing. Here's our property in Indio where the gardener totally flaked out on us. He talked a good talk, and then didn't do anything for a month. And can you believe this this, he lives right next door!



And this is even more unbelievable, but I'm not making this up, we had bids of $500 and $700 to clean out the weeds. We figure that works out to about $50 a hour. To pull weeds! If any of you are looking for a career, don't bother with college, just go to Indio and be a gardener.

So what else is new, Crystal and I spent a couple of days weeding, fixing sprinklers, and generally cleaning up the place. We took 18 big contractor trash bags of weeds, dirt, and trimmings out of the place, and brought 40 bags of pea gravel in. 2 trips in our Prius, which was riding very low!

When we were finished, it looked a whole lot better, and now we hired a different gardener to overseed the lawn with ryegrass.

Unlike investing in mutual funds, sometimes investing in real estate means you have to get your hands dirty. The good news is that we got an offer on property and we are now in escrow. When it closes, we will be paid very well for our efforts.

Palm Springs

One of our timeshare weeks was about to run out, so we booked a 2 bedroom in Palm Springs. With 2 bedrooms, we can invite family to join us, so that works out well. Palm Springs is a desert resort area about 2 hours from San Diego County, but it feels like a different world. It has a totally different climate and you can really feel like you "got away" without going very far. That's one of the great benefits of living in San Diego.

Here's my granddaughter Grace on the play equipment at the resort. Hard to believe she's 3 already!

My son Nate (the professional photographer) and I took a hike up Murray Canyon. He taught me a few Photoshop tricks which I can use in my real estate photography!

Murray Canyon is home to one of the largest groves of fan palms in the world, and runs all the way up to the Pacific Crest Trail. The "easy" part of the hike ends about 2 miles up at a series of small waterfalls call the "Seven Sisters".

After this point, you have to go bushwhacking and rock scrambling to go further up canyon. So of course we did. I had to stretch way out on a cliff to get this next shot of two of the Seven Sisters and a group of palms. It was a challenge, but I got it!