Just Listed in Oceanside

S-T-R-E-T-C-H O-U-T in the spacious home with plenty of room for all! 4 bedrooms plus huge bonus room, master bedroom with retreat, 3 car garage, big 9000 square foot lot! Excellent condition, remodeled kitchen with granite counters, stainless steel appliances, and travertine flooring. Almost 2400 square feet, built in 1992. Just listed at $569,000, this is the best buy for a home of this size and age in Oceanside.

Oceanside is the most reasonably priced coastal city in all of Southern California. This same home would cost over $100,000 more in nearby Carlsbad. To arrange for a private showing of this home, just give me a call at 760-730-1310.

Under The Rock

One of Idyllwild's many landmarks is "Suicide Rock". Most hikers take the Deer Springs Trail to the top of the rock and are rewarded with awesome views of Southern California. What most hikers don't know is that there is another way to the Rock starting off Fern Valley Road called the "Climber's Trail". This trail takes you to the base of Suicide and offers an astonishing "close encounter" with this massive chunk of granite. It's scenery I haven't seen anyplace else in the San Jacintos.

This other-worldly terrain is not in the high Sierras, this is 2 hours from San Diego!

Self-portrait at 8000 feet.

Freddie Mac to Stop Buying Some Sub-Prime Loans

Less-easy credit found a new champion in Freddie Mac this week, which announced that it would stop buying sub-prime loans with certain characteristics by September 2007. The company also announced that non-sub-prime borrowers will need to be qualified at the fully-indexed, rather than introductory, interest rate for ARMs.

Qualifying a borrower at a higher interest rate, weighed against the same income, doesn't mean that the borrower cannot get a loan, but it does have the net effect of lowering the maximum loan for which that borrower can qualify. That smaller loan amount, in turn, means that although the borrower can get a loan, it might not be enough to afford available properties -- which would effectively shut that borrower out of the market.

This will lessen the demand for homes. As the housing market is stumbling a bit already, with just the barest signs of stability evident, that's not particularly good news.

Especially if you're a homebuilder. Sales of New Homes, which had managed to hold above 1 million annualized during the downturn, finally collapsed through that level in January, falling 17% to only a 937,000 annualized rate of sale. Inventory levels bloated back to 6.8 months of available supply, while prices are about 2% below year-ago levels. As one would expect, Construction Spending has also faltered of late, declining by 0.8% in January, pulled down by the continued reductions in spending on residential projects.

Existing Homes fared better. After hitting a low last September, sales have generally drifted higher, though mildly. Sales of used homes rose by 3% during January, lifting to an annualized 6.46 million units sold. Inventory levels held at 6.6 months supply at the current rate of sale, while prices eased by 2.5% for the month.

Excessive mortgage liquidity served to extend and expand the housing boom, and at least some of that liquidity -- perhaps a lot of it -- is on its way out of that segment of the market. Lessening liquidity may also begin to affect the gray area of mortgage finance between prime and sub-prime, known collectively as "alt-A" lending. To what degree that may occur, we'll need to wait and see. At the moment, sub-prime lending changes are happening and those will likely continue.

For more on this subject, read REO Nationwide's April 2007 Newsletter.

Median Home Price Steady, Home Sales Inch Up

The median price for re-sale single-family homes in San Diego County stayed at $560,000 in February. Year-over-year, the median price was off 4.2%. This is the eighth month in a row year-over-year prices have been negative. The median price is now off 6.4% from the high of $598,000 set in November 2005.

Home sales rose 3.2% from January. Year-over-year, sales were down 11.3%. On the plus side, agents report many buyers are out looking. Interestingly, inventory is down about 20% from last summer.

The median price for condos rose 4.2% to $372,005, month-over-month, up 0.5% compared to last February. This is the first time the median price for condos has been positive, year-over-year, since last March. The median price is now 5.1% below the high of $392,000 set in November 2005. Condo sales were down 2% from January, off 6.8% year-over-year.

The sales price to list price for single-family homes rose 1.1 points to 95.5%. The ratio for condos rose 1.2 points to 95.8%.

Days on market for homes fell one to 78 days. Days on market for condos rose two to 78.
My advice? For buyers, it's all about finding the seller who really wants, or needs, to sell. The only way to find out is to make offers.

For sellers, be willing to negotiate. Remember, what you lose on the selling side, you'll make up for on the buying side.

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.

The GO Zone

It’s been a couple of years since I’ve seen any real estate investment to get excited about, but I’m really excited about this! It’s called the Gulf Opportunity Zone Act, signed by President Bush on December 21, 2005. It offers 50% bonus depreciation the first year you buy newly constructed real estate in certain areas along the Gulf of Mexico. The intention is to stimulate jobs in the areas hard hit by hurricanes, but you can buy in areas far from the coast, like Tuscaloosa, and still take the depreciation!

What does that mean exactly? Say you buy a house for $150K. Normally, you would say the land is worth about $50K, and the house $100K. You would then depreciate the house over 27.5 years, or $3,636 a year, and you would take that off your taxes. (Note! Please check your tax advisor to see how this applies to you, because depreciation can be limited or get phased out at certain income levels.)

Now imagine taking $50K off your taxes that first year you buy a property. Yes, you read that right, FIFTY THOUSAND written off! I don’t know about you, but if you’re in the 28% fed tax bracket and 9% state, that means you save 37% of $50K on your taxes, or $18,500. You simply send Uncle Sam $18,500 LESS in taxes than you would if you didn’t buy a house in the GO Zone.

And prices are still low in these areas of Louisiana, Mississippi, Alabama, and the Florida panhandle. You can buy houses for 10% down that just about break even. What is 10% down on a $150K house? That’s right, $15K. Where do you get the $15K? Uncle Sam gives it to you! That $18,500 that you don’t spend in taxes is just about enough to cover your down payment and closing costs. Let’s see, should you send the money to the government and have nothing to show for it, or use the money as down payment on an investment house? It’s a no brainer!

Now you have absolutely no excuse for not retiring rich… Uncle Sam is GIVING you the money to do it! And what to you think will happen to house prices in the Gulf when the government pours all this money into the area? I predict they will go up, making this a sweet investment indeed.

Disclaimer! I’m not a CPA, so you MUST check with your accountant to see if what I’m telling you is true for your situation. The IRS publication concerning the GO Zone is http://www.irs.gov/pub/irs-pdf/p4492.pdf

My mind is spinning with the possibilities! The Act runs until 2008, so you can buy a house this year, and one in 2008. Keep them a few years and then 1031 exchange them for an apartment building in an up and coming area that spins off cash flow to you for the rest of your life. All done with no money out of your pocket, just money you would have spent in taxes! It just doesn’t get any better than this!

I'm involved in a couple of new homes outside of Gulfport, MS. I’m exploring several other areas as well, and I’ve talked with many agents in the GO Zone. So give me a call if you’re interested in this, and I can put you in touch with agents who specialize in working with investors. My number is 760-730-1310.

Happy Investing!