San Diego

Interest Rates Headed Higher?

March 26, 2013 By dkaiser Leave a Comment

I just attended a breakfast meeting with Wells Fargo and received this in a handout from their Economics Group:

“We have been continuously warned that despite all of the Fed’s proclamations, interest rates will likely incease sooner and much more than the markets currently believe.” Whoa! This comes from those who operate behind the scenes and are in the know!

The take home message was that NOW is the time to take advantage of the lowest rates in our lifetimes before they are gone.

In addition we also discussed:

- A brilliant technique to get your offer accepted over 17 other competing offers,

- How to get a loan and close escrow in 21 days,

- and what kind of pre-approval letter you need to amaze the seller’s agent! Did you know that there is no industry standard on what constitutes a “pre-qualification” or “pre-approval”? Not all pre-approvals are equal and the right one could make the difference between getting your offer accepted or not.

If you’d like to know how to put these tools to work for you, just give me a call at 760-889-2272. Make it a great day!

Filed Under: San Diego

Why are all the wealthy people buying all the real estate right now?

February 12, 2013 By dkaiser Leave a Comment

We’ve seen a big increase in the number of San Diego homes being sold as investments to people with money to invest. What’s going on? Let’s go over a few reasons.

1. The FED’s zero interest rate policy is causing people who live on interest from their savings to look for a reasonable rate of return. Retired folks who used to make $80K a year from CDs paying 5% are now making $8K at half a percent. They are now eating into their principle and that is not a workable long term strategy. A real estate investment could return 6-7% a year even if the price never goes up.

2. Higher tax rates are causing people to look for tax-sheltered investments. California real estate purchased as a rental provides “depreciation” which can be taken off your taxes. The house is considered by the IRS to have a useful life, and you can write-off a percentage of the house each year until you have depreciated it to zero. Then you do a 1031 tax-deferred exchange and start over. There is no other investment other than real estate that provides these amazing tax advantages.

3. People are putting their money into hard assets because they are nervous about the future value of paper currency. Porter Stansberry says it best: “The earners and savers of the world simply don’t believe governments can borrow and spend their way to prosperity. They don’t believe handouts and bailouts are the answer to every problem we face. They don’t believe you can dole out free houses, free food, and free health care without having to eventually pay a very painful bill… and without devaluing our paper currency.”

Can real estate help you achieve your investment goals? We call the different types of investments “vehicles” because just like your car, they can take you where you want to go. Where are your bonds and CDs taking you? If it’s time to consider a different vehicle, call me at 760-889-2272 and I’ll be happy to discuss your options.

Filed Under: Real Estate Investment, San Diego

San Diego Real Estate Update and 2013 Predictions

January 14, 2013 By dkaiser Leave a Comment

I warned you about it back in April, and now there’s no mistaking it – the market has shifted back to a seller’s market! Will it continue? Here are some reasons why it should:

Boomerang buyers: Owners who lost their homes to foreclosure in 2008-2010 and have been renting are now able to buy again. It generally takes 2-3 years for their credit to improve enough to qualify again for a home mortgage and these buyers are sick of renting!
Un-stuck: The price appreciation that occurred this past year has already lifted 1 million underwater homeowners above water. This means they can now sell and make the move they’ve been unable to make in the past few years.
Investor demand: The FED has made it clear you will get no interest from the banks for the foreseeable future. Many are finally getting the message and putting their money to work elsewhere. Real estate as an investment creates very attractive 6% cash flows and people like the idea of a tangible asset instead of more paper assets.
Lower REO inventory: The wait for the flood of bank-owned properties (aka “shadow inventory”) is over – it will never come! Banks are going to sell in bulk to large investors or rent them out themselves. As a result, these homes will not be coming on the market until prices are much higher.
Rents going up: In most areas, it’s now cheaper to buy rather than to rent, a situation we haven’t seen in decades. With interest rates at all time lows and rents continuing to rise, buying makes a lot of sense.

For these reasons, many are predicting prices in California will continue to rise in 2013. Bruce Norris of The Norris Group predicts that low inventory will cause the California Median Price to rise 20% in the coming year! So what should you do with these facts? Here are some way to take advantage of the current market:

If you plan to stay in your home, be sure to re-finance at today’s super-low interest rates. Get a 15 year fixed if you can.
If your home was worth less than you owed on it, maybe that’s not true anymore. I’m happy to take a look for you.
Now’s a great time to move up since upper-end homes still have some price softness while entry-level and mid-range homes sell for more than the asking price with multiple offers.
Look into investment real estate that can provide you with cash flow and tax write-offs now and potential appreciation in the future.

We’re happy to consult with you about your real estate holdings and see if any changes could be made to improve your quality of life, increase your cash flow, or set you up for a great retirement. Call or text any time at 760-889-2272.

We wish you and yours a prosperous 2013!

Filed Under: San Diego

The rush to shelter income

December 4, 2012 By dkaiser Leave a Comment

After the recent election where voters in California ddecided to raise taxes on those with over $250K of income, the rush is on to shelter income wherever possible. One of the best ways to do this is with investment real estate. Why? In a word, depreciation. I’m not a tax advisor, but I do know that when you own investment real estate you can write off the improvements according to a pre-defined IRS formula. This write off serves to lower your income each year. The more properties you own, the more the write off.

The number of investors in the market was already high before the election thanks to the banks paying nothing on your money. But we’ve seen that number swell even further as high income earners now have another very good reason to buy investment real estate. Is owning rental properties right for you? Connect with me by cell, email or text if you’d like to know more.

Filed Under: San Diego

The one word you must never use with banks

April 4, 2012 By dkaiser Leave a Comment

Boy I wish I had a nickel for every time someone used this word when trying to buy a bank-owned property or a short sale, or even when getting a loan. You will want to use this word many, many times when working with a bank, and yet it is the word you should never use. The word is “Why?” You must never use this word because there is no answer to it, and you will drive yourself crazy if you try to figure it how a bank operates. You cannot apply logic to something that is illogical.

I wish I could answer the question for you. Just like you, I want there to be an answer for everything, so that it all makes sense and fits into a neat box in my head. But there are some things that just won’t fit, and the way the banks do business is definitely one of those things.

Why do you need to sign something again that you already signed? Why does it need to be back by Friday at 5pm when the bank won’t even be open until Monday? Why do the banks ignore Department of Real Estate regulations and force you to do things their way? Why would the bank reject your short sale offer and then sell the property at the Trustee sale for less? These are all questions that have no answers.

The fact is that if you want to buy a bank owned property, they will call the shots every step of the way. You are totally and completely out of control in the transaction. If the bank wants something, you provide it in the ridiculously short time frame specified or you don’t get the house. When they say “Jump”, you only say “How high?” You will be tempted to say “Why?”, but that is the word you must never say.

Now that I’ve learned not to use that word, I feel so much better. The frustration is gone. Once in a while that part of me that wants to think starts to rise up, but I must shove it back down. Don’t think. Don’t ask why. It’s the only way to work with banks and maintain your sanity.

Filed Under: Buying a Home, Distressed Property, Real Estate Investment, San Diego

Low Inventory

March 13, 2012 By dkaiser Leave a Comment

It’s a seasonal thing – around November the number of homes for sale starts dropping as people let their listings expire, and those contemplating selling don’t put them on the market until after the holidays. And we usually see a bump up in inventory in late January and February. Except this year we didn’t.

There are still fewer homes for sale than normal in the entry levels, and this means higher prices as sellers see they have no competition. And buyers will face added competition as they compete for the few homes available.

“Entry level” means homes under $300K in nice neighborhoods in Oceanside, or under $150K in a 55+ community, for example. Anything that rents for a 6% return will have investors making offers on that property, and some of them will make cash offers. That makes it tough for someone wanting to buy a house with a loan, especially a low down payment loan. Why? Because sellers will often choose the offer that is most certain to close escrow, and having a low down payment loan adds to the risk that the sale might not go through.

Well what if you raise the price above the cash offers? Wouldn’t the seller take on the risk of the loan not going through if they got a high enough price? Ironically, the higher the price, the more likely the loan will NOT go through because the lender will do an appraisal on the property and appraisers these days tend to be conservative. That means banks tend to appraise homes lower rather than higher in order to reduce the risk to the bank. So your high offer will most likely fail because the home won’t appraise at that price.

So what’s a home buyer to do? There are some strategies we’ve used to help combat this, but they are not for everyone and each person’s situation is different. If you want to hear about some ideas that might work for you, just give me a call.

Filed Under: Buying a Home, Relocation, San Diego

January 2012 San Diego Real Estate Market Update

January 15, 2012 By dkaiser Leave a Comment

HOME SALES UP, PRICES DOWN IN 2011

Single-family, re-sales home sales were up 2.5% last year in San Diego County.

Unfortunately, after a nice gain of 7.1% in 2010, the median price was down last year. The median price for homes dropped 5.3%. The average price dropped 3%.

Condo sales in the county were down 5.7% compared to 2010.

The median price for condos dropped 6.8%.

THE CALIFORNIA ASSOCIATION OF REALTORS®
expects the median home price to increase 1.7% in 2012. They forecast sales to increase by 1%.

“2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today’s very affordable housing market.

“The most likely scenario is for the modest recovery to continue, and this should push sales up slightly next year by 1 percent and maintain levels that are significantly higher than those recorded during the depths of the housing downturn,” said Appleton-Young.

MARKET STATISTICS
Sales of single-family, re-sale homes were up 8.3% year-over-year in December. This is the sixth month in a row home sales have been higher than the year before.

Condo sales were up 25% year-over-year.

The median price for homes was down 5.3% year-over-year.

The median price for condos rose 2.5% year-over-year.

Inventory of both homes and condos continues to be weak. Home inventory was down 14.7% compared to last December.

Condo inventory was down 29.4% year-over-year.

Pending home sales grew by 9.7% year-over-year. That’s thirteen months in a row pending sales have been higher than the year before.

Pending condo sales were down 14.1% compared to last November.

For trend charts and full graphical information, visit http://denniskaiser.rereport.com

Filed Under: Real Estate Investment, Real Estate News, San Diego

When both choices suck

January 15, 2012 By dkaiser Leave a Comment

Wouldn’t it be great if all choices were easy? Choice A is good, choice B is bad, so we would pick choice A. But what do you do when both choices are bad? This video offers some help.

Filed Under: Buying a Home, Real Estate News, Selling a Home

Rent vs. Buy in an Uncertain World

November 27, 2011 By dkaiser Leave a Comment

The real estate market in San Diego is so uncertain – should I rent or should I buy? The following video gives a financial breakdown of both and explains how to build some certainty in your life.