HUD SAYS $8K TAX CREDIT CAN BE USED FOR CLOSING COSTS

This subject has been in discussion for several weeks, but it looks like it's going to get done.

HUD is going to allow those eligible for the $8,000 first-time buyers tax credit to use a portion of their tax credit proceeds to cover closing costs and prepaid items.

Read more about this development by clicking HERE

Buyers will still need to come up with a minimum of 3.5% to cover their FHA down payment requirement, although that can come in form of a gift.

But the bridge loan on the tax credit figures to bring even more buyers into the market once HUD finalizes its guidelines.

More good news to take to your buyers!

CENTURY 21 CALL TO ACTION

Tom Kunz is asking for our help... please see below

Dear CENTURY 21® Broker,

I need your help. I’m writing to you today and asking you to deliver a message that could have historic impacts on our industry and the economy.

In May the CENTURY 21 National Brokers Communication Congress and the CENTURY 21 International Headquarters leadership team met with 115 U.S. Representatives and Senators in Washington, D.C. to push for legislative priorities that many believe will stimulate demand for housing and ultimately improve the economy. That was a great start, but we need our politicians to take action; which is why I’m asking for your help.

Congress is in recess this week. Your local Representatives and Senators are likely in their home offices for the balance of the week. Please contact your local congressmen and women to ask for their support for the following:

- Extend the $8,000 tax credit for first time home buyers to all buyers of primary residences and continue it for an additional year

- Increase the tax credit to $15,000

- Make the tax credit available on homes valued at existing FHA conforming loan standards and remove income restrictions

The real estate industry does play an important role in the U.S. economy. NAR estimates that each home sale at the median price generates approximately $62,000 of economic impact. According to Bureau of Economic Analysis, housing and housing related services are responsible for 21% of U.S. GDP*. Industry leaders agree that taking action as described above could contribute to our economic recovery.

Please arrange to meet your representative in person or on the phone. I understand that you are busy, but the time that you take now in talking to your elected officials will pay dividends over the balance of the coming months and years.

I have attached a series of Legislative Advocacy Talking Points to aid you in this effort, as well as a letter template to send to your local representatives, if you are unable to call.

As always I appreciate everything that you do!

Sincerely,

Tom Kunz, President & CEO
Century 21 Real Estate LLC

TEN THOUSAND HOURS

Have any of you read Outliers, by Malcolm Gladwell?

In the book, Gladwell studies the traits, characteristics and commonalities of the most successful people in a variety of fields, as well as cultural and social issues that impact the professional development of those in different fields of work.

One chapter is called "The 10,000 Hour Rule", and the premise of the chapter is this...

It takes about 10,000 hours of sustained, committed engagement with a subject to become a world-class expert. This applies whether you are talking about athletics, concert pianists, fiction writers, composers, plumbers, or even master criminals. It's a minimum of five years of full-time engagement, unbroken, coupled with an unyielding commitment to apply new principles, learn from mistakes and persevere when others quit.

The book discusses how, when other bands were playing gigs one or two nights a week, the Beatles spent their formative years playing eight hours a night, seven days a week in Hamburg, Germany before they burst on to the global scene. It talks about Bill Gates, who became infatuated with computers at the dawn of the mainframe era and often spent 24 hours a day working on code as a student at Lakeside High School in Seattle. And Mozart had been playing the piano 20 years before he began to write his greatest concertos.

The point is that, in real estate, I see this principle play out every day. It takes years to master many of the complexities of this business, as well as persistence and a commitment to finding out the answer every time you run across a question or issue you have not seen before. Over time, we become a collection of our experiences... but only if we are committed to learning from them and applying the knowledge we acquire going forward.

A TALE OF TWO MARKETS

Activity is soaring throughout San Diego, Riverside and Orange Counties... so why does the median price continue to fall?

Keep in mind that the median price is that "line" at which half of the homes sell above, and half sell below.

As you know, foreclosures have had a more pronounced impact on the lower end of our market. It was entry level buyers who drove the frenzy in the final stages of our housing boom, enticed by easy money and lenders who could not say no.

When things turned, it was the newest homeowers who had no equity to withstand the storm, and so for the most part it's been homeowners who benefitted from the easiest access to credit that have been hit the hardest.

And these homeowners were predominantly in the entry-level of our market.

What that means is that foreclosures have had a disproportionate impact on the lower end of our market, which means that the biggest discounts have been on the housing inventory that was already the cheapest... and that means you're seeing a lot more sales of $100,000 foreclosures in Lake Elsinore (for example) than million dollar homes in Del Mar, Coto de Caza or Yorba Linda.

So if the overall median home price in Southern California is off over 50% from its peak in 2007 - does that mean everything is half off?

No way.

It means that the market is being driven by the cheapest housing stock... and that fact continues to pull the median price down.

I'm not saying the higher end of the market has been immune - I'm not saying that at all.

But I am saying that one of the reasons our clients need us is to interpret these numbers, and to let them know that price and value changes happen neighborhood by neighborhood, not based on a headline in the Los Angeles Times or San Diego Union-Tribune.

In a market where our clients have tons of general information, it is up to us to be "the expert" on local neighborhoods.

DATA QUICK SAYS WE'RE HOT INLAND, BUT COOL ON COAST

In the six county Southern California region, a total of 20,514 new and resale homes sold last month, according to the latest market figures from DataQuick.

That was up 5.2% from March and up 31.4% from one year ago, and it represented the highest one month total since April of 2006, when 27,114 homes sold.

For the entire SoCal region, foreclosures represented 53.6% of all sales, but in San Diego that number was only 47%. Much of the heat in the foreclosure market is coming from inland areas like Lake Elsinore, Perris, Moreno Valley and Indio, which were among the last places to "boom" during the good times and amongh the first to go "bust" during the downturn.

The sales picture was dramatically different in many older, high-end communities closer to the coast, where foreclosures and deep discounts are less common. Sales of existing houses remained at or near record lows for an April in markets such as Beverly Hills, Malibu, Palos Verdes Peninsula, Manhattan Beach and Pacific Palisades.

Among the reasons high-end sales remain so sluggish: The “jumbo” mortgages needed to buy such homes have been more expensive and much harder to obtain since August 2007, when the credit crunch hit. Before then, nearly 40 percent of Southland sales were financed with jumbo loans, then defined as over $417,000. Last month it was 10.9 percent.

In the more affordable inland areas, first-time buyers have relied heavily on government-insured FHA financing. Such loans were used to finance a near-record 39.1 percent of all Southland home purchases last month, up from 18.4 percent a year ago. In the Inland Empire, more than half of all April home purchases were financed with FHA loans.

Absentee buyers, including investors who will have their property tax bills sent to a different address, bought 18.6 percent of the Southland homes sold last month. That’s up from 17 percent a year ago and compares with a 15 percent monthly average since 2000.

Across the Southland, the median price paid for all homes combined last month was $247,000, down 1.2 percent from $250,000 in March and down 35.8 percent from $385,000 a year ago. Last month’s median was the lowest since it was $242,000 in February 2002, and was 51.1 percent below the peak $505,000 median reached in spring and summer of 2007.

To access the latest DataQuick article and sales chart, click HERE

SAN DIEGO HOME PRICES RISING AGAIN

San Diego area median home prices rose almost 2% in April, to $290,000... after falling for 18 of the previous 19 months.

The San Diego Union-Tribune reported this week that sales activity was up almost 12% in April, reflecting an increased demand for housing brought about by discounted prices, low interest rates and an $8,000 federal tax credit for first-time buyers.

Interestingly, the percentage of sales that were foreclosures fell to 47% after rising to as high as 55% in January.

So is it a false bottom, or the start of a real recovery?

The number of homes for sale in the San Diego MLS is just over 13,000, representing a 27% decrease from a year ago. The number of sales in April was up over 20% from April of 2008.

Here's one reason why we might finally be bouncing off the bottom... in any down market, you must establish a firm base before you see the market stabilize and recover. And those coming into this market (new buyers) are in much stronger positions (mostly) than those homeowners who are coming out... because today's new homeowners are getting lower interest rates, buying at a discount, and have to pass much more stringent qualifying guidelines than buyers of four or five years ago.

We're planting a much firmer foundation this time, with better qualified, more cautious buyers setting themselves up for long-term success.

YOU ATTRACT WHAT YOU BECOME...

Jim Rohn has always been a mentor of mine. I have enjoyed his seminars, books and audio series for well over a decade, and he has played a significant role in shaping my philosophy about both business and life.

“You attract what you become.”

Jim Rohn has always taught that our success is defined by the type of person we choose to be. If you are disciplined, you will attract disciplined people. If you are generous, you will attract generous people. If you are focused, you will attract focused people. The best way to improve the quality of the people in your life is simply to improve yourself.

“You attract what you become.”

We are all facing challenges right now. Economic challenges. Business challenges. Perhaps even relational challenges. If you want to create a better reality, create a better you.

“You attract what you become.”

I want to encourage everyone to become passionate about going to work on yourself in the coming months… on improving your skills, improving your time management, improving your follow up and improving your accountability. There are so many things we can work on to get better – you don’t have to tackle them all, but start with one or two things that are easy to do, and do them faithfully.

“You attract what you become.”

When I first heard Mr. Rohn make this statement, it was cryptic to me. I had to think about it before it clicked. But now, I will tell you that it makes all the difference, and it will make all the difference for you if you go to work on becoming the best person you can be.

GALLUP SAYS AMERICANS WANT HOUSES

As long-term investments, Americans prefer houses and savings accounts to stocks, bonds, or mutual funds, according to a Gallup Organization survey released earlier this week.

Gallup asked the question, "For people in general, do you now is a good time or a bad time to buy a house?" An overwhelming 71% of respondents said they felt now was a good time to buy a house.

Of course, there are going to regional biases in this answer. But if you're looking for an attitudinal shift toward the United States housing market, the Gallup poll this week is more evidence that we're turning the corner.

CAR'S MARKET RESPONSE CENTER WORTH CHECKING OUT

There's no doubt that the Southern California real estate market is a far more complex place than it was just three years ago. Foreclosures, short sales, loan mods, first-time buyer tax credits, new construction tax credits, distressed property certifications... it's a sea of specialization these days.

I want to direct you to a great resource when it comes to getting educated quickly - and educating your clients quickly - on these important subjects. The California Association of Realtors has developed a Market Response Center page on its website that includes free, downloadable and customizable information on:

* Loan modification charts
* Short sale pointers
* Foreclosure scam alerts
* Tax credit information

as well as links to FHA, HUD, the US Treasury Department and a host of other important agencies.

I strongly encourage you to spend some time on this site.

The best way to do it... when you visit the site, simply click on the "Tools" icon on your desktop, then click on "Internet Options", then enter the web address (http://www.car.org/tools/smart) as your home page.

The CAR Market Response Center will be the first thing you see each time you open your web browser. Click on a different link each day, and within a week you'll be up to speed on many of the most important issues and trends in our market.

ON ACHIEVING YOUR DREAMS

Achieving your dreams requires preparation, not just imagination.

John Maxwell has been a mentor of mine for many years. Starting with his 21 Irrefutable Laws of Leadership, I have incorporated many of Maxwell's philosophies and disciplines into my own life.

Last month, John Maxwell was the subject of an excellent cover story in Success Magazine (which I highly recommend, by the way).

In the article, Maxwell cites several ways we can prepare to convert our dreams into a new, better reality.

1) Mental preparation - read and study in areas of your greatest interest.

2) Experiential preparation - engage in activities related to your interests.

3) Visual preparation - put up pictures of people and things that inspire you in a place where you will see them regularly.

4) Hero preparation - read about and try to meet people you admire.

5) Physical preparation - get your body in optimal shape to pursue your dream.

It takes imagination to visualize a dream. It takes preparation to achieve it.

Let me know how I can help you achieve your dreams.

HOW'S YOUR WALK SCORE?

Looking for an interesting site that your clients might have some fun with?

Try www.WalkScore.com.

Walk Score helps people find walkable places to live. Walk Score rates over 2,500 different neighborhoods in America's 40 largest cities.

Walk Score calculates the walkability of an address by locating nearby stores, restaurants, schools, parks, etc. Walk Score measures how easy it is to live a car-free lifestyle—not how pretty the area is for walking.

Your Walk Score is a number between 0 and 100. Here are general guidelines for interpreting your score:

90–100 = Walkers' Paradise: Most errands can be accomplished on foot and many people get by without owning a car.

70–89 = Very Walkable: It's possible to get by without owning a car.

50–69 = Somewhat Walkable: Some stores and amenities are within walking distance, but many everyday trips still require a bike, public transportation, or car.

25–49 = Car-Dependent: Only a few destinations are within easy walking range. For most errands, driving or public transportation is a must.

0–24 = Car-Dependent (Driving Only): Virtually no neighborhood destinations within walking range. You can walk from your house to your car!

For what it's worth, my neighborhood scores a 88.

ORANGE COUNTY DEMAND NOW HIGHEST SINCE AUGUST 2005

Some simple math facts for you this morning:

There were 3,632 homes placed under contract in Orange County last month, the highest level since August of 2005. Last year in the same period there were 2,540 pending sales.

There currently are 10,363 active homes for sale in SoCal MLS, the lowest level since April of 2006. One year ago there were 15,437 homes on the market.

So pending sales are up 30% and available inventory is down over 30%.

What do you think this means?

NATIONAL PENDING HOME SALES UP 3.2% IN MARCH

Is this stimulus package working? Are people feeling differently than they did a few months ago?

If pending sales is an indicator, the answer is "yes".

Pending home sales jumped 3.2% in March on a nationwide basis, providing a dose of hope that low interest rates, discounted prices and an $8,000 tax credit for first-time buyers is incentive enough to pull buyers off the fence and back into the market.

The biggest change in psychology? While distressed inventory still dominates the market, accounting for over half of all sales in California, buyers are no longer able to "cherry pick" the best listings and write aggressive offers. Mulitple offers are now common, and many properties continue to sell for over list price.

It's also interesting to note that CAR reports Lemon Grove actually saw price appreciation of over 18% year over year in March, and Rancho Santa Margarita posted a 3.1% price gain.

Clearly, some communities are bouncing off the bottom.