It's No Great Depression Again

Mortgage rates improved and US stocks fell for a fourth straight week as concerns grew about the possible default of smaller European nations, Greece and Spain, will stall the economic recovery. These countries are limited in their ability to adjust domestic economic policy as members of the European Union, increasing the risk of defaulting on government debt. The National Association of Realtors reported that Pending Home Sales increased 1% following a record 16% decline in November. According to the Bureau of Labor Statistics, the unemployment rate fell from 10% to 9.7% in January, while job losses were essentially unchanged compared to the month prior. Employment fell in construction and in transportation and warehousing, while retail and temporary employment gained jobs. Additionally, the under-employment rate, the broadest measure of unemployment (U6), fell from 17.3% to 16.5%. Currently, the 30-Year Fixed sits at 4.625% (4.804% APR) and the 15-Year Fixed is at 4.125% (4.432% APR). Retail Sales, which account for approximately 70% of economic activity, will headline a light week for economic data.

Thanks to an article written by First Trust Portfolios' Chief Economist, I was able to put our financial turmoil in perspective. Many economists have suggested our current downturn is a repeat of the Great Depression, worrying that when government stimulus winds down, the economy will tumble again. Between 1929 and 1933, real GDP fell for four consecutive years, and by a total of more than 25%. The Federal Reserve also made a huge mistake, allowing the money supply to decline by a third. At the same time, President Herbert Hoover increased the top income tax rate from 25% to 63% in 1932, reducing the incentive to work and invest. By comparison, today's economic growth is on the rise for a second straight quarter after less than 12 months of decline, the Feds are making money readily available with a fed funds rate between zero and 0.250%, and current tax rates top out at 35% and are scheduled to increase modestly in 2011.

Central Coast Lending, Inc.
(805) 439-2300
info@centralcoastlending.com

Are You Considering Getting Your Real Estate License?

Home prices aren't the only thing declining in this market, Realtor membership is down too. For the California Assoication of Realtors, they expect a 26% drop in membership since the high water mark set in 2006.

In SLO County, there are 1861 MLS agents as of a second ago. There are also 445 Santa Maria MLS agents that can sell property in SLO County too.

There is a misconception of what money you can make in real estate. It doesn't take that much to get a real estate license. Most take an online course to prepare for the state license exam. I think most people think they can get their real estate license and sell at least one property a month. They do the math using 6% commissions but what the real estate classes don't cover is how the real estate industry works.

So, here's an overview for those thinking of getting their license and counting on real estate to support you (and your family).

When you get your license, you need to "hang it" with a Brokerage. As a brand new agent, you probably want your first Brokerage to have good training and hand-holding so you can learn the contracts and get you through your first transactions without messing up someone's transaction.

When you hang your license with a Broker, you also get a commission split. That's how much your Broker will take of the commission. A new agent going to a large franchised Brokerage will start typically start off at a 50/50 or 55/45 Agent/Broker split. Most commission plans will raise the agent's cut as they bring in more sales. Some plans also reset themselves every year, so if you have a good year you get a bigger split towards the end of the year but then go back to the lowest split when you start a new year.

There are also other fees that get taken out of the agent's commission. If you go with a franchised Brokerage (one using a nationwide name), you'll pay 6-8% to the parent corporation. There is also errors and omissions (e&o) insurance that some Brokerages don't include in their split and charge the agent. An agent also needs to sign-up with the MLS and pay quarterly fees. If an agent decides to join the National Association of Realtors, that's a yearly fee too.

Then there is the business expenses. Car expense (gas, usage) and advertising are the minimum expenses.

So let's look at an example of what an agent makes with a sale. Using the SLO County 2009 median home price of $400,000 and a 2.5% commission (half of a 5% total commission), and a 55/45 Agent/Brokerage split:

$400,000 x 2.5% = $10,000 gross commission
8% franchise fee = $800
E&O insurance = $125
Broker Net = $4,084
Agent Net = $4,991

If an agent sold 3 transactions, they'd make $14,974 and that is without the Realtor/MLS fees that need to be paid out of this plus their other expenses. If an agent only had this many transactions last year, they'd be below the U.S. 2009 poverty levels of $14,570 for 2 persons. If an agent had 6 transactions in 2009, they'd be making a bigger commission split on the later transactions so say the agent made $30,000. You'll probably have $4000 in realtor dues/advertising so the net is $26,000. If you were working full time, that would average out to be $13/hour. And remember...you'll probably be working most weekends, especially when you're new or don't have much business because you'll be sitting at many Open Houses hoping that a Buyer will walk through the door that ready to buy and not already working with another Realtor.

Now a reality check....

The following table shows the number of transactions Realtors had in 2009 for homes and condo sold in SLO County. First you'll see that if you get one sale a month, you are in the elite. VERY FEW agents averaged one sale a month. The majority of agents had ZERO transactions last year.

This has forced a lot of Realtors that haven't dropped out of real estate completely to take non-real estate jobs, hoping that the market will turn and they will get more sales. But, the industry has changed and an agent is going to have to invest in their business to be successful. This includes all agents, no matter if they are new or have had their license for 15+ years. Also, if you're a part-time agent you're not going to be keeping up with the home inventory and contract changes which lowers your ability to provide a good service.

If you are looking to get your real estate license, make sure you have a PLAN and set realistic expectations of how much money you "might" make.

2009 San Luis Obispo Home and Condo Sales. Buyer is Buyer-side transactions and Listings are Seller-side transactions. Percentage is out of 2300 total agents.

2009 Year-end Summary

I put a bunch of tables and graphs for 2009 market statistics. I'll be adding more to this page in a bit.

http://www.slowatch.com/2009_year_end_slo_market_statistics.html

Light, Bright and Airy Home Staging Tips

Happy Groundhog Day! Apparently we have 6 more weeks of winter. Whether you believe that or not, here are some important staging tips for your 'for sale' home in these winter months.

• Mind your weeds! Lots of winter rain brings lots of blooming weeds!
• If at all possible hire a gardener through the tough-to-keep-up-with growing season.
• Long hours of darkness and gray days, means turn on extra lights during showings.
• Upgrade your light bulbs to put out more light during the winter months.
• If you are repainting rooms, choose lighter neutral colors, especially during these dark months.

Happy Selling! - Shannon D'Acquisto

For more tips or to contact me directly: shannon@LightBrightandAiry.com or go to my website: www.LightBrightandAiry.com .

Cuesta Cancels Summer Session

To reduce expenses, Cuesta College is canceling most of its summer session. The press release says "Cuesta College experienced near record enrollment numbers for the 2009-2010 school year. This pushed the college’s Full Time Equivalent Student (FTES) count above the state formulated funding cap, resulting in approximately 400 unfunded FTES."

So, rising state colleges and university fees create a record enrollment at the Community College and then they shut down classes for those that want to get an education because there are too many students.

When do we declare an education crisis??

Rate Update and the FOMC

After a busy week of economic news, there was little change to mortgage rates. As expected, the Fed made no change in the fed funds rate, and their statement essentially followed the expected script. Demand for the Treasury auctions was very strong, with indirect bidders gobbling up approximately 50% of the $118 billion of 2, 5 and 7-year notes. Ben Bernanke was reconfirmed as Fed Chairman by the Senate for a second four-year term by a 70-30 vote, the weakest endorsement ever in the central bank's 96-year history. Much of the economic data released during the week exceeded expectations, highlighted by a 5.7% increase in Gross Domestic Product (GDP) for the fourth quarter. Currently, the 30-Year Fixed sits at 4.625% (4.804% APR) and the 15-Year Fixed is at 4.000% (4.307% APR). The big news next week will undoubtedly be the important employment report on Friday.

The Federal Open Market Committee (FOMC) is responsible for open market operations, which influence "the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate." The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. The FOMC does not set mortgage rates, but changes in the federal funds rate often affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and mortgage rates. The FOMC meets eight times per year where it reviews "economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth." The FOMC consists of twelve members - the seven members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York, and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.

During the current economic downturn, the FOMC has taken an exceptional role to support the battered real estate and mortgage markets with their $1.25 billion allocation to purchase mortgage-backed securities (MBS). In addition to last week's rate announcement, the FOMC offered additional insight regarding future policy. The biggest surprise was that there was one dissenter from the Fed's decision to keep the fed funds rate unchanged, as he believes economic conditions have improved enough that the Fed should begin to tighten policy. The statement also repeated that the MBS purchase program will be concluded by the end of March, fostering a wide range of expectations about the impact of this change. The Fed has been purchasing roughly 75% of the new MBS issuance, and a decline from one source normally leads to higher yields to attract other buyers. Some argue that the end of the program has been expected for a while, so mortgage rates already reflect the news. Others believe this could lead to an increase in mortgage rates of as much as one percent.

Central Coast Lending, Inc.
(805) 439-2300
info@centralcoastlending.com

Million Dollar Home Market Picking Up a Bit

While the January numbers don't indicate that this year will be much different than last year, there does seem to be some uptick in the Million Dollar + home market.

For 2009, the number of homes sold $1 Million and above continued to decline vs. previous years as shown below.



But in January, we had ten $Million+ properties that sold in the month. I also looked at the properties that went Pending Sale in January and there are ten $Million+ properties too. Don't know if all those properties will make it through the escrow process but at least there is activity. The Pending Sales were in the following cities:

Arroyo Grande (1)
Cambria (1)
Creston (1)
Paso Robles (1)
Pismo Beach (3)
San Luis Obispo (3)

Also, as of today there were 235 $Million+ homes on the market. With the 10 Solds in January, that would mean that there currently is 23.5 months of inventory.

January Numbers Do Not Indicate The Market is Improving

I ran a bunch of statistical reports last night and today looking at 2009 info and what January's numbers may indicate. Here's what I came up with:

- January started off the year with the lowest amount of Pending Sales in 2 years. We've had so-so activity in the market the past 2 years and the January Pending Sales don't indicate that people are rushing out to buy a home.

- Foreclosures in SLO County Sold through the MLS didn't let up in January. In 2009, we had 60% of homes sold as non-foreclosures. In January, it dropped to 56%. REOs in 2009 were 28% and in January it dropped to 27% but Short Sale percentages, which were 12% of solds in 2009, jumped to 16% in January.

- While REOs bring down the median home price, Short Sales do too. In 2009, the median SLO County home price for REOs was $310,000. For Short Sales, it was $340,000. For Non-foreclosures it was $472,250. The overall SLO County median home price for 2009 was $400,000.

- Short Sale percentages also jumped in Santa Maria/Orcutt in 2009. In 2008, the percentage of homes sold as REOs was 64% but dropped to 52% in 2009. For Short Sales, it was 13% in 2008 and 21% in 2009. Non-foreclosures were 24% in 2008 and 27% in 2009.

- Home inventory rose during the month of January. Months of Inventory as of today for SLO County is at 10 months, up from 7.1 months at the beginning of last month. The last time it hit 10 or more months of inventory was May of last year. Orcutt and Santa Maria also saw their Months of Inventory rise to their highest level in a year.

- While inventory in many individual cities dropped as of the January 1st tally, many rebounded as of today. Arroyo Grande went from 134 properties to 161. Atascadero from 137 to 155. Morro Bay from 90 to 101. Orcutt from 165 to 184. Paso Robles from 337 to 359. San Luis Obispo from 151 to 176. And Santa Maria from 180 to 192. (see the inventory page on SloWatch.com for more inventory info)

Also an FYI...the breakdown in types of SLO County residential properties in 2009 was identical to 2008 with 80% being stick-built, 7% condos, 4% PUDs, and 9% Manufactured/Mobile Homes.



While there are so many factors in play that could effect the market, the January numbers don't point that a recovery is imminent. The percentage of foreclosures need to go down over multiple months before we can say a recovery has started, IMO.

Median Home Prices - 2008 vs. 2009

I updated the median home price page on the SloWatch.com site with 4th quarter and 2nd Half prices for each city. In addition, I calculated the 2009 median home price for SLO County and compared it to previous years.

The chart below compares the 2008 vs. 2009 median home price. Only 1 city had a higher median home price and that was Templeton. Morro Bay was next on the list with only $2,000 less than 2008's median. All the other cities lost 5 to 31 percent.

But that's calculated for the entire year so doesn't tell the whole story. If you look at the Median Home section on the SloWatch.com site, you'll see that the 4th quar4ter of 2009 had higher median home prices than previous 2009 quarters in some cities.



Here's the median home price comparison for Santa Maria and Orcutt:

January 2010 Residential MLS Statistics

New Listings rose in January but what was more surprising, Pending Sales dropped from December's level to 364. This is the lowest number of Pending Sales we've had in any month since January 2008.

January 2010
Includes SLO County + Santa Maria/Orcutt
(Last months data is also included - January (December)

New Listings - 595 (392)
Back on Market - 282 (270)
Price Changes -469 (372)
Contingent - 275 (248)
Pendings - 364 (404)
Solds - 267 (360)
Expireds - 422 (309)
Inactives/Withdrawns - 181 (163)

Go to www.SloWatch.com for more January 2010 stats

MLS Caravan Report- South County

(submitted by one of our South County Realtors)

The amount of houses on the weekly MLS Caravan of new listings has been slim lately due to the wet weather but this week we had twenty-four houses on the list this week. Out of all of them, a few stuck out to me. The first house that I want to share with you is on Rosemary Court in Arroyo Grande. This house was absolutely exquisite for its price. This 5 bedroom, 4 bath house had everything you would want in your dream home. With Mahogany floors and twenty-foot ceilings it was light and open.

The next house was on Castaic Avenue in Pismo Beach. The Castaic house was such a darling little cottage home, close to the beach, and smelt so good (of course those burritos from Zorro’s definitely helped.)

I then made our way to the Village of Arroyo Grande to W. Le Point. This house absolutely beautiful (not to mention, I won a bottle of Opolo wine.) It’s always fun to enter our business cards into various drawings that the open houses hold.

One of the last homes I went to was in one of the most desirable neighborhoods off of Rodeo Drive in Arroyo Grande. This was a quaint little home with a beautiful swimming pool and waterfall in the backyard. Of course there were many other homes on the Pismo Coast that I really enjoyed but I thought that I would share just a few of my favorites with you but until next Friday for another adventurous Caravan.

Yummy Ribs at SLO Farmers Market

I was at the SLO Farmers Market tonite and heard about the ribs from a relatively newcomer to Thursday nights. Creekside Brewing has a bar-b-que at the South end of the market, past McLintock's. I tried their pork ribs and I haven't tasted a rib this good in a long time. It's got a rub spice on it so it's not one of those ribs where the taste is all sauce. Really tender too. I'm getting hungry just thinking about it again!

If you're down at future Farmers Markets, give them a try.

Create Your Own Avatar

If you've seen the movie Avatar and wondered what your Avatar may look like, you no longer have to wonder. McDonald's has a web application where you can upload a photo and it will create the Avatar from it. Ok, so it's not perfect but it's kinda entertaining for the few minutes it will take create it.

Here's mine...I don't think I have any chance of being in Avatar 2 though :)

http://www.avatarizeyourself.com/?mId=33955266.3

THE 30-DAY ESCROW

Will it become a thing of the past?

With the new RESPA rules of 2010, it looks like escrows of 45-60 days may become the new norm, if a loan from a financial institution is involved. RESPA is the Real Estate Settlement Protection Act administered by HUD.

As always, in an effort to simplify things and make them clearer… these new rules, intended to protect the consumer, will require, among other things, that the loan originators re-issue a Good Faith Estimate (GFE) to the client if changes or variances occur from the original GFE. In addition, the GFE must now include any and all potential charges that the buyer may be subject to, even ones that are paid by the seller as standard practice.

Of course, we all agree, and strongly support the belief, that the client needs to know about any and all issues related to their loan and their purchase. The effect on the escrow period comes into play with the requirement that the consumer be given 10 business days after re-issue of the new GFE. 10 business days equates to 2 weeks, at best.

It will be interesting to see how these new rules are interpreted and implemented by the various lending institutions over time. Putting additional pressure on the escrow time period are last year’s new rules and regulations regarding appraisals and appraisal reviews. These appraisal changes have an impact, with many transactions, on the length of time needed for an escrow to close.

For now- do not be surprised, whether you are the buyer or seller, if you find the required time to close a transaction growing longer. As your agent, I will guide you through these continually changing issues so that your transaction is a smooth one.

Lynn Bates, North Coast Realtor including Morro Bay, Los Osos, Cayucos, Cambria, Keith Byrd’s Real Estate Team, 805 458-4409.

New Arroyo Grande Listing

We just listed another Premier listing! This Arroyo Grande home is in the Ranch Grande neighborhood and is 3900 sq feet.

For details, photos, and our "Fly Through Video Tour" in High Definition, check out the property website.

www.685ViaBandolero.com

Yogurt Creations Offers Flavor Alerts

Yogurt Creations offers a flavor alert either via email or text message. I applaud them for using the Internet and messaging to do this. They have stores in Arroyo Grande, Atascadero, San Luis Obispo, and Santa Maria. The alerts will tell you when and where your favorite flavor is available!

http://www.iloveyogurtcreations.com/

Million Dollar Properties in Cambria

In 2009, Cambria had a total of 98 sales of SFR, single family residences. Of those, 10 sold for over One Million Dollars.
So far in January of 2010- there have been 8 sales in Cambria and 3 of those sold for over One Million Dollars.
Two of these million dollar sales were in Lodge Hill, one on Kenneth Drive and one on Drake Street; and one was in Leimert on Chelsea Lane.

For more information about these properties or any others in Cambria and on the North Coast, call Lynn Bates, Cambria & North Coast Realtor, Keith Byrd's Real Estate Team. 805 458-4409.

Morro Bay Annual Bird Festival

Over 400 birders come to Morro Bay each year to participate in the Annual Winter Bird Festival. This year's festival was last week-end, January 15-18th and included workshops, boat excursions and other events.

Morro Bay is a designated State and National Estuary, located on thePacific Flyway and is considered a globally important bird area. We consistently rank in the top 5 % of the Audubon Society’s Annual winterbird count, with over 200 species of birds who either winter or live hereyear round.

I am a beginning amateur birder- if such a designation exists. Although I don’t have binoculars- yet- with all the beautiful birds that I see on my walks- I am drawn to learning a bit more about them.

Here are a couple of snapshots of some of the more frequently seen Morro Bay coastal birds.

Lynn Bates, Morro Bay & North Coast Realtor, Keith Byrd's Real Estate Team, 805 458-4409.

Closing Cost Calculator Added to Property Detail Pages

I added a really cool calculator just now at the bottom of the property listing detail pages on our MLS search. It's a Closing Calculator that will compute how much you'll need to pay in escrow fees and other closing costs.

Check it out!

B-52's Return to Chumash

The B-52's must have liked it when they last appeared at Chumash Casino a few years ago as they are coming back for a show on Friday, February 28th at 8 pm. I saw their last show and it was a good one if you like the band.

Details here

Rain Slowly Filling Local Reservoirs

Will all this rain you'd think that the water levels at the local reservoirs would be rising. Well they are, but not as much as I would have hoped for.

Here are some levels as of today:

- Lake San Antonio capacity has gone from 35% as of Saturday to 37% as of today.
- Lake Nacimiento has risen from 16% on Sunday to 27% as of today.
- Lake Lopez is at 51.5% capacity, in late November it was at 50%.

Hopefully we'll continue to see increases as the runoff continues.

Light, Bright and Airy Home Staging Tips

Hello Rain! Wow we have seen some wet weather over the past few days and I hear we have more in store. If you have a house for sale through this wet season here are some things to keep in mind, and to keep your home value at its best!

• Turn on extra inside lights, this weather makes rooms extra dark.
• Keep a clean dry mat at your door.
• Ask visitors to remove their shoes if you have very light carpet - its a pain, but it shows buyers that you care about the home.
• Keep your gutters and drains flowing properly - nothing spells disaster like a home that looks like it could flood.
• Try to keep the moisture out and the house warm and dry to keep away musty winter smells that often make people think of mold (the 4 letter bad word of real estate).

Happy Home Selling! - Shannon

If you have more questions for me directly- please contact me directly or through my website: www.LightBrightandAiry.com or email: shannon@LightBrightandAiry.com

Lights Out

I'm one of the lucky households to lose power at Noon today and at 9:45 PM, still sitting here in the dark using my laptop with my Blackberry hooked up to it for Internet connectivity. Guess I'll be filling up the garbage can tomorrow with the food in the refrigerator as I didn't put it in an ice chest thinking the power wouldn't be out for this long.

Today was an interesting day to observe people trying to drive in areas with power outages. It's amazing to see the people that just go through the intersection without even realizing that there is no green light, actually any light. Then there are the jerks that know the light is out and don't want to wait their turn so when the guy in front of them goes, they just continue going through right behind them. Saw this pattern repeat itself throughout today.

With more storms on the way, I won't be stocking my refrigerator again until the end of the week but I will make sure I'm really careful when out driving.

The Keith Byrd Team is Hiring!

If you're a Realtor wanting to be on the leading edge of the real estate industry, check out our job posting at slo.craigslist.org under the real estate job section (posted Saturday, January 16th).

What's Different In These Avila Beach Photos?

There are 8 differences between the two Avila Beach photos below. An Answer link is at the bottom which will display a photo pointing out the 8 changes.





Answers

Home Buyer Tax Credit IRS Form Now Available

It took a few months but the IRS released Form 5405 on Friday. This is the form to file for the home buyer tax credit for homes purchased after the original tax credit expired on November 30th.

For the new home buyer tax credit you need to have a contract by April 30th and close escrow by July 1st.

Here's form 5404 (pdf) from the IRS website.

HUD suspends 90-day flipping rule

To speed the sale of foreclosures and other properties to Buyers, the prior rule that you couldn't get FHA mortgage insurance for properties held by an owner less than 90 days will be suspended as of February 1st. This will stay in effect for at least one year.

Read the press release here

2009 Agent Sales

I ran a report for homes and condos sold on the Central Coast in 2009. There are some pretty eye-opening facts including...

- 87% of agents on the Central Coast DID NOT HAVE A SINGLE home sale to a Buyer in 2009

Things have changed in the real estate industry. Agents that have done well in past years have struggled over the past few years. Would you want an agent to assist you to buy a home that hasn't sold one in over a year?

I'm also seeing fewer agents going out on the weekly MLS caravans to preview new listings and keep up with the inventory.

2010 is going to be an interesting year.....

Murals of Morro Bay

(submitted by one of our North Coast agents)



Throughout Morro Bay, you may notice beautiful murals painted on the side of buildings. Most, if not all of these projects, were sponsored by the Morro Bay Public Art Foundation.

This mural, entitled Robbie Robinson, is one of my favorites. It was painted in 2002 by artist Mary Carol Larson with the help of her art students and friends. You will see it as you drive east on Morro Bay Blvd, in about the 700 block on the south side of the street.

Robbie Robinson is known as the founder of the Morro Bay Art Colony in the 1920’s.

Walking Away

It sounds so passive, to calmly turn and put that underwater house behind you. Put one foot in front of the other until it's well in your past.

I urge you to warn your friends, family members, and co-workers that this is not a passive act, but rather very critical decision that must be made with the utmost care. There are known and some unknown consequences of defaulting on a mortgage, and I strongly urge a consultation with a lawyer AND a tax professional. Only those professionals can help you plan for the consequences. These professionals can tell you what to expect, whether the lender can sue you, if you will lose your retirement account, face an IRS penalty, and many other possible ramifications that you may not have considered.

For many, there is no choice; it’s a matter of eating or making the mortgage. For others, it’s a voluntary choice based on simple economics. In either case, don’t call it "walking away" and mislead others to believe that it's an easy road. Remember that getting a mortgage in the future will be harder, other creditors may decide to cut or close unrelated accounts, and even renting a house will be harder with a foreclosure.