Santa Barbara Real Estate Through the End of September 2013

This is an analysis of the Santa Barbara Real Estate market including Carpinteria/Summerland, Montecito, Hope Ranch, downtown Santa Barbara and Goleta through the month of September 2013. For the Home Estate/PUD market the numbers of sales fell from the previous month to 107 in September dropping from 121 in August and 113 in July. The Median Sales Price also fell for the month down to $922,500 in September going from $1,065,000 in August and the $948,000 we saw in July.  The opened escrows also fell in September to 98 from 116 in August and 101 in July while the median list price on those escrows fell, going from $999,000 in August to $975,000 in September. There were about 130 new listings that came on the market in September with a median list price of approximately $1.1 million and an average list price of just about $2.13 million which left the overall inventory flat from 337 units for sale in August to 337 in September.

                Year over year sales are up about 5% with the median sales price up to $937,500 for an 18% rise. The average sales price is also up going from about $1.36 million in 2012 to approximately $1.43 million in 2013 for a 5% rise while the numbers of escrows are up with 1,004 in ’12 to 1,016 in ‘13 with the median list price on those escrows up about 15% to approximately $950,000.

Looking at the Districts, Carpinteria/Summerland sales are up from 65 to 80 and the median sales price is up from $732,000 to $849,000. The numbers of escrows are also up from 69 to 91 with the median list price on those escrows rising from $767,540 last year to $861,900 this year.

             For Montecito, sales are down going from 191 to 184 with the median sales price rising from $1.872 million to $2.438 million. Escrows are also down going from 214 to 192 but the median list price on those escrows is up from $1.995 million to $2.495 million.

                East of State St sales are down going from 248 in ’12 to 246 in ‘13 but the median sales price is up from $870,000 to $970,000. The escrows went from 256 to 253 with the median list price on those escrows rising from $897,500 last year to $999,000 this year.

                West of State St sales are up from 199 to 215 and the median sales price is up from $700,000 to $875,000. The numbers of escrows are up with 226 in ’12 compared to 233 in ‘13 and the median list price on those escrows is up from $699,000 last year to $895,000 this year.

                Hope Ranch sales are up from 22 to 26 but the median sales price is down from just over $2 million to $1.983 million. The numbers of escrows are down with 26 last year compared to 23 this year and the median list price on those escrows is down from $2.3 million in ’12 to $2.195 million in ‘13.

                Goleta South sales are up with 93 last year and 95 this year and the median sales price is up from $632,200 to $711,350. The numbers of escrows are down from 108 to 85 with the median list price on those escrows rising from $659,000 to $704,950.

                Goleta North sales are up with 163 in ’12 and 167 in ’13 with the median sales price rising from $623,500 to $775,000. The numbers of escrows are also up from 169 to 170 with the median list price on those escrows going from $615,000 to $779,000.

For the Condo segment of the market sales fell to 34 in September down from 49 in August and 42 in July. The median sales price went back up however from $508,000 in August to approximately $545,000 in September while the numbers of escrows went down from 40 in August to about 30 in September with the median list price on those escrows remaining stable from $532,000 in August to about $530,000 in September.

There were about 50 new condo listings that came on the market for the month with a median list price of about $515,000 and an average list price of approximately $615,000. The overall inventory rose in September from about 80 units for sale in August to approximately 100 in September with the median list price on those new listings going down to about $515,000 in September from $645,000 in August.

Looking at the Districts, Carpinteria/Summerland sales are up from 44 to 71 with the median sales price rising from $364,500 to $443,000. The numbers of escrows are also up from 48 last year to 68 this year and the median list price on those escrows is up from $395,000 to $448,500.

Montecito condo sales are up with 20 in ’12 and 25 in ‘13 but the median sales price is down from $1,105,000 to $995,000.The numbers of escrows are up with 23 in ’12 and 25 in ‘13 while the median list price on those escrows is down from $1,195,000 in ’12 to $995,000 in ‘13.

East of State St sales are down from 98 to 79 with the median sales price rising from $497,495 to $559,000. The numbers of escrows are also down going from 137 to 82 with the median list price on those escrows also down from $587,000 last year to $585,000 this year.

West of State St sales are up from 66 to 87 with the median sales price rising from $375,000 to $550,000. The escrows went from 73 to 87 with the median list price on those escrows going from $399,000 to $558,000.

  Goleta South sales are even from 52 to 52 with the median sales price up from $288,950 to $439,500. The numbers of escrows are up with 55 in ’12 and 61 in ‘13 with the median list price on those escrows up from $310,000 last year to $444,500 this year.

Goleta North sales are down from 46 to 44 with the median sales price up from $349,000 to $422,500. The escrows are down however from 54 to 40 with the median list price on those escrows going up from $369,000 to $425,000.

Through the end of September sales of single family homes is up about 5% from ’12 while the median sales price for those homes is up about 18%. For condos, sales are up approximately 10% with the median sales price up over 27%. Of the single family homes that sold for the month roughly 34% of those sales were over the asking price and for condos that number was about 26%.  The average over asking price for homes that sold fell to about 4.3% and for condos that number was about 5.3%. Sales went down in September as well as escrows and the median sales price also went down under $1 million to about $920,000. Despite the decline of sales and escrows in September the rest of 2013 should remain strong. 

Read More

New Westport at Mandalay Bay Listing

Walk to fabulous beaches or stroll along peaceful nature trails from this elegant townhouse in Westport at Mandalay Bay. Gated complex of 88 units features lush landscaping and large pool with spa. Coveted Cape Spencer model is a light-filled corner unit boasting formal living room with 12' ceilings and French doors to patio, flowing kitchen/family room with balcony, three spacious bedrooms and two and a half baths. Master bedroom has large balcony, two walk-in closets, double sinks, soaking tub and separate walk-in shower. Lots of closet space in roomy second and third bedrooms. Windows and doors galore, all with screens and high-end plantation shutters. Hardwood flooring, plenty of storage space in oversized attached two-car garage, and laundry room with full sized washer and dryer. Ideal home or vacation getaway. Pet friendly!

Offered at $549,000.

Read More

Manhattan 3rd Quarter Market Report

Supply shortages combined with increasing demand pushed Manhattan apartment prices higher over the past year.  Our preliminary data shows prices averaged $1,451,621 in the third quarter, 8% more than a year ago.  The median price reached its highest level in over four years, rising 3% to $870,000.  A 75% increase in the number of closings over $10 million played a large role in these increases.

Buyers, concerned about low inventory and rising mortgage rates, moved quickly during the quarter.  Average time on the market was just 77 days, 29% less time than a year ago.  Buyers paid 98.6% of the seller’s last asking price in the third quarter, up from 96.3% in 2012’s third quarter.  Buyer urgency was also evident in the fact that 16% more closings were reported than the same time last year, despite inventory levels that were 25% lower.

Co-op prices averaged $1,175,163, 11% more than in 2012’s third quarter.  Studio co-ops posted a 17% increase in their average price, while three-bedroom and larger co-ops had a 15% gain.  The average condo price reached $1,864,711 in the third quarter, an increase of 9% from a year ago.  Three-bedroom and larger condo showed the biggest price increases, as their average price jumped 26% to $4,820,112,

The NYC economy remains strong, with 84,400 jobs added in the 12 months ending August.  This growth has offset the sharp rise in 30-year mortgage rates, which are about 1% higher than a year ago.  New development activity has remained strong thanks to the continuing presence of foreign buyers who see the value in Manhattan real estate.

Please keep in mind that third quarter 2013 data is preliminary and subject to revision in future reports.  Data from the prior four quarters has been revised to include sales recorded after our initial reports were released.

by Ellen Devens, Brown Harris Stevens
devensel@bhusa.com

Read More

Housing-Recovery Fears Overblown?

By Nick Timiraos, The Wall Street Journal

Oct. 2, 2013.

Fear that the housing market’s recovery is stalling has been overdone, Goldman Sachs economists say in a new report.

The paper — titled “Where is the pent-up housing demand?” — suggests that housing demand among the young has been suppressed because of cyclical issues not structural ones.

Homeownership hasn’t fallen out of favor and student-debt levels aren’t the main culprits for lower housing demand among young buyers, economists Hui Shan and Eli Hackel write. Instead, they suggest that the economic downturn is most responsible for muted homeownership gains among younger households, and that the “pent-up” housing demand will improve in step with economic gains.

The bear case on housing goes something like this: The current “recovery” has been driven to an unhealthy degree by low interest rates and investor purchases of homes, particularly by large institutions. Meanwhile, traditional owner-occupant buyers can’t qualify for loans, because of some combination of having too much debt (especially student loans for younger buyers), stagnant incomes and tight credit standards.

Shan and Hackel aren’t convinced.

“We think the pessimism about the housing recovery is overdone,” they write.

The authors focus on the homeownership rate among those between ages 25 and 44, the largest cohort of first-time buyers and move-up buyers. Compared to the 1985-1994 period (when the overall homeownership rate was mostly flat), homeownership among 25-to-44 year olds was reduced by around 1.1 million owners last year. Most of the shortfall, they conclude, comes from medium-to-high income households. They turn to three reasons that might be the case:

1. Could it be that homeownership simply isn’t cool anymore? Not really. Surveys show the vast majority of non-homeowners under age 49 still aspire to homeownership.
2. Could it be that young renters don’t have enough money to make a down payment or enough income to qualify for a mortgage? Not so much, they find. Using data from the 2010 Census, they find that among 25-to-44-year-old renters with incomes above $50,000, around 40 percent have at least $25,000 in financial wealth — enough for a 10 percent down payment on the median priced U.S. house. Nearly half of younger renters with at least $50,000 in income have total debts of less than 5% of their incomes, meaning they should have the capacity to take out a mortgage for a home purchase.
3. Could young households have delayed purchases because of the severe shock that housing and labor markets went through? The authors conclude that this is the most likely explanation. Homeownership rates declined less in states where the job market experienced less stress.

In states where unemployment fell by less than one percentage point below their long-run average, the homeownership rates of younger renters with incomes over $50,000 remained similar in 2012 to their 1985-94 levels. But in states where unemployment rates were more than one percentage point above their long-run average, homeownership rates for younger renters fell by four percentage points compared to their 1985-94 levels.

“As the housing and labor markets gradually recover, we expect to see the homeownership rate in this population normalize,” Shan and Hackel write. Moreover, population growth among the so-called “echo boom” generation of children born to the baby boomers, who are just now beginning to form households, “implies upward pressure on housing demand.”

Read More

Buffett's Real Estate Chain Opens in Santa Barbara

Prudential California Realty's mainstay blue-and-white "for sale" signs that featured the Rock of Gibraltar as its corporate symbol are now a thing of the past.

In their place on lawns in front of homes up and down the South Coast will be the cabernet-and-cream signage of Berkshire Hathaway HomeSerivces.

Click here to read the Santa Barbara News-Press article from Wednesday, October 2, 2013.

Read More

The Secret Life of Your Mortgage Application

Meeting with a loan officer and completing paperwork are just the beginning. What happens once everything has been submitted? Here's a look at 5 steps your application takes as it marches toward a decision from your lender, and what to do if your application is rejected.

By Marilyn Lewis of MSN Real Estate

Applying for a mortgage loan can leave even the savviest consumers scratching their heads in confusion.

To lift the veil of mystery around the mortgage-approval process, we peeked behind the scenes at an application's five-step journey with a lender. We also learned three tips for helping to speed your application toward approval and five ways to improve an application if your loan is rejected.

Step 1: Talk with a loan officer.

Your first and probably only contact with your lender is your loan officer, the salesperson who takes your application. When you first meet, the questions on your mind are likely to be, "Do I qualify for a loan?" and "How much can I borrow?" The loan officer is probably wondering, "Am I going to be able to sell a loan?" It's a courtship.

This first meeting is a simple, no-commitment step, conducted in an office or on the phone, or you may fill out a form online. You reveal a few basics — your name, your income, your debts and your estimated credit score. Your lender looks up your "tri-merge" credit score, which includes scores from the three biggest credit-reporting agencies.

You're itching to get a "thumbs up" or "thumbs down." Do you qualify or don't you? But the loan officer has only your word to go on at this point, so don't expect to get an ironclad approval. Not yet.  The answers you'll get at this stage will be versions of, "It depends."

The loan officer might say, "If what you've told me about your income, credit score and debts all checks out, yes, you'll qualify for a loan. Let's submit the application and find out." Or you might hear, "It looks like you'll qualify, but for less money than you're hoping for." Or, "You're probably not eligible right now, but your chances would improve if you save up a larger down payment or pay off your car loan."

At this stage you can be "preapproved" and get an estimate — not a promise — of how much you can borrow.

If you're refinancing, your application is ready for the next stage of the process. If you're buying, you may not be able to get a good faith estimate (GFE) and a preapproval without choosing a home to buy, because the home, too, must pass muster. The bank needs to know what it's worth and what shape it's in. After all, if you default, the bank will become the owner.

Still, it's a good idea to apply before house hunting, with one or several lenders. That way, the process can move quickly when you find a home.

Savvy borrower tip No. 1: Look for a lender who takes your application seriously enough at the preapproval stage to run your application through Desktop Underwriter or Loan Prospector, software programs used to qualify borrowers, says Bryan Wiley, loan officer at Guild Mortgage Co.'s office in Bellevue, Wash. This will speed up the approval process by providing an early warning of problems your application might face.

Step 2: Fill out your application.

Here's where your real work begins. You answer the questions in the borrower information sections (Sections III, IV, V and VI) of the Uniform Residential Loan Application. (All lenders use the same form. It's here, at FannieMae.com.) It asks your name, address and Social Security number, housing and employment history, income and housing expenses, assets and debts. Your loan officer can help you with some questions, but you'll need to take it home to add up your monthly expenses and find documents such as old W2 forms, tax records, 401(k) and IRA documents, bank statements and addresses of old employers

Whether refinancing or purchasing, you'll need to hire an appraiser at this point to get an expert valuation of what the home is worth.

Savvy borrower tip No. 2: With home values uncertain these days, your best chance for an accurate appraisal is with a local appraiser who knows your neighborhood. Avoid lenders who use out-of-town appraisers. Don't know? Just ask.

Step 3: Submit your application.

When you hand your application to a loan officer, the clock starts ticking. Within three days, the lender must give you a packet of "disclosures" including:

• A good faith estimate (Here's the GFE, a PDF file), describing the loan, costs and terms offered.
• A truth-in-lending form, disclosing the loan's annual percentage rate, the number to use in comparing competing loan offers.

The lender's offer is conditional. The information on your application has to check out.

After you submit the application, the loan officer passes it to the operations department, the guts of the operation, usually hidden from public view in cubicles or even in offices in other states.

If you're working with a mortgage broker, your broker now submits your application to one or more lenders and they take over.

Next, your application goes under the microscope for review by two kinds of banking professionals, loan processors and underwriters.

Step 4: Processors give your application the third degree

Processing is a strange term; it sounds more like sausage making than banking. The processing team double-checks your file to make sure it's complete and true.

Processors look for errors, misinformation, discrepancies and hidden flaws that could make you a risky candidate for a loan. They check the liabilities you listed against those on your credit report. They scan your credit history for bankruptcies, foreclosures or a history of bills in collection, all likely deal killers.

Your income is scrutinized, too. Processors ask your employer to confirm that you're actively employed, and they obtain your tax filings from the IRS to compare them with your mortgage application.

They also search for debts you may not have disclosed, contacting courts and lawyers to confirm whether you are married or divorced and if you owe child support, alimony or a court-awarded judgment. "On a pay stub you'll sometimes see a loan, child support, garnishments -- it's amazing the things that may be payroll deducted,"  says Scarlett Miller, director of underwriting for Columbus, Ohio-based Residential Finance Corp.

Credit reporting agencies will tell the lender if, after applying for the mortgage, you take on a new loan or credit card. "That could disqualify the borrower for a mortgage," she says.

Your down payment gets the once-over, too. The lender wants to know it's really your money and not a recent credit-card advance or a loan from a friend or relative in disguise, since your overall debt level is a big factor in the approval of your application.

The processor engages title-company professionals to search for hidden claims, liens and loans attached to the property to ensure that the title on the home you want to buy is free and clear.

Wiley, who prides himself on a quick turnaround, says his company often decides on a loan application in less than a week. But just as often, a problem can turn up. Maybe your application says — correctly — that you're unmarried, but a loan processor finds that you used to be married. The processor may need to take a detour to ensure you don't owe undisclosed child support.

If you're buying a condo, the processor must also confirm that no more than 15% of the homeowners association members are behind on their dues and that fewer than 49% of the units are rentals -- requirements of the giant government-sponsored companies that buy and guarantee mortgages from lenders.

Step 5: The underwriter makes the decision

You'd think your application would be home free once the processing is done. But there's one final hurdle: underwriting.

The underwriter weighs the risk of lending money to you and decides if it's in the lender's interest. The underwriter may already be familiar with your application. To speed things along, processors often consult with the underwriting department. The idea is that it helps the underwriter anticipate what he will need to make a judgment.

Since your lender probably will sell your loan to another company, the underwriter needs to make certain your application meets mortgage lending guidelines from Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs, all of which purchase loans. Each agency has slightly different requirements for, say, the size of a down payment or credit score required. Your lender may have guidelines, too.

If your application is simple, it's processed quickly, sometimes in just a few days. Typically, it's solid if:

• Your assets, income and debts listed on the application check out.
• The home you're buying has a clear title and passes a home inspector's scrutiny, and the appraised value isn't less than what you've agreed to pay.

But plenty of glitches, surprises and problems can crop up, even at this stage. You may get a request from the lender for still more information. For example: Let's say your salary is $48,000. It's late June, and your pay stub's year-to-date notation should show you've received $24,000 to $30,000. But, for some reason, it shows only $10,000. Alarm bells ring. The lender needs to solve the discrepancy.

"Were they off work because of surgery? Was it because they were not at the job very long?" Miller says. Or maybe it's just a mistake.

Savvy borrower tip No. 3: When choosing a lender, Seattle real-estate agent Ardell DellaLoggia advises asking if there's an underwriter on site, allowing the company to process applications faster. Also, a decision on your loan by an on-site underwriter is less likely to be subjected to second-guessing by underwriters further up the corporate food chain, she says.

What to do if you're rejected

If your application is accepted, congratulations. If not, don't feel as if you're alone. Lenders have become very fussy. More than 2 million mortgage applications were rejected last year, according to the Federal Financial Institutions Examination Council.

There are things you can do, though, to help improve your chances next time:

1. Understand what went wrong. Sit down with your loan officer to ask why your application was rejected and what you can do to improve your chances.

2. Try another lender. Another lender may offer a different loan program with guidelines that better fit your situation. Credit unions and small local banks often have more freedom to work with a client. Look for a lender that does not sell its mortgages on the secondary market; these loans may be easier to qualify for, although they may carry higher fees and interest rates.

3. Revisit the appraisal. If your problem is a too-low appraisal, you and your loan officer are prohibited by federal law from ordering a new appraisal. Occasionally, though, an appraiser will reconsider when given new evidence. If you know of nearby homes like yours that recently sold for more, your real-estate agent may be able to offer the appraiser evidence that persuades her to revise her valuation. Otherwise, the only way to get a different appraiser to value your home is to make a fresh mortgage application.

4. Repair your credit. If your credit score was slightly too low to qualify, paying off a credit card or loan may help. It takes up to 90 days for the result to show up in your score. Other strategies that take longer are:

• Close credit card accounts you're not using.
• Make every single payment on time; eventually, late payments will "age" off your credit score.
• Reduce the proportion of your available credit that you're using.
• 5. Improve your debt-to-income ratio. Big monthly payment obligations compared with your income jeopardize an application. Fixes include:
  • Paying off an outstanding loan by, for example, selling your newer car and using the proceeds to get a cheaper vehicle and pay off the loan.
  • Asking a free credit counselor approved by the Department of Housing and Urban Development (find one here) for help consolidating your debts. (The Federal Trade Commission tells how torepair credit and avoid scammers).
  • Borrowing against your 401(k) to pay off high-interest revolving or credit-card debt.

Read More

Beanie Babies Creator Pleads Guilty to Tax Evasion

CHICAGO, Sept 18 (Reuters) - The billionaire creator of Beanie Babies, Ty Warner, was charged on Wednesday with tax evasion and agreed to plead guilty and pay a penalty of almost $53.6 million, according to prosecutors and his attorney.

Warner, 69, ranked as the 209th richest American by Forbes, "went to great lengths" to hide from his accountants and the Internal Revenue Service more than $3.1 million in foreign income generated in a secret Swiss bank account, according to the U.S. Attorney's office in Chicago.

Warner has agreed to pay a civil penalty of $53,552,248 million for failure to file a Foreign Bank Account Report, according to a statement from Warner's attorney Gregory Scandaglia.

"Mr. Warner accepts full responsibility for his actions with this plea agreement," Scandaglia said.

Warner is the second taxpayer to be charged in federal court in Chicago in connection with an ongoing investigation of U.S. taxpayer clients of Union Bank of Switzerland and other overseas banks that hid foreign accounts from the IRS, according to prosecutors. As part of a 2009 agreement with the United States, UBS provided the government with the identities of certain customers, prosecutors said.

The federal charge alleges that in 2002, Warner earned more than $3.1 million through investments held in his UBS account, but did not tell his accountants and failed to report it on his 2002 tax form. He failed to pay $885,300 in taxes owed for 2002, according to federal officials.

Beanie Babies, small plush toys sold for between $5 and $7, have been popular with collectors. During their peak of popularity in the 1990s, some collectors would pay hundreds of dollars for a rare character on the resale market, according to press accounts.

Warner's net worth was listed this week by Forbes as $2.6 billion.

Note: Ty Warner is the owner of The San Ysidro Ranch, The Four Seasons Resort, the Biltmore Santa Barbara, and The Coral Casino Beach and Cabana Club.

Read More