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Last Friday’s vote in the House of Representatives on the Cap & Tax Trade bill contained a surprise gift for home sellers. This new provision would take place at “point of sale”, meaning before your home transaction could close you would be required to have an energy audit performed. Similar in nature to a general home inspection, an energy audit would look at the energy inefficiencies of your property. Minimum guidelines would probably be developed to determine pass or fail, and then the appropriate repairs or updates would have to be performed to bring your home up to standards.

Consider many of the homes in Pasadena, built in the early 1900’s with no insulation, original windows and probably the original knob and tube wiring running through the attic, which every home inspector will tell you not to cover with insulation.

Are you beginning to understand the increased costs you could incur when selling your home?

From Congressman John Boehner’s website:

“Home Sellers Beware. Having a hard time selling your home? Here’s one more hurdle to jump: all homes sales are conditioned upon an energy audit and a new energy rating assessment and energy labeling program for your home that’s outlined in the Democrats’ bill. And if you thought you could improve your property with a fresh coat of paint and some granite counters? Think again! Now your home will be subjected to a new energy rating assessment and energy labeling program that will penalize you for older windows, original fixtures, and dated appliances. So the Democrats’ bill would bring down the value of your home”!

Deja Vu All Over Again

It was just a little over one year ago in May 2008, when the California Assembly narrowly passed AB 2768, a similar bill that would also mandate energy audits for California home owners at point of sale. The California Association of Realtors projected it could add thousands of dollars to the cost of a home, not to mention the estimated cost of $400 for the inspection. Through the lobbying efforts of the Realtor organization the bill failed in the senate.

Additional costs and regulations. Not exactly the cure for energizing the real estate market.

Tags: HOw does an energy audit affect the sale of your home, The cost of an energy audit, What is an energy audit?

A housing dichotomy has developed between those who think the residential real estate market has bottomed and those who think we are still falling. For the moment forget about the latest national prognostication, and let’s go local. A Southern California blogger who maintains the site called Dr. Housing Bubble, wrote an article about Pasadena and the impending market meltdown anticipated in the next few months and well into 2010. While many other recent reports have suggested that prices in California have begun to stabilize evidenced by median home values which have recently trended upward, the good Doctor takes what I would call a different approach. I hesitate in calling it a contrarian viewpoint since many forecasts go either way.

Therefore, I thought I would rebut some of the assertions and defend the honor of our fair city. I realize some of the naysayers will point out the fact that I am a Pasadena real estate broker and therefore subscribe to the National Association of Realtor motto that “It’s Always a Good Time To Buy” campaign and credo of never speaking negatively about the housing market. I can assure you I don’t. Projecting a false sense of optimism to mask reality is not in the kool aid around here.

The Dr. states that Pasadena prices will be coming down late this year and into 2010 due to a several factors:

Current Prices do not reflect local area incomes - many housing pundits point to the fact that residents cannot afford a house in the city and therefore prices must fall. The Dr. states that the median income in Pasadena is $66,465 (2007) and that only 48% of residents actually own any of the city’s 51,000 households.

If 48% own a home, the owner occupied inventory would be at 24,500 units. Pasadena will report approximately 900 home sales this year which represents about 3.7%. So if we use median income as a barometer, it’s safe to say that home ownership is not linear across income levels. Pasadena and much of California have always been expensive housing markets. People in the upper income levels are buying houses, people in the lower income brackets rent. At least they do today.

Now before you minimize my argument consider this: If prices in Pasadena are unsustainable then Beverly Hills must be about to implode. The median income in Beverly Hills is $82,669, with 15,000 households and the median price is well in excess of $1 million.

The argument that local incomes do not support housing prices doesn’t seem to be a good prediction of future housing prices.

Distressed Property & Housing Inventory - The Housing Bubble website states that distressed property (preforeclosure, auction and bank owned) in Pasadena now exceed 600 units. That is correct according to Foreclosureradar. However, the bubble states that these homes are now making their way into the market, but goes on to say only 11 homes are listed as foreclosure in the MLS.

Distressed Property in Pasadena

There have been rumors that banks were going to turn loose of their repossessed property, flood the market and drive down prices. This isn’t happening. It’s also not likely to happen. If you are a homeowner in foreclosure on a second home or investment property, you may be less likely to receive any lender leniency. However if your primary home is in foreclosure, the empirical data I am seeing doesn’t suggest that banks are in any hurry to take the property. Data does suggest that banks are taking as long as 5-6 months after the first payment is late to issue the NOD. Additional data also shows that some properties have been in the auction stage now for 5-6 months. Furthermore banks seem more willing to work with sellers and approve short sales as an alternative to foreclosing.

Actively Listed Inventory - As discussed in the Pasadena May sales report, the current months supply of single family inventory is about 6.75. As you can see from the enclosed chart, inventory has come down significantly in the last year and prices have also been on the increase beginning in March. Two indicators that do not support buyer reluctance.

Inventory is down and Prices are up in Pasadena

One last thing regarding home buyer apprehension; our office just made an offer on a house listed in the mid $800’s. There were 22 offers. Evidently some people believe opportunities do exist.

Option Arms - as the Housing Bubble states, the “tsunami is building” due to the option arm, which was yet another innovative mortgage product. Business Week reported that California holds about 60% of these loans which are now beginning to reset including higher rates, and higher payments. The presumption being another wave of foreclosures.

I don’t see this happening. The current administration is taking a very activist role in usurping the free enterprise system that would allow homeowners and industries to fail. If programs can be designed and customized to aid banks and car companies, can they selectively design programs which would only apply to states with the highest rates of foreclosure? The current programs which have not been very beneficial to Californian’s may just be delaying the inevitable biggest bailout of all.

Tags: California home prices, local incomes don't support area home prices, pasadena housing bubble, real estate outlook for Pasadena CA

The State of California has a new law. The California Foreclosure Prevention Act became law this week. The law applies to specified loans that were recorded from January 1, 2003 to January 1, 2008 and only pertains to a principal residence. The law provides the homeowner an additional 90 days, provided the Notice of Default has been filed. There are some exceptions, so please seek the appropriate legal advice to see how this might benefit you.

The reason it was drafted is as follows:

SEC. 2. The Legislature finds and declares all of the following:
(a) California is facing an unprecedented threat to its state and local
economies due to skyrocketing residential property foreclosure rates in
California. Those high foreclosure rates have adversely affected property
values in California, and will have even greater adverse consequences as
foreclosure rates continue to rise.
(b) It is essential to the economic health of California for the state to
ameliorate the deleterious effects that will result from the continued high
rate of foreclosure of residential properties by modifying the foreclosure
process to provide additional time for borrowers to work out loan
modifications while providing an exemption for mortgage loan servicers
that have implemented a comprehensive loan modification program.

If you will recall Governor Schwarzenegger ask lenders to place a 90 day hold on foreclosure proceedings before the holiday season began in late 2008. There was some speculation that foreclosures would begin to escalate in April or May this year as the Obama Housing Plan was announced and the temporary moratoriums expired.

Are Federal Programs Helping Californians?

One of the key components in the Obama Housing Plan called for a laundry list of qualifications but the kicker was that your newly modified mortgage must not exceed 105% of the current market value. Isn’t that like telling the poor “since you have access to a dumpster you are not entitled to food stamps”? Depending on where you live and when your house was purchased, there is a good chance it has lost 30% to 40% of its value over the last few years. Translation, you are not a candidate for a modification and foreclosure is inevitable.

The explanation provided in the article I read stated that if you lived in a state such as Nevada, Florida or Arizona where home prices have plunged there is a good chance you won’t be eligible Where do they think ground zero occurred in the housing bubble? There is no mention of California, just might as well forget that. So the program designed to ease the financial burden of homeowner’s will not help the ones for whom it is intended. If you live in one of the top 4 states which have experienced the greatest crisis, well you are just SOL my friend.

We even have adjustments in the FHA guidelines to address the high cost areas such as LA County which increase the loan limits that can be insured. Why did it just seem to end there? Is California just so far removed from Washington that we are a forgotten people out here? The first time homebuyer credit of $8000 means much more to the young couple in Kokomo, Indiana buying their first house than it does to the same couple in Pasadena, CA. If the median price in Indiana is $100,000 that 8% credit is now worth $40,000 on a $500,000 median priced home here in Pasadena. Where is the equality?

Whle Rome burns we watch the sunset.

Tags: California foreclosues, foreclosure prevention in California, preventing foreclosure in California

The real estate business has experienced many changes in the last few years. As a result the business of Pasadena Real Estate has evolved as well. The old web site that features a “canned presentation” and general prewritten content has been replaced with sites now that feature weekly updates specializing in community information. Consumers want to know what is happening in their neighborhoods, and in their cities. If all real estate is local, it must be time to get hyper local!

Pasadena Real Estate Guide

We created this video to showcase our great City and to also give you a glimpse of upcoming material on the new Pasadena Real Estate Guide!

The Pasadena Real Estate Guide will feature:

Pasadena Home Search - will allow you to search all homes for sale in Pasadena and Los Angeles Counties. Create your very own VIP Account and receive email notifications of homes matching your criteria.

Pasadena Condominiums - articles and reviews on Pasadena’s newest communities.

Pasadena Events - stay updated on community activity including entertainment and special events.

Pasadena Neighborhoods - interested in a specific neighborhood? Learn the characteristics as well as the latest neighborhood pricing.

Buying a Home in Pasadena - tips on how to get the best deal for your money.

Selling a Pasadena Home - how to get your home sold quickly and mistakes to avoid.

Pasadena Market Reports - new statistics and graphs to provide easy to understand trends.

Pictures and Videos - the business of real estate is enhanced and told with pictures. We will have lots of photos, including informative and “to the point” videos.

If there is anything you would like to see please let us know. We welcome your comments and suggestions.

Tags: about Pasadena, information about Pasadena CA real estate, moving to pasadena, where to find information about Pasadena real estate

Unit sales along with the median price make positive gains in May, continuing an upward trend in 2009.

Predictability, which was absent in the Pasadena real estate market during the last two years appears to be making a return. Predictable that is, when the seasonal home buying months once again become the months of May thru August. The median price of a Pasadena home exceeded $500,000 for the first time since November 2008.

The housing market which has exhibited some positive trends of late still offers a few inconsistencies. For example, the market for single family homes is outselling the condo/townhome market by a ratio of 2:1. In terms of months of supply, single family is about 6.75 months, and the condo market is closer to 10 months. Also sellers of condos and townhomes are having to be more aggressive in marketing their properties, evidenced by the final sales price achieving only 90% of the original asking price.

The catalyst for this market remains homes under $500,000. One of the most telling statistics is how the market has changed. As an example in May of 2008, only 13 homes sold at a price below $500,000. In May of this year that number increased to 28.

In the market for homes over $1,000,000 there were 18 homes selling in May 2008 and the number dropped this year to 11. Whereas “declining” used to be the adjective of choice to provide a one word label that summed up the Pasadena real estate market, I think the new word now becomes “shifting“.

Pasadena Homes May 09 Sales Report

View more OpenOffice presentations from up2date.

Tags: Pasadena home sales, Pasadena Real Estate Market Reports, pasadena real estate review