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What Does China’s Stock Market Mean For The U.S

You have likely heard: The Stock market of the world’s second-largest economy, China, fell dramatically last week by 11.5%, causing panic with global financial markets and losing nearly $10 trillion since their peak in June. Investors’ concerns over China’s economic slowdown have showed no signs of letting up. This has caused a ripple effect across world markets.

However it’s not only the stock market that has fallen in China. The government has also devalued the currency.  Additionally the real estate bubble has burst and prices have had a sharp decline.china stock market 1

But what does this mean for the real estate market in the United States? The Chinese stock market crash and the recent fall in real estate prices have given rise to an even stronger desire to seek out investments in safer economies. They consider the hard asset of real estate as the safest. Real estate in the U.S has been looked at as a stable asset, and demand for it has been felt locally: prices in with some of our local markets have skyrocketed in the past couple of years.

However the Chinese buyers now are facing two big changes: the real estate that they sell at home is bringing them less profit and the money that they have has been devalued!  The logic here is simple: China’s millionaires still seek safe investments in US Real Estate, yet they are adjusting their price point and seeking out less expensive areas and other locations besides the two coasts.

“There’s still a strong desire to buy in America, but maybe they’re not coming in with quite as strong offers,” Ken DeLeon told KCBS. Time will tell.

 

State Program for retrofitting homes

California Residential Mitigation Program > Homeowners

Special Retrofit Assistance Program for Homeowners

“The Earthquake Brace + Bolt program provides homeowners up to $3,000 to strengthen their foundation and lessen the potential for earthquake damage. A typical retrofit can cost between $2,000 and $10,000.

Houses that meet the state building code retrofit criteria typically were:

  • constructed before 1979
  • built on a level or low slope site
  • constructed with a four-foot (or less) cripple wall under the first floor
  • have a raised foundation

Homeowners must complete the qualification questionnaire answering questions about their house and agree to the terms of the program to be considered for participation in the program.

There are several locations in Northern and Southern California that will be included in the program. These areas were selected because they have a high concentration of houses that meet certain state building code retrofit criteria for existing single-family buildings.

As of January 15, 2015 houses must be located in the following ZIP Codes to be eligible for participation in the program.

 

Oakland
94602
94607
94609
94610
94618
San Francisco 
94112
94121
94127
94132
San Leandro
94577
94578
94579
Los Angeles
90026
90031
90039
90041
90042
90065
Pasadena
91101
91103
91104
91105
91106
91107
Santa Monica
90401
90404

Homeowners in these ZIP Codes can register for EBB from January 15, 2015 through February 15, 2015. Space is limited.

Selection of program participants will be made after registration has closed. There will be a random drawing and homeowners will be notified by email if they have been selected to participate.”

A project of the California Residential Mitigation Program
a joint power authority between the California Earthquake Authority
and the Governor’s Office of Emergency Services

The above information is deemed reliable but has not been verified.

The Chinese influx is felt locally

This year, for the first time, the Chinese surpassed Canadians as the top investors in American residential real estate. According to the NAR, during the 12-month period that ended in March, investors from China (Mainland China, Taiwan and Hong Kong combined) invested $22 billion in the U.S. housing market.
Canadians, the perennial leader in foreign investment, spent about $13.8 billion.

The Chinese have good reason to invest in U.S. real estate, and the impact is being felt in our local market.
Chinese investors consider the U.S. market and the coastal cities of California to be inexpensive in comparison to China. But price is not the only attraction.

The U.S. offers consistently enforced contracts, legal transparency and educational opportunities for their children.

Most Chinese buyers are shopping with cash. Locally the hottest city is Arcadia.

Read this detailed recent Business Week article:
http://www.businessweek.com/articles/2014-10-15/chinese-home-buying-binge-transforms-california-suburb-arcadia?campaign_id=yhoo

Cooler Real Estate Market Coming?

Cooler Real Estate Market Coming?
This year started with what I termed the “Tsunami real estate market”. The market made incredible leaps and bounds towards a full recovery, with prices surpassing the highs of the boom in some of our local markets. But as the hot summer is coming to an end, we are seeing the first signs that the housing market is cooling off as well.
Why will this probably happen? The huge increase in prices cannot continue at the recent pace. Home prices have risen significantly from their lows only a couple years ago. Mortgage rates have begun to return to their pre-crisis levels, and even all cash buyers notice that change, as higher interest rates means there will be more options besides real estate to “park” their money. .
These factors are some of the reasons why the market is probably beginning to slow down. Let’s be clear, the market is still growing, but the rate has slowed. Many experts say we’re entering another phase in the market’s recovery.
One factor that we see locally is the increase of sellers in the market. It’s simple: higher prices have encouraged more sellers to enter the market, which in turn has increased inventory. More choices means a lesser demand for any one home and as a result there are less offers per property. In our market, there are still multiple offers, but just not as many. Over time, the net result will be a flattening of prices.
For some, these changes could be considered a reason for alarm, considering how quickly prices have risen over the nine months, but many “experts” are classifying this as a healthy change in the market. Frank Nothaft, Freddie Mac’s chief economist, said that this is just a new phase in the housing recovery. This phase is may be slower, but much more sustainable.

What’s Up With This Crazy Market?!?

The market is going crazy all over LA. In every pirce range. The LA Times had a great article this week, if you want to see the actual numbers to back up that opinion:
http://www.latimes.com/business/la-fi-socal-home-prices-20130515,0,4117313.story

In some areas prices are at or above the peak-like San Marino and Arcadia. In other areas prices are still 30% below the peak, but things are shooting up. Is this is some kind of bubble again?

If you want to buy in this market, here’s the scoop: be willing to pay more than anybody else.

Looking for a home is a full time commitment. Sit and get real with your expectations and the realities of the current market.
Look on the the internet to do your homework and preliminary looking. Go do the things you like to do in the areas you are considering living. Don’t run around looking at homes but scope out the areas. It does no good to find a home you love in a town you don’t want to live in!

When you have narrowed down what you really want, how much you can afford and where you want to live, then you have to look at homes. Get email alerts of new houses in those areas only. Stop looking elsewhere!!! Be prepared, be fast, be unemotional. That’s the only way to beat this market.

Don’t waste your time writing offers and then realizing that you need “more information to make a decision”.

When dealing with multiple offers, the goal is to get into escrow. Accept the reality that every home has “issues”. No home is perfect. Figure out in escrow how you will deal with those imperfections. Once you’re in escrow, it’s just the buyer and seller trying to work out an amicable solution instead of you trying to beat out lots of other buyers.

There are some great homes coming on the market, just not enough of them. SELLERS we need more of you!!

 

 

Home Improvements Before You Sell?

When considering the sale of a “high end home”, most sellers want top dollar. What can you do to make your home more appealing so that it will sell for the highest and best price?  In this four article series, we will consider improvements and upgrades that can be made to showcase the home but also those that return the most on that investment. We will discuss working with a budget of up to $25,000 with optional more expensive upgrade suggestions.

The approach must be focused and directed towards a sophisticated buyer who wants a more upscale home. What impression do you wish to make? Think of it as if you were planning a dinner party: do you want fine china or plastic plates?  Who is on the guest list of potential buyers?

Set a budget. Once you have committed to a number that you can abide by, try to see how your house looks to others. Check your own emotions at the door. Remember, this is to make your home appeal to the next owner, not the present one.  It’s best to get a disinterested third party to come and give you their opinion on what they see when they walk in. Optimally, the remodel process should begin at least 3 months before putting the home on the market. This will allow  enough time to hire the right contractor(s), acquire all materials and complete the work.

We will begin with the exterior.  The curb appeal and a home’s street presence is the first thing a buyer sees. It is difficult to undo a bad first impression.

If the home has not been painted recently, that should be one of the first things. Is the color choice in style? Color schemes have changed. Even a freshly painted home will look dated if the color scheme is wrong. Are the gutters clean and straight? Is the walkway up to the front door level and undamaged? Look at the entryway: perhaps a different front door will create a new look.   Front porches or stoops often have cracked grout and outdated railings. Repair them or change them out.  Add some new plantings to freshen up the yard. Choose flowers of the season that will be in bloom during the listing period. Do not plant summer bloomers in September, even if they are plentiful and on sale.  It’s often better to use fewer plants but spend the money on edging and mulching. Invest in a few bags of mulch for the beds, making sure you get a neutral color that complements the plantings.  As potential buyers walk up to your home, fresh mulch will give your beds and yard a “finished” look.

In a future article, we will walk inside and see what changes need to be made to get your home ready to be the star!

The Pros of doing a short sale

 

There are many reasons why you might consider a short sale.  In this blog, we will consider these points.

Pros

      1. Short sales are perceived to be less damaging to the credit.   However both can be a painful process for the family and can take up to a year to complete.
      2. If you are not able to pay the mortgage premium, you can try to work with the lender to negotiate a lower monthly payment, called a loan modification. If this fails,  a short sale is the best case scenario.
      3. You are more likely to avoid a bankruptcy with a short sale. Chapter 13 bankruptcy can be used to wipe out the junior liens. Seek good legal counsel.
      4. It is usually easier and quicker to recover from a short sale situation instead of a foreclosure.
      5. It is usually quicker to be able to qualify for a new mortgage with a short sale rather than a foreclosure.
      6. There is the possibility that the lender will forgive the difference between the price of the mortgage and the amount you owe. However be sure to check with a tax advisor, as the forgiven debt must be reported to the IRS. 
      7. By the end of the process, you might not owe anything but you will no longer have your home.   

Participating in a short sale can give some control in the process of losing your home.  You will be finding a buyer and can negotiate terms with the bank. Although a short sale does damage your credit, by taking this approach, you can avoid the really major hit to your credit that happens with a foreclosure. By decreasing the damage to your credit score(s), you put yourself in a better position to purchase in the near future.

In the end,  perhaps a short sale is your answer.  The banks are finding that short sales are less expensive and more efficient for them in the long run. 

Feel free to contact me for a confidential discussion regarding your specific situation and the choices you have.

Divorce and Real Estate

Divorce is very common and in most cases there is real estate involved.

If both parties are still on title, then both must agree to the sale. Both parties must sign all documents and disclosures. If one party refuses, then it may be necessary to get a Court Order.

Very often financial difficulties have contributed to the failure of the marriage. Oftentimes there are multiple loans and there is more owed than the house is worth. In that case not only does the house need to be sold but there is a short sale involved. Both parties must agree to participate in the short sale process. This involves a lot of paperwork and disclosure of financial information of both parties to the bank, but not necessarily to each other. A short sale would allow a sale for less than what’s owed to the bank. According to current California law, there is no obligation of repayment for principal residences. These laws may be altered or changed in the future.

Sometimes the home is being sold after one person has signed a Quit-Claim Deed. In that case, only the person still on Title is able to sell the home and sign the listing papers. Oftentimes even if a quit Claim Deed has been signed, the underlying Note, or obligation to repay the loans, is still in both names. In such a situation, the person who is no longer on Title has not say in the selling process and yet is still liable for the loans.

It is very important to consider all aspects of the titling of real property as well as any underlying loans with a divorce attorney early in the divorcing process. Nancy Valentine, who has much experience in dealing with divorcing couples, can provide you and your attorney with important information, including loan and title information, as well as an opinion of the current market value, to aid in the evaluation process.

The only deal killer is when one party is in agreement and the other is not. Unfortunately I can only assist when both parties are in agreement because both parties will need to sign the contracts and disclosures. Or if it is stipulated within the divorce decree that the property is to be short sold.

It may be easier and I would recommend having your attorney stipulate within your divorce decree the house is to be sold by short sale just in case you run into problems down the road.

Rest assured, I can help you as long as the Divorce Decree states for you to sell the property or both husband and wife are in agreement.

Contact me for further information regarding how to handle your real property during a divorce.

 

Becoming Single Again..Dealing with Divorce & Death..Part 1

Whether divorce or by the death of your spouse, you have found yourself a single person.  In this and the following blog, we will discuss the financial issues that need to be considered when you are put into either of these situations.

In the case of a divorce

In case of a divorce.....

While this is an emotional time, there are financial issues that need to be considered as soon as possible so there aren’t any unintended consequences. The following are some suggestions of important issues to be considered both during and after the divorce process. Please consult with your attorney and CPA for specifics regarding your own personal situation.

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  • Sever all unnecessary financial ties to your soon-to-be-ex.  Contact any credit card companies with whom you have joint credit cards and cancel any joint accounts. Have a new card(s) issued in your name only.
  • Revise your will. If you and your husband shared the same attorney, you might wish to get a different estate planning attorney.
  • Meet with a reputable financial planner to review your overall retirement situation and update your plan beneficiary designations.
  • Review your life insurance policy including beneficiaries.
  • If there are minor children involved, select a guardian for them.  Be sure to include written instructions on how the children are to be raised.  Also include instructions on how your assets are to be managed and used for the care, benefit and protection of the children.
  • Make sure the children’s future needs are funded.
  • Inventory your assets via pictures or video.
  • Update your medical directive.
  • Meet with a reputable CPA to calculate any tax implications of the divorce.
  • Review budget to include alimony/child support arrangements and revise as needed.
  • Decide what to do with the family home. Get updated information regarding all loans, including copies of the most recent mortgage statements.
  • Contact me for a current market valuation of any real property owned.

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The financial implications of divorcing are important to consider.

The financial implications of divorcing are important to consider.

I can meet with you to discuss what options are available to you in regards to any real properties that may be involved.  This includes any investment or vacation properties. If you are in need of referrals for Family Law Attorneys, CPA or Financial Planners, please contact me and I will be glad to give you several to choose from.

Becoming Single Again..Dealing with Divorce & Death..Part 2

In this and the previous blog, we are discussing the financial issues that need to be considered when you find yourself single again.  The previous blog covered what to do in the case of divorce.  

In the case of a spouse’s death

As traumatic as the death of a loved one can be, the loss of a spouse not only impacts one emotionally, it can also impact you financially. Below are financial issues that need to be considered as soon as possible so there aren’t any unintended consequences. Please consult with your attorney, financial planner and/or CPA for specifics regarding your own personal situation.

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  • Revise your will.
  • Contact any credit card companies and cancel any accounts of the deceased. For joint accounts, change them to be in your name only.
  • Meet with a reputable financial planner to review your overall retirement situation and update plan beneficiary designations.
  • Review  life insurance policies including beneficiaries.
  • If there are minor children involved, select a guardian for them.  Be sure to include written instructions on how the children are to be raised.  Also include instructions on how your assets are to be managed and used for the care, benefit and protection of the children.
  • Make sure the children’s future needs are funded.
  • Inventory all assets. Make a pictorial or video inventory
  • Update your medical directive.
  • Meet with a reputable CPA to calculate estate tax implications.
  • Review budget based on new financial situation.
  • Get updated information regarding all loans, including copies of the most recent mortgage statements.
  • Decide what to do with the family home.
  • Contact a Realtor for a Date of Death Valuation of all real property.

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I have a large network of professionals that my team and I work with. We can give you referrals to help with any of the points listed above. 

When deciding what to do with any real property, I would be happy to meet with you to discuss your options. 

When a spouse dies