One would think that things couldn’t get any tougher for real estate brokers in the Central Valley of California  with the housing market slumping badly after the first-time homebuyer tax credit disappeared; but wait, there’s more.  Central Valley buyers and sellers are closely eying the changes from the Federal Housing Administration to gauge possible impacts. 

Why should brokers worry about the FHA? The obvious answer is; the FHA insures about 30 percent of all home loans in the United States and and that means a lot to the folks in and around the Central Valley.  New FHA borrowers are required (as of Oct. 4, 2010) to have a minimum FICO score of 580 to qualify for the minimum 3.5 percent down payment. New borrowers with a FICO score in the range of 500-579 must now put down at least a 10 percent down payment, and those with FICO scores below 500 cannot qualify.

“Based on HUD statistics, less than 2 percent of all borrowers who use the FHA loans have credit scores of less than 580, and this slice of borrowers are the most likely to get into trouble with a 27% default rate.  Also, consider the reduction in upfront premiums for FHA mortgage insurance moving from 2.25 percent to 1 percent in the recent changes, while the statutory limit on annual premiums rose from 0.55 percent to 1.55 percent.

Those FHA borrowers with loan-to-value ratios of up to 95 percent will see an increase in annual premiums to 0.85 percent, and those with higher LTVs will see annual premiums rise to 0.9 percent.  Perhaps they should look at the high debt rations of these borrowers to determine whether they will be able to handle the additional debt.  

A borrower can still get a mortgage loan with a debt ratio as high as 55 percent of gross monthly income.  A family can be approved for a mortgage with a combined debt load of $2,750 per month with a net income of about $3,500, which leaves them $750 a month to live on, including groceries, electrical bills, other utilities, kids’ stuff, etc. That is not a whole lot of money to live on for a family of four.

In the early 1990s, before the advent of automated underwriting, the maximum debt ratio was 41 percent on an FHA loan, which may have already been a stretch for many home owning families. Back then the FHA was stricter — if you had even a 44 percent debt ratio, you were not going to get a loan.  While it’s true some homeowners can handle the higher debt load, the statistics don’t lie.  In most cases, an individual who has a 620 credit score perhaps should not be allowed a 50 percent debt ratio. Yet, by FHA standards, that is allowable.

The FHA fund has fallen so low that the government entity is running through a number of alternative plans to increase credit quality, reduce default rates and not to have to go begging to Congress for money – maybe, the FHA just needs to run smarter.   With the housing market in the Central Valley of California, like most of the rest of the country, is hanging on every change in the lending industry, it will be interesting to see what changes, if any these new policies of the FHA will have on the market.

 

For property owners that have suffered a severe decline in market value may be eligible for property tax relief.   In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in taxable (assessed) value when real property suffers a decline in current market value.  When the market value of a  property on the January 1 lien date falls below the assessed value, the assessor is obligated to review the property and enroll the lesser of the two values.  If it is determined that the market value of your home is less than its assessed value, your property’s assessed value will be adjusted to the level of its current market value, and consequently, your property taxes will be reduced. 

To apply, each county assessor office has implemented its own procedures for Proposition 8 applications.  Some county assessors require  the filing of a formal application with the inclusion of two comparables sales.  Others require the filing of a simple informal form or a written notification.   Some only require a phone call.

Be Aware of Scam Artists!  There is no fee for this and you should not pay anyone a fee for this service. 

Every year the assessor will review your lien date value.  The assessed value of a property with a Proposition 8 value in place may increase each lien date by more than the standard two percent maximum allowed for properties assessed under Prop. 13.  However, unless there is a change in ownership or new construction, a property’s assessed value can never increase above its factored Prop. 13 base year value after adjusting for the annual increase. 

In order to effect a change in value be prepared to provide evidence of the change in value of your property to support your opinion of that market value.  The best supporting documents are at least two comparable sales in your neighborhood as close to January 1st of the subject year.   The properties you include should have comparable size, amenities, and features to your own.  If you do not know where to get this information contact your local Realtor , or visit your Realtor’s website .

If you don’t agree with the outcome you do have some options.  You may file a formal appeal with the County Assessment Appeals Board or the County Board of Equalization.  These Boards are independent entities established these differences.   Appeals must be filed within July 2 and either September 15 or November 30 of the same year.   Go to www.boe.ca.gov/proptaxes/pdf/filingperiods.pdf. 

It is important to remember, outwardly scam artists tend to be clean cut, well spoken, and often seem to know a lot more about  your situation than you do.   They often attempt to lure people by belonging to, or pretending to belong to the same racial, religious, social, or other group as their victims.  They will often say or do whatever you want to hear or have them say in a very convincing manner, often agreeing with your plight and seem to empathize with you. 

With certain exceptions, someone who charges you a fee to negotiate with your lender on your behalf must be licensed with the California Department of REal Estate.  You can do a quick check, or “License Status Check” by going to www.dre.ca.gov.  You should also conduct further investigations before doing business with someone offering to help you by checking public records, the Better Business bureau. and the Internet, asking for and verifying references and going to the physical address to verify one actually exists. 

Another clue is when someone tries to push you into making a decision right now, or making false deadlines.  If they give you a deadline ask to see it in writing from a source you trust.  Taking time to ask friends, family, or just discuss the decision with someone else is always a good idea.   If and when you do finally sign a document, know what you are signing after you have had a chance to read it, and don’t allow the person to leave without giving you copies of what you signed.  Never believe anyone who tells you, “it doesn’t matter what it says in the contract, here is the truth”.   A written contract almost always trumps a verbal promise. 

Don’t be afraid to ask questions and don’t ever allow someone to talk you into doing something illegal, or let them convince you it’s OK because everyone is doing it.  Do not comprmise your position by getting involved in anything underhanded.  Once you agree, you will be less likely to blow the whistle on the scam artist if you too are involved in the scheme.   The bottom line is the more you know about foreclosures, the less likely you will be duped.

Contrary to popular beleif, the average price per square foot for Tracy CA dropped - Currently at $119, a decrease of 1.7% compared to the same period last year. The median sales price for homes in Tracy CA for Dec 09 to Feb 10 was $234,000 based on 630 home sales. Compared to the same period one year ago, the median home sales price increased 0.4%, or $1,000, and the number of home sales decreased 27.5%.

There are approximately 286 resale and new homes in Tracy, including 1,095 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for homes for sale in Tracy CA was $302,839 for the week ending Mar 10, which represents a decrease of 0.9%, or $2,738, compared to the prior week.

Here is what that looks like graphically according to Trulia:

Market View for Tracy

Market Trends for Tracy

Average Listing Price

$302,839 -0.9%

Median Sales Price

$234,000 +0.4%

Average price/sqft

$119 -1.7%

Number of Sales

630 -27.5% y-o-y

More Tracy Market Trends

Home Prices for San Joaquin County

Info

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Most popular zip codes Avg. listing price Week ending Mar 10

 

95391

$343,826

-1.7%

95376

$222,713

+0.9%

95206

$137,182

+0.5%

95377

$297,510

-1.6%

95219

$342,370

-1.3%

 

95205

$218,163

+21.6%

95212

$302,719

+20.4%

95202

$266,240

-19.5%

95215

$207,923

-15.4%

95204

$190,183

+8.5%