My Congressman Voted “Aye” for Controversial Bill

By Alicia Lanier, REALTOR

Did your congressman vote for or against what the media has been calling the “Wall Street bailout plan”? Mine voted Aye. That would be Congressman Mike Honda. U.S. House Representatives Zoe Lofgren and Anna Eshoo from the Silicon Valley also were Aye votes, as was Speaker of the House Nancy Pelosi.

I checked Speaker Pelosi’s website today to get info on the roll call vote that sent the U.S. financial markets into a diving tailspin on Monday. One of the most interesting things I learned is that the actual bill name is  The Emergency Economic Stabilization Act of 2008 … that’s pretty significantly different than the bailout moniker that we’ve been hearing 24/7 in the press. No wonder most of the country is so against this bill.

Speaker Pelosi’s comments:

“Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets—including requiring a plan to ensure the taxpayer is repaid in full. On September 29, the House voted on this bill. While 205 Members voted for the bill, it failed to receive the necessary votes for passage.

“The defeat of the Economic Emergency Stabilization Act resulted in additional severe economic impacts both on Wall Street and on Main Street. The consequences of the vote – an historic drop in the stock market and the loss of $1.2 trillion in savings, investments, and retirement funds – had a major impact on American families, small businesses, and others that demonstrated the imperative for Congressional action.

“Democrats will continue our bipartisan efforts of the past two weeks to pass a comprehensive bill to help stabilize our financial system and protect the American taxpayer. Democrats are committed to working with the Administration and our Republican colleagues to enact a bipartisan bill without further delay.”

For the first time, the full text of a Congressional bill is being published on the web. Before you buy into the “bailout” tag, I suggest you mark this historic occasion and have a read – or at least review the summary of the The Emergency Economic Stabilization Act of 2008. 

In terms of housing, this bill is said to help prevent home foreclosures from crippling the U.S. Economy with these measures:

• The government can work with loan servicers to change the terms of mortgages (reduce principal or interest rate, lengthen time to pay back the mortgage) to reduce the 2 million projected foreclosures in the next year
• Extends provision (enacted earlier in this Congress) to stop tax liability on mortgage foreclosures
• Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis—allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

Savvy Buyers Snapping Up Under-Value Homes

By Alicia Lanier, REALTOR

Grim housing news aside, there are Silicon Valley buyers who know a good investment when they see it and, as a result, it’s not unusual to again be seeing multiple offers on a bank-owned property or other home that is priced under comparable homes in a neighborhood.

Last week I heard about a colleague who received … count them … 100 offers on a bank-owned property he had listed. And I have personally represented clients this summer who either participated – or were scared off by – multiple offer bidding on a property. Part of this results from the skyrocketing number of foreclosures, which can be a real bargain for buyers who have been previously sidelined by pricey homes in the Silicon Valley. Amazingly, in some San Jose areas, we are now seeing single-family homes under $200,000.

Before running out and chasing foreclosed properties, make sure you are pre-approved and have sufficient money available to put down a reasonable deposit; you need to be pre-approved by a reputable lender; your offer should contain reasonable, straightforward contingencies and the offer should specify a closing date that is within a reasonable amount of time. The combination of these factors can position you as a stronger buyer in the eyes of the bank. And use a real estate professional … this is no time to go it alone.

Also, be aware of the pitfalls! Determine all fees associated with purchasing the property. There may be hidden fees like liens, unpaid taxes, penalties, etc. to contend with. How low will they go? Lenders may not be willing to negotiate the price down from market or close to market. This is especially true in areas where home values have fallen further than lenders want to acknowledge. Be prepared for a counter offer. Because the sale of bank-owned properties are becoming increasingly popular and therefore, competitive, we are seeing cases in which banks are countering at an amount that is above the original list price. These actions can discourage some buyers who thought a bank-owned property automatically meant a bargain.

TIP: Coldwell Banker has just published a new Guide to Purchasing Bank-Owned Properties. Contact me today for your free copy. I’ll also be happy to provide you a free list of bank-owned properties (complete with photos and details) for any Silicon Valley neighborhood or community … just ask!

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

Take a Collective Deep Breath About News of Day

By Alicia Lanier, REALTOR

With headlines like “worst crisis since 1930s” screaming from the newstands and TV’s talking heads endlessly recounting the latest financial casualties, we here in the Silicon Valley need to take a collective deep breath, review the last year, and get some perspective on the current situation. Because it was just about this time last fall that we began to understand the “mortgage meltdown” had arrived in full force and was going to actually impact our own local housing market.

But, all real estate is essentially local, and the monthly sales statistics for Santa Clara County indicate that our Silicon Valley housing market has actually fared better than most other metro areas in 2008. Some Silicon Valley cities, have even had what could be termed a fairly robust year. That’s not to say that a lot of people weren’t impacted – both homeowners and real estate professionals – but it could have been worse.

I was reminded of this last week at our annual Santa Clara County Association of Realtors Conference when Dave Walsh, president, said in his presentation: “The market is robust in certain price points and lethargic in others, but we are still seeing increased sales activity with comparison to our 2007 pending sales numbers.”

Median Prices: His analysis of median selling prices indicates that, in general, the expensive and moderately expensive communities (Palo Altos, Los Altos, Sunnyvale, Cupertino, Saratoga, Los Gatos and Almaden Valley) have been doing well and are at or near their record high prices. Their combined median price point: $990,000. 

The affordable and out laying communities (East, Central, & South San Jose and South County) have been doing poorly. The combined median price in the affordable East, Central and South San Jose areas is $400,000 and in South County, $559,000.

The moderate areas – Santa Teresa, Evergreen, Berryessa, Milpitas, Santa Clara, Willow Glen, Blossom Valley, Cambrian and Campbell – have a combined median of $640,000 and have been, well, moderately okay. Even though sales and prices have decreased in the past year, these communities still attract buyers.

“The activity at the high end artificially increased the median prices during most of 2007 since it seemed like only the more expensive areas of the valley were selling,” says Walsh. “Now that the lower end of the market is moving again as a result of the increased activity at the REO (bank-owned properties) and Short Sale end of the market, this downward adjustment in the median price is to be expected.”

Unsold Homes Inventory: Walsh pointed out that the inventory of homes for sale is still declining, which is good news. “Our unsold inventory normally increases through mid-July so a drop in inventory earlier than July is very encouraging. In fact, we have decreased our available inventory since our May 17 high inventory levels by 659 unsold units,” he pointed out.

“Overall, the rate of the increase in inventory this year has been less than is typical, and the rate of decrease in unsold inventory is slightly greater than is normal. Five areas – Willow Glen, Almaden Valley, Saratoga, Cupertino, and Los Gatos Mountains – are all registering increased inventory over the mid-May high water mark. Overall, the county continues to decline in inventory with only 6,467 unsold single-family and condo/townhomes on the market. Compared to other major markets, our inventory is low.

Obviously we don’t yet know is how the recent financial markets crisis will impact housing sales in the Silicon Valley. Autumn usually is our second highest selling season and previously looked attractive for buyers with falling mortgage rates, a decent amount of inventory to choose from, FHA now available, and the extension through the end of the year of the $729,750 limit for jumbo loans.

But, if we will all take that deep breath … look for opportunities instead of concentrating on the negatives … treat this phase as another bump on life’s road instead of an insurmountable mountain … then we can survive this, too.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

Real Estate Execs on Recent Takeover of Fannie Mae & Freddie Mac This Week By U.S. Treasury

By Alicia Lanier, REALTOR

Real estate insiders have generally reacted positively to the U.S. Treasury takeover of mortgage giants Fannie Mae and Freddie Mac earlier this week.

Joe Brown, president of Coldwell Banker Silicon Valley, said:

“I see this is a positive step for our industry, one that should have a positive impact on consumers.  The ultimate goals are to help stabilize the mortgage market, improve mortgage rates in the near term, improve consumer confidence and possibly spur some new housing demand.”

Richard F. Gaylord, president of the National Association of Realtors(NAR), called the efforts:

“…bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen

“NAR believes that the announced plan will help restore confidence in the secondary mortgage market. We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. This demonstrates that the government is clearly committed to keeping the flow of capital uninterrupted, which is crucial to the housing sector and the economy.”

A statement released by the California Association of Realtors (CAR) said the takeover has “calmed the markets and restored confidence” and added that “in the longer term these entities need to be able to fulfill their historic mission” of affordable home loans.

CAR’s executive vice president Joel Singer explained:

“Without an institutionalized mortgage-backed securities market, mortgage capital will be less predictable and more expensive, and adjustable-rate mortgages could become the standard loan for home buyers, as could higher down payment requirements,” he said. “The 30-year, fixed-rate mortgage as we know it will no longer be readily available for most home buyers and may effectively disappear. The result could be a dramatic decline in homeownership rates in California and across the nation.”

“We have just recently begun to see an increase in home sales, currently at nearly 490,000 units on an annualized basis, up from 284,000 in the fourth quarter of last year. The most significant, reliable source of home loans in California today are financed by either Fannie Mae or Freddie Mac,” he said. “California’s and the nation’s housing markets simply cannot withstand the financial rug being pulled out from beneath them. Additionally, the repercussions this could have on the already weak economy could be devastating.”

CAR is urging lawmakers to support continued government involvement in supporting the institutional secondary market and its role in creating homeownership opportunities, and Singer said: “We applaud the U.S. Dept. of the Treasury for increasing the GSEs portfolio limits, but we will be asking Congress to enact legislation to ensure the two companies continue to fulfill their mission.”

TIP: Home loan rates this week have dropped almost 1/2 percent following the news of the takeover. This essentially has given buyers more purchasing power. Call your lender and REALTOR today to learn how it impacts you … this could be a temporary drop in interest rates. Also, remember, the jumbo loan limits now temporarily at $729,750 will drop significantly at the end of the year – so Silicon Valley buyers have a unique buying window of lower interest rates with a higher jumbo loan ceiling plus a large inventory of homes for sale. 

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

Down (but not out) in Silicon Valley

By Alicia Lanier, REALTOR

We may be down, but we’re certainly not out here in the Silicon Valley. At least not enough to eliminate us from showing up on a list of the nation’s most expensive housing markets.

Coldwell Banker has just released its annual Home Price Comparison Index and eight of the 10 most expensive home markets in the country are – yup, you guessed it! – in California. And three of those eight are right here in the Bay Area: Palo Alto, San Francisco, and San Mateo. La Jolla and Beverly Hills were ranked #1 and #2 respectively; both had average selling prices in the $1.8 million range for a 4-bedroom home. Other California cities making the list were Santa Monica, Santa Barbara, and Newport Beach.

The Coldwell Banker study compared the average value of 2,200-square-foot houses with four bedrooms, two and a half baths, a family room and a two-car garage across 315 U.S. markets.

The most affordable city in the study was Sioux City, Iowa, where the average-priced home cost a mere $133,459. 

 Reflecting the nationwide slump in housing sales, the average sales price of the homes that met the survey criteria this year was $403,738, a drop of 4.4 percent from 2007.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

Urge Governor to Sign California Health Care Bill Passed by California Legislature Last Week

By Alicia Lanier, REALTOR

Yesterday, health care reform advocates from around the state trekked to Sacramento to rally in favor of SB 840, a single-payer health care bill that many strongly believe is the right health plan for California – and the rest of the country, too.

The rally was pointed at Governor Schwarzenegger, who has repeatedly threatened to veto this important legislation which was passed by both the California Assembly and Senate last week. This bill should be passed for two huge reasons. The first, and most important is because Californians need a health care system that takes profit out of the health care process and covers everyone. But, running a close second, SB 840 should become law because, in this election year, the passage of health care reform in California (which, as we know, frequently leads the way for the rest of the country) will send a loud signal to the Presidential and Congressional candidates that we need single-payer health care nationwide for everyone.

You can help. No matter your political persuasion or where you live in California, you know how important having an adequate health care is to our children and their families. Please email the Governor right now and tell him to sign SB 840 into law. Just click on http://gov.ca.gov/interact (or copy/paste the link into your web browser) and fill out the form and then the comments field. Be an advocate for change …

Related Blogposts:

June 20, 2008: Single-Payer Health Care Advocates Rally June 19 at San Francisco’s Moscone Center    
February 19, 2008: California Health Care Reform Is Dead – or Is It?
January 15, 2008: California Health Care Reform Battle Heats Up As Governor, Speaker File Ballot Initiative For Fall
October 30, 2007: “Trick” or “Treat” for Health Care Reform?

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

What are Fannie Mae and Freddie Mac and Why Do We Care in the Silicon Valley?

By Alicia Lanier, REALTOR

We learned today that the U.S. Government is apparently poised to take over the nation’s two largest mortgage lenders – commonly called Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Mortgage Corporation). Why are these two privately owned Fortune 500 companies so important to the housing market and why should we care whether they survive?

First, just a bit of history … the Great Depression in the 1930s and the collapse of the nation’s housing market discouraged private lenders from investing in home loans. Fannie Mae was established in 1938 as part of the New Deal in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.

Initially, Fannie Mae operated like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer. This led to the development of what we now call the secondary mortgage market. Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government.

Borrowing at low rates allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers and the company, in turn, profits from the difference between the interest rates homeowners pay and foreign lenders charge.

For its first 30 years, Fannie Mae held a monopoly over the secondary mortgage market. During the LBJ and Vietnam War Era, the company was removed from the federal budget for fiscal reasons and privatized as a Government Sponsored Enterprise (GSE). To prevent further monopolization, Freddie Mac was created in 1970 and together they have controlled as much as 90% of the nation’s secondary mortgage market.

Operated as GSEs, both Fannie Mae and Freddie Mac enjoy government protection including access to a U.S. Treasury line of credit and exemption from state and local income taxes. They also are exempt from scrutiny by the Securities and Exchange Commission, which some watchers believe led to the accounting scandals of 2003 at Freddie Mac.

Together Fannie Mae and Freddie Mac currently hold or back half of the nation’s mortgage debt, and have played an increasingly important role in the real estate market since the credit crisis began in August, 2007.

A government bailout could cost taxpayers around $25 billion, according to the Congressional Budget Office. However, some say our current lending crisis is the worst since The Great Depression. So it doesn’t take much calculation to understand why the U.S. Treasury Department would step in with a bailout and a probable conservatorship for at least year and, just as importantly, get an inside look at the financials of these two troubled mortgage giants to see what changes might be needed.

For now, Treasury Secretary Henry Paulson outlined a multi-step plan and emphasized the conservatorship will focus on improving the economic and credit climate. The most significant benefit to prospective home buyers and sellers is that the firms will continue to make loans “without limits,” at a time when mainstream banks have tightened lending standards or raised interest rates. One can’t quarrel with the need for that.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally http://www.AliciaLanier.com 408-491-1634