Last Sunday we held our first open house for a lovely home on Via Marina in Oxnard and buyers came out in droves. A steady stream all afternoon from 1 pm until well after 4 pm.

The first offer was delivered to us at the open house – fast!

The balance of offers came in within the next 72 hours or so. Needless to say, offers came in over asking price.

What’s driving this craziness? Four main reasons:

• Lack of inventory
• Super low interest rates
• Short sales and bank foreclosures have dried up
• Lots of buyers

Grab a pencil and let’s see where the housing cost numbers are today as you consider whether to continue to rent – or make the leap into home ownership.

Understand this is only number crunching and doesn’t consider other crucial decisions – like, are you willing to commit to one home for a period of time? Renters can give 30 days notice and move on.

So I’ve arbitrarily picked out 2 scenarios – 1) buying a $200,000 condominium in the very popular Todd Ranch condos complex in Ventura and 2) buying a “typical” $400,000 single family house.

Both examples use FHA financing with a 3 1/2 % down payment, 3.75% at today’s interest rate (good credit, etc), and a 30 years fixed rate.

Here’s how the numbers play out:

A Todd Ranch condo:

Mortgage payment – $894
Mortgage insurance – $201
Taxes – $190
HOA – $325
Total = $1,620 per month

Rents in Todd Ranch? About $1,650 – $1,750 depending on size and loacation.

Note this analysis doesn’t take into account tax benefits. You’ll deduct the property taxes and interest on your tax returns for an extra “pop” to your income. But don’t buy a home just because you get some tax benefits – that’s merely icing on the cake.

Buying a $400,000 single family house:

Mortgage payment – $1,788
Mortgage insurance – $402
Taxes – $380
Insurance – $63 (homeowners insurance premiums can vary depending on several factors)
Total = $2,633

Rents for a single family home vary substantially, but will probably be in the low $2,000 range to mid $2,000+ range.

The key takeaway here – for investors, it used to be a rule of thumb you needed a 50% down payment to break even on cash flow. Today, a minimal down payment of 3 1/2% about breaks even.  Now you know why investors are snapping up real estate! Just food for thought…

Skimming the office copy of the Wall Street Journal yesterday, I was surprised to see on Page 1 an article titled “Stunned Home Buyers Find the Bidding Wars are Back”.

The article said that many buyers are now competing for the same house – but unlike the “go-go years…today’s bidding wars are a result of supply shortages”.

In closing two escrows this month representing buyers of homes in the entry level price point range for single family homes, both parties had to fight to get their home – in both cases offering more than the listed price.

The scenario often goes like this:

After a period of looking to gain a good understanding of value, a buyer will make their first offer. It will generally be under the asking price (plus asking for seller concessions) because the lender or short sale seller “needs to get rid of it” or “it isn’t worth any more than that”.

A week or so later, after hearing their bid wasn’t accepted, we start the process again of looking at new listings, and a new offer is made. This time, we’re more attuned to the other buyers and the offer might be closer to the asking price (and not so much in seller concessions) and maybe again our offer isn’t accepted.

It’s a highly emotional, frustrating experience, but now it’s “game on”. More looking, and finally this time there’s a highly tuned understanding of where the market place is at that moment in time and what it takes to close the deal.

Don and I counsel our buyers upfront about what they may face, but unless you’ve gone through that process, it’s hard to understand how frustrating and emotional it can be.

Many economists believe this lack of inventory and this competition among buyers is signalling that the “housing crisis” is about over. Rents have been rising, spurring more buyers into the market. But with patience,  buyers today are still finding “great deals” out there.

Here’s a link to the article…

On Monday night, the City Council spent most of the evening considering various housing related issues. Culminating almost 3 years of stakeholder involvement (homeless advocates, landlords, city staff, etc), the Community Development Director presented the City Council its report.

Much of the discussion concerns “bootlegged” dwelling units (converted garages, un-permited room additions, etc), but what concerns a lot of Realtors is a proposal for an official, notarized inspection of all home sales in the City, provided to the City, conducted by a local certified home inspector (the “Local Resale Inspection Report Program”). See page 9 in the report. There would be fees involved for this report to the City.

In my personal opinion, this is completely unwarranted and unjustified. There is no reason the City needs to become so intimately involved in this intrusive manner of “big brother”. There will now be hundreds of dollars of extra cost for a home inspector to go to City hall to review the permit file, then act as an appraiser and measure the square footage of the home, determine number of rooms, etc, then have his report notarized before turning it into the City.

Unbelievable! How can this creeping bureaucracy continue? Have these people lost their common sense? I say – enough already!!

If you’re a first time home buyer and have been sitting on the fence – this will blow you over and get you going! You’ve known about the $8,000 first time home buyer federal tax credit.  But now, Californians  can take advantage of newly enacted AB 183 allowing up to $10,000 of additional tax credit! That’s $18,000! This is huge! But there are time lines and the tax credit is on a first come, first served basis. Want to know more? Call us now at 659-2000!