South Bay Real Estate Blog by Tim Burrell

The effect of new loan limits on Palos Verdes Real Estate

Posted by Tim Burrell - As a part of the new stimulus package recently signed by President Bush, the loan limits for Fannie Mae, Freddie Mac and FHA loans were increased to 125% of the median price of a home in the area, up to an amount of $729,750. The Department of Housing and Urban Development has released the increased limits for the state of California yesterday, and the limits for other states are expected to follow in short order. The new loan limits are set county by county for the entire state. There are fourteen California counties where the loan limits for FHA, Fannie Mae and Freddie Mac were raised all the way up to the new $729,750 cap. Most of these counties are in the San Francisco Bay Area and northern California (Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Cruz, Santa Clara are on the list) with five more in the Los Angeles area (Los Angeles, Orange, San ..(read more)

Palos Verdes Real Estate: Moving with Children

One of my friends who is also a Realtor had some excellent ideas when moving with Children. I would like to share them with you. Here is what she had to say: Ok, Who decided that moving with children was a good idea? As a Realtor myself, I see families pack up their family (and lives') belongings everyday and move them to a new house. It looks like an easy task from the outside. We, the agents, just get the paperwork signed and the family packs their belongings...Right? Well, when I was in high school and college I was a waitress and thought everyone should do it once just to see what it is like to better appreciate what the servers are going through. Maybe part of the real estate exam should be to see how well we Realtors handles a move of our own. This might help agents better understand what our clients go through on a daily basis. I have recently had to move my newborn and a 10 year ..(read more)

Help Palos Verdes Real Estate: Contact Your Senator!

The Senate Finacne Committee has approved an economic stimulus package that does not include an increase in the limits for loans by Fannie Mae and Freddie Mac (commonly called GSE's), and does not include an increase in the limits of the guarantees allowed by the FHA. The stimulus package passed by the House of Representatives in HR 5140, the Recovery Rebates and Economic Stimulus for the American People Act of 2008, includes increases in the amount of Fannie Mae and Freddie Mac loans to 125% of the median price for homes in high cost areas, with a cap of $729,750. The House bill would also allow FHA to guarantee loans up to 125% of the median price in high cost areas, with the same cap. This increase would be temporary, as it would expire at the end of they year. Now is the time to contact your Senator and explain the obvious: THE PROBLEM IS REAL ESTATE LOANS, STUPID! The main source of the economic problems, and possible recession, is the lack ..(read more)

Will the Federal Reserve Rate Cut Help Palos Verdes Real Estate?

The Federal Reserve cut the Federal Funds interest rate by 1/2 point and the Discount Rate also by 1/2 point. The one is the rate of interest when banks borrow from the Federal Reserve, the other is when they borrow from each other. There were two quick financial responses. In the first response, major banks cut their Prime Rate, the rate that their best borrowers get, from 6.5% to 6%. The second was an immediate improvement in the stock market, that had been down before the announcement, trading immediately went from negative territory to positive. The decrease in the Prime Rate affects many homeowners who have Home Equity Lines of Credit (HELOC). Many of these loans have an interest rate that floats with the prime rate. So, this decrease will reduce the monthly payments on those loans. This will have a positive effect on Raleigh Real Estate, as it will enable more families to afford their mortgages and stay out of financial trouble. ..(read more)

Palos Verdes Real Estate and Media Coverage

Posted by Tim Burrell - When I was younger, the spin of the Media made me angry. Now, it makes me smile. There is an advantage to getting older, as you realize that sometimes journalists get an assignment to write a story on "How Bad is Real Estate" or "The Mortgage Meltdown". If the reporter is told to write a story on the Mortgage Mess, the reporter has to find the facts that support that story. I do not question that the housing and finance market statistics that are reported can be defended as accurate. However, you have to understand that the choice of the statistics to use creates the spin that supports a particular conclusion. Are there serious problems in the mortgage industry today? Yes. Are the supply and demand of the real estate market different from two years ago? Definitely, in many areas it has shifted in favor of the buyers, in some others it has shifted in favor ..(read more)

Palos Verdes Real Estate Needs An Increase In Conforming Loan Limits

One of the reasons for the decrease in the number of home sales in California is the decrease in available financing. Much of the rest of the country is selling most of its real estate using loans that are associated with Fannie Mae and Freddie Mac loans, as they are able to stay within the limits allowed for those loans, so called Conforming loans. The loan limit is $417,000. Other loans are guaranteed by the FHA, with a lower limit of $362,000. These programs do not do much for buying a home in California, unless you have a huge down payment. Last week, an agreement was reached between the leaders of the House of Representatives and the White House to raise the Conforming Loan limit. Some of the people involved in the agreement must not have taken good notes, as House Republican Leader John Boehner said they were raising the limit to $625,000 while House Speaker Nancy Pelosi said the limit would go up to $729,750, so the conforming loan ..(read more)

The Stimulus Package Misses the Most Important Point for Palos Verdes Real Estate

Posted by Tim Burrell - Many articles are appearing that analyze the Bush Administrations proposal to stimulate the economy. Virtually all of them miss the most important point for the Palos Verdes Peninsula. It is claimed that the biggest problem in the economy is the sub-prime loan fall out, and its effect on limiting the availability of financing, which in turn effects the real estate market. Without financing, would be buyers cannot buy the homes that are increasing the inventory of homes for sale, particularly in areas like Palos Verdes and Manhattan Beach that require Jumbo Loans, i.e. loans above the conforming limit of $417,000. When the inventory is too large, the real estate market is out of balance and prices decline. Since the problem is a lack of financing, the solution is to provide more financing. Doesn't that seem obvious. But, new regulations proposed by Congress restrict the type of financing ..(read more)

Palos Verdes Real Estate Short Sales

Posted by Tim Burrell - The pain may have been lessened for some "short" sales of South Bay Real Estate. One of the problems with a "short" sale used to be that a seller had to pay income tax on the amount the payment was "short". A "short" sale is where a home is sold and the seller does not repay the full amount of the mortgage, i.e. the payment is "short". So, if you owed the bank $800,000 on your Peninsula home and you paid $750,000 when the sale closed, the $50,000 that you are short is taxed as ordinary income. Some commentators call this "Phantom Income." That could cost you $14,000 to the IRS and more to the state taxing authorities. The Mortgage Forgiveness Debt Relief Act of 2007 was just signed into law eliminating the income tax for some sellers whose sales close between January 1, 2007 and January 1, 2010. There are several requirements: 1. The property sold must ..(read more)