Archive for May, 2014

Some jumbo lenders are targeting a new wave of luxury-home shoppers in the U.S.—buyers from Asia.

Global bank HSBC found in a 2013 survey of its affluent customers in Asian countries that more than one-third owned a property abroad, with the U.S. being one of the top destinations. The survey found that the largest proportions of Asian home buyers for U.S. properties were in China, Taiwan, India and Indonesia.

Many Asian buyers for luxury U.S. homes pay all cash, but more are seeking mortgage financing as the market swings from the superrich to the affluent, says Ryan Gonsalves, HSBC’s head of global mortgage proposition. An estimated one-third of HSBC’s U.S. jumbo-mortgage lending—loans above $417,000 in most U.S. markets and $625,500 in some high-price areas like New York and San Francisco—goes to foreign nationals, he says.

Down-payment requirements for foreign nationals at HSBC range from 20%—similar to jumbo mortgages for U.S. citizens—to 50%, depending on the credit-risk profile and home location, Mr. Gonsalves says.

Interest from Asia in luxury New York City-area properties has been growing for the past five to six years, says Kathy Tsao, an associate broker with Douglas Elliman Real Estate. One reason, especially for Chinese buyers, is a desire for children to receive a U.S. college education, but many families plan years ahead, she adds.

Other motives include buying second homes, vacation homes and investment properties, she adds. Many affluent Chinese buyers own or are seeking to acquire multiple properties in the U.S. and other countries, with the U.K., Canada and Australia also popular destinations, Ms. Tsao says.

“They have an apartment in Manhattan and a house on Long Island or in Westchester County,” she says.

Lower prices in the U.S., favorable currency-exchange rates and overheated property markets in their home countries have increased the appeal of home-buying overseas for Asians, Mr. Gonsalves says. For example, in Hong Kong, luxury condos go for more than $4,100 a square foot, compared with $2,100-plus in Manhattan, according to Knight Frank’s Prime International Residential Index.

A 2013 report from the National Association of Realtors showed China ranked second, behind Canada, among countries of origin for foreign buyers of U.S. homes. Canada is expected to remain on top when new data are released this year, says NAR spokesman Walt Molony. But he says the gap between them appears to be narrowing, with Chinese buyers gaining in market share.

Many U.S. banks won’t lend to foreign nationals because borrowers may lack a U.S. credit score, and verifying income and assets across borders can be difficult.

But financing options are increasing to meet the rising demand, says David Adamo, chief executive of Stamford, Conn.-based Luxury Mortgage Corp., which serves the New York area.

Luxury Mortgage has issued jumbo mortgages to foreign borrowers who can document income and assets, such as people relocating to the U.S. to work, Mr. Adamo says. While some national lenders remain reluctant to issue jumbos to foreigners, more regional and commercial banks are willing to lend to well-documented home buyers, Mr. Adamo says. “Since these loans have a lower loan-to-value ratio and higher interest rates, regional banks find it very attractive to have some of these loans on their balance sheet,” he adds.

Other issues sometimes arise for newcomers to the U.S. housing market. Asian customers may not be accustomed to needing proof of financing when making an offer on a home, Mr. Gonsalves says. Sellers can request verification from a lender that a buyer’s payment will be received on time and for the right amount. “One of the big things we tell our Asian customers is to start to finance before they leave home,” he says.

Most borrowers from Asia prefer adjustable-rate mortgages because they don’t expect to be holding property for more than five years, Mr. Gonsalves says.

Loans by domestic lenders to non-U.S. citizens/residents typically have interest rates at least one-quarter of a percentage point higher than jumbo loans to U.S. citizens; they also typically require a bigger down payment, up to 35%-40%.

Here are other considerations for affluent borrowers from Asia and other countries.

Establishing credit: One reason affluent Asians may borrow is to help build a credit rating for children who plan to remain in the U.S. after their education is complete, Ms. Tsao says.

Additional hurdles: Asian buyers may face restrictions by their home country’s government on the amount of currency they can transfer quickly. An international lender may be able to assist with dealing with these restrictions. Some buyers may need to transfer funds years in advance.

 

New home sales rose more than expected in April, indicating the housing market may be heating up.

Sales of recently built single-family homes jumped 6.4% from March to a seasonally adjusted annual rate of 433,000, the Commerce Department said Friday.

It was the first increase since January and larger than analysts predicted. Economists polled by Bloomberg News had called for a 425,000 April rate.

The data come one day after sales of previously owned homes climbed 1.3% in April. Those dual increases signal some underlying strength in a housing recovery that has cooled recently.

Buyers have struggled to afford a home after prices jumped last year. And severe weather across much of the country earlier this year also depressed sales.

New home sales are still 4.2% below April 2013 levels.

But mortgage rates have stabilized after jumping last year and remain at historically low levels.That could entice more buyers into the market.

The sales increase from March came largely from the Midwest, where buyers scooped up new homes at a 47.4% faster rate in April.

New home sales rose 3.1% in the South, while remaining flat in the West, a major home building region. Sales dropped 26.7% in the Northeast.

First-time buyers know owning is a better investment than renting, but the type of homes first-time buyers are looking for are being kept off the market in part because nationally, those homes are almost three times more likely to be stuck underwater than more expensive homes.

That’s the finding of the Zillow  negative equity report for the first quarter.

The national negative equity rate fell to 18.8% in the first quarter, with almost 9.7 million American homeowners with a mortgage underwater, owing more on their mortgage than their home is worth.

Specific to the challenges of first-time buyers in terms of affordability, among all homes with a mortgage nationwide, roughly one in three (30.2%) priced within the bottom third of home values were underwater in the first quarter, compared to 18.1% of homes in the middle third and 10.7% of homes in the top third.

It is very difficult for an underwater homeowner to list their home for sale without engaging in a short sale or bringing cash to the closing table, which is a major contributor to inventory shortages across much of the country, even as negative equity slowly recedes.

More than one-third of homeowners with a mortgage (36.9%) are effectively underwater, unable to sell their homes for enough profit to comfortably meet expenses related to selling a home and afford a down payment on a new one.

“The unfortunate reality is that housing markets look to be swimming with underwater borrowers for years to come,” said Zillow chief economist Stan Humphries.  “It’s hard to overstate just how much of a drag on the housing market negative equity really is, especially at the lower end of the market, which represents those homes typically most affordable for first-time buyers. Negative equity constrains inventory, which helps drive home values higher, which in turn makes those homes that are available that much less affordable.”

Negative equity has fallen for eight consecutive quarters, but fell at its lowest pace in almost two years in the first quarter as home value growth slowed.

Negative equity fell from 25.4% in the first quarter of 2013 and 19.4% in the fourth quarter, while the pace of annual home value growth slowed to 5.7% in the first quarter, from 6.6% at the end of the fourth quarter. Looking ahead, the national negative equity rate is expected to fall to 17% of all homeowners with a mortgage by the first quarter of 2015, according to the Zillow Negative Equity Forecast.

At the end of the first quarter, the number of homes foreclosed nationwide fell to 4.9 homes per 10,000, from 5.4 homes per 10,000 at the same time last year. As foreclosure activity continues to fall, the pace of negative equity improvement will also slow, as homeowners’ debt is wiped from lenders’ books following foreclosure.

Long ago they were the punching bags of American real estate, accused of rank incompetence, wrecking home sales and failing to pick up on signs of the housing turnaround.

That was then. Today appraisers are suddenly getting much more favorable reviews.

But wait a minute: Have appraisals actually improved in accuracy in any measurable way over the last several years? Nobody really knows. There are no nationally published statistical audits that gauge appraisal accuracy. But one major industry group regularly surveys its members’ sentiments on appraisals, and lately things have been looking up.

When the National Assn. of Realtors conducted polls sampling its million-plus members in the spring and summer of 2010, more than 40% of respondents reported having problems with appraisals.

Within the realty field, criticism of appraisers was rampant and scathing. Appraisers allegedly too often:

•Used rock-bottom-priced foreclosures and short sales as “comparables” for valuing houses that had no financial distress. Those low appraisals blew up perfectly good sales or forced angry sellers to renegotiate prices with buyers.

•Traveled long distances beyond their areas of geographic competence and inevitably were out of touch with local conditions.

•Paid scant attention to evidence that local home prices were on the increase, such as pending contracts, and numbers of properties that sold for above list or that experienced multiple bids.

Worst of all, critics charged, poorly trained appraisers who had flooded the industry during the boom years now were getting the bulk of the valuation assignments from appraisal management companies — primarily because they would work for cut-rate fees.

In the latest monthly survey, NAR pollsters found that 24% of members reported having significant issues with appraisal results. Granted, that’s still nearly a quarter of all agents in the sample. But it’s down significantly from where it was a few years ago.

What to make of this? Have there been changes in the appraisal industry itself that might explain the better reviews out of former critics? Appraisers I interviewed in various parts of the country agree on one key fact: The dramatic decrease in foreclosures and short sales during the last 18 months has cut the number of houses with depressed prices that appraisers can choose — or justify — as comparables for any given sale.

In places such as Las Vegas, Phoenix and California’s Central Valley, where distressed properties once accounted for large percentages of all sales in the wake of the housing bust, today they are far fewer. Gary Crabtree, an appraiser in Bakersfield, says such sales now “only comprise about an 11% share” of transactions. As a result, “there are plenty of arm’s-length” sales for appraisers to use as “comps.”

Pat Turner, an appraiser in the Richmond, Va., area, said the sheer number of appraisers has plunged in recent years “and a lot of the less-competent, poorly trained [appraisers] have left” the business in the wake of the recession. One industry group, the Appraisal Institute, estimated the number of appraisers is declining 3% a year. The steady shrinkage of the industry, Turner believes, could be contributing to perceptions that appraisals are more accurate today.

Gary Kassan, a Los Angeles-area realty agent with Pinnacle Estate Properties, disagrees.

“My personal belief is not so much that the incompetent appraisers are gone,” he said in an email, “but rather that they have better comps to work with.” With prices on the rise, “they have more latitude and are more comfortable stretching the comps to bring the appraisal in at sales price.”

Whoa. Stretching the comps, eh? Appraisers insist that’s not the way it works — they’ve got to justify every conclusion in their valuation reports and are subject to reviews by lenders and underwriters.

But Jayne Allen, an appraiser in Charlottesville, Va., says realty agents’ views on what constitutes a “good” valuation and what’s a deal-killer are keyed to whether the appraisal supports the contract price.

“At this point,” she said, “I do not believe that … appraisers [are] providing ‘better’ valuations.” Rather it’s that more appraisals are validating the number on the contract, thanks in large part to the sharp decline in distressed sales sitting on the market as potential comparables.

Bottom line for you as a seller or buyer: Though there are no guarantees that an appraiser will confirm the price on your sales contract, the odds are better this spring that your deal won’t fall apart because the appraiser came in with a low-ball valuation tied to distressed comps.

Strawberry Festival

Posted: May 15, 2014 in Arroyo Grande

Click here to download the 2014 schedule of events.

The Arroyo Grande Strawberry Festival named the place to be on Memorial Weekend by Sunset Magazine!

As one of California’s largest festivals and premiere festival on the Central Coast this family-style event brings together thousands of visitors and residents to enjoy activities and entertainment, the Strawberry Stampede, hundreds of art, craft and display booths, ethnic foods, and of course, scrumptious strawberry treats of all kinds in shortcakes, funnel cakes, milkshakes, ice cream and by the box!

The wonderful May weather and ambiance of the historic downtown village also add to the festivals merriment.

Thousands of visitors from all our western states attend or participate in the festival. If you plan on attending, we recommend making your lodging reservations at least six months in advance. Admission is free but bring money for food, drink and children’s game booths.

Features include Strawberry Stampede walk/run, Strawberry Pancake Breakfast, Strawberry Shortcake & T-shirt booths, Strawberry Prince & Princess Contest, Strawberry Blonde Contest, Strawberry Cook-Off Contest, Kiddie Carnival, Arts & Crafts Show, and Entertainment including Ethnic, Folk, Blues, Jazz, Contemporary & Rock ‘n Roll music!

Click here for photos from the 2011 Strawberry Festival.

FATHER-DAUGHTER DATE NIGHT

Posted: May 12, 2014 in Arroyo Grande

The City of Arroyo Grande Recreation Services Department, Walmart, and Albertsons will present the 15th Annual Father-Daughter Date Night, Saturday, June 7, 2014 from 6 p.m. to 9 p.m. at the South County Regional Center, 800 W. Branch Street. This event for fathers and daughters will include an evening of dinner, dancing, contests, king and princess crowning and more. The cost is $45.00 per couple, plus $20.00 for each additional daughter. Ages 4 years old through adult are welcome for this semi-formal affair. Couples can register at the Arroyo Grande Recreation Services office, 1221 Ash Street, through Friday, May, 30th. For ticket information call Brenda Barrow, Recreation Supervisor, at 473-5476.

AMGEN Tour

Posted: May 12, 2014 in Arroyo Grande
The AMGEN Tour of California Bicycle Race will take place on Thursday, May 15, 2014, between 11:30 am and 1:00 pm. Because this is a sanctioned race, it requires that the entire race route be closed to vehicular traffic while the racers and their support staff traverse through Arroyo Grande. The following roadways will be subject to closure at some time during the event:

Valley Road from Los Berros Road to Fair Oaks Avenue;
Fair Oaks Avenue from Valley Road to Traffic Way;
Traffic Way from Fair Oaks Avenue to Branch Street;
Branch Street from Traffic Way to Corbett Canyon;
Corbett Canyon from Branch Street to Gularte Road;

Additionally, there will be “No Parking” along Branch St from 7am until the conclusion of the event. As part of the Incident Action Plan, all unattended bags, backpacks, packages, etc. will be seized and searched by law enforcement personnel. We encourage you to label all personal belongings with your name/phone number.