Coastal Real Estate and Lifestyles

“The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 and targets any individual or household that hasn’t owned a home for at least three years.

Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9. It’s worth up to $7,500 and can be taken in a single tax year.  Authorization for the credit ends July 1, 2009, so if prospective buyers wait to purchase their home in the first half of 2009 they can take the credit on their 2009 tax return.  The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so new homeowners can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500.  Income limits are $75,000 for individuals and $150,000 for households.  Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.” — Provided by Susan O’Driscoll, Princeton Capital.

This IRS page dedicated to explaining the new tax credit states that this in essence an interest-free 15 year loan. 

This N.A.R. informational handout (pdf) also states that if your income is over the limit, there is a phase-out formula.  In other words, not all of the credit is lost.

Real estate intersects with law, tax, finance, construction, and other specialties.  Find the appropriate specialist and create a team to work with and communicate together on your behalf.  It’s a win-win for all involved - especially you.  Please consult with your tax specialist on this issue to determine how H.R. 3221 will specifically apply to you - particularly if it may be in your best interest to modify your tax withholding sooner rather than later.

With fewer overall transactions taking place these days, yet with pending sales a notch up right now, I wanted to get the back story of what was causing some properties to sell during these uncertain times.  I called fellow Listing Agents to talk about their recently ratified listings.  Here are who is buying on the Coastside right now according to the colleagues I spoke with.  Note this is not ALL reasons, just a few that I know of…

• Buyers with 20% or more downpayment, or cash buyers.

• Buyers who have been renting for a year or more.

• Buyers who want a second home by the ocean.

• Buyers from the East Bay.

• Buyers looking for the “best deal” of available inventory in their price range.

In the last two weeks, four transactions closed escrow with sales prices ranging from $580,000 for a 3 bedroom, 2 bathroom rancher, 1000+ square foot home, 5000+ square foot lot, on the market for over 100 days - to a 3800+ square foot home, 12,000+ square foot lot, Spyglass (Ocean Colony) home for $1,675,000 - also on the market for over 100 days.

During this time period there were 12 expired or withdrawn or cancelled listings.  Sometimes these are re-listed; I did not analyze these properties in that way.

A noteable change is the increase in pending sales.  In these two weeks alone, there are currently 19 pending sales - all due to close escrow in the remaining month of October or November, one in December.  Of course, we don’t know if this will continue.

Buyers still have lots to choose from, including homes that may have come off the market to take a break, but whose sellers would still consider an offer.  The key factor for financing buyers right now is working with a qualified Mortgage Broker who offers the best product(s) for your situation.

I remember when the phone would start ringing off the hook as soon as the property hit the MLS.  Sometimes offers were submitted before the Broker Tour or first open house.  We are now in a Buyer’s Market, yet some sellers think that waiting it out will change buyer behavior.  Waiting doesn’t change it, buyers change it.  In other words, buyers determine the market - not real estate professionals and not sellers, and certainly not the well-intentioned neighbors or relatives.

Listings agents need to think like long distance runners and act like sprinters.  If a house does not sell within the first 30, 60, 90 days, (determine what your re-assess date is, maybe it’s 10 days), we maintain focus and come up with new ideas to generate interest and exposure.

The skill set is a combination of communication skills, the 3 P’s (price, presentation, place/location) and exposure.

Understand your clients’ goals and financial needs and create a plan to address those priorities.

Help your client understand the real value in their property and then know how to communicate that value to the target audience of propective buyers.

Counsel your clients on how the new online world of syndication, blogs, social networking, and other sophisticated internet marketing approaches will help them.  Having a property website is no longer enough, it’s what you do with that website.

As Jason Steele of Better Homes and Gardens highlights in a Clean Slate blog post, houses can be sold in this market. 

Don’t give up, but do have a plan.

This mini graph of data I selectively pulled together from MLSListings.com statistics summarizes sales activity and sales price trends for Half Moon Bay, El Granada, Moss Beach and Montara, combined, for 2002 through 2008 using data from the month of August.  The last percentage number uses the average (not median) sales price to determine the increase or decrease in market value from the starting year (on the left side) to the current year, August 2008.

For example, Coastside home values showed an average sales price of $731,812 in August 2003; the average sales price in August 2008 is $906,908.  Therefore, the difference +/- between those years, not year-over-year, is a 23.9% increase in value.

This is just another way to look at the numbers to give a different perspective on our community’s home values over the last several years.  For active buyers and sellers, it is important to get the hyper-local numbers for your town, neighborhood, street, including the most likely comparables from a real estate professional.

As a reminder the difference between median and average sales prices:

Median Sales Price:  The midpoint between the most expensive house and the least expensive house sold in an area during a specific time; an equal number of properties sold above the midpoint as the number of properties sold below the midpoint.  The Median Sales Price is often used as an indicator of the strength and the direction of the real estate market.  This number can be misleading in a market with very few sales during a specific time period; one month there may be more higher priced homes that sell compared to the next month.

Average Sales Price:  Take the total number of properties you are looking at and add up the sales prices to get a total. Once you have that number you divide by the number of properties and you have the average sales price for that particular search.  This calculation averages out all price points in all price ranges in an area during a specific time.  If more higher priced or lower priced homes are selling during that time period, it will be reflected in the average sales price.

More Half Moon Bay-Pacifica coastside market activity statistics to come, so check back or subscribe to these posts.

Half Moon Bay used to be a sleepy little town when we moved here from Marin County in 1989.  Perhaps by some people’s estimations it still is.  If you’ve been here at least 10 years or more, you’ve noticed the changes. 

This is why I’m in awe of the fact that Half Moon Bay Golf Links is currently hosting the Samsung World Championship and the Ladies Professional Golf Association(LPGA) this year.  Plus, you know you’re a big deal when Main Street sports a banner about you. 

Our little Half Moon Bay town was discovered when the Ritz Carlton came to town in 2003 - in my opinion.  That opinion is shared by many long time coastsiders.  So while the coastside has had golf for many years, it now appears to be a golf “destination”.

To work on your golf swing, locals have access to the Half Moon Bay Recreation Department - adult class starting on 10/15/08 - and Oceanview Driving Range.  In addition, San Mateo County offers beautiful courses such as Crystal Springs Golf Course, Cypress Golf Course, Sharp Park Golf Course, and others.  Check golfable.com/San Mateo County for more courses and reviews from people who have played at these places.

Half Moon Bay High School also has a golf team.  I hear some team members are volunteering at the Samsung Tournament…  To catch local or visiting celebrities, fans can find out the details of attending this weekend in this Wednesday’s HMB Review article.

OCEAN COLONY HOMES FOR SALE CURRENTLY can be found here.   This is a lot of inventory for Ocean Colony!