La Jolla Named Most Expensive Place to Buy a Home in the Nation

For the second straight year, La Jolla is the nation's most expensive housing market, according to Coldwell Banker's home price index.

The real estate brokerage bases its rankings on the price of 2,200-square-foot homes with four bedrooms and 3½ baths. The La Jolla price was listed at $2,125,000, up $282,333 or 16.6 percent from last year.

The lowest-priced similar home went for $112,675 in Grayling, Mich., a town of about 2,000 that calls itself the “canoe capital of the world.” La Jolla calls itself “the jewel.”

La Jolla and No. 2 Beverly Hills were the only markets among the top 10 that saw a price increase from 2008. San Mateo experienced the biggest drop, down 20.2 percent. Of the top 10, all but Boston and Greenwich, Conn., were in California.

The most affordable markets were in Florida, Georgia, Kansas, Michigan, North Carolina, Ohio, Texas and Wisconsin.

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How to Beat the Tax Credit Deadline

It's not too late for a determined first-time home buyer to take advantage of the $8,000 federal tax credit, which expires Nov. 30, but they need to target homes that can close quickly.

To identify those properties without touring them, contact the listing agent with blunt but important questions that aren't likely addressed in the listing. These can include:
-Is there mold?
-A need for extensive repairs?
-Aging systems or appliances?
-Troublesome neighbors?

Buyers should factor in these questions before making an offer:
-How long has the property been on the market?
-Have there been any price reductions?
-Are there any offers written on the property?
-Do the home owners need to move by a specific date?

Other recommendations include:
Provide buyers with as much information about financing as they need and that you can offer.
Encourage buyers to begin the process right away. Make sure buyers are aware of who is responsible for closing costs since state requirements vary.

Source: Move.com, Scott Voak (09/23/2009)

Prudential Listing Agents Sell Homes for Best Prices

The power and prominence of the Prudential Real Estate brand is evident throughout the industry. Once again, the Prudential Real Estate Network has achieved the industry's highest average sales price of $344,232.

This sales price is based on an analysis of transaction sides and sales volume data of the largest independently owned brokers in the U.S. for franchise networks recording at least 25,000 closed transaction sides in 2008, as reported in the 2009 REAL Trends 500.

How Short Sales and Loan Mods Affect Your Credit

Mortgage problems are walloping Americans’ credit scores. Homeowners who find themselves struggling with mortgage payments and unsure how to handle the situation—short sale, foreclosure, or walk away—are advised to consider the impact of each on their credit scores.

Loan modifications that roll late payments and penalties into principal debt owed on the house can actually increase borrowers’ scores modestly, while refinancing underwater mortgages may have little or no negative effect on credit scores, according to Vantage Solutions, a scoring company created by the three national credit bureaus.

Short sales on the other hand can trigger large declines in credit scores, according to researchers. A homeowner with an excellent credit score might see a 120 to 130 point decline after a short sale.

Homeowners who choose to walk away from the home and stop payments altogether should expect their credit scores to fall 140 to 150 points, plus negative marks on their credit bureau files for up to seven years.

People filing for bankruptcy protection covering all their debts will get hit with an average 355- to 365-point drop in their scores. Bankruptcies remain on borrowers’ credit bureau files for 10 years.

But there is good news. Homeowners facing financial stress can experience minimal declines to their scores if they contact their loan servicer or lender when they first discover that they may have trouble making their monthly payments.

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Cool Facts about Foreign Buyers

Some interesting facts about foreign nationals who buy property in the U.S....

The top five countries of origin for foreign buyers were:
-Canada, 17.6 percent of buyers
-United Kingdom, 10.5 percent
-Mexico, 9.8 percent
-India, 8.5 percent
-China, 5.4 percent

The percentage of buyers from Canada, the U.K., and China declined from the previous study, while purchasers from Mexico and India increased. Although most buyers were from North America, Europe and Asia, buyers from Latin America, Africa, and Oceania also purchased U.S. real estate.

Most Popular States
Foreign buyers were active in every state and the District of Columbia, with the most popular states being Florida, which accounted for 23.0 percent of all foreign purchases; California, 13.0 percent; Texas, 10.7 percent; and Arizona, 7.1 percent. These states are major gateways into the U.S. from other countries and also offer relatively mild climates.

California saw a notable rise in foreign interest as affordability conditions improved markedly in the state last year.

Property Types
The study shows 69 percent of international purchases were single-family homes, while condos accounted for 18 percent. Townhomes made up 8 percent of transactions, with commercial property at 4 percent. Nearly 46 percent of properties were in suburban areas and 25 percent in urban environments. The rest were evenly split between resorts and small towns or rural areas.

7 Tips for First-Time Homebuyers

A year after the financial collapse of 2008, the housing market is very different than it was before the foreclosure crisis.

Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today:

-Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
-Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
-Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
-Include a maintenance budget. Even new homes need upkeep and repairs.
-Buyers who can't afford their dream home now should opt for a starter home where they can save money each month for what they really want.
-Consider a property that can be expanded and improved down the road when money is available.

No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.

Source: The New York Times, Ron Lieber (09/12/2009)

Top 12 Tips for Buying an Investment Property

Are you ready to buy an investment property? Here are some things to consider.

1. Location, location, location. We’ve said it before and we’ll say it again! Invest in the best location you can afford. It will determine the kind of tenants you will attract, and how much rent you can charge. A property in a desirable location will also appreciate more over time and be less susceptible to the ups and downs of the real estate market.
2. Don’t go overboard when you’re fixing up an investment property. You don’t necessarily need granite countertops and stainless appliances. After all, you’re going to get some reasonable wear and tear when the tenants move out. Most renters are happy with units that are light, bright and clean.
3. Forget about flipping. Real estate today is a buy-and-hold investment—for at LEAST five to ten years. You’ll face considerably more risk with a shorter time frame. Although your rental will almost certainly appreciate over the next 20 years, the next few years are anyone’s guess.
4. Think long term. For most small investors, long-term ownership makes the most sense. You’ll have plenty of time to ride out any swings in the market, and your rental income will be a nice supplement to your day job. Historically, real estate has been an excellent investment, always appreciating a few points over the rate of inflation.
5. Be prepared to have cash on hand. These days, buying a non-owner occupied property requires at least 25-30% down.
6. Calculate the cost of ownership. This includes ALL the expenses of owning and managing an investment property, not just mortgage payments. Common expenses include property taxes, insurance, utilities, maintenance, and repairs.
7. Look for a property for what it can be, not what it is. Buyers with a little imagination can look past the cracked paint and overgrown landscaping and score a great deal.
8. Hire and pay skilled workers to do your renovations. Start collecting recommendations for electricians, plumbers, painters, and contractors.
9. Always screen your tenants. Run a credit check and call old landlords. Ask if they paid the rent on time, what condition the property was when they left, and if they caused any problems with the neighbors.
10. Read up on your rights as a landlord. Learn about the eviction process and other potential issues so you can do things right, saving time and money.
11. Carefully consider all options. In general, buildings with 3-4 units or duplexes pencil out best, followed by single family homes with 3 bedrooms. Some investors find it works out great to buy a duplex and move into one of the units.
12. Enjoy the advantages of your investment property! When managed correctly, investment properties are a great source of passive income—now, and when you retire. Take advantage of amazing tax benefits to make your investment pay off!