Home Buyer Tax Credit Extended

Following the Senate’s favorable vote yesterday, the U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers. We expect President Obama to sign the legislation in short order.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. We expect that number to increase dramatically in the months ahead with this new legislation in place.

James Liptak
2009 President
CALIFORNIA ASSOCIATION OF REALTORS®

City of El Cerrito Street Repairs Conflict with Stege Sewer Lateral Ordinance

Thanks to voter approval of Measure A: the El Cerrito Pothole Repair, Local Street Improvement and Maintenance Measure, the City of El Cerrito is in process of much needed repair to its city streets. However, with improvements underway, real estate agents have noticed a conflict with an existing Sewer Lateral Ordinance.

El Cerrito (along with Kensington and part of Richmond) is included in the "Stege Sanitary District." In 2005, the District revised its Sewer Lateral and Compliance Policy, and now requires property owners to obtain a “Certificate of Compliance” upon the sale of property, prior to the close of escrow. Base on the the ordinance's definition of a lateral, compliance includes the connection to the main sewer. The main sewer in El Cerrtio often lies in the center of the newly paved streets.

According to Suzanne Iarla, Public Information Specialist for the City of El Cerrito, "this is a multi-agency issue." In short, the Stege Sanitary District would like home owners to comply with their 2005 ordinance, and the City of El Cerrito Public Works Department would like to maintain the integrity of the newly refurbished city streets.

Stege's official stance:

Because the City places a moratorium on recently paved streets that prohibits digging through new pavement for up to five years, a potential conflict exists between the City’s moratorium and Stege’s requirement to have a sewer lateral inspected and repaired (if necessary) before a house is sold.

If you have any existing sanitary sewer lateral problems or plan to sell your house in the next five years, now is the time for you to do a sewer lateral inspection and any necessary repair/replacement work before the street is resurfaced.

I spoke today with Rex Delizo, from the Engineering Department at Stege. His office would prefer that homeowners get proactive and repair the sewer laterals before the city street crews arrive. Barring such cooperation, he outlined three basic options for compliance in instances where the city's moratorium takes effect:

1. Video the sewer lateral and if the portion in the street passes, you can make all needed repairs to the line on the subject property.
2. If the street section is in disrepair, you can opt to do the accessible portion now, and agree to complete the remaining section in the street once the moratorium has passed.
3. Talk to Stege about new techniques which allow for full replacement and compliance without disrupting the newly resurfaced street.
   

For more information contact:

Stege Sanitary District
7500 Schmidt Lane
El Cerrito, CA 94530-0537
(510) 524-4668 Office
(510) 524-4697 Fax
(510) 524-4667 24-hour

City of El Cerrito Public Works
10890 San Pablo Avenue
El Cerrito, CA 94530-2323
(510) 215-4300 Office
(510) 215-4319 Fax

Toxic Chinese Drywall

As reported by Greg Allen from NPR

Between 2004 and 2007, an estimated 100,000 homes in more than 20 states (including California) were built with toxic drywall imported from China. Emissions from the drywall corrode plumbing and electrical systems. Homeowners also blame them for headaches and respiratory ailments.

Here is a video on how to detect the toxic product.

Breaking Down Berkeley's Median Home Price Statistics.

In our last post we provided the Median Home Prices for Alameda and Contra Costa Counties. We also stated that:

This is not an automatic indication of the depreciation of your individual home. Our area contains many unique geographic pockets and real estate is still acting in a hyper-local manner.

This statement is more profound and dramatic than our previous post illustrates. In this post we have taken two Berkeley zip codes, 94702 and 94708, and charted a graph for each zip code's year performance.

(Click on the graphs for a larger view)

These two zip codes alone represent a 64 point statistical spread. The graphs stress that this area does not lend itself to blanket statements about "the current market." The city statistics can not accurately depict values for individual neighborhoods. National statistics and trends are even less telling. Talk to your Realtor (or one of Berkeley Hills Realty's qualified agents) to get a better understanding of this hyper-local phenomenon.

Sep 2009 Median Prices for Alameda and Contra Costa Counties

This chart depicts statistics for median home prices in Alameda and Contra Costa counties. Median home prices for additional California counties can also be found on the CAR website. This data is a reflection of a general year-to-year trend based on an analysis of limited inventory. This is not an automatic indication of the depreciation of your individual home. Our area contains many unique geographic pockets and real estate is still acting in a hyper local manner. To get a comparative market analysis that reflects the true value of your Berkeley, Albany, Kensington, El Cerrito, Richmond, Oakland, Piedmont, Emeryville, Lamorinda or Alameda home contact one of Berkeley Hills Realty's experienced agents.

County/City/Area	Sept 2009	Sept 2008	Y-T-Y % Change
Alameda County	357,000.00	385,000.00	-7.3%
Alameda	502,000.00	564,750.00	-11.1%
Albany	480,000.00	694,000.00	-30.8%
Berkeley	581,000.00	660,000.00	-12.0%
Castro Valley	449,000.00	476,250.00	-5.7%
Dublin	415,000.00	460,000.00	-9.8%
Emeryville	265,000.00	315,000.00	-15.9%
Fremont	515,000.00	500,000.00	3.0%
Hayward	265,000.00	310,000.00	-14.5%
Livermore	434,000.00	445,000.00	-2.5%
Newark	337,500.00	405,000.00	-16.7%
Oakland	219,750.00	275,000.00	-20.1%
Pleasanton	616,000.00	737,000.00	-16.4%
San Leandro	294,500.00	350,000.00	-15.9%
San Lorenzo	320,000.00	337,000.00	-5.0%
Union City	340,000.00	410,000.00	-17.1%
Contra Costa County	259,500.00	300,000.00	-13.5%
Antioch	200,000.00	221,000.00	-9.5%
Brentwood2	285,000.00	353,500.00	-19.4%
Concord	242,000.00	317,000.00	-23.7%
Danville	852,500.00	905,000.00	-5.8%
Discovery Bay	312,000.00	362,500.00	-13.9%
Hercules	311,500.00	335,000.00	-7.0%
Lafayette	765,000.00	899,000.00	-14.9%
Martinez	305,000.00	335,000.00	-9.0%
Oakley	220,000.00	250,000.00	-12.0%
Pinole	293,000.00	350,000.00	-16.3%
Pittsburg	180,000.00	200,000.00	-10.0%
Pleasant Hill	494,000.00	449,500.00	9.9%
Richmond	135,000.00	180,000.00	-25.0%
San Pablo	175,000.00	220,000.00	-20.5%
San Ramon	568,000.00	755,000.00	-24.8%
Walnut Creek	495,000.00	580,000.00	-14.7%

Median home prices contained in this chart were generated from DataQuick Information Systems.The price statistics are derived from all types of home sales -- new and existing, condos and single-family. Movements in sales prices should not be interpreted as changes in the cost of a standard home. Median prices can be influenced by changes in cost, as well as changes in the characteristics and size of homes sold. Due to the low sales volume in some cities or areas, median price changes may exhibit unusual fluctuation.

Preparing an Estate Home for Sale

Today, in preparing a Kensington home for the market, we sent the following list of recommendations to the heirs. We thought all would-be sellers might find it useful:

1. Landscaping: We observed the home to have well-manicured, mature landscaping. In our opinion, this existing structure would benefit by the addition of some economical, fresh, new plantings to fill in some empty spots and marry the mature plantings with a bit of updating. Now that rains have started in our area, we believe the lawn could be greatly improved by a sprinkling of grass seeds. We can get a landscaper to work within a budget here.
2. Interior painting: In our estimation, there is no better return on investment than a coat of fresh paint. We can choose a color pallet that allows the paint to not only clean and brighten, but also instantly update the home’s interior. We believe the home is in need of complete interior painting all the way through the closets and down into the laundry/furnace room. As part of our service, painting quotes can be obtained.
3. Floors: The home is believed to have serviceable hardwood floors beneath the carpeting. We believe the carpet should be removed and the floors cleaned and polished (not refinished.) We have a floor man that can restore the floors to a very good look at a fraction of the cost of refinishing. This assessment is based on a look at exposed wood floors and the condition of the older carpet. We do believe there is a good chance they will only need a thorough cleaning. If the carpet is removed and we discover a surprising amount of hidden damage, we may have to reassess. This is not our expectation.
4. Repairs: There is a broken window pane in the kitchen that should be repaired. There is also an area of peeling paint on house and large cracks along the back. The repair and paint matching of these exterior sections should be bid out before determining if they make sense to the market prep budget.
5. Cleaning: After floors and painting, the home would benefit from thorough cleaning and window washing.
6. Clearing: The home needs to be cleared of current contents. If you need help with this we can offer names of estate sale organizers and haulers.
7. Staging: Staging is very important. We often tell sellers that staging is like buying a shiny stainless steel appliance, but sprinkling that high-end appeal all over the house. In addition, 85% of buyers are now using the web in there home search. Empty rooms lose visual square footage and buyers do not stay on a site with less than stellar photos. To have good photos, there must be something in the rooms on which to focus.
8. Reports: There are some reports that buyers expect to see as part of the sale preparations. These include; zone disclosure report ($123.95), Termite report ($250), sewer lateral compliance (the bid is free, but likely to reflect needed repairs). There is also an ordinance in Kensington requiring an automatic gas shut off value before the sale. This device costs approximately $500. Some additional reports are optional, but may have value in this case. These include general home inspection and structural engineers report. We should meet in person to discuss your options and the pros/cons of supplying additional reports.

We believe that these improvements will not only maximize the home’s potential value on the open market, but also that these improvements optimize the dollar for dollar value of the costs associated with the market preparations. We understand that market preparations are costly, but our experience is that these are the items that draw buyers to the property and keep them interested. Never-the-less, this list represents our advice only. You are the decision makers. Please don’t hesitate to call your agent to discuss your concerns and share your thoughts on marketing the home. As part of our service, written bids will be delivered to you and approved before any work is ordered.

Related Post:
Preparing Your East Bay Home For Sale - Top Ten Value Added Improvements

The Simplified Explanation of Closing Costs

The home buying process is fraught with a flurry of paperwork associated with the property and the process. By the time closing costs are delivered in writing, "disclosure fatigue" has set in and the mysterious numbers are floating like stars around a cartoon head injury. This informative three minute video lets the cartoon characters deliver the breakdown:



Tip for Home Buyers: Have your real estate agent provide you with an Estimated Closing Costs Statement early in the process. Then you will have time to talk over the individual charges and understand their merit. If you know the basic charges in advance, you may discover a few that are negotiable in your contract with the seller. As a very rough estimate, we tell home buyers to budget aproximately 3% of the sales price for the purpose of costs associated with the transaction (AKA closing costs).