March 16, 2009: Happy St. Patty’s Day

Did you know there were never any snakes in Ireland? Apparently, snakes came from our prehistoric past and Ireland has always been locked by water, ergo, no snakes. The same holds true for New Zealand another island without snakes. I am like Indiana Jones, I HATE SNAKES!

• Good-bye McMansions
• Looking for a Mortgage says the New York Times, Check out FHA rules
• Stock Market Bottom, New York Times says even for veterans this is unchartered waters.
• New York Times says Housing Market’s Upside: AFORDABILITY
• Upside Down on Stocks, check out rules for tax loss selling
• Private Equity, Apollo Management raises stakes on Realogy in attempt to keep it afloat.
• Mortgage Applications Raise
• Mortgage Bankers seasonally adjusted index for Re-financing surges 13.3%

Mortgage Rates: CNBC.com
• 15 year fixed 4.54% down from 4.73%
• One year adjustable rate mortgages increased to 6.21% from 6.13%

Mortgage Rates: Mike Colyer Countrywide Bank
• $625,000 30 year 4.875%
• $800,000 30 year 5.875%

Housing Inventory & Statistics
Palo Alto Active Pending Sold
129 * 25 0
* $4,098,000
La Honda Active Pending Sold
11 * 2 0
* $625,000
Portola Valley Active Pending Sold
20 * 4 0
* $2,898,000
Woodside Active Pending Sold
44 * 6 0
Atherton Active Pending Sold
41 *2 0
* $1,399,000
Menlo Park Active Pending Sold
120 * 23 0
* $2,195,000
Rwd City Active Pending Sold
161 * 64 0
* $2,499,000
I made some changes to the lnventory statistics for the week and I have added the highest sales to the “Pending” list. When sales occur I will add the highest to that list. A present the gap between pending and sales is attributed to the delay in financing approval. What use to be done in 30 days or less is now in the 45 days or more category. I also added all of Menlo Park and all of Redwood City. There are areas in each city where the districts are lower income areas that are hard hit with REO’s and Foreclosures and Short Sales.

Good-bye McMansions was an interesting article in the latest issue of California Real Estate an issue sent to all realtors who are members of the California Association of Realtors. You can learn a great deal of housing history from the homes. Cookie-Cutter rows of small tract homes indicate the lack of building materials. Grand Victorians are time pieces form the early 20th Century. McMansions and their energy inefficient cathedral ceilings will remind us of the excesses of the Dot.com era and the sub prime melt down, says the CAR article. Evidence is trends are pointing to smaller homes, possibly with attached units, sound proofing and closer to other homes, energy efficiency and solar panels are noted demands for new buyers.

The National Association of Home Builders reports that 89% of its members planned homes of 2438 square feet down from 2629 square feet.

Look at the FHA rules says the New York Times. As I noted in a previous letter FHA is an area home buyers should look when getting competitive pricing for mortgages. FHA loans were once an area for low income borrowers the FHA has become a new area for all borrowers. The reason for this is the fees that lenders are tacking onto all mortgages. At present the FHA loans can be obtained for as little as 3.5% down and has become the least expensive when it comes to fees. Loan limits do apply and at present for our area the maximum loan is $729,750. FHA never marked the exotics of sub prime, 30 year and 15 year and adjustable rate mortgages are in the FHA offerings. Contact me or see the Department of Housing website for approved lenders. In many cases you will have to work with mortgage brokers.

Even for Stock Market Veterans it unchartered territory say the New York Times. During the last commentary I noted that all charts indicated the stock market had hit the downside targets technicians forecasted, but today we have the veterans unsure where we are going. Bryon Wein of Pequot Capital says he is an optimist. Barton Biggs, forever a bear o, of Traxix Partners places himself in the optimist’s camp. Peter Lynch, forever a bull, declares himself “bullish as ever”. That being said, I still believe it will take many years, maybe 10, for the new bull market to take over. There has been too much technical damage done. The trust has been destroyed and it must be earned back. Large investors both domestically and internationally are looking at the base strength of the United States, Real Estate, as the first to come back. As one of my clients has sate, “Dirt will always be worth something”

With that last comment in mind it makes much sense to consider A rising dollar lifts the U.S. but adds to the Crisis Abroad. Last week a colleague held a bus tour of visiting Chinese investors looking for high end and luxury homes in the East Bay. Two weeks ago I had the same tour in the Skyline area. The world is seized with anxiety. The safest place in the world for store of value (savings) and political and personal safety is the United States. American investors are ditching foreign ventures and bringing their dollars home. The raise in the dollar is adding to the inability of Third World nations balance their budgets or to finance their internal programs. The cost of the dollar makes Chinese goods more expensive at a time China must use their reserves to support their economy. This is common to all the Tigers, India, Pakistan and the rest of the Third World nations who prospered on the dollar’s weakness and the consumer spending of the United States. This tilt is also forcing locals within those nations to look at the safety of their accumulated wealth and personal safety as the authoritarian governments look to ways to fiancé their short falls and blame to their woes. Add to that the OPEC countries’ inability to finance their budgets due to the falling price of oil.

Before ending the Stock Market commentary, Upside Down on Stocks, selling stocks for tax losses? While the end of the year is the best time, around October and before November is the best time to install tax strategies, many investors panic at tax time to think about selling now and take the tax loss. Before doing so, talk to your tax professional or seek the help of one before dumping wholesale out of panic. There are many strategies from doubling down to 31 day buy and sell or sell and buy strategies.

The Wall Street Journal says Apollo Management raises stake on its Realogy stake. The price tag keeps growing for Apollo Management and its investment in Realogy. Realogy is the largest residential real estate brokerage business as parent to Coldwell Banker, Century 21, and Sotheby’s International, Better Homes and Garden and other major brands. Apollo pledged $150 million to keep Realogy afloat for 2009. Realogy continues to cut costs and is trying to increase market share by launching Better Homes and Gardens Real Estate brand.

U.S. Mortgage applications rise for the first time in three weeks. The jump came after the strongest government action recently taken to aid homeowners.

The Mortgage Bankers Association said the seasonally adjusted index of mortgage applications surged 13.3% for refinances to 3470.7, up 41.8% from one year ago.