The Latest Episode
Copy for Real Estate Guide Column for 7-28-06 (456 words)REAL ESTATE PATTERNSBy Ken DuVall The Latest EpisodeWe’re overwhelmed with news these days. Some see $4 a gallon gas due to the Mid-East turmoil. Lenders are cutting staff due to loan slow downs. Builders are scaling back home starts and jobs amid rising interest rates as home prices surpass local area incomes. Speculators are fleeing the market. Homes are languishing unsold as sellers ask more than buyers are willing to or capable of paying. We are clearly at the end of the historic, high-flying era of all time, the most incredible real estate market ever. Now we’re in “pause” mode, a plateau, for the moment.As California’s tough regulatory climate makes it difficult for builders to compete, many markets are experiencing a mild slowdown that will stabilize as existing inventory levels are worked down. Some are offering incentives to get their ’06 models sold. Our Chico MLS had an all-time record 600 residential listings last week. But demand never stops, only affordability. Yet houses that are “priced right” still sell in less than 2 months. Conversely, rental vacancies are way down.There’s a vast pool of buyers out there waiting to jump in as soon as the dust settles. Today’s market is starting to shape up to again be normal and balanced. Sure, it’s softer now than last year. But there are absolutely no signs whatsoever of a recession or a bursting bubble. Even Fed Chair Bernanke said last week, “The housing downturn appears orderly. The level of activity is still relatively high on a historical basis.” We’re simply making the transition from the unsustainable to the sustainable. Welcome back to the old days. Don’t try to TIME the market; you invest IN TIME, for the long term.Home appreciation historically runs about 1% to 2% over the inflation rate, currently at 3.6%. Say you could put 10% down on a $275,000 home. Your cash-on-cash return at 5% appreciation would be 50% in ONE YEAR. If you paid $1500 a month RENT for 10 years, you’re out $180,000. If you could BUY a house for $275,000 with 10% down, at today’s rates the payment would likewise be $1500. Using 5% annual appreciation, your home would be worth around $450,000 in 10 years. That’s a $175,000 profit plus your income sheltering homeownership tax deductions, for a 64% gain over your original cost! The renter’s $180,000 is unfortunately down the drain. We’ve a culture of homeowners. It’s the American Way of life. There’s no “right time” to buy a house. Don’t wait for some magic moment. You’re losing money. The clock is running. Get into the market as soon as you can. Call your local lender and see how much of a loan you can afford. Do it now. Take advantage of today’s buyer’s market.Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.
"Thou Shalt Steal!"
Copy for Real Estate Guide Column for 7-21-06 (462 words)REAL ESTATE PATTERNSBy Ken DuVall “Thou Shalt Steal!”Change of pace this week. I love the law. “Thou shalt not covet thy neighbor’s property”, one of the Ten Commandments. But real estate laws say it’s legal to “steal” your neighbor’s land. In fact, statutes in every state ENCOURAGE the “theft” of unused property. The reason is States want to collect taxes by keeping the property in use. King Arthur originally owned all the land- like all States did in the beginning- who gave out “land grants”. Arthur charged “tribute” to his “grantees” to use it. Just try not paying your “tribute” to the State for 5 years and see what happens! Only the names have been changed to protect the guilty: The “King” is now the “State.” “Tribute” is now “property taxes.” You see, we don’t actually OWN the land. We possess only the RIGHT to own the land, subject to Laws. That’s what title insurance is all about. It insures your “rights” of ownership.California has the easiest ADVERSE POSSESSION law in the country. Our adopted English Common Law includes the tradition of “Squatter’s Rights”, meaning if I OCCUPY your real estate without your permission, AND pay the property taxes for 5 years, I can eventually get full title to your land. All I have to do after that is to bring a QUIET TITLE action against you. It’s that easy. It’s called use it or lose it.You can also “steal” a PORTION by simply USING part of that property for the same 5 year period, to plant a veggie garden, put up a fence, drive over it regularly, a walking path, etc. The user could end up with what’s known as a PRESCRIPTIVE EASEMENT, literally an easement PRESCRIBED by law, vs. adverse possession. The main difference is you don’t have to pay the property taxes. However, you must occupy a portion of the property by “OPEN, NOTORIOUS, HOSTILE, AND CONTINUOUS” possession for the same 5 year period. But PERMISSIVE USE stops someone from acquiring a prescriptive right. If the owner puts up a sign stating, “Permission to pass over or use my property is revocable”, that defeats the required “HOSTILE” element. As in adverse possession, the claimant must institute a quiet title action. So if someone is using all or part of your property, just give them PERMISSION! It can’t be “hostile” if you ALLOW it. It’s a good idea to inspect occasionally.Case in point: Stanford Law School’s main drive is blocked once every year by an officer directing people to a temporary detour. This is to prevent the sharp new lawyers from acquiring a permanent prescriptive easement! Be sure to check with your attorney on any of this stuff as I can’t give legal advice. Our Chico market is holding its own, more next week.Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.
Whatever It Takes!
Copy for Real Estate Guide Column for 7-14-06 (461 words)REAL ESTATE PATTERNSBy Ken DuVall Whatever It Takes!With some 570 +/- Chico MLS residential listings lately- vs. 120 a year ago- the competition for buyers has become fierce. While home sales are projected to be merely “the 4th best on record”, we are looking for “only” 5.7% appreciation this year, following 42% over the last 5 boom years. With interest rates heading for 7% or more by year end, it’s definitely a New Deal. There’s now a 6 month’s supply of homes on the market vs. 4 months a year ago. If you read only the headlines, you’ll lose. “Home Sales plunge 21%, median prices rise 8% in May in California”, etc. There’s a lot of data out there. Know where you’re at in the game.The numbers look even better for 2007. A soft landing and cooling sales along with easing appreciation in 2006 will actually SETTLE the market. It’ll give household income a chance to gain ground lost to increased home prices, and will drive more buyers back into fixed-rate loans, offsetting the danger of foreclosures down the road. We are heading back to fundamental stability. Despite the “Chicken Little’s” among us, the sky will not fall. Continuing economic growth will sustain solid housing demand. Not even the Supreme Court can repeal the Law of Supply and Demand!But you must deal with the reality of today’s market. If you want to sell your house in the midst of all this competition, listen to me. Only seriously motivated sellers need apply here. These techniques are not for wimps! When the rock meets the hard place, move on down to the gate. Guido says: “Make those fewer buyers an offer they can’t refuse”. First and foremost, we agents recognize an overpriced listing. Every Wednesday we go out and see all the new listings on tour, scores of them every week. Consequently, we all know a good deal when we see it. Age-old truths: Price it right in the first place. You cannot be too rich, too thin, or price a listing too low. The market sets all prices.Don’t be having a “price reduced” rider on your yard sign. Try pricing it 5% BELOW what similar properties are selling for UP FRONT. Or, cut the price quickly and continuously until it sells. Consider contributing to your buyer’s closing costs. Put your home in “model home” condition. Most buyers want a turn-key home. Get all your inspection reports now so there are no surprises when you do get an offer. Your buyer will probably come in pre-approved. Have your house “pre-approved” too. Offer incentives for us to show your home, and likewise, for buyers to buy it. If you really want to sell now, stand out from the crowd. Bottom line: What will you walk with from escrow?Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.
