Bay Area Market Update (9/29/08)

With all the talk about the $700B bail-out of the financial markets, I leave the commentary to the pundits.   While we may be in a “wait-and-see” mode when it comes to the financial arena, let’s take a look at this week in real estate:

 

• East Bay—Busy, busy, busy were the open houses in the East Bay.  The CB Danville office reports sales picking up for properties that aren’t bank owned.  The same is the case in Fremont, though REOs are still scorching there.  At an open house in Livermore, an Agent wrote an offer on the spot.  The CB Oakland-Piedmont office says that buyers nervous about the financial market, are offering less than asking price in multiple-offer situations.  Nerves were also to blame for two offers canceled at the Berkeley office.  But overall, CB’s East Bay offices report that buyers are still out there looking.  Desirable listings are getting lots of visitors. Buyers are on the move to find the right homes and the market remains active.
• Monterey County—This seems to be an area where buyers are really taking a step back to consider the financial market before moving forward.  Several buyers there were considering making offers, but have put things on hold for now.  There have also been a few requests from buyers already in escrow to reduce prices from what was already agreed to in the purchase contract.  But overall, things remain steady and 14 offers were ratified.
• North Bay—It’s not a surprise that the Greenbrae office reports that buyers fear not being able to get a loan, paying too much for property, or trying to come to terms with a loss of equity.  But the San Rafael office reports that a home in Petaluma they listed for $319,000, had eight offers and sold over asking price just two days after it was listed in MLS—a sign that smart buyers know a good opportunity when they see it.  CB’s Santa Rosa office reports that the market below $500,000 has increased in activity, almost doubling the open escrows for the week.  Activity is also increasing over the $1.5 million range in Southern Marin. Our Mill Valley office has put three of their listings between $1.5M and $2.6M into contract this past week.  The Sebastopol office says “cash is king” when it comes to  REOs, as all accepted cash offers were not the highest.  And though inventory has slowed in the Petaluma office, open escrows continue to be strong.
• Peninsula—The key words on the Peninsula are “reasonably priced.”  That’s what the Burlingame office attributed to a house in Hillsborough selling in 24 hours, and the Half Moon Bay office says one of their listings had two offers after the seller reduced the asking price.  The Redwood City/San Carlos office reports having more inventory coming on the market—all more realistically priced.  Though buyers there are taking their time, once they find the right property, they move quickly.  Open houses were busy in Palo Alto and Menlo Park, where the El Camino office reports offers contingent on selling an home becoming more common.
• San Francisco—Lenders seem to be causing some hiccups for some transactions in the City by the Bay.  CB’s Lombard office says that most deals are being sold very close to asking price and about one deal a week has numerous offers and sells over asking.  But skittish lenders are causing more 11^th hour problems and appraisals are becoming more of an issue.  The Noriega office also reports new obstacles when it comes to loans.  Overall, inventory is growing in the City, and the Market Street office says it is seeing great attendance at open houses for well priced listings.
• Santa Cruz County—Inventory levels are starting to drop slightly in the county and our offices report sales in July and August have exceeded those of 2007.  Much of those have been REOs, with about half the sales under the $500,000 price point.  But, one Agent sold his $5 million listing to a cash buyer and closed in 21 days, and has other cash buyers making offers in the $3 million-plus market.
• Silicon Valley—This area continues to be a little bit of a mixed bag.  The Cupertino De Anza office is reporting an increase in pending properties, which are mostly in the low-end or under-priced.  Those are the only kind of deals the San Jose Almaden office says buyers are willing to pull the trigger on.  But an open house in Sunnyvale has had an excess of 175 people on recent weekend openings, and open houses and floor calls are still keeping the San Jose Willow Glen office busy.  REOs are still the hot ticket, but non-bank owned properties are also selling well.
• South County—REOs are still in demand in South County, especially in Salinas, Watsonville and Hollister.  Activity on that front is booming and the Hollister office reports multiple offers on many bank owned properties.

It’s true that what happens on Wall Street affects Main Street, and in our case Oak Lane and Maple Drive.  But we all know real estate is one of the best investments one can make.   Even Donald Trump told Larry King this week, “it’s an unbelievable time to buy a house…go out and make a deal!”

Ugly MLS Pic of the Day

When I first saw that this agent include 99 pictures in their listings, I was impressed.   That is, until I started looking at the pics.   Is it really necessary to include pics of outlets and water heaters (also included were light switches, and other inconsequential items that are a waste of download time).

Bay Area Market Update (9/22/08)

It’s been a bumpy week, so let’s take a look at what’s happening in Bay Area real estate:

 

• East Bay—Berkeley continues to struggle with low inventory in some of its core markets including Berkeley, Albany, Kensington and El Cerrito.  Just to give you an idea, there was a mob scene at a new Berkeley listing the other day despite the fact that it was a 60-step walk-up to the door and there were two football games playing and a street fair down the street.  Castro Valley remains a hot spot for the first time home buyer with the market sizzling in the $275,000 to $350,000 range.  Fremont is reporting that REOs continue to drive much of its market and CB’s Livermore office noted that of the seven new pending sales this week, five were REOs and four of those five were at or below $215,000—these are prices we haven’t seen in years, folks.  Lamorinda, which hasn’t been quite as affected by REOs is reporting that the market remains steady, though Agents who have had trouble putting deals together due to financing issues, are finally starting to see success—a good sign (hopefully) of things to come.
• Monterey County—The market remained steady this week with a total of 17 ratified offers. 
• North Bay—Marin County, according to CB’s Greenbrae office, seemed to be impacted by the news on Wall Street.  Buyers in this market were a bit skittish this week as they watched things unfold on the nightly news.  Having said that, Agents were still quite busy with activity and searches so we’ll wait to see if those housing searches translate into ratified sales over the next several weeks.  CB’s San Rafael office is noting that some condos in San Rafael are listed at an all time low of $125,000 and Novato is seeing an increase in activity in the $400,000-500,000 price point.  Our Southern Marin office reported a well-priced waterfront Larkspur listing had four offers in the first weekend.  Sonoma County sales continue to thrive thanks to REOs.  Petaluma reported this week that four out of the six multiple-offer sales had 10 or more multiple offers.  Santa Rosa reports that the under $500,000 market is moving quickly with anything above (typically) sitting. 
• Peninsula—News on the coast is bright!  CB’s Half Moon Bay office reported that listings are up 40% this week, the largest increase in listings in several years.  Overall the Peninsula seems to be enjoying a pick-up in the market this week, largely due to an increase in new inventory.  Menlo Park Santa Cruz Avenue is reporting that new listings hit last week and more are to come; buyers, however, seem to be playing the wait and see game.  Our Redwood City/San Carlos office reported that buyers are looking but aren’t quite ready to commit. 
• San Francisco—Lots of new inventory in the City!  The well priced listings are going quickly—some with multiple offers—as evidenced by our Market Street office’s news that all but one property this week received three or more offers.  Our Lombard office noted that San Francisco is at a good inventory balance right now which creates a positive environment for both buyers and sellers.  The Van Ness office is reporting that things are picking up (as expected after the Labor Day holiday) in all price ranges. 
• Silicon Valley—Things are looking pretty bright for Silicon Valley real estate.  Cupertino DeAnza notes that “things are picking up and there is a lot of optimism.”  Los Altos First Street reports that buyers are still lining up for a few select properties.  We had one very nicely redone and staged Cupertino townhome listed at $588,000.  The listing had 14 offers and sold in the mid $600,000s.  Los Altos San Antonio reports that we are seeing more floor time activity including a walk-in that translated into a $3 million listing and a floor call on a $1.5 million listing.  While the news throughout Silicon Valley seems to be good, San Jose Almaden did report that the Wall Street news was ruffling quite a few feathers and was causing concern for some.  We’ll have to watch as this plays out over the next few weeks and I would once again caution would be buyers that despite the economic hardships that our nation is enduring right now, real estate remains one of the strongest investments that you can put your dollar towards. 
• South County—The market seems to be relatively stable, driven largely by REOs.  We saw a limited number of multiple offers this week, almost all were on REO properties.

Okay, so in looking at it, yes, the nation’s economic news did nothing to help our wallets this week.  Some are still sobbing over their investment portfolios.  But as you can see, real estate has remained pretty stable in the face of the negative news on Wall Street.  Real estate values don’t ever reset to zero like you are seeing in some of the equities markets right now.  There is only so much desirable land in our metropolitan areas, and as a result, real estate has always been more resilient than most other financial investments.  Overall it appears buyers are starting to get the idea that it may just be time to get into the housing market and sitting on the sidelines may cost them plenty—in terms of higher prices, higher interest rates and less inventory. 

 

A whole lotta shakin’ going on!

It’s been referred to as “Nightmare on Wall Street.”  In the past two weeks, the government took over Fannie Mae and Freddie Mac, Lehman Brothers filed for bankruptcy and Merrill Lynch sold itself to Bank of America.  If that weren’t enough, the Federal Reserve announced late Tuesday night that it was loaning $85 billion to American International Group (AIG).

 

Our nation’s financial system is in the midst of a massive shakeup, caused largely in part by this decade’s housing correction.  The housing correction has occurred largely because speculative investors as well as marginal borrowers were purchasing homes with unreal loans as fast as production builders could complete them.  If you are living or working in an area that hasn’t had land available for substantial housing development in years, then you haven’t seen much of this in your local market. The higher-end communities around San Francisco that have showed the most resiliency to price declines have had extremely low levels of new home construction for decades.  But overall, between 2002 and 2006, household borrowing grew at an average annual rate of 11%, far outpacing overall economic growth.  Borrowing by financial institutions grew by a 10% annualized rate.  Now many of those borrowers can’t pay back the loans, a problem that is exacerbated by the decline in housing prices in a majority of markets.  They need to reduce their dependence on borrowed money, a painful and drawn-out process that can choke off credit and economic growth.

 

According to the Wall Street Journal this week, “At least three things need to happen to bring the deleveraging process to an end, and they’re hard to do at once. Financial institutions and others need to fess up to their mistakes by selling or writing down the value of distressed assets they bought with borrowed money. They need to pay off debt. Finally, they need to rebuild their capital cushions, which have been eroded by losses on those distressed assets.”

 

Only time will tell how and when this shakeup will correct itself.  The recent figures released by DataQuick (http://www.dqnews.com/News/California/Bay-Area/RRBay080918.aspx) this week are a hopeful sign, despite the negative news they unveil.  Among the highlights:

 

• “The pace of Bay Area home sales reversed its July uptick and dropped again last month, marking a return to the long-running waiting game that many potential buyers and sellers have been playing for more than a year.”
• “A total of 7,232 new and resale houses and condos were sold in the nine-county Bay Area in August. That was down 4.7 percent from 7,586 in July, and down 0.9 percent from 7,299 in August 2007, according to San Diego-based MDA DataQuick.”
• “Last month’s sales total was the second-lowest for an August, behind 6,688 sales in August 1992, in MDA DataQuick’s statistics, which go back to 1988. An “average” August had 10,031 sales, while the peak August in 2004 had 13,940.”
• “At the county level, foreclosure sales ranged from 8.6 percent of resales in San Francisco to 61.3 percent in Solano County. In the Bay Area’s other seven counties, August foreclosure sales were as follows: Contra Costa, 54.4 percent; Marin, 13.5 percent; Napa, 39 percent; Santa Clara, 24.7 percent; San Mateo, 16.6 percent; Sonoma, 41.6 percent.”
• “The median price paid for all new and resale houses and condos sold in the Bay Area last month was $447,000, down 4.9 percent from $470,000 in July and down a record 31.8 percent from $655,000 in August 2007, according to MDA DataQuick.”
• “Last month’s median stood at the lowest point since January 2004, when it was $440,000. The median peaked at $665,000 in June, July and August of 2007.”

Waiting for the bright spot?  Keep reading.  There’s no question, the result of foreclosures have drastically hindered our median sales price in many of our markets.  And for those sellers who are not under duress and are just looking to sell, they are forced to lower their prices dramatically just to compete. 

 

But we knew that the housing correction posed the biggest risk to our economy and that our economy and our markets would not recover until the bulk of the housing correction was behind us.  The good news is that we are in the midst of depleting much of our distressed inventory.  With stats like 61.3% of sales in Solano County being foreclosure sales, 54.4% in Contra Costa and 41.6% in Sonoma County, we are starting to push through that negatively impacted inventory.  And once we do, we will start to see a market rebound.  No, it won’t happen overnight.  But as it does, we will see first a leveling off and then, ultimately, a positive increase in market conditions.

To everything, there is a season…

For me and my colleagues, now is a time to weep.   

A few days ago a vibrant sweetheart of an agent in my Coldwell Banker office suddenly died.   She was only 51 years old.    She was not out skiing, or skydiving, or driving too fast, or anything else you might associate with danger.   She was simply showing a house to a client, and by a freak accident she fell down a set of stairs into a dark basement.   She was pronounced brain dead almost within minutes of arriving at SF General (by all accounts, the SF emergency response team and SF General were incredibly efficient, caring and on point).
 
This tragedy pains my heart, so I wanted to take a minute to remind all of us how truly precious and precarious life is.    And with this knowledge, maybe we can be a little more forgiving of each other; maybe we can remember what connects us rather than divides us;  maybe we can say “I love you” more and criticize less; maybe we can remember to pack more fun into our days and not delay happiness; maybe we can truly silence our self-critic forever and live fully in the moment.

Take this chance to hug those you care about, and tell them how much you appreciate them.   You won’t regret it.

Bay Area Market Update (9/15/08)

Earlier this week, Federal officials unveiled an extraordinary takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.

 

As CNN pointed out, “The move, which extends as much as $200 billion in Treasury support to the two companies, marks Washington’s most dramatic attempt yet to shore up the nation’s housing market, which is suffering from record foreclosures and falling prices.”

 

Under this new plan, the government is stepping in to stabilize the mortgage market by taking conservatorship of the two entities.  Essentially, the government will temporarily run Fannie Mae and Freddie Mac until they are on stronger footing. 

 

So what does it mean for consumers?  I see this is a positive step for our industry, one that should have a positive impact on consumers.  The ultimate goals are to help stabilize the mortgage market, improve mortgage rates in the near term, improve consumer confidence and possibly spur some new housing demand.

 

NAR President Richard F. Gaylord responded to the news with this statement, “I commend Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen.

“NAR believes that the announced plan will help restore confidence in the secondary mortgage market. We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. This demonstrates that the government is clearly committed to keeping the flow of capital uninterrupted, which is crucial to the housing sector and the economy.”

Soon after the takeover was announced, Wall Street rebounded and interest rates dropped.  Take a look at these excerpts from Tuesday’s USA Today article (http://www.usatoday.com/money/economy/housing/2008-09-08-fannie-freddie-effects_N.htm?loc=interstitialskip) entitled Mortgage rates drop; investors applaud Freddie, Fannie rescue:

• “Wall Street staged its biggest rally in a month Monday as stock investors bet that the government’s move to seize and backstop the USA’s two largest mortgage finance companies will help stabilize the housing market, thaw credit markets and boost the ailing economy.”
• “The Dow Jones industrial average jumped 289.78 points, or 2.6%, to 11,510.74. But common shares of Fannie and Freddie were essentially wiped out, since common-stock shareholders are last in line in any claims.”
• “Average rates on 30-year fixed-rate mortgages, which have hovered well above 6% for months, plunged from 6.5% Friday to near 6% Monday, says Bankrate.com, according to national overnight averages. And most analysts expect the government’s takeover of Fannie and Freddie to extend that decline, at least in the short term.
• “In part, that’s because in taking control of the two companies, the U.S. Treasury will buy mortgage-backed securities, thereby driving their prices up and mortgage yields down. The takeover should also shore up confidence in Fannie and Freddie and the mortgages they own or guarantee.”

 

I truly believe that the government rescue of Fannie Mae and Freddie Mac is a good thing for real estate and a great thing for interest rates and consumer confidence.  It will be interesting to watch it unfold over the next several weeks.

 

With this week’s good news in tow, let’s take a look at this week in real estate:

 

• East Bay—It seems the after Labor Day spike is working its magic in the East Bay these days.  Castro Valley is reporting that open houses are well-attended and that buyers are coming out of the woodwork.  Danville also has its fair share of good news noting that inventory is decreasing for the second week in a row and they are now down to a 4.4 month supply.  Fremont is feeling the benefits of the REO market with a lot of activity in the entry level.  Buyers seem to have a lot of interest in REOs and the potential bargains they hope to gain.  Oakland is pleased to be seeing some good, quality listings on the market after a several-week slump in good inventory.  I think we all anticipate that September and October will bring a much needed spike in sales to the East Bay.
• Monterey County—We’ve been seeing an increase of new escrows in the last few weeks, in price ranges across the board.
• North Bay—We are seeing spotty activity with well-staged, well-priced homes winning the prize of a sale.  In Marin, under $800,000 is looking good, $800,000 to $1.4 million is quiet, $2 million range is slower and $3 million plus is solid.  If there were more upper end listings, they’d sell!  CB’s San Rafael office is reporting a lot of activity in the entry level in Novato and San Rafael.  Multiple offers are back and 80% of the San Rafael office’s deals this week are REO and/or short sales.  The Marin Association of Realtors this week reported an incredible 57% increase in homes under contract from August 08 to August 07.  A great sign of good things to come!  For neighboring Sonoma County, action remains brisk below $500,000 with REOs commonplace throughout the entire county.   
• Peninsula—Our Half Moon Bay friends are singing the tune of new listings.  Traditionally they have just about 110 listings on the market on the coast.  Currently they have 148 which means better, more quality choices for buyers.  The high-end market of the Peninsula seems to be moving well.  Menlo Park is reporting that they had both a $3 million and a $5 million sale this week.  Palo Alto continues to be plagued by lower inventory but is noting that though the inventory is low, buyers are looking for the right property that is priced well.  Unless a home is priced well and shows well, even in a market that has limited inventory, it will sit.  Buyers want value no matter what market they’re in.  Our Redwood City office saw the first signs of the Freddie Mac and Fannie Mae takeover noting, “Slow week though buyers who were on the fence are now deciding to purchase with the government takeover of Fannie Mae and Freddie Mac.”
• San Francisco—Our anticipated post Labor Day serge is coming to fruition in the City!  We had a total of nine multiple offers amongst our five San Francisco CB offices this week.  Our Market Street office noted, “Of the three multiple offers we had, one property had not even reached the open market.  We had 10 new listings come on the market this week ranging from a condo at $499,000 to units at just under $3 million.”  Our Lombard office saw a big post Labor Day week, too, noting that one sale was pre-emptive for 15% over in the $2 million range.  The Van Ness and Noriega offices have yet to see the post Labor Day bounce but are confident they, too, will soon feel it.  Van Ness continues to report success in the upper-end.
• Silicon Valley—As CB’s Cupertino office points out, “Lots of enthusiasm!  Let’s hope it translates into transactions!”  We’re definitely seeing increased buyer interest right now.  Pendings are up 121% over this time last year and inventory is down.  But buyers are still cautious and slow to make offers.  Our Los Altos San Antonio office points out that “Activity was way up from last week.  Buyers seem to be out in full force at our open homes.”  Our Saratoga office concurs, despite what they thought was going to be a slow week.  “Although sales have been decreasing,” said the Saratoga Manager, “we experienced a spike in sales yesterday with nine being processed.  Hopefully this is a sign of improvement.  Additionally we had 10 offers on a well-priced Saratoga home.”  

I know I said it last week, but now that Labor Day is over and everyone is back from vacation, I think we’re going to see a spike in sales.  Couple that with some new-found stability in Fannie Mae, Freddie Mac, and we’re in a pretty solid situation heading into fall.   Of course, we’ll have to see what impact the latest headlines have on the market.   As the Magic 8 Ball says:  “More will be revealed”.

Bay Area Market Update (9/11/08)

Labor Day is behind us.  Kids are back in school, the last of the summer vacations concluded.  Now that the traditionally slow July and August months are past, we do anticipate that sales will begin to pick up in September and October.  This is typically the time of year in which serious buyers begin to take action—hoping to get into their new home before the holidays.

 

And now that buyers and sellers, and Agents for that matter, have returned from their vacations and are homeward bound, we should see a pretty decent pick-up in sales activity.  Of course, only time will tell but if history is any indicator, we are anticipating a more robust September than we saw in July and August.  From what I have heard stopping by offices this week, there is already a decent increase in quality listings coming to the market over the next several weeks.

 

Overall, the Bay Area housing market is running pretty steady as we head into fall.  Certainly there are pockets in which sales activity is thriving thanks to REOs/foreclosures.  And in certain markets like San Francisco, the North Bay and parts of the Peninsula, we are seeing a lot of activity in the upper end.  But for the most part, generally speaking, the market is moving steady—erring on the side of status quo for a buyer’s market.

 

Homes are selling.  But again, as I’ve said in the past, only those homes that are priced right, show well, are in a good location and are seen as a “value” to buyers in this market, are moving in a timely manner.  Others tend to sit.

 

Buyers are perusing.  Yes, perusing seems the most appropriate choice of words.  In talking with many CB Agents, it is apparent that the message has been driven home that this is one of the best buyer’s markets in more than a decade to buy and the good news is that many buyers are starting to get their feet wet through increased open house activity, increased office calls and even an increase in pending sales —with Santa Clara County last week reporting that pending sales were up 121% this week, year over year.  Those wet feet, however, haven’t resulted in closed sales quite yet and only time will tell if they do. 

 

So while we wait to see what becomes of the wet feet, let’s take a look at this week in real estate:

 

·        East Bay—Still a lot of activity based on REOs.  Short sales are finally starting to get approvals which will help to decrease some of our standing inventory.  LaMorinda is reporting that it is “hot, hot, hot!”  In fact, the CB office noted that listings aren’t lasting long and most are seeing multiple offers.  Of course this is one of the few Bay Area markets that hasn’t felt the effects of REOs and short sales.  CB’s Walnut Creek office is noting that some REOs in Antioch are receiving 10+ offers, with the accepted offer 10-15% over the asking price. 

·        Monterey County—This largely second home market enjoyed the benefits of the three day weekend as potential buyers came to Monterey in droves, particularly in Carmel.  A number of offers were written over the weekend and we are holding twice as many deposit checks than usual so things definitely seem to be picking up. 

·        North Bay—CB’s Southern Marin office is noting that activity is picking up with more listings coming on the market.  This week, in fact, our Southern Marin office introduced five new Previews listings to the market and put one Previews listing ($2.7 million) in escrow that had been on the market for 400 days.  Things are looking up!  Sonoma County is still seeing a lot of lower-end, REO activity.  One REO out of our Sebastopol office this week received 27 offers.

·        Peninsula—Our Half Moon Bay office is reporting that even with the Labor Day weekend, things are still moving briskly.  CB had 18 homes open over the three day weekend on the coast and Agents reported a lot of serious and motivated buyers.  Palo Alto is still feeling the effects of low—painfully low—inventory.  But the good news is that they expect that even in the next few days to get some good, quality inventory brought it to spur some more buyer interest.

·        San Francisco—My manager said it best, “We are waiting for the market to heat up.  Multiple offers are a result of proper pricing, not market conditions.”  This is a good lesson for sellers that if you price your home properly and competitively, you may be able to generate some good, solid interest from buyers.  Overall, coming off the Labor Day weekend, things have been pretty quiet in the City.  We’re awaiting some exciting new inventory to come on the market in the next two weeks which will move us back into a more normal market for the City.

·        Silicon Valley—I think we are all going to be glad when everyone is back in school and work, Silicon Valley especially.  Certain areas of Silicon Valley are dealing with the challenge of a lack of quality inventory which is driving would-be buyers back on to the fence.  There just aren’t enough quality listings to attract buyers to the market.  The good news is that many of CB’s Agents have spent their August preparing their clients’ listings for sale and we expect some good inventory to come on the market over the next few weeks.  This should help to stimulate things for our Silicon Valley clients as right now, things are pretty quiet.

 

Now that the Labor Day holiday is over, we have a lot to look forward to.  The dog days of summer are behind us and now we can move forward to the more robust Fall selling season.  Buyers, start your engines!  Sellers, get ready to negotiate, be reasonable and prepared, and don’t forget to remain competitive.

As “Baby Boomers” Retire Reverse Mortgages Gain Popularity

Born between 1946-1964, the generation known as the Baby Boomers will begin to retire in large numbers, substantially shrinking the labor force in the US. As a result, Social Security, Medicare, and other government programs will be significantly affected over the next several years. In fact, the Social Security Advisory Board (SSAB) estimates that, by 2030, about 20% of the American population will be 65 years old or older. With rising costs of living and a dwindling budget to accommodate the elderly and disabled, we will see increased usage of the reverse mortgage. This loan allows equity to be taken out of the home to meet day-to-day expenses, and was designed in the late 1980s to help those who owned property, but lacked sufficient income to live on. However, there are benefits and disadvantages to be considered before going into this type of loan. In most loan scenarios a home will go into foreclosure if payment is not made. If payments are made, the debt decreases and equity increases. The opposite holds true for a reverse mortgage; equity is taken out of the home to sustain the family, causing debt to increase while equity decreases. There is an exception – if the actual value of the home increases, less equity will be lost overall. Most reverse mortgages are set up so there is no monthly payment as long as the owner or co-owner(s) resides in the home. There are no minimum income requirements, and the money can be used for any purpose. Equity disbursed from this type of loan is tax-free. Depending on the type of plan, reverse mortgages will usually allow the owner to retain the title to the property until they have lived in a different residence for 12 months, sold the property, died, or the end of the loan term has been reached. On the flip side, reverse mortgages can be more costly than a normal equity loan. Interest is added to the principal balance each month, and the amount of interest owed is compounded over time. The interest will not be tax deductible until the loan is paid off, in part or in full. Also, since the reverse mortgage uses equity in the property, this constitutes a loss of assets one could pass on to heirs. The Federal Trade Commission warns of abuse with this type of loan, as they have received reports of predatory lenders taking advantage of the elderly. It is best for the individual interested in a reverse mortgage to research and obtain counsel from reputable sources.* HUD does not recommend consulting an estate planning service to obtain a referral to a lender. HUD provides this information free to the public. Even if the home was not originally an FHA loan, the reverse mortgage can be federally secured. *Visit the HUD page on this subject at http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm, consult AARP (American Association of Retired Persons) at http://www.aarp.org, and the National Center for Home Equity Conversion at http://www.reverse.org.

SF Natural Area Work Party

This is a friendly reminder about this important upcoming Natural Areas event!

Here are details:

Date and Time: Sat, 06 Sep 2008, 09:00 – 12:00

Size Limit: 15 (13 left)

This month we’ll be “up-planting” at the Golden Gate Park nursery—one of the most entertaining of the tasks we do. Note in particular the location; check the map.

Because of new policies at the nursery, it is essential that you arrive on time. If you come late, you probably won’t be able to enter the nursery.

As always, a grand time will be had by all!

Kids under 12 need to be accompanied by an adult and should bring their own gear; otherwise gloves, tools, water and snacks will be provided. Call Suzanna Buehl (415-831-6328) for any other questions.

For info:   http://sfnaturalareas.org/events/81