AFG Realty Blog

My strong recommendation for the coming year for both Homeowner/Buyers and Investor/Buyers is GET OFF THE SIDE LINES AND INTO THE GAME! For several reasons that I will outline below now is the time to buy and invest. Let’s look at why I feel so strongly about this recommendation:
1) At this time, until April, the federal government will give you $8,000 to purchase a home! This program will most likely not be renewed for a third time. This is an incredible deal and all Buyers should take advantage of it!
2) Interest rates are between 5% and 5.50%. It is expected that the rates will climb to finish the next New Year (2011) over 6%. I personally believe they could finish over 6.50%!
3) The banks have worked with almost every homeowner in default on their loan. Either they worked it out or are about to work it out. In any case, there are thousands of homes that are finishing the foreclosure process. Expect to see these homes hit the market in the first half of the New Year. Bank owned homes (REO) tend to sell on the lower end of market prices. In addition, here in California, there is a push to speed up the short sale process. Combined REO and short sale opportunities will create the lowest prices we have seen since the early 1990’s. How low is a different discussion. Our experience shows us that good properties get picked up quickly. It is a far better decision to purchase now and get what you want (and financed at a low interest rate) than to wait to see if you can save another 3%!
4) Inflation is on its way! Many of you have not experienced the nightmare of Inflation! Those of us that were around in the late ’70s and early ’80s can’t forget it! It does not take a rocket scientist to see that the only way for the Feds to pay back their debt is to reduce the value of the debt. Look for the Feds to ease their grip on interest rates by late in the year (see #2). Many of us are already showing concern over inflation. Google reports a sharp spike in the number of searches for “Hyperinflation”. A consumer confidence survey, published by The Conference Board, shows Americans expect prices to climb a troubling 5.1% over the next 12 months! One of the best ways to protect yourself from inflation is to have fixed rate debt. Imagine how protected you will feel if you have purchased a home at under replacement cost and with a fixed, low interest loan!
5) Today you are buying below the replacement cost of the property! In our area the average sale price of a single family home is below $75 per square foot. Most contractors tell me that they would charge between $90 to $100 per square foot to build a home on your lot. Add another $10 per square foot for the lot cost and you can see that you are purchasing at 25% to 30% below replacement cost. What a great deal!
6) For Investors, the rate of return from rental income is far above what you can get in the bank. Taking into consideration #4 above, now is the time to invest! Even if you cut the rent below the current market and pay a property management company to manage the property, most likely you will have a positive return. And this is before you factor the tax advantage and the appreciation value of the investment.
Any of the Realtor’s at AFG Realty (760.369.2347) would be happy to explain and expand on the points listed above. We recommend Ms. Debbie Rogers at Allied Home Mortgage (760.832.1159) for financing help and advice. Our partner company, AAA Property Management (760.369.1221), can answer questions related to property management cost. As you can see from above, Now is the time to get into the game!
We here at AFG Realty wish you the most successful New Year!

Bob Armstrong
Broker
AFG Realty

Wow! Time does fly. I apologize. I did not realize that we had not updated the blog for some time. I will try to get back on track. I thought I would focus on the last three months in this week’s post. Next post I will make some market forecast for the winter/spring season. Let me say this though, Now is the time to buy! If you have been sitting on the sidelines and waiting, wait no more! I will expand that thought next post but keep it in the forefront of your thought process. OK…Let’s get up to date on the information included in the reports published by the County Assessor and provided by Vicki Bishop at Fidelity National Title.
YUCCA VALLEY
The last three months saw the combined sale of 137 homes in the area (less than 47 per month). The average price of a home by the end of October has sank by more than 30% from 2008 to $85,000. By October the average price per square foot was $68.00. Currently there at 742 homes in some state of foreclosure* in the 92284 zip code!
TWENTYNINE PALMS
The last three months saw the combined sale of 66 homes in the area (less than 22 per month). The average price of a home by the end of October dropped by more than 20% to $77,000! The average price per square foot by October was $68.00. Currently there at 474 homes in some state of foreclosure* in the 92277 zip code!
JOSHUA TREE
The last three months saw the combined sale of 52 homes in the area (less than 18 per month). The average price of a home by October sank by a huge 35% to $91,000! The average price per square foot increased to $76. Currently there at 377 homes in some state of foreclosure* in the 92252 zip code!
LANDERS
The last three months saw the combined sale of 12 homes in the area (less than 4 per month). By October the average price of a home plummeted from 08 by 53% to $59,000! The average price per square foot was $60. Currently there at 106 homes in some state of foreclosure* in the 92285 zip code!
MORONGO VALLEY
The last three months saw the combined sale of 28 homes in the area (just more than 9 per month). Almost 50% of the sales happened in October! The average price of a home decreased by over 7% to $115,000 in October! The average price per square foot was $66. Currently there at 139 homes in some state of foreclosure* in the 92256 zip code!
SUMMARY
As many of you know, I am also a licensed Broker in Nevada. I have an office in Henderson with a RE/Max Broker. I will elaborate in my next post, but, like I said at the beginning of this post, GET OFF THE SIDELINE AND INTO THE GAME!!! Foreclosures in our area are slowing, prices are well below the cost of replacement, and interest rates today (at this posting) are at an all time low! Even if prices slide a little more I believe the inventory of quality homes is also beginning to decrease so your choices by April may be limited. Till our next post…
Bob Armstrong
Broker
*information gathered from Trulia.com

It appears that my “Summer Market Forecast” was a bit optimistic! New statistics came out this week for the month of July 2009 which shows much slower sales in our area than I believed would happen. I thought I would bring us up to date on the information included in the reports published by the County Assessor and provided by Vicki Bishop at Fidelity National Title.
YUCCA VALLEY
July saw the sale of 47 homes in the area. The average price of a home sank by more than 34% from 2008 to $105,000! The most expensive home sold was around $350,000. The average price per square foot was $72.00. Currently there at 802 homes in some state of foreclosure* in the 92284 zip code! This is around 10% of the community!
TWENTYNINE PALMS
July saw the sale of 25 homes in the area. The average price of a home dropped by less than 0.5% to $110,000! The most expensive home sold was around $225,000. The average price per square foot was $75.00. Currently there at 504 homes in some state of foreclosure* in the 92277 zip code! This is around 6.5% of the community.
JOSHUA TREE
July saw the sale of 18 homes in the area. The average price of a home sank by a modest 19.3% from to $83,000! The average price per square foot was $69. Currently there at 430 homes in some state of foreclosure* in the 92252 zip code! This is almost 8% of the community!
LANDERS
July saw the sale of 3 homes in the area. The average price of a home actually rose from 08 by 72.2% to $50,000! The average price per square foot was $73.00. Currently there at 430 homes in some state of foreclosure* in the 92285 zip code! This is just over 5.25% of the community!
MORONGO VALLEY
July saw the sale of 5 homes in the area. The average price of a home decreased by over 38% from to $83,000 in 2009! The average price per square foot was $77.00. Currently there at 157 homes in some state of foreclosure* in the 92256 zip code!
SUMMARY
I recently read an article where the economist was predicting that by 2012 real estate prices will be back to where they are today! He may not have been far off. As you can see from the above we have many homes in some state of foreclosure and no increase in the job market in our area in the foreseeable future. I think we will see a slowdown in sales over the remainder of the year. Prices in our area must continue to drop if we are to be competitive with other prime retirement areas. I stick with my May prediction, overall look for a further decline in price points in the Morongo Basin by at least 15% and as high as 30% by the year’s end.

Bob Armstrong
Broker
*information gathered from Trulia.com

What a great question! I have read articles and visited web sites that constantly interchange these two items, often to erroneous results. The short answer is really easy. Assessed Value is the value your property taxes are based on and Appraised Value is the value of your property on the day and time the appraisal was performed.

In California, Assessed Value is most affected by Proposition 13 that was passed in 1978. This proposition basically did two things. It created a cap of assessed value increase per year at 2 percent and capped property tax at no greater then 1 percent of the assessed value. You may pay slightly over 1 percent of the assessed value of your property due to bonds and fees approved by the voters. If you purchase a property, the purchase price is typically used as the basis for the initial Assessed Value. If during the first year property values go up 6 percent the Assessed Value will only be increased by the cap of 2 percent. What this means is that as more years go by after purchase, the difference between the Assessed Value and the Appraised Value will broaden. Only through a purchase by a new owner or a significant improvement of the property can the Assessed Value be raised to equal the Appraised Value. In general Assessed Values cannot be over the Appraised Value. If you believe this is the case you can contact your tax assessor and ask them to review your Assessed Value. If you are correct, the tax assessor will often lower your Assessed Value and, consequently, your tax bill.

Appraised Value is the value of your property at a specific date and time as figured by a California Licensed Appraiser. This value is often used by finance companies to determine the value of a property they are issuing a loan on. Many different methods are used to appraise a property. They may use a replacement method, a best use value method, a comparative market analysis or any one of a number of other methods depending on what will work best with a specific property.

An AFG Real Estate Agent can perform a comparative market analysis on your residential property. The result of this analysis should be very similar to an actual appraisal and should be the very start of pricing your home for sale or to find out if an offer you are making on a home purchase is over or under market value.

Stephen Armstrong
AFG Realty
Broker

This is one of the most frequently asked questions in our office. In the past, in our area, vacant land tumbled as the housing market fell. It was not uncommon in the late 90’s to have people offering to sell their land on the cheap to raise much needed cash. Today’s market has been very different from the past. Sellers have been holding their price points up and Buyers have been, for the most part, staying away!
Most of our land is either in acreage or infill lots. Most of the past Buyers for these lots are contractors looking to build a “spec” house. The contactor buys the lot, builds the home, sells the home and goes out on the market to purchase one or more lots to start over again. With the slowdown in the construction side of the housing market, contactors are not buying. The other large group of Buyers for vacant land is the end user. This is generally a retiree who picks the land to build their retirement home. This Buyer will pay more for the right location. With the low cost of existing housing on the market, it is not cost effective to build so this Buyer has been purchasing existing homes.
With our largest group of Buyers not buying, it is easy to see that the vacant land market is minimal at best! The following is a breakdown by city:
YUCCA VALLEY
Year to date 15 parcels have sold. The smallest was 0.26 of an acre. The largest was 5.41 acres. The cheapest sold for $4,000. This was a 4.56 acre parcel on the Yucca Grade. The most expensive sold for $55,000. This was a 0.70 acre parcel in Sky Harbor. Most of the sales appear to be infill lots with 3 being over 2 acres. Currently there are 262 parcels on the market with the largest being 320 acres.
TWENTYNINE PALMS
Year to date 29 parcels have sold. The smallest was 0.20 of an acre. The largest was 19.50 acres. The cheapest sold for $4,350. This was a 4.50 acre parcel. The most expensive sold for $80,000. This was a 19.50 acre parcel. Most of the sales appear to be split between acreage and infill with half the lots sold under 2.50 acres and half over. Currently there are 369 parcels on the market with the largest being 120 acres.
JOSHUA TREE
Year to date 14 parcels have sold. The smallest was 0.22 of an acre. The largest was 2.50 acres. The cheapest sold for $2,500. This was a 0.22 acre infill lot. The most expensive sold for $80,000. This was a 2.50 acre parcel on Uphill on the south side of JT. Currently there are 321 parcels on the market with the largest being 320acres.
LANDERS
Year to date 6 parcels have sold. The smallest was 1 acre. The largest was 5.00 acres. The cheapest sold for $5,900. This was a 2.50 acre parcel. The most expensive sold for $30,000. This was a 5.00 acre parcel on Jackrabbit. Currently there are 52 parcels on the market with the largest being 640 acres.
The current market shows over 1132 active listing for vacant land in our area! With only 72 sold year to date!
Needless to say, the market for vacant land is bleak. I expect it to get worse over the next two years as Buyers continue to look at homes for a better real estate investment.

All statistics are from the Desert Communities Board of Realtors Mutliple Listing Service as of this publishing.

Bob Armstrong
Broker
AFG Realty

Last post I included the April sale statistics for the Basin. The new statistics came out this week for the month of May 2009 so I thought I would bring us up to date on the information included in the reports published by the County Assessor and provided by Vicki Bishop at Fidelity National Title.
YUCCA VALLEY
May saw the sale of 35 homes in the area compared to 34 in 2008. More importantly the average price of a home sank by almost 40% from $170,221 in 2008 to $102,357 in 2009! The most expensive home sold was $228,000. The least expensive was $36,500. The average price per square foot was $71.00 (the most expensive per square foot was $138 and the least was $28). The average square footage of a house sold in Yucca Valley was 1417. Over half were bank owned and one sale was a short sale.
TWENTYNINE PALMS
May saw the sale of 11 homes in the area compared to 19 in 2008 (A drop of more than 42%). The average price of a home dropped by more than 42% from $133,637 in 2008 to $95,182 in 2009! The most expensive home sold was $219,000. The least expensive was $48,500. The average price per square foot was $78.00 (the most expensive per square foot was $167 and the least was $46). The average square footage of a house sold in Twentynine Palms was 1204. Over half were bank owned and one sale was a short sale.
JOSHUA TREE
May saw the sale of 7 homes in the area compared to 18 in 2008. The average price of a home sank by a modest 11% from $123,000 in 2008 to $109,429 in 2009! The most expensive home sold was $185,000. The least expensive was $44,000. The average price per square foot was $80.00 (the most expensive per square foot was $115 and the least was $37). The average square footage of a house sold in Joshua Tree was 1344.
LANDERS
May saw the sale of 2 homes in the area. One home was sold for $50,000 and the other for $45,000. Because of this low amount of sales all other statistics are irrelevant.
MORONGO VALLEY
May saw the sale of 5 homes in the area compared to 7 in 2008. The average price of a home decreased by over 50% from $118,857 in 2008 to $56,200 in 2009! The most expensive home sold was $67,500. The least expensive was $34,000. The average price per square foot was $55.00. The average square footage of a house sold in Morongo Valley was 1058.
SUMMARY
By looking at the above numbers we can see our market starting to correct its self to competing markets like Victorville, Hesperia, the Low Desert, Las Vegas, and Phoenix. Last month prices in Victorville hit $55 per square foot! Vegas and Phoenix are at or below that point. Even the Low Desert is getting to the $70 to $80 per square foot point! I think we will see a slowdown in sales over the remainder of the year. I think June sales for the Morongo Basin will be below 75 total units. This will be well above May but way behind for the season. Overall look for a further decline in price points in the Morongo Basin by at least 15% and as high as 30% by the year’s end.
Bob Armstrong
Broker

I have lived and worked in Yucca Valley since 1981. In some circles I am a newcomer! For most of us information is key when trying to make good business decisions. This week I had the opportunity to review some statistics about our community that I thought many of you would find interesting. Most of the statistics are from 2008 (the last year available).The statistics used are for the Town of Yucca Valley. I look forward to your comments!
2008 Population 21,268
Between 2000 and 2008, the total population of the Town increased by over 4,400. The Towns growth rate of 26% was higher than the County rate of 20%. From 2005 to 2008 growth decelerated to 1.3%
Median Age 40
Our share of over 65 population is projected to remain 20% higher than the County average. Middle-aged workers (35 to 54) are projected to decline significantly while our younger workers (21 to 34) are expected to increase significantly.
Over 77% of us are white, non-Hispanic, 15.20% are Hispanic.
Hispanics are the fastest growing ethnic group in Town. Their population share is projected to increase over 1% a year for the next three years.
There are 9,574 housing units in Town.
Between 2000 and 2008 households increased 20% which is lower than the population growth of 26%. We average 2.5 persons per household, well below the County average of 3.3. 79% of households had 3 people or fewer. 29% of our households are occupied by singles (well above the County average of 18%). About 10% of all households have more than 5 people. 68.60% of us own our homes (or at least have title, I mean really….the bank owns most of them!)
The median family income is $45,043.
This is 22.50% below the County average! In 2007 more than 2/3 of households earned less than $50,000. Almost 35% make less than $25,000. 25% made between $50,000 and $100,000. 9% made over $100,000.
Between 2000 and 2008, 1583 new residential permits were issued.
The number of permits increased from 72 in 2000 to 386 in 2004. However, from 2004 to 2008, permits dropped steadily from 386 to 24! Between 2000 and 2006, median home sale prices more than tripled, jumping from $70,000 to almost $225,000. Prices dropped between 2006 and 2007 (7% decline) but fell sharply in 2008 (29%).
In 2008 there were 4,415 jobs in Town.
Manufacturing jobs have declined in the last 3 years. The largest decline is in construction jobs with a loss of 21% between 2006 and 2008. Retail jobs increased by 20% between 2003 and 2006 (would you like to upsize that meal?). By far the biggest increase and continued increase is in the professional and management sector. Between 2003 and 2006 these jobs increased by over 26% and have continued to increase 2% a year since.
April Home sale prices (the last full month available at this writing) by Community:
Joshua Tree- 15 sales for the month. The most expensive home sold was around $175,000. The average sale price was $78,800. The average per square foot price was $64.
Landers- 3 sales for the month. The most expensive home sold was around $75,000. The average per square foot price was $97.
Twentynine Palms- 17 sales for the month. The most expensive home sold was around $150,000. The average sale price was $89,941. The average per square foot price was $72.
Yucca Valley-30 sales for the month. The most expensive home sold was around $350,000. The average sale price was $109,833. The average per square foot price was $74.

As always, happy home hunting. The Agents here at AFG Realty are available anytime to help answer any questions these statistics may create.

Bob Armstrong
Broker
AFG Realty

Several weeks ago I posted my guidelines for establishing a purchase price for a single family home in the Morongo Basin. Each season I will post my forecast for the upcoming new season. I have dusted off my crystal ball so here goes!
First we should look at where we are today, Thursday June 4, 2009. Traditionally the months of March, April, May, and parts of June are the best sales months in the Valley. This is stimulated by military moves. Military families get orders for July/August moves to new bases and many are moving to and from Twentynine Palms. As they enter the market, local families have the ability to sell their home and move up to the next level. To some extent we saw this again this year. Currently approximately 200 homes are in a pending sale with an average price of $125,000. Over 25% of these have been pending for over 60 days (which indicates some problem with the escrow so the sale may not complete). So far this year approximately 500 homes have sold with an average price of around $108,000. The average days on market for sold properties is 108. Almost 80% of these sales are bank owned property (REO).Less than 35 of all pending and sold properties are from short sales! Today we have over 800 single family homes for sale in our market. The average price is over $200,000. The average days on market for current listings is over 225 days. Morongo Basin’s current listings are more than double the current sales days on market and almost double the average sales price!
What does all that mean?
1) Of the over 800 properties for sale in our area, only 220 are priced at or below the current average sales price. Therefore most listed properties are overpriced.
2) Most Buyers are looking at REO properties and not private sale properties. Probably because of item 1!
3) Completed short sales are few and far between!
If this was not enough, we have more foreclosures on the way! The Press Enterprise reports that thousands of properties are about to be foreclosed on and put on the market in the Inland Empire. Just look at the Hi Desert Star legal section and you will see a dramatic increase in trustee sale notices. I anticipate several hundred new REO homes to hit the market starting in late July or August and continuing through the end of the year.
For the summer sales season, my crystal ball tells me:
1) If you are a Seller, take a good look at your price point and adjust it to market value. If you are unable to drop the price low enough (see our April 24th posting), take the property off the market until we see an improvement! Most likely this will not be until at least next spring.
2) If you are a Buyer, You are king! Take your time, review our April 24th posting, and have fun. Don’t look to educate an unreasonable Seller. Offers of 50% of asking price rarely work. Look for properties that are priced right and make fair offers. Do not be in a hurry. You have the time and inventory to find that perfect home! I do expect interest rates to remain steady through the end of the year but watch them carefully. We may see an increase of up to ¾ point between now and then. This can make a big difference in your monthly payment.
3) The season will be slow for sales with approximately 85 homes a month closing escrow (see current pending sales). I would expect that by the fall season we will see pending sales decline to 100.
I will review my forecast in September before I make my fall forecast. Good luck!

Bob Armstrong
Broker
AFG Realty
*all figures are from the Desert Area and Desert Communities Board of Realtors MLS.

For the purpose of this Blog post I will address only San Bernardino County and more specifically the Morongo Basin.
As most of us are aware, back in the 70’s California passed the now famous “Proposition 13”. This proposition limited the ability of the State, County, or Town governments to increase property tax. Property tax is based on the purchase price of your property. The government is allowed a 3% increase in the tax rate annually. Again, the basis is your purchase price. Keep in mind that you may also pay various bonds with your tax payment. These bond payments are not included in the discussion on property tax. They, for the most part, will stay the same throughout the term of the bond. In our area a “rule of thumb” is your tax bill will be approximately 1.15% of your purchase price. As an example, a property purchased for $100,000 will pay $1,150 per year or almost $100 per month towards property tax.
The newer Proposition 8 allows for a temporary reduction in property tax if it can be shown that during the current market the value of the property has declined. In many cases, the Assessor’s office will automatically review the assessment roll and set a new value for tax. This is a temporary reduction and can be increased back to the basis (plus 3% annually) when the market returns. Many of us have recently received an Assessment Notice from the Assessor’s office notifying us of this reduction.
The County Assessor offers both an online and print version form for Proposition 8, Decline in Value Application. If your property was not automatically re-assessed, or if you believe the new assessment was incorrect, simply fill out the form and submit it to the Assessor’s office. The last date to request a review for decline in value is December 31, 2009.
All of the Agents at AFG Realty have access to the County tax rolls. Any one of the Agents would be happy to give you a list of comparable sales for property like yours. You can attach this information to your application for re-assessment. Simply call us at 760.369.2347 and speak with the Agent on duty. This is a free service and we are happy to help.
One last point- This is a free service from both the County and AFG Realty. DO NOT PAY FOR THIS SERVICE! Your County Assessor is here to work for you and will be more than happy to answer your questions and help you with our application. You can find more information on line at: http://www.sbcounty.gov/assessor or you can call them locally at 760.228.5420.
Bob Armstrong
Broker
AFG Realty

In the current market, many listings are REO’s or Short Sales. Sometimes as many as 80% of the listings in a given area are in these 2 categories. Many buyers are unsure of what exactly these terms mean and how they affect a purchase. Short Sales are the easiest to explain so I will start with those and then explain REO’s.

Short sales have very little affect on the buyer. Basically, a short sale is an agreement between the seller and their finance company. When a homeowner is at risk of losing their house to foreclosure, one of their options is to convince their mortgage company to accept a “Short Sale”. What this means is that the mortgage company will allow the homebuyer to sell the house for less then is owed. The reason that the mortgage company may allow this is that they save the hassle and expense of going through the foreclosure process. The homeowner’s credit is not damaged as badly as if they went through an actual foreclosure. The problem for the buyer is that they have to wait until the seller and their mortgage company have come to an agreement before an offer is accepted. I have personally been involved in a short sale transaction in the last year where it took over 5 months for the seller and their mortgage company to come to an agreement. That is a long time for a buyer to wait. You may get lucky and find a short sale where the mortgage company and the seller have already gone a long ways into the process. On the plus side, the seller is still bound by all laws of transaction and disclosure when involved in a short sale.

REO stands for “Real Estate Owned” and means that the mortgage company owns the property and that nobody purchased the property when it was involved in the foreclosure auction. The property is now on the open market. Since the mortgage company has never lived in the property they are exempt from providing many disclosures regarding the property. These houses are almost always sold “as-is” although there are no laws stopping the buyer from requesting repairs. It is very important for the buyer to exercise great caution in investigating the property. A home inspection is highly recommended as well as follow up investigations in regards to the findings of the home inspector. Possible items are roof, plumbing, heating/cooling and electrical issues. There are some great deals to be found in purchasing REO’s but the buyer needs to be careful they are not buying too many problems.

Following the guidance of a reputable real estate agent through the purchase of REO’s or short sales will increase the odds that the property purchased is a good deal. Any Agent at AFG Realty can assist you in deciding where the good deals are and which properties to stay away from. We would look forward to assisting you in your purchase!
Stephen Armstrong
Broker
AFG Realty