AFG Realty Blog

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

Here in the Morongo Basin prices are continuing to drop. During this time of price adjustment it would be wise to use this guideline:
$50 to $70 per square foot= great buy! Our market is selling in this range. Many foreclosures are being forced into this range. You might need to fix it up a little. This is the range to not get emotional about the house. Pillage and rape!
$70 to $90 per square foot- good buy! These will most likely be newer homes and in good shape or in good locations. This should be a turnkey purchase with little or no repairs required. This is the current average range in the Yucca Valley market.
$90 to $110 per square foot= OK buy. This should be a medium range investment (5 year). Home should be in near perfect condition and include amenities that you desire or require (like handicap accessible or a pool).
$110 to $125 per square foot= Better love it! This should be a long term investment like a retirement home.
Anything over this, in today’s market, would make for a poor financial decision. Keep in mind that when the market peaked in our area in 2005 we were between $180 and $200 per square foot. The current replacement cost for just the home is around $100 per square foot not including the land.
You can adjust these for the specific area. As an example, I would adjust down $10 per square foot for most of Joshua Tree and the Mesa area. I would go down $20 per square foot for the outlying areas like Landers, Flamingo Heights, North Joshua Tree, and Johnson Valley. Twentynine Palms has seen activity as the new Marine transfers seem to prefer to live in Twentynine Palms instead of over in Yucca Valley. You might expect to add $10 per square foot at this time in that community.
As always I would suggest you contact your lender first and find the obstacles in today’s lending market that you will have to overcome. We use our in house Allied Home Mortgage representative, Debbie Rogers (760.832.1159). Money is available and is cheap but lenders are placing all sorts of strange conditions on the loans.
Today’s market is perfect for Buyers. You can find a lot of house for your money! Armed with this guideline you can narrow your search. Use a Realtor that is active in our market and will focus on you and your needs! We at AFG Realty would be happy to help you in your search!

Bob Armstrong

Broker

AFG Realty