San Joaquin Homes Community Blog

Many consumers make common mistakes concerning their credit score.  Common misperceptions include closing credit card accounts to decrease the amount of credit available, and maintaining zero balances on open, unused credit cards.   Experts advise consumers to keep credit cards open, but to limit the outstanding balance to less than 50 percent of the available credit.  This helps demonstrate to lenders that the consumer is financially responsible and capable of making payments. 

Norbert G. Huston

www.SanJoaquinHomes.info

STOCKTON - All but six of the 189 units in the Vintage Square Apartments on Rosemarie Lane in Stockton already are occupied, but that doesn't keep manager Vivian Elithorp from running a newspaper ad touting a "move-in special."

That's $499 for the first month's rent on a $645-per-month, one-bedroom unit with only a $200 deposit.

"A lot of people are still coming out to rent from us," she said.

Which is the way she likes it, because demand for apartments in San Joaquin County has been getting softer in the recession, even though occupancy still is at a solid 94.6 percent. That number generally is considered excellent in the rental sector.

But that's down from 96.6 percent occupancy in the third quarter, according to a recent report from RealFacts, a Novato research firm that tracks trends in the apartment industry.

Elithorp said foreclosures have increased the number of people wanting to rent apartments, thus the shortage of two-bedroom units at her complex.

"Late last summer, it got kind of crazy," she said.

But what foreclosures giveth, foreclosures also taketh away.

"We do have some people moving out because they're buying a (foreclosure) home," she said.

According to the RealFacts report, rents in San Joaquin County slipped in the last three months of 2008 as the economy soured and the housing market continued to get pounded by foreclosures. Average apartment rents in the county slipped by 0.6 percent, to $876, compared with $881 in the third quarter.

Keeping tenants and trying to fill rentals and keep complexes as full as possible - without raising rents - is seen as the best hedge in the sinking economy, rental managers and real estate experts said.

"With a slowing economy, places are not getting filled up as fast," said Norbert Huston, a Stockton real estate broker who has managed rental properties for more than two decades. "Property showings have decreased. However, if things that are good come on the market, they are snapped up quickly."

Also, an increase in the number of foreclosure properties converted to rentals has slowed demand for apartments, he said.

"It's very hard for us right now to raise rents when the market has softened," he said.

Huston said an increasing number of existing tenants are asking for six-month or one-year lease extensions - at the current rent.

"And they're being accepted, because I don't want the vacancies," he said.

Randy Thomas, a Sperry Van Ness commercial real estate broker in Stockton who specializes in the Northern California apartments market, said the apartment rental market is getting softer because of the increasing number of "shadow" properties - rental houses - out there.

But he agreed that apartment complexes are losing many tenants who are jumping on low foreclosure prices these days to buy a home - "a great opportunity to them."

Others are leaving because they have lost their jobs and move in with friends or family, he said.

"I see that continuing until the economy improves, and we see some stabilization in the job markets," Thomas said.

House rents, which run between $1,000 and $1,500 per month in San Joaquin County, have dropped about $50 over the past year primarily because of the economic downturn, said Terry Hull, whose Stockton-based family business Property Management Experts manages apartment complexes, duplexes, triplexes and rental homes from Elk Grove to Fresno.

"In tough times, people tend to double up, go live with mama and so on, so that keeps demand down," he said.

It's also taking longer to rent properties, especially for smart landlords who aren't getting desperate and taking chances with people who are poor credit risks and likely to be bad renters, he said.

The rent slippage in San Joaquin County mirrored a softening in most rental markets nationwide, according to the RealFacts report.

While the decline in rents and occupancy is good news for renters, it's less welcome news to those who have invested in rentals as income properties, as rental income held flat while inflation drove costs up by 3.85 percent, RealFacts CEO Caroline Latham said.

This has slowed nationwide sales of apartment complexes larger than 100 units, with just 386 sales last year, down about two-thirds from average sales in each of the three previous years, she said.

"This data for 2008 indicated that the year's widespread economic problems have finally affected the rental market by the end of the year," she said. "The choice to invest in income property for the last several decades has been based on the assumption that rents would continue to grow. In 2009, investors are likely to evaluate rental properties based on current income alone."

Thomas said the apartment sales market is extremely slow these days.

Owners mostly are content to sit on what they have and take going market rate rents, he said, while would-be apartment complex buyers are interested only in bargain prices.

"What people are trying not to do is catch a falling knife," Thomas said. "Nobody wants to be involved with purchasing in a declining market unless it's an extremely good value."

Other apartment rental changes in the area:

» In Sacramento, the occupancy rate slipped by 0.9 percent year to year, to 92.6 percent, while average rent slid 0.1 percent, to $911.

» In Modesto, the occupancy rate dropped 1.5 percent year to year, to 92.3 percent, while average rent fell 0.5 percent, to $815.

The RealFacts survey covered 3.2 million rental units in 60 metro areas. Last year, only about 9,200 apartments were added to that supply, compared with an average of 65,000 units constructed annually in the 10 years before that.

Contact reporter Bruce Spence at (209) 943-8581 or bspence@recordnet.com.

Some homeowners may be unaware that neglecting to pay their property taxes, homeowners’ insurance, or fire insurance; allowing the home to fall into disrepair; or demolishing the property without lender approval could result in their home being foreclosed upon. Two possible scenarios could play out if a homeowner fails to pay property taxes. The county could repossess the home and sell it at auction, or the lender could pay the tax bill and pass along the premium to the owner. Most lenders will choose the latter so they do not lose money should the house be sold at auction. If the lender pays debt tied to the property, they may pass along the premium to the owner, increasing the monthly mortgage payment. The lender may do the same if the homeowners’ insurance is not maintained on the property.

Norbert G. Huston

www.SanJoaquinHomes.info

As homes in some affluent neighborhoods still are selling quickly, and in some cases also are garnering multiple offers, buyers may not realize the strategy of paying above the asking price for a home.  Buyers looking for a specific property type, or for a home in an exact neighborhood, should work closely with their REALTOR® to determine a competitive offer, which may be above the seller’s asking price.  In the long run, a home in a desired community, if properly maintained, historically increases in value and is likely to garner a profit for the buyer when the home is resold.

Norbert G. Huston

www.SanJoaquinHomes.info

Be persistent during ordeal of short sale

Approximately one in five homeowners is “underwater” – meaning they owe more on their mortgage than their home is currently worth. For borrowers in default or at risk of defaulting, selling their house for less than is owed, often termed a short sale, may be the only option. However, short sale offers must be accepted by the bank that owns the mortgage, and can take as long as a few months before an offer is accepted.

· Some home buyers are submitting unrealistically low offers on bank-owned properties, hoping to purchase a home at a bargain price. Low offers often use valuable time and resources that could be dedicated toward more favorable offers more likely to garner bank approval. It is vital that home buyers work closely with their REALTORS® to submit appropriate offers, especially when dealing with a short sale property.

· Theoretically, short sales should be a win-win for the bank and the homeowner. Although the bank does not receive the full payment on the mortgage, it also does not incur the costs of foreclosure and/or eviction, if necessary. Many homeowners also prefer short sales because it does less damage to their credit score than a foreclosure. However, many real estate experts say that the majority of banks are reluctant to approve short sales, and often let properties go into foreclosure, even when there are reasonable offers on the property. In addition to considering the price, most lenders also take into consideration whether the homeowner can demonstrate financial hardship. If the homeowner is capable of making payments, many lenders will try to work out a loan modification, rather than a short sale.

· Short sales often are more time intensive than traditional transactions and often require additional paperwork. Due to the large number of short sale offers, many take as long as a few months to receive approval. If information or required forms are missing or incomplete, the bank may set the offer aside, which could delay the process and cause the property to go into foreclosure. To expedite the process, it is important that sellers work closely with their REALTOR® to provide all of the necessary paperwork.

To read the full story, please click here:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/30/BUIQ14C4F5.DTL