Lake hills in western Riverside has already seen some amazing price declines, especially in the high end stuff. The mid-priced homes have actually been kinda sticky lately with most of them lurking in the high 400s and low 500s. That has changed this week with the listing of 16447 Village Mdws.
16477 Village mwds is a 3 bed 3 bath home, 3455 sqft in size and it sits on a nice big .4 acre lot (much of it is a hill though). This home sold new in Feb of last year for $685k. It has already gone back to the lender so the purchaser obviously did not make very many payments (if any). The house just listed today for $389k. That is a loss of nearly $300k (43%) in a little over a year.
I imagine that this will get a flurry of offers since it is the first sub-$400k listing (there is another one but it's a short sale so I don't count it). Even at that price this is probably still at least $100k too high if you go by comparable rental values though. The taxes are also very high as are the HOA fees. Regardless someone, probably multiple someones will hop off the fence and fire offers off at this one. I bet it does not last 2 weeks.
What does it take to buy this home using traditional amounts. Lets say it sells over asking for $400k. With 20% down that means you have a loan of $320K. Assuming you have stellar credit and can get a loan at 6.5% your payments will be 2022/mo, add in tax pf $600/mo and HOA of $190/mo and another $150/mo for insurance you get a monthly payment of nearly $3000.
If you go by the old standard of 28% rule that would mean you will need to make over $86k per year to afford this home and that is with 20% down. If you only have 10% down then you need to make $98k per year to hit the 28%. And that is 28% using just the mortgage (no tax, HOA or insurance factored in).
23 comments:
http://www.msnbc.msn.com/id/24580917/
I came across this article on MSN
Good reading on no money down lowns still happening.
Enjoy!
I have to say I have been checking the taxes on some of the properties that I notice are good prices.
Then after looking up the tax information I am floored to see the additional supplemental tax in addition to the property taxes. What is the deal some of theses taxes? Its strange some houses have it then right down the street they do not?? Go figure. I thought theses taxes were bonds that he construction have with the counties to build the parks, police stations, schools the infrastructure that is lacking in theses new areas.
Some were two payments a year of over $2,000 that is crazy.
I am trying to stay away from theses regardless of what a great deal the price of the house is. Like GolferX showed in this post the monthly payment will still add up fast.
When I am ready to purchase they do reassess all theses taxes down the purchase price correct?
Anybody know what is the overall tax rate in San Bernardino/Riverside
1.5%, 1.6% ? When I was going to buy up in Victorville it was much high up there it was 1.8% on a new track I was looking in at that time and that bothered none the less I walk from that area.
But Right here in good old Covina, CA it is I think like 1.1%
The tax rate in most areas is around 1.1% to 1.2%. The extra comes from the mello roos and junk like that. This jacks the total up to between 1.5% and 2% on most of the new tracts. It's sometimes confusing the way the builders list the taxes but the total tax included the mello roos usually. So that 1.6% or 1.8% will be the total you pay. (1.1% or so, state and local tax and the mello roos on top of that). It's also worth noting that ONLY the state and local taxes are tax deductable. Mello Roos is a FEE and not considered a tax, therefore NOT deductable.
There are a few new tracts that were built on land that is not subject to mello roos taxes. These developments are few and far between though. There are also a few where the builder just rolled that into the price of the home. Most of the newer tracts are running about 1.8%. You definately have to factor this in when looking at homes. It's a helluva big chunk of money when buying a $500k house.
The actual property tax is based on the fair market value. The accessor is supposed to bill you 1% of market value based on comps, according to prop 13 law, which by the way, was a tax revolt. Then our glorious politicians set themselves against us, to find ways to tax us into submission once again.
The politicians unleashed their minions, the lawyers, to find devious ways to implement new taxes on property owners and undo the righteousness of prop 13. The lawyers found they could circumvent (note the similarity to the word circumcise and its interchangability) prop 13 by levying taxes on the lot or parcel and calling them fees, or by issuing bonds for such things as schools and police and fire depts. These must be passed by a 2/3 majority vote, but who could say no to schools and fire and police? Certainly not the esteemed voters of this state.
But wait, just incase that bar was set too high, the wise voters (rolls eyes) of Calif lowered the bar to 55% majority for passing school taxes. How could we deny the children, after all? (sniffles, eyes tearing up).
Now, if you choose to live in an older area you can still benefit from prop 13 with taxes around 1% of the market value. If however you would like to live in a newer home in a newer area, bend over, lube up, and prepare to be boarded!
It looks like it may be entirely possible that you could purchase a nice newer home in a high fee area during the coming year that has taxes and fees equal to the mortgage payment, or more.
I say it's time for another tax revolt, it's time for fair and sensible taxes. Maybe if we could fix it so it was fair and reasonable, we could lure some people into buying some homes in California.
Bigdog,
If I understand you correctly, you are talking about a supplemental tax bill. This is the county tax collector adjusting your taxes to meet fair market value, not mello roos, etc. When you purchase property, add an addition, etc. that adds value to the existing property tax, you will receive a supplemental which is paid at the same time as your regular property taxes (1st half/2nd half). It will be merged into the regular tax bill the next year.
When you purchase a property where the value has gone down from the last sale, you will be paying the higher tax amount until the property is reassessed by the county. That could take well over a year.
Hope this helps!
Angela
Is it not AMAZING that an adjustment upwards in your tax, happens without delay, at the least excuse to justify the increase. But to reduce the tax... oh my, that may take years, or it may be labeled a temporary reduction, or they may just ignore your request entirely at their pleasure by claiming you have not proven to their satisfaction, that the value of your property has fallen as you claim. Grrrrr!
That is crazy it can take up to a year. Doesnt the house get reassessed at the time that a new buyer buys the property?
I cannot see paying taxes for a property based on the price of say $650,000 which it originally sold for when I purchase it for $350,000 how is that? It should be no different then buying existing as it is buying new. When I was going to buy a brand new house the taxes were based on what the house apprasied at I thought and declared in the good faith estimate.
Can someone explain this?
The reason it can take a year or more to re-adjust the property tax is they usually only do it once per year. Taxes are due Nov 1st (delinquent after Dec 10th) for the first half and February 1st (delinq. after April 10th) for the 2nd half. If they have already calculated the tax bill, they usually won't adjust it until they re-evaluate the next year. I've even seen it take longer (almost 2 years). Kind of sucks, doesn't it. Be aware of what the current taxes are because you'll be paying them for a while.
Angela
A property is reassessed when sold. So it should not matter what the taxes were previously. Your tax will be based on the assessment when you buy. Usually it is assessed for the purchase price but not always. The california tax law is that a property cannot be assessed for more than fair market value. If you somehow manage to buy a property for far less than what the taxman thinks its worth they might assess it higher. That's pretty rare though.
Taxes bill are sent out in October for the new tax year starting in November. When you purchase a home that has a fair market value of less than previous purchase price, you will be paying the higher amount until the new tax bill come out. They try and re-evaluate your taxes within 3-6 months of your purchase but you will still be paying the higher amount until the new tax bill comes out. This is what they try and do but it has taken longer. There is also a possibility that you may receive a refund for the difference. I would definitly question a refund with the tax auditor.
Say you purchase a property in June. They will re-evaluate your taxes within 3-6 months. Lets say they do it in 4 months. Well, it's already October and the new tax bills have already gone out. You are now stuck paying the higher taxes until next November when the 1st half taxes are due for the next year. That is over 1 year that you are paying the higher amount.
Angela
Angela As far as I know it. What you have said is true. But that is old school.
The housing market has taken such a dump. The County Assessors office is back logged with tons of houses that they are in the process of reassessing.
If you want to wait for them to get around to reassessing the house you purchased at today's prices or the house you purchased for double that 2 years ago then you have to do the leg work and paper work yourself and it will get done quicker for sure.
Bigdog,
Yeah, your probably right. I wouldn't count on the county being very efficient right now.
Angela
Hi GolferX, Thanks for the great blog. I really enjoy reading what you and everyone have to say about the IE.
I'd like to ask you or anyone else for some recommendations on finding a buyers agent for the Corona area. I'm finding we need someone who knows the area and also knows what's coming available. Right now by the time the better properties appear on the mls they already have multiple offers. Anyones recommendations or advice would be great. Thanks Again X.
X, you should get a real estate license. Heck you can make it a side biz. With Dems looking to take the WH, maybe the defense biz will slow down.
GolferX,
I am interesting in the North Chino Hills area. Do you have any info for that area?
My prediction about that area would be $175-$200/sf when it hits the bottom. What do you think?
Forgot to mention in the above post, the target size I am looking at is 1500sf - 2000 sf single family houses in north Chino Hills.
inlandempirex, in most things it is really hard to predict the top or bottom. Then, it is even harder to get the very best deals. I think most of us will have to be satisfied to pick up a good house, at a good price. Kicking ourselves if we don't hit the exact bottom of the market, or if we don't get the ultimate deal, will only make us miserable. I'm going to jump on something when the price seems good enough and I like the property a lot.
Despite all the fact that there is going to be huge amount of unsold inventory at the bottom, I still think that people have a basic desire to own a home in America, and that there will always be buyers for the attractively priced and attractively presented homes. Even if we (US Citizens) can't afford a home, there are always foreign buyers who have money and are eager to invest. So I think competition is going to always exist for the better properties when they are priced right.
I am planning on moving to IE, looking to buy a house for 3-4 yrs. I work in Corona. What areas have the best potential for resale value? Looking for around .5 acre, 2700 sq/ ft or more, willing to pay between $400,000- $450,000. Can wait until 2009 to purchase.
Love this site, best info & most fun to read.
Thanks for the input.
chicago, if you one now in woodcrest, it is a fixer but it doesn't look bad... fill in the pool if you don't swim, lol:
http://www.redfin.com/search#pt=6&max_price=500000&min_listing_approx_size=3500&min_parcel_size=21780&lat=33.85074408022878&long=-117.3175048828125&zoomLevel=13&market=socal&v=2
oops, try again:
http://www.redfin.com/CA/Perris/19043-AVENUE-C-92570/home/6546369
They certainly made a mess of that house. It's hard to believe that was once a model home.
As far as Corona goes the best areas are up against the hills south of the 91. Sierra Del Oro, Amberhill, Crown, Eagle Glen etc. I'd avoid anything over towards Chino.
If anyone is concerned with buying during the bottom, there should be no problem identyfing it. However, as someone else has mentioned, timing the exact bottom is impossible. Due to the large number of foreclosures and inventory, buying in the IE during the bottom is not hard to time. Monitor your target area every month. When values stop dropping at the current rate of 3-5k month, in parallel inventory is decreasing then 'my' bottom has come. The bottom in the IE will be huge and last quite a while. Most people will have a good window to shop in due to the amount of inventory. What ever you do dont get caught up in a mini bidding war. Move on to the next hot deal. You just need excellent credit, a down payment, steady incmome and let's roll.
In regard of identifying the bottom by the combination of prices that stop going lower and inventory that begins shrinking...
I read on, ummm I think it was MrMortgage (you can find him on youtube)that we can expect to have problems knowing about the real inventory. He has coined the term "shadow inventory" for those properties that do not show up on the MLS. REOs can backup in bank portfolios and they can sit on them or release them to sale or auction, apparently at whim.
When I drive neighborhoods I see vacant homes and a good number of them have little or no signs posted that they are for sale. When I go home and look at Redfin or other MLS driven databases to see if I can find info on some of these empty homes, I often find nothing. This would be "shadow inventory", I guess.
Mr Mortgage also makes the point that buying in an area with a lot of "shadow inventory" around you is risky biz. You open yourself to the possibility that those properties may be dumped at some time in the future, and lower your comps.
Post a Comment