Real Estate In San Diego

Home prices post record 18% drop

2008-12-30T06:46:00.001-08:00

The 20-city S&P Case-Shiller index has posted losses for a staggering 27 months in a row.

NEW YORK (CNNMoney.com) -- Home prices posted another record decline in October, falling 18% compared with a year earlier, according to a closely watched report released Tuesday.

The 20-city S&P Case-Shiller index has posted losses for a staggering 27 months in a row. In October, 14 of the 20 cities set fresh price decline records.

"The bear market continues; home prices are back to their March 2004 levels," says David Blitzer, Chairman of the Index Committee at Standard & Poor's.

Sunbelt cities suffered the most, but most of the country is watching home values fall. In Phoenix prices have plunged 32.7% since October 2007, Las Vegas home values are down 31.7% year-over-year, while San Francisco prices fell 31%. Miami, Los Angeles and San Diego recorded year-over-year declines of 29%, 27.9% and 26.7%, respectively.

As of October 2008, the 20-City Composite is down 23.4%," said Blitzer. "In October, we also saw three new markets enter the 'double-digit' club."

Atlanta, Seattle and Portland reported annual rates of decline of 10.5%, 10.2% and 10.1%, respectively.

"While not yet experiencing as severe a contraction as in the Sunbelt, it seems the Pacific Northwest and Mid-Atlantic South is not immune to the overall demise in the housing market," Blitzer added.

First Published: December 30, 2008: 9:15 AM ET

I got this off CNN for those who insist prices have dropped 50%. It's not a pretty picture, but San Diego is down less than 30%

Top Selling Zips Nationwide

2008-09-09T07:10:00.001-07:00

I was rather surprised to see Scripps Ranch listed as one of the fastest selling areas in the nation. I hadn't expected anything in San Diego to be on the list considering how depressed some other areas of the country are (hence bargain areas on sale) but I guess San Diego is still one of the more desirable places to live and people are willing to pay the price to be here.

The key I guess is that the statistic is for the shortest market time, not the lowest or highest price or most foreclosures or short sales those may be statistically tied to the shortest market time. The fact that market time anywhere in san Diego is so low I feel is indicative of the recovery process beginning. Buyers are finding what they are looking for and making an offer without letting the property sit on the market for months on end.

On a side note; Sunnyvale is a relatively high priced are up in the Bay Area but its market time is a very respectable 66 days. I think this bodes well for the real estate market in the coming year.

A copy of the article from Realtor Magazine is below:

Daily Real Estate News | September 8, 2008

ZIPs Where Property Is Selling Fastest
Altos Research, which tracks real estate data all over the country, identified these ZIP codes in which homes for sale spent the fewest days on the market.

In cases where communities of relatively fast-selling real estate were clustered, the best ZIP Code in the area was chosen.

Overall, expensive homes and big bargains are selling with general ease, says Ken Gold, director of the Center for Real Estate Education and Research at Ohio State University. Meanwhile, homes in middle-income neighborhoods are selling the slowest, he says.

Here's the list of the Top 10 fastest-selling ZIPs:

Sunnyvale, Calif. 94087: 66 days on market
Austin, Tex. 78749: 68 days on market
San Diego, Calif. 92131: 70 days on market
Plano, Tex. 75075: 75 days on market
Portland, Ore. 97202: 77 days on market
Houston, Tex. 77094: 77 days on market
Wakefield, Mass. 01880: 79 days on market
Seattle, Wash. 98117: 86 days on market
Littleton, Colo. 80130: 90 days on market
Atlanta, Ga. 30340: 91 days on market

Source: Business Week, Prashant Gopal (09/05/2008)

Todays Market

2008-05-19T08:54:00.001-07:00

Finally the news media is starting to publish articles that support when Realtors have seen happening over the last few months (see article below). Granted it is a real estate spokesman being quoted, but if he's right, then the worst is over. We need to flush out the foreclosure mess and get things stable after the mortgage debacle. It is an election year so I don't know how skewed the recovery data will be due to that, but it looks like people who buy now will be the ones sitting pretty in five years.

Home Sales, Prices to Pick Up in Second Half of 2008, Says NAR Chief Economist

2008-05-19T08:51:00.001-07:00

WASHINGTON, May 15, 2008

Home sales and prices throughout most of the country are poised for improvement in the second half of 2008, and the recovery will vary by market, Lawrence Yun, chief economist for the National Association of REALTORS® said today during NAR's Midyear Legislative Meetings & Trade Expo. More than 9,000 REALTORS® and guests are attending the conference that runs here through Saturday.

Middle-America cities that performed evenly over the past few years – like Cincinnati, Milwaukee and the Kansas City, Mo., area – are likely to experience home price gains in the 20 to 30 percent range over the next five years, while markets like Miami, Las Vegas and Phoenix could see prices go up as much as 50 percent during that time period, Yun said.

Yun blamed most of the softening of the housing market over the last year on the "subprime mess," where consumers with blemished credit records got loans they couldn't afford when the interest rates reset to higher levels.

"In fact, if you look at where home prices fell the most, it's the markets were subprime loans were prevalent," Yun said. Cape Coral, Fla.; Detroit; Las Vegas; Miami; Orlando, Fla.; Phoenix and Riverside, Calif. were among the cities with a high percentage of subprime lending and where the markets suffered the biggest downturns, he explained.

"It's important to keep things in context," he said. "While much of the media is focusing on the fact that the rate of foreclosures doubled this year from historic averages, the foreclosure rate has gone from 1 percent of all homeowners with mortgages to 2 percent. Foreclosures are being driven principally by subprime loans."

He further explained that more than half of today's foreclosures are concentrated in the subprime market. The great majority of homeowners are making their mortgage payments on time.

Now that the subprime market has dried up, and loans insured by the Federal Housing Administration and those purchased by Fannie Mae and Freddie Mac are making a comeback, the housing markets will strengthen and prices are likely to begin a steady uptick in the coming months, Yun said.

Yun urged the Congress and White House to enact NAR-supported legislation to modernize FHA programs, reform regulation of the government-sponsored enterprises (Fannie Mae and Freddie Mac), establish a first-time home buyer tax credit, and make the temporary increases to the conforming loan limits established by the Economic Stimulus Act of 2008 permanent.

"These measures would quickly stabilize the housing markets and get fence-sitters into the market to buy homes," Yun said.

"There are many reasons for people to get into the housing market today, and very few reasons not to. With the plentiful supply of homes for sale at affordable prices, interest rates approaching 40-year lows, and the strong track record of housing as a good long-term investment, conditions are ripe for buyers," he added. "Those are the facts, plain and simple."

As for a recession, it's not happening, Yun said. "A slowdown, yes, but the definition of a recession is two consecutive quarters of negative GDP growth. It's not in the cards – no matter how you look at it."

'Cyclical' real estate market will improve, Realtors told

2008-05-14T15:25:00.001-07:00

State commissioner offers strategies

By Emmet Pierce

UNION-TRIBUNE STAFF WRITER

May 10, 2008

Although the current real estate market downturn eventually will reverse itself, agents should prepare for difficult times, California Real Estate Commissioner Jeff Davi yesterday told about 300 members and guests of the San Diego Association of Realtors.

"The market is cyclical, you know that," he said. "There's no quick fix. There's no silver bullet."

Several years ago, during the fevered housing boom, some agents could make sales simply by going to work and answering the telephone, Davi said. "Well, those days are over."

He suggested that agents who haven't worked through previous housing slumps network with veterans have who seen the ups and downs of the business. They also should turn their attention to the rising number of foreclosure properties, he added.

"I see that as an opportunity for agents," he said.

Davi's remarks came during the association's Home Expo 2008, which ends today at the San Diego Convention Center. He was one of three luncheon speakers, along with Mayor Jerry Sanders and Greg Smith, the county's assessor, recorder and clerk.

It's Davi's responsibility to oversee the licensing and regulation of real estate agents and to investigate complaints. Because the ranks of agents grew rapidly during the recent boom, competition now is keen, he said. There are well over 500,000 licensed agents in the state.

"One in 53 adults in California has a real estate license," Davi said, drawing laughter from the crowd.

Many analysts blame the current market downturn on weak loan underwriting standards. Davi said the blame for the subprime mortgage crisis extends beyond real estate professionals. In cases of consumer loan fraud that his department investigates, borrowers often are in complicity.

He said he needed the help of Realtors to regulate the industry.

"I want to make sure we put the bad people out of business so they don't hurt people," he said.

While Davi emphasized the need for agents to work through the housing slump, Smith said that tough times are almost over. Taking the stage after Davi, the assessor predicted that the housing market will soon rebound.

"We're going to be in a trough for a while, but '08 is basically the bottom," Smith said. " . . . This is an outstanding time to buy real estate."

A key hurdle to the recovery is the recent surge in home foreclosures, he added. "Before the market can take off, we've got to get through these foreclosures."

Smith criticized the loose loan underwriting standards that enabled people to continue purchasing homes as prices soared.

"We had people offering 1 percent teaser rates, no down (payments), stated income. How in the world do you suspend the laws of economics?"

In his talk to the Realtor group, Sanders, who is seeking re-election, focused on his accomplishments in office, including his efforts to resolve the city's pension fund problems. In part, he said the city, under his leadership, had made progress in restoring finances, streamlining operations and developing new budget priorities.

The Housing Crisis Is Over

2008-05-06T12:48:00.001-07:00

By CYRIL MOULLE-BERTEAUX
May 6, 2008
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP,
a hedge fund firm based in New York.

Update On Realtor Being Sued

2008-04-11T08:23:00.001-07:00

I read the following article regarding the resolution to the lawsuit filed against a Realtor in Carlsbad with a slight sigh of relief that the agent was vindicated and had done no wrong, but was shocked to read the last line that all his lost business and legal fees were gone with no chance for recourse! What is this country coming to when someone can take you to court for what is determined to be a false accusation, but not be responsible for the thousands of dollars the lawsuit costs you. I remain speechless....

Home buyers not duped, jury finds

Carlsbad couple lose lawsuit claiming they overpaid for house

By Lori Weisberg
UNION-TRIBUNE STAFF WRITER

April 11, 2008

A Carlsbad couple who sued their real estate agent, claiming he duped them into overpaying for a $1.2 million home, said they have no regrets about taking the case to court, despite a unanimous jury verdict yesterday that the Realtor had done nothing wrong.

The case, which attracted national attention, involved the purchase of a 3,700-square-foot Aviara-area home in the summer of 2005, when housing prices in San Diego County were still climbing.

Marty and Vernon Ummel, who moved to the county after selling their Bay Area home for more than $1 million, argued they would never have bought the upscale tract house near the Aviara Four Seasons golf course had their real estate agent told them that other homes on their same street had sold for substantially less within the same time frame.

"Of course, it's devastating and shocking that the standard of care (provided by an agent) doesn't seem to include having the agent tell you about houses that sold on your block for much less money," Marty Ummel said. "I believe it's the agent's responsibility to do his due diligence and inform his clients of any material fact that would impact their willingness to buy or not buy.

"But I don't have a single regret. I really thought we were doing the right thing. The jury spoke, but what they decided hurts the real estate industry. It says the Realtors don't have to do their due diligence."

The 10-woman, two-man jury apparently had little trouble reaching a decision, delivering a unanimous verdict within two hours yesterday afternoon.

Jurors were charged with determining whether the Ummels' agent, Michael Little of Re/Max Associates, had breached his "fiduciary duty" and committed "negligent misrepresentation" when handling their home purchase.

The original lawsuit included a number of other allegations, including fraud, but the Ummels' attorney later removed those. Also named in the lawsuit was the Carlsbad area Re/Max office where Little worked.

In reviewing all the evidence, the jurors remained unconvinced that Little had done anything unprofessional, jury forewoman Wendi Brick said.

"We felt that yes, he had acted on their behalf, and we felt he met his fiduciary duties as defined," she said. "In any kind of purchase, especially one that big – and most of us have had our own situations we'd been through – the bottom line really stops with you. Whose final responsibility is it to sign a contract? It's yours.

"It's just a very sad situation for everyone. You could tell the strain on everyone."

Little said he has had a difficult time carrying out his real estate business since the lawsuit was filed in 2006.

"I feel incredibly relieved and vindicated," Little said. "It has been more than two years of quite problematic times for me, and I'm happy to get it behind me. I've just had a very difficult time working, approaching clients. You just get leery.

"I sit on pins and needles. I've never had problems with anyone in my career, and now I look at things through a different looking glass."

Marty Ummel, 60, and her husband, Vernon, 71, had asked for a damage award, claiming their home at the time they purchased it was worth $150,000 less than what they paid.

Before finally agreeing to buy the house on Amanta Court in May 2005, the Ummels say they had repeatedly reminded Little they were out-of-town buyers unfamiliar with the San Diego County real estate market and wanted to make sure that the $1.2 million purchase price was a good value.

Little assured them that it was, they said in their lawsuit. They also claimed that Little never provided them with lists of comparable properties that had sold in the immediate area.

According to county assessor records, one Amanta Court home sold for $1,025,000 on July 29, 2005, the same day the Ummels closed escrow, and the other sold for $1,095,000 three months earlier. Each house is identified as having the same square footage as the Ummels' house.

Little's attorney, David Bright, argued there were valid reasons the houses sold for less. One house had a lap pool, which was unappealing to many prospective buyers, and the sellers were also asking to lease back the home for two years, Bright pointed out.

"This is a manufactured case," Bright told the jury. "It's nothing more than an effort to renegotiate a deal at Mr. Little's expense."

Attorneys on both sides said there is no opportunity in this case for Little or the Re/Max office to recoup attorney fees. Marty Ummel declined to say how much she and her husband had spent on their lawyer fees.

Disclosures

2008-04-10T15:31:00.001-07:00

I was just talking to someone that asked me if they should disclose a drainage problem seeing as how the chance of rain is nil until next winter. When in doubt, disclose!

Your Realtor is responsible for all the paperwork and negotiating but they aren't mind readers. Your Realtor must see that the proper disclosure forms for the city and county are delivered with the contract, but it's the homeowners responsibility to disclose any known defects or conditions that would affect the value, appeal or useability of the home. I am assuming the Realtor is not aware of the issues not being disclosed and that the Realtor has given the seller a disclosure form to fill out.

Disclosing up front rarely kills a deal, but when the buyer finds out later that something was not disclosed there could be a huge problem. When in doubt, disclose, no matter how trivial.

From Todays Union Trib

2008-04-09T09:39:00.001-07:00

I'm not sure what to read into this mornings article on SignOnSanDiego but I'm sure there's more to come.

Bush administration widens homeowner aid

REUTERS

7:43 a.m. April 9, 2008

WASHINGTON – The Bush administration will loosen rules that underpin the largest U.S. homeowner aid program in order to help more borrowers who have seen their home drop in value and are facing foreclosure, a senior administration official said on Wednesday.

Brian Montgomery, head of the Federal Housing Administration, told lawmakers that his program would encourage lenders to erase some of a failing loan amount in order to receive a government guarantee of timely payments.

"We will permit and encourage lenders to voluntarily write down outstanding principal," Montgomery told the House Financial Services Committee, in his written statement.

Montgomery stressed that the he wanted to preserve the self-funding structure of FHA and not put taxpayers on the hook for failing loans. Unlike a proposal by Democratic lawmakers, the plan outlined by Montgomery would not required a big cash-infusion to get started.

"This new administrative change will ensure the integrity of the FHA insurance fund over the long-term, protect the taxpayer, and guarantee that FHA will be around to help struggling homeowners in the future," he said in his prepared remarks.

Washington policymakers have faced increasing pressure to help staunch increasing foreclosures that are threatening to drive the U.S. economy into a deep recession.

The Federal Housing Administration is a Depression-era program that underwrites a borrower's monthly mortgage payments and so helps him win more favorable loan terms. The program was conceived to help low-income borrowers but policymakers have lately focused on its potential to help today's troubled borrowers who are at risk of losing their home.

(Reporting by Patrick Rucker; Editing by Tom Hals)

Capital Gains and 1031's

2008-04-09T06:57:00.000-07:00

When it comes to capital gains avoidance, I've seen some misleading information on the web lately thats either outdated or just misunderstood by the poster. I'm going to give it my best shot here to clear up a few things, or at least explain them as I understand them.

My first comment is actually advice. If you're considering selling your home or an investment property, see a CPA for tax advice. I was just talking to a lady last week who thought there was no capital gains tax any more. Trust me, there is.

To avoid paying some of the capital gains on a property it must have been your primary residence for two of the previous five years (it does not have to be continuous and uninterrupted, could be four six-month stays) and (so Ive been told) not have been a 1031 exchange in the past. You can avoid paying taxes on up to $250,000 gain for a single person or $500,000 for a married couple.

Now for what I don't know, hence the need for a tax advisor or CPA. I don't know if this gain is computed from your original basis or from what you paid for the home. If for instance you sold a home prior to this law taking effect, ten years ago or however long ago it was, for $100,000 gain and used that profit for a down payment on your present home, would that $100,000 gain count towards your sum total gain? I don't know.

Also, I was told (though I haven't confirmed it) that if you did do a 1031 into the property you now live in (and it was an investment property for some period of time before you moved into it) then you must live in it all five of the five years prior to you selling it (escrow closing date). If anyone knows the specifics of these rules please comment below.

New FHA Limits

2008-04-04T14:04:00.001-07:00

Effective April 4, 2008 the new FHA 30 year fixed product will allow the new increased loan amounts:

1 unit $ 697,500
2 units $ 892,950
3 units $ 1,079,350
4 units $ 1,341,350

To Buy Or Not To Buy? That Is The Question.

2008-04-04T14:02:00.001-07:00

I was just sitting here thinking about the question it seems is asked of me most often. "So is it a good time to buy?" My answer is ... Hell Yeah. Not because I'm in the business. If I had cash for a down payment I'd buy something for myself today. I said buy, not to get stupid. Make sure you cash flow, which means enough of a down payment to keep the payments in line with rent potential.

Rates are down and prices are too, but this alignment of the planets won't last forever. Sure prices may drop more (but not according to the latest blurbs I have been reading), but if you don't buy and then rates go up, your potential for good cash flow goes South. One can talk about rates, appreciation etc, but you need to make your monthly nut and thats what cash flow is all about.

My broker sent out a memo stating that escrow closures are up, which he said is inidicative of prices increasing in six months or so. I'm the first to say no one has a crystal ball, but if there are signs of changes it doesn't make sense to ignore them. It is an election year and I'm never sure how distorted the economic picture gets during the months leading up to the election. More later....

My Thoughts On The Lawsuit

2008-04-04T06:48:00.001-07:00

I haven't been watching this case mentioned below real close but heard in a class yesterday that they have picked a jury. I have such mixed emotions on the case. I'm sure I don't have all the details, but my gut screams somethings wrong with all this. Yet another person who doesn't want to be held responsible for ther own actions. If they paid too little for the house, can the seller also sue the Realtor when the place next door sells for more? From what I've read the buyers are mad that they paid more for their house than another one that closed the day they presented their offer. Besides the fact that I always let my buyers make the final decision on how much to offer (with my guidance of course, but it is their decision), the buyers agent couldn't have known what the other home sold for until after escrow closed. I need to think on this more. If the Realtor did anything underhanded then he should be held accountable, but I'm not so sure this isn't just some rich couple having their lawyers try to recover money from a bad decision they made.

Who Decides How Much is Too Much?

2008-04-03T06:54:00.001-07:00

The following article from the San Diego Union Trib outlines a case here in San Diego. It raises a lot of questions such as who decides how much a home is worth. Do agents or buyers?

Homeowners suing agent over high purchase price

By Lori Weisberg
San Diego union Tribune Staff Write

March 31, 2008

Anyone who bought a home near the peak of the once-sizzling real estate market no doubt has found it painful to watch prices tumble with no end in sight. But in the case of one North County couple, it's not the volatile market they blame but their real estate agent, who they say duped them into overpaying.

And they're going to court to prove it.

Tomorrow, Vernon and Marty Ummel, who purchased a $1.2 million home in Carlsbad three years ago, will try to convince a jury that their real estate agent defrauded them when he failed to inform them that similar houses on the same block were selling for more than $100,000 less than what the Ummels had paid.

Jury selection is expected to begin tomorrow morning in the Vista courtroom of Superior Court Judge Lisa Guy-Schall.

Although legal experts say the case is intriguing, most doubt it will spawn a raft of lawsuits in which disgruntled buyers go after real estate agents alleging they were led astray.

Experts also question whether the Ummels will be able to prevail, recognizing that ultimately, the Ummels were the ones who decided to pay what they did in 2005 for their two-story, 3,700-square-foot tract home in a neighborhood just north of the Four Seasons Aviara golf course. In those days, prices throughout the county were still climbing.

"The real estate broker has an obligation in good faith to tell the buyers what he knows about pricing information and that there were houses selling for less than what the buyer was prepared to buy. And the buyers have an obligation to wake up and smell the roses before they buy and get as much information as they can," said George Lefcoe, a professor of real estate law at the University of Southern California.

"As an agent, you'd have to basically lie and cheat on this one, and the buyers would have to be as innocent as angels."

The Ummels, who moved to San Diego County after selling their San Rafael home in Northern California for $1.15 million, have declined to talk about their case, as has their attorney, because of the pending trial.

The lawyers representing Michael Little, the Re/Max Associates agent who sold the Ummels their home, also have said they will not comment. Little, too, said he cannot talk about the case until after the trial.

Earlier this year, the law firm representing Little and the Encinitas brokerage he works for sought a delay in the trial and a change of venue because of a January article in TheNew York Times in which the Ummels discussed their case shortly before it was supposed to go to trial.

Guy-Schall decided to keep the case in North County but agreed to a delay.

"The plaintiffs are not victims of a subprime loan scheme, nor are they victims of the declining real estate market," attorneys for the Re/Max agent wrote in court papers supporting their request for a delay. "Plaintiffs simply think they paid too much for their home when they purchased it. Nevertheless, plaintiffs have now painted themselves as the 'poster children' of the current crisis."

In the past, the Ummels have not been shy about discussing the circumstances surrounding their purchase. They've made it their mission to publicize their anger with their Realtor, beginning with Marty Ummel's weekly picketing of Re/Max offices in 2006. By the time they filed their lawsuit in July 2006, prices in San Diego County had started to fall.

Earlier this year, the couple were featured in an NBC "Today" show report about their lawsuit in which Marty Ummel, 60, once again expressed her anger.

"We feel we were misled, we are disappointed, we do feel angry," she told an NBC reporter. "We worked hard, and to think we've done that all of our lives and then for a Realtor not to tell us . . . that there was a house selling for much less."

Ummel said at the time that she was confident she and her husband would win in court, but she said that if nothing else, they are at least "trailblazers" in their quest to reform the real estate industry.

"We want disclosure," she said.

When Vernon Ummel, 71, and his wife decided in late 2004 to sell their Northern California home and search for property in San Diego County, the real estate market was red-hot. Every month, median home prices were posting year-over-year percentage increases in the double digits.

By April 2005, when the Ummels began working with Little, the market was still healthy, though price increases had started to moderate. The couple had a verbal agreement with Little to have him work as their real estate agent, as well as help secure a loan for the purchase of a property, according to the Ummels' lawsuit.

Although there was no written contract, agents representing buyers are legally obliged to represent their best interests, according to the legal counsel for the California Association of Realtors.

Before agreeing to buy their home on Amante Court in May 2005, the Ummels say, they had reminded Little repeatedly that they were out-of-town buyers unfamiliar with the county real estate market and asked him if the $1.2 million purchase price was a "good present-day price." He assured them it was "a very good value," according to court papers. The house had been listed for between $1,175,000 and $1,245,000.

The Ummels also claim in their lawsuit that Little never provided them with lists of comparable properties that had sold in the immediate area. Court papers filed by Little's lawyers state that the Ummels had indeed reviewed 40 other comparable properties, though it is not clear whether those were provided by the agent they had worked with before Little.

The couple also allege that they repeatedly asked Little for a copy of the appraisal that was being prepared for the purpose of getting a loan but never saw it until after they closed escrow in late July. The appraisal did value the home at $1.2 million.

What angered the Ummels and ultimately led them to file their lawsuit was when they discovered a month later that two other homes on their street had sold for substantially less.

According to county assessor records, one of the Amante Court homes sold for $1,025,000 on July 29, 2005, the same day the Ummels closed escrow. The other had sold for $1,095,000 three months earlier. Each house is described as having the same square footage as the Ummels' house.

More recently, in August 2007, a home on Amante that is about 500 square feet larger sold for $1,150,000. And currently for sale on the same street is a 4,192-square-foot home for which the seller is asking $1,185,000.

A review of recent property records reveals that no other home on Amante Court has sold for as much as $1.2 million.

Amante Court is a quiet cul de sac of two-story Mediterranean-style homes and palm trees that looks much like many Southern California subdivisions. The difference is these homes, built by Brehm Communities, are much larger and include more luxury amenities.

When the homes were built nearly seven years ago, they were selling for more than half a million dollars. Within four years, prices had doubled.

While some experts argue that valuation of properties is far from an exact science, they also point out that real estate professionals have a legal and ethical obligation to provide buyers with all the pertinent information they need before making what often is the biggest purchase of their lives.

"You can't necessarily believe everything that everyone says, but if there are houses in escrow that are virtually identical to your house that are selling for less, and that information is readily accessible to your agent, you'd expect them to give you that information," said Shaun Martin, a law professor at the University of San Diego. "If everything the plaintiff is saying in the lawsuit is true, it sounds like it's a darn good lawsuit. But there are always two sides."

San Diego Realtor Lori Staehling acknowledged that anyone can file a lawsuit, but she doubts that local agents have to worry about being targeted. Staehling and other industry experts said they know of no other case like the Ummels'.

"Buyers and sellers decide what they're going to pay or sell for," said Staehling, president of the San Diego Association of Realtors. "We don't determine those prices. We do provide information, but at the peak of the market when people were paying high prices, there were comps to justify that."

Originally included as defendants in the Ummel suit were John Contento, who handled the appraisal for the loan, and Horizon Pacific Financial, the broker for the Ummels' $300,000 loan. Earlier this year, Contento and Horizon Pacific Financial settled with the Ummels for $10,000 each.

Russ Coats, owner of Horizon, declined to comment, and Contento could not be reached.

San Diego appraiser Todd Lackner said many people in the industry are closely watching the Ummel case, and while Lackner said he believes the couple have a legitimate gripe, he doubts they will win in court.

"I give the buyers an awful lot of credit. They're sticking to their point, and most people couldn't afford these legal expenses they're shelling out," Lackner said. "But appraisals are subjective. Did they pay too much? Yes, they absolutely did. But they bought it willingly. No one forced them to purchase that house."

Home prices: Down record 11%

2008-03-26T07:05:00.000-07:00

From CNN this morning:

The residential real estate market continues to deteriorate in 2008, with 20 key markets reporting steep drops.

Open Houses

2007-12-02T12:09:00.000-08:00

A few questions about open houses. As a buyer, is it a good idea for me to visit open houses? As a seller, is having my home open as an open house the right thing? As a Realtor, should I encourage clients to have open houses?

As a buyer, is it a good idea for me to visit open houses?
Well, it depends no if you mean you are driving by an area or neighborhood you are already interested in and you see an open house sign should you go in? YES! Any new information you can collect about what is on the market is valuable. What I don't recommend is driving about looking for open house signs or looking at the ads in the paper and driving all over creation without qualifying the property at all. You have no idea of price or condition from an ad. Thats what your real estate agent is for! Then you can view the properties that match your criteria and on your schedule.

As a seller, is having my home open a good idea?
Well, statistically speaking, the odds of selling your home during an open house is slim. But it does happen, and if your agent wants to sell your home he will do everything possible to get it as much exposure as they can. Important points to remember when listing your home is that less is more (so it shows spacious and clean) and always remove any valuables or items of sentimental value.

As a Realtor, should I encourage clients to have open houses?
Absolutely! For two reasons. One, as an agent you want as much exposure as possible for your clients home. One never knows where that potential buyer is or how they will find your listing. The second reason is gathering leads. Once the neighborhood lookie-loo's have seen the house, what you will be getting are people that are at least thinking of buying and probably dont have an agent (and if they do, where is he if they are going to open houses?)