November 2005 Sunil Sethi Real Estate & Mortgage Loan Team www.SunilSethi.com

Good relationships are what it’s about, and thanks to your efforts I was voted 2005 Best of the Tri-Cities – Mortgage Broker, and Show and Sell Realty was also voted the 2005 Best Realty Firm. All of us here thank you for your support. My team looks forward to continue working with you in the years ahead. Best regards, Sunil Sethi Real Estate Team

Real Estate – It’s slowing down

The real estate market is slowing down. The California Association of REALTORS® (C.A.R.) Housing Affordability Index for August stood at 14%. What I’m seeing today is a lot more buyers are over stretching to purchase, qualifying with 100% financing, interest only loans and stated income documentation.

Is the market collapsing? – No. Part of the reason for the slowdown in sales is seasonality; however it’s not the sole reason. Affordability has been reduced because the people who are buying today have poorer credit, make less money, and are facing higher interest rates which is compounded with seller’s overpricing their properties.

As a seller, should I sell today or wait until the spring? I would set a price that will encourage multiple offers in hopes of getting a clean purchase agreement. I believe interest rates will continue to rise (see below), and you’ll most likely end up selling at no better a price in the spring than you could right now.

Take a look at this month’s MLS activity in Fremont. The number pending is greater than the number sold, so we can expect even more closings to complete in November than did in October. So transactions are happening, however, we are seeing fewer offers, more price reductions (which are reductions from seller’s lofty expectations), and longer days on the market. Instead of a listing going pending in 15 days, you are seeing listings sit for 30, 45, 60 and even 90 days.

Fremont Area
October 1-28, 2005 Snapshot
Price Range	Active	Pending	Sold
$000K - $400K	48	22	17
$400K - $500K	47	28	14
$500K - $600K	57	36	20
$600K - $700K	103	70	61
$700K - $800K	63	34	46
$800K - $900K	34	10	9
$900K - $1000K	17	7	5
$1000K - $1500K	25	12	9
$1500K +	22	7	2
Total	416	226	183
per MLS 11/28/05 4:40PM

Fast Facts

Calif. median home price - Sept. 05: $543,980 (Source: C.A.R.)

Calif. affordability index - Aug. 05: 14 percent (Source: C.A.R.)

Calif. highest median home price by C.A.R. region Sept. 05:
Santa Barbara So. Coast $1,475,000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region Sept. 05:
High Desert $312,410 (Source: C.A.R.)

Mortgage rates - week ending 10/20:
30-yr. fixed: 6.10%; Fees/points: 0.5%
15-yr. fixed: 5.65%; Fees/points: 0.6%
(Source: Freddie Mac)

Are you wondering what your home is worth based on the most recent sales? Give me call for a free evaluation.

Interest Rate Watch – Long Term Rates Finally Moved

Interest rates have gone up the last couple of weeks, for a couple of simple reasons and based on the recent GDP growth, inflation figures and upcoming changing of the guard at the Fed we can expect 3-5 more rate increases. At the Fed’s Nov. 1 meeting the Fed Funds rate was raised a 0.25%, which moved the prime rate to 7.00%. The next meeting/rate increase will be on Dec. 13 followed by another increase on January 31, 2006. Action Point: If you still have home equity line 2^nd, consider moving it to a fixed 2^nd. You should be able to get a rate that is the same or better than the floating rate you currently have.

Property Taxes

You should have received the tax bill for the 2005-2006 fiscal tax year by now. The first payment is due Nov. 1 and late if not received by Dec. 10. If you don’t receive it in the mail, get it online at http://www.sunilsethi.com/property_taxes.htm. For those of you, who purchased your home and haven’t received your supplemental bill, call the assessor’s office on when you can expect it or check for it online at http://www.sunilsethi.com/property_taxes.htm.

Money Market Interest at 4.5% - Superior Savings of New England
	GreenPoint Mortgage’s affiliate Bank Superior Savings of New England, N.A. is offering a 4.5% rate with a minimum $25,000 balance. That’s the best rate I’ve seen so far. www.superiorsavings.com or call 1-877-728-3758.

Reduction of Mortgage Interest Deductibility

TAX REFORM PANEL PROPOSES REDUCTION OF MORTGAGE INTEREST DEDUCTIBILITY The President's Advisory Panel on Tax Reform (http://www.taxreformpanel.gov) published its recommendations on how to reform the federal tax code. Its mission from President Bush's Executive Order calls for the panel to find a way to make the tax code "simpler, fairer, and more pro-growth to benefit all Americans," while staying revenue neutral.  As with any revenue neutral legislation, the elimination of a revenue stream or the lowering of a tax rate must be offset by the elimination of deductions and/or increase in tax rates in another area. Members of the panel have suggested reforming portions of the tax code that would negatively impact homeownership and the housing market. The current interest deduction for mortgage loans of up to $1.1 million for primary residences and vacation homes would be scaled back. The new ceiling would be a much lower regional average ranging between $227,000 and $412,000 for primary residences only. Reducing the mortgage interest deduction and radically changing areas of the tax code that promote homeownership would be detrimental not only to California's housing market, but to housing nationwide.  As most buyers today are lucky to put down 10%, with loans often in excess of $600K. The proposed cap would further reduce the affordability index for Californians.

Real Estate Investment Club – East Bay Wealth Builders

Please let me know if you plan to attend so I can look for you. All meetings start at 6:00PM. These are both educational and networking events.

Calendar of Events

Date	Topic	Speakers
Nov. 17, 2005 Fremont Marriott, 6 pm to 9 pm	EXCEPTIONAL REAL ESTATE OPPORTUNITIES IN TEXAS PROPERTIES!! (COMMERCIAL & RESIDENTIAL)	Don McClain

October 1, 2005 – California Energy Efficiency Law Changes

If you are planning on or doing a remodel make sure you’ve looked at the new Title 24 law changes concerning energy efficiency. For example, If you change your furnace, now you’ll have to test the efficiency of you ducts for leakage, through the use of an independent certified duct tester (which probably doesn’t exist yet). Another example if you install new lighting in a kitchen, 50% must be energy efficient, and operated by a separate switch. Have a question about exemptions; Call the Energy Efficiency Hotline at 800-772-3300.

New Air-conditioning Law – 13 SEERS Minimum

Beginning January 23, 2006 – only 13 SEER (Seasonal Energy Efficiency Ratio) AC units will be manufactured. What this means is that if you have a less than 13 SEER unit, and it goes bad, you may be have to upgrade to a 13 SEER unit. The higher the SEERs the more efficient the unit, however the costs involved in upgrading involve more than just the unit. Consider your options now while you still have the ability to get spare parts for your existing unit.

Theatre and other Events Discounted
Check out this new service which sends you updates on events happening in the bay area that you can attend for discounted prices. http://www.goldstarevents.com?p=F18Dear Tina Clayton,4047N (sample newsletter).

Baby Names – Jacob and Emily most popular
	Looking for ideas for baby names, try the Social Security Administration. It’ll tell you which are the most popular baby names for the last couple of years. Check it out at http://www.ssa.gov/OACT/babynames/ .

Sunil’s Holiday Sangria Recipe
For those you who tried my Martini recipe and liked it. I’m sure you’ll like this recipe for Sangria. a bottle of Shiraz or other light red fruity wine some OJ a splash of cranberry juice a splash of sprite and a splash of peach schnapps. Mix to a consistency you like and enjoy. On Halloween, I refer to this as a Blood Sangria.

Effects of Preschool on Kids’ Development: Good and Bad News

A UC Berkeley/Stanford University report has found good news and bad news about how preschools nationwide influence children's development. Among the findings, involving more than 14,000 kindergartners nationwide: While middle-class children benefit modestly from preschool, youngsters from poor families experience two times the gains in early language and mathematics learning. The social skills of white, middle-class children suffer - in terms of cooperation, sharing, and engagement in classroom tasks - after attending preschool centers for more than six hours a day, compared to similar children who remain at home with a parent prior to starting school. >More information

If you found this month’s newsletter informative, please forward it to your friends. 100% of my business is from word of mouth. No doubt, from time to time you will come across quality people such as yourself who would appreciate the services I offer.  As these people come to mind, would you kindly give me a call or send me a note with their name and number?  I always appreciate your confidence in me, and I will happily take great care of them.
	Sunil Sethi, Realtor, Broker-Owner, MBA, CPA Voted 2005 Best of the Tri-Cities – Mortgage Broker UCLA Anderson School of Business ’98 – MBA London Business School ’97 Finance & Strategy US F ’88 Accounting UC Berkeley ’88 Economics Show and Sell Realty/SMA Financing Voted 2005 Best of the Tri-Cities – Real Estate Firm (510) 793-8600 office (510) 388-2436 cell (510) 344-3080 fax www.sunilsethi.com sunil@sunilsethi.com
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