This time of year I oftentimes get asked the question “What do you think will happen to the real estate market next year?”. I thought I’d take a moment and let you know my thoughts on where we are and where we might be headed in the not so distant future.
With the Euro in question, a U.S. presidential election and a sizable (and arguably unknown) portion of inventory being controlled by banking institutions it is very difficult to hypothesize what will happen to our local market. What we can do is look backwards and note that real estate prices generally went down across the board in 2011. On average, prices fell by around 5.6 percent over the year, with the national average house price sitting at $170,000. While it’s not been a great year, the downturn has slowed somewhat, indicating a possible momentum shift which could swing the price of real estate upwards. Unemployment continues to dampen our local economy with most recent figures reporting 15.7% for our county. A survey conducted by HouseLogic.com asked the question “What issue/ area will have the greatest impact on your vote in 2012?”:
Jobs/unemployment – 54% Housing – 27% National security – 8%
Healthcare – 4% Energy/Environment – 2% Other – 4%
It is very clear that the focus of America is on employment. With an improvement in jobs will come consumer confidence and an increased participation in the purchase of housing. But until then we will continue to face a difficult and constricted real estate market. It is my belief, however, that we are nearing the bottom. We will likely continue to see small decreases in values, with sporadic months reporting no change, through the first two quarters of 2012. The third quarter of 2012 is when I might anticipate we look backwards and notice the trough of the market has passed with a very gradual but consistent upward trend continuing into 2013.
Currently low values coupled with historically low interest rates maintains a huge buying incentive - now is the time to buy. "Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year," said Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of REALTORS®. "Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970."
It is my sincere hope that 2012 will bring us some much needed change and upward swing in both our economy and the housing market. My sights are set on the third quarter…
Thursday, December 15, 2011
Sunday, November 6, 2011
Mortgage Rates Hit New 40 Year Low
Investor worries over the European debt crisis helped drive the average rate for a 30-year fixed home loan down to 4% this week, according to Freddie Mac.
The figure, down from 4.1% last week, was the second lowest in the 40 years Freddie has been conducting a weekly survey of the terms being offered by home lenders. The lowest average rate recorded was 3.94% four weeks ago.
Freddie Mac said lenders were offering 15-year loans, a popular choice for homeowners who are refinancing, at an average rate of 3.31%, down from 3.38% a week earlier. That rate was below 3.3% for three weeks in late September and early October.
To obtain the loans at the rates being offered this week, a borrower would have to pay upfront fees averaging 0.7% of the amount borrowed.
Worried about the possibility of defaults on European debt, investors rushed to buy U.S. Treasury securities early this week, driving down interest rates.
The low mortgage rates have created an opportunity for some homeowners who are current on their loans to trade them in for new mortgages, often lowering their interest costs dramatically.
http://latimesblogs.latimes.com/money_co/2011/11/mortgage-rates-freddie-mac.html
The figure, down from 4.1% last week, was the second lowest in the 40 years Freddie has been conducting a weekly survey of the terms being offered by home lenders. The lowest average rate recorded was 3.94% four weeks ago.
Freddie Mac said lenders were offering 15-year loans, a popular choice for homeowners who are refinancing, at an average rate of 3.31%, down from 3.38% a week earlier. That rate was below 3.3% for three weeks in late September and early October.
To obtain the loans at the rates being offered this week, a borrower would have to pay upfront fees averaging 0.7% of the amount borrowed.
Worried about the possibility of defaults on European debt, investors rushed to buy U.S. Treasury securities early this week, driving down interest rates.
The low mortgage rates have created an opportunity for some homeowners who are current on their loans to trade them in for new mortgages, often lowering their interest costs dramatically.
http://latimesblogs.latimes.com/money_co/2011/11/mortgage-rates-freddie-mac.html
Wednesday, October 26, 2011
Smoke Detectors – You Need to Know the Differences
Like most, I have always believed that smoke alarms were pretty much the same. After all, every smoke alarm sold is required to be tested and approved. The smoke alarms most of us have at home are either Ionization or Photoelectric type alarms. I have recently learned that the reality is that all smoke alarms are not the same. In real-world fires, these two types of alarms will react very differently and knowing the difference could very well save your life.
Back in the 1970’s, smoke alarms were not commonly used in homes. Back then, the residential fire death rate was about 7 to 8 fatalities per 1,000 US home fires. Between the 70's and now we have installed hundreds of millions of smoke alarms in US homes. Yet today, our chances of dying in a fire still hover around 7 or 8 deaths per 1,000 home fires. Clearly, something is wrong here.
The smoke alarm marketers tell us that the alarms are the same and more recently that we should have both types. It is true that an ionization alarm responds marginally faster to an open or "fast-flame" fire than a photoelectric smoke alarm. On average, ionization alarms will react about 30 to 90 seconds faster to this type of fire. However, nearly 100% of residential fire fatalities are from smoke inhalation and not from the actual fire. Most deadly fires occur at night while you sleep. On average, ionization alarms respond about 30 to 90 minutes slower to smoldering fires than a photoelectric alarm. In these fatal fires, a photoelectric alarm will alert occupants in time to allow a safe exit about 96% of the time. Ionization alarms will generally give sufficient warning less than 40% of the time, meaning 60% of the time someone may die. The problem with ionization alarms isn't just their slow response times. Ionization alarms nuisance trip when you cook, shower, etc. People become frustrated and intentionally disable them, leaving their family completely unprotected. About 2/3's of all residential fire deaths occur in homes that are unprotected. Ionization alarms account for over 85% of disabled alarms. Most of the remaining fire deaths occur in homes where an alarm sounds, but it sounds too late for the occupants to escape. For Ohio fathers Dean Dennis and Doug Turnbull, the battle over ionization alarms is very personal. Both lost daughters in separate Ohio college off-campus housing fires. Those fires claimed a total of eight lives, There were around twenty smoke alarms between those two fatal fires. Some alarms had no batteries, none of the functional alarms responded, all were ionization alarms. Dean and Doug founded Fathers for Fire Safety as a way to educate the public and fire service about this critical issue. This group works closely with the World Fire Safety Foundation, an organization that has been instrumental in educating the fire service community and general public about this critical issue.
There is significant university and government research - some going back to the mid-1970's - clearly showing that ionization alarms are slow to react in smoldering fires. It has taken decades, but there is finally a growing public awareness of this issue. Recently, the International Association of Firefighters (IAFF) took a stand and now recommends that only photoelectric smoke alarms be installed. In July, 201O, the City of Albany, California became the first city in California to require photoelectric smoke alarms in new construction and remodels. In late 2010, the cities of Palo Alto and Orange enacted ordinances requiring photoelectric technology alarms, In January 2011, the City of Sebastopol enacted an ordinance requiring photoelectric technology.
Which Ones Do I Have? It is not always possible to know. In general, if the alarm has a "Hush" feature, it probably an ionization unit. If the label says anything about radioactive material, Americium-241 or the model number has an "I" in it - then it is probably an ionization alarm. If there is any doubt, there is a 95% chance the alarm is an ionization unit. To be safe, simply replace any unknown units with photoelectric alarms.
What About Combination Alarms? There are combination photoelectric/ionization units available. These units have the same issues as ionization only detectors. In some cases - they may actually be worse. They can nuisance trip due to the ionization detector. Some manufacturers appear to have reduced the smoke sensitivity/response of combination units as a way to cut nuisance tripping. There are design issues with certain combination alarms that actually make them less effective than photoelectric only alarms. The International Association of Fire Fighters (IAFF) specifically recommends against installing combination alarms. There are also combination photoelectric/carbon monoxide (CO) alarms. For safety reasons, smoke alarms should be replaced every 10 years. CO detectors should be replaced every 5 to 7 years. With combination units, you are either replacing the smoke alarm portion too soon or relying on a CO detector that is past its replacement date. Combo units are also more expensive. Separate units make more sense. Every year, about 1,000 people die needlessly in residential fires and thousands more are seriously injured. It is critical that public awareness of this issue become the top priority for each of us. Photoelectric alarms provide the best protection in real-world fires that we have available today. And they cost only a few dollars more.
Back in the 1970’s, smoke alarms were not commonly used in homes. Back then, the residential fire death rate was about 7 to 8 fatalities per 1,000 US home fires. Between the 70's and now we have installed hundreds of millions of smoke alarms in US homes. Yet today, our chances of dying in a fire still hover around 7 or 8 deaths per 1,000 home fires. Clearly, something is wrong here.
The smoke alarm marketers tell us that the alarms are the same and more recently that we should have both types. It is true that an ionization alarm responds marginally faster to an open or "fast-flame" fire than a photoelectric smoke alarm. On average, ionization alarms will react about 30 to 90 seconds faster to this type of fire. However, nearly 100% of residential fire fatalities are from smoke inhalation and not from the actual fire. Most deadly fires occur at night while you sleep. On average, ionization alarms respond about 30 to 90 minutes slower to smoldering fires than a photoelectric alarm. In these fatal fires, a photoelectric alarm will alert occupants in time to allow a safe exit about 96% of the time. Ionization alarms will generally give sufficient warning less than 40% of the time, meaning 60% of the time someone may die. The problem with ionization alarms isn't just their slow response times. Ionization alarms nuisance trip when you cook, shower, etc. People become frustrated and intentionally disable them, leaving their family completely unprotected. About 2/3's of all residential fire deaths occur in homes that are unprotected. Ionization alarms account for over 85% of disabled alarms. Most of the remaining fire deaths occur in homes where an alarm sounds, but it sounds too late for the occupants to escape. For Ohio fathers Dean Dennis and Doug Turnbull, the battle over ionization alarms is very personal. Both lost daughters in separate Ohio college off-campus housing fires. Those fires claimed a total of eight lives, There were around twenty smoke alarms between those two fatal fires. Some alarms had no batteries, none of the functional alarms responded, all were ionization alarms. Dean and Doug founded Fathers for Fire Safety as a way to educate the public and fire service about this critical issue. This group works closely with the World Fire Safety Foundation, an organization that has been instrumental in educating the fire service community and general public about this critical issue.
There is significant university and government research - some going back to the mid-1970's - clearly showing that ionization alarms are slow to react in smoldering fires. It has taken decades, but there is finally a growing public awareness of this issue. Recently, the International Association of Firefighters (IAFF) took a stand and now recommends that only photoelectric smoke alarms be installed. In July, 201O, the City of Albany, California became the first city in California to require photoelectric smoke alarms in new construction and remodels. In late 2010, the cities of Palo Alto and Orange enacted ordinances requiring photoelectric technology alarms, In January 2011, the City of Sebastopol enacted an ordinance requiring photoelectric technology.
Which Ones Do I Have? It is not always possible to know. In general, if the alarm has a "Hush" feature, it probably an ionization unit. If the label says anything about radioactive material, Americium-241 or the model number has an "I" in it - then it is probably an ionization alarm. If there is any doubt, there is a 95% chance the alarm is an ionization unit. To be safe, simply replace any unknown units with photoelectric alarms.
What About Combination Alarms? There are combination photoelectric/ionization units available. These units have the same issues as ionization only detectors. In some cases - they may actually be worse. They can nuisance trip due to the ionization detector. Some manufacturers appear to have reduced the smoke sensitivity/response of combination units as a way to cut nuisance tripping. There are design issues with certain combination alarms that actually make them less effective than photoelectric only alarms. The International Association of Fire Fighters (IAFF) specifically recommends against installing combination alarms. There are also combination photoelectric/carbon monoxide (CO) alarms. For safety reasons, smoke alarms should be replaced every 10 years. CO detectors should be replaced every 5 to 7 years. With combination units, you are either replacing the smoke alarm portion too soon or relying on a CO detector that is past its replacement date. Combo units are also more expensive. Separate units make more sense. Every year, about 1,000 people die needlessly in residential fires and thousands more are seriously injured. It is critical that public awareness of this issue become the top priority for each of us. Photoelectric alarms provide the best protection in real-world fires that we have available today. And they cost only a few dollars more.
Wednesday, October 5, 2011
Young Investors Planning for Retirement
Cheap foreclosures and short sales in Fresno are luring young investors who dream of snapping up bargains, renting them out and retiring early.
Matthew Phillips, 34, is one of them. The operations supervisor at Toyota Material Handling made a $75,000 offer Aug. 7 on a short sale in northwest Fresno. If the offer is accepted, the home will be his first investment property and the beginning of a plan to retire in 20 years.
"I was thinking, 'How could I get the most money back on my investment?' " Phillips said. "If you put it in the stock market, it's bad right now. If you put it in a bank, it doesn't grow much interest. When you buy real estate ... you'll make money and keep the money you invested in it."
Phillips hopes to join the flood of investors buying foreclosure and short-sale properties in Fresno. Many of those buyers are fixing up their homes and renting them out. After all, as one local real estate professional notes, people who lost their house still need a place to live.
"There's no greater investment now, especially for young people," said veteran investor Tom Hyatt of Hyatt Real Estate in Fresno. "It's like the gold rush."
But it only works with less-expensive houses and there is some risk. Cheap foreclosures can come with expensive problems, and tenants could decide to stop paying rent at any time. To many investors, however, the potential return outweighs the risks.
Read more: http://www.fresnobee.com/2011/10/04/2564682/young-investors-buying-valley.html#ixzz1ZwkOqazX
Read more: http://www.fresnobee.com/2011/10/04/2564682/young-investors-buying-valley.html#ixzz1ZwkHRmGE
Matthew Phillips, 34, is one of them. The operations supervisor at Toyota Material Handling made a $75,000 offer Aug. 7 on a short sale in northwest Fresno. If the offer is accepted, the home will be his first investment property and the beginning of a plan to retire in 20 years.
"I was thinking, 'How could I get the most money back on my investment?' " Phillips said. "If you put it in the stock market, it's bad right now. If you put it in a bank, it doesn't grow much interest. When you buy real estate ... you'll make money and keep the money you invested in it."
Phillips hopes to join the flood of investors buying foreclosure and short-sale properties in Fresno. Many of those buyers are fixing up their homes and renting them out. After all, as one local real estate professional notes, people who lost their house still need a place to live.
"There's no greater investment now, especially for young people," said veteran investor Tom Hyatt of Hyatt Real Estate in Fresno. "It's like the gold rush."
But it only works with less-expensive houses and there is some risk. Cheap foreclosures can come with expensive problems, and tenants could decide to stop paying rent at any time. To many investors, however, the potential return outweighs the risks.
Read more: http://www.fresnobee.com/2011/10/04/2564682/young-investors-buying-valley.html#ixzz1ZwkOqazX
Read more: http://www.fresnobee.com/2011/10/04/2564682/young-investors-buying-valley.html#ixzz1ZwkHRmGE
Tuesday, September 27, 2011
2012 Market Forecast - 1.7% Increase in CA
California home sales and median price are predicted to improve only slightly in 2012, as the continuation of the tepid economic recovery, uncertainty about the future, and funding challenges for residential mortgages are expected to keep the market moving sideways, with little foreseeable momentum in either direction, according to C.A.R.’s “2012 California Housing Market Forecast” released Tuesday.
The forecast, which was presented today by C.A.R. Chief Economist Leslie Appleton-Young during her luncheon at CALIFORNIA REALTOR® EXPO 2011, says that California home sales next year is for a slight 1 percent increase to 496,200 units, following essentially flat sales of 491,100 homes this year compared to the 491,500 homes sold in 2010.
The California median home price will increase 1.7 percent in 2012 to $296,000 in 2012, according to the forecast. Following a double-digit increase in the median price in 2010, the median home price will decrease a projected 4 percent in 2011 to $291,000.
Full Article:
http://www.car.org/newsstand/newsreleases/2011newsreleases/2012forecast/
The forecast, which was presented today by C.A.R. Chief Economist Leslie Appleton-Young during her luncheon at CALIFORNIA REALTOR® EXPO 2011, says that California home sales next year is for a slight 1 percent increase to 496,200 units, following essentially flat sales of 491,100 homes this year compared to the 491,500 homes sold in 2010.
The California median home price will increase 1.7 percent in 2012 to $296,000 in 2012, according to the forecast. Following a double-digit increase in the median price in 2010, the median home price will decrease a projected 4 percent in 2011 to $291,000.
Full Article:
http://www.car.org/newsstand/newsreleases/2011newsreleases/2012forecast/
Tuesday, September 13, 2011
Cashing in on Rental Property
Most of the news lately about real estate has been dismal: Home prices are swooning, foreclosures ballooning.
There is, however, one bright spot: the rental market, where demand is up and rents are rising. That's partly because those foreclosures have turned more than 4 million former homeowners into renters, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.
As with many investments, the best time to get in is when most others are sitting on the sidelines.
Full Story:
http://money.cnn.com/2011/08/30/real_estate/rental_property_investing.moneymag/index.htm?iid=SF_M_LN
There is, however, one bright spot: the rental market, where demand is up and rents are rising. That's partly because those foreclosures have turned more than 4 million former homeowners into renters, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.
As with many investments, the best time to get in is when most others are sitting on the sidelines.
Full Story:
http://money.cnn.com/2011/08/30/real_estate/rental_property_investing.moneymag/index.htm?iid=SF_M_LN
Friday, September 9, 2011
Mortgage rates hit record lows in Freddie Mac survey
Mortgage rates have plunged to all-time lows amid concerns the economy is stalling again, Freddie Mac said Thursday. Lenders were offering the 30-year fixed-rate home loan at an average rate of 4.12 percent this week, down from 4.22 percent last week.
Full Story:
http://latimesblogs.latimes.com/money_co/2011/09/mortgage-rates-record-lows-freddie-mac.html
Full Story:
http://latimesblogs.latimes.com/money_co/2011/09/mortgage-rates-record-lows-freddie-mac.html
Wednesday, August 31, 2011
Property Tax Values
Despite home prices in major urban centers decreasing 31 percent between 2005 and 2009, property taxes across the U.S. increased by nearly 20 percent. There is good news, however; homeowners can fight back.
Homeowners should keep in mind that property taxes do not always correspond with home values, because local governments typically don’t measure values every year and some have limits on annual property-tax increases.
As a result, current property taxes might reflect the home’s value when the market was healthier. According to the Congressional Budget Office, property-tax adjustments lag behind changes in home prices by an average of three years.
Although homeowners cannot change their property-tax rate, which is set by the local government, homeowners can get their assessment lowered if they appeal to their local assessor.
One key to a successful appeal is fact checking the assessor’s work. About half of all successful appeals come from homeowners pointing out an error in the assessor’s description of the home, according to one property tax expert.
During the appeal process, which is similar to a less-formal court hearing, homeowners may present their case to several local officials or representatives. The simplest way to convince officials that a property has been incorrectly valued is to provide evidence of the sales price of homes that are comparable to the property being discussed. This should include square footage, amenities, and neighborhood characteristics. Sale documents and photos of the property in question, as well as the comparable properties also should be brought in.
Homeowners who have made improvements or substantial changes to the property should be cautious about appealing an assessment though, as it could have negative effects and actually increase the property’s value and, in turn, the property taxes.
Excerpt from:
http://online.wsj.com/article/SB10001424053111904070604576514573303531678.html?mod=WSJ_RealEstate_LeftTopNews
Homeowners should keep in mind that property taxes do not always correspond with home values, because local governments typically don’t measure values every year and some have limits on annual property-tax increases.
As a result, current property taxes might reflect the home’s value when the market was healthier. According to the Congressional Budget Office, property-tax adjustments lag behind changes in home prices by an average of three years.
Although homeowners cannot change their property-tax rate, which is set by the local government, homeowners can get their assessment lowered if they appeal to their local assessor.
One key to a successful appeal is fact checking the assessor’s work. About half of all successful appeals come from homeowners pointing out an error in the assessor’s description of the home, according to one property tax expert.
During the appeal process, which is similar to a less-formal court hearing, homeowners may present their case to several local officials or representatives. The simplest way to convince officials that a property has been incorrectly valued is to provide evidence of the sales price of homes that are comparable to the property being discussed. This should include square footage, amenities, and neighborhood characteristics. Sale documents and photos of the property in question, as well as the comparable properties also should be brought in.
Homeowners who have made improvements or substantial changes to the property should be cautious about appealing an assessment though, as it could have negative effects and actually increase the property’s value and, in turn, the property taxes.
Excerpt from:
http://online.wsj.com/article/SB10001424053111904070604576514573303531678.html?mod=WSJ_RealEstate_LeftTopNews
Tuesday, August 23, 2011
July Pending Home Sales
California pending home sales dipped in July, as did the share of sales of distressed properties, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
Pending home sales:
Pending home sales in California fell 1.7 percent in July, according to C.A.R.’s Pending Home Sales Index (PHSI)*. The index was 117.0 in July, down from June’s index of 119.0, based on contracts signed in July. The index was up 4.9 percent from July 2010. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
“While pending home sales dipped in July, all indications show we should continue at the current level for the next couple of months,” said C.A.R. President Beth L. Peerce. “Pending sales have been ahead of last year’s level for the past three consecutive months and should be on track to finish the year even with last year’s pace.”
Distressed housing market data:
• The total share of all distressed property types sold statewide fell to 44.5 percent in July, down from June’s 46.9 percent. The share of distressed sales also was down from a year prior, when distressed sales totaled 47.7 percent of all home sales.
• Of the distressed properties sold statewide, 17.5 percent were short sales, a decline from last month’s share of 19.3 percent and last July’s share of 20.9 percent.
• At 26.7 percent, the share of REO (real estate-owned) sales was down from June’s 27.3 percent figure, but was up slightly from the 26.3 percent reported in July 2010.
• Non-distressed sales made up the remaining share of home sales in July at 55.5 percent, up from 53.1 percent in June and 52.3 percent in July 2010.
From: http://www.car.org/newsstand/newsreleases/2011newsreleases/julpendinghmsales/
Pending home sales:
Pending home sales in California fell 1.7 percent in July, according to C.A.R.’s Pending Home Sales Index (PHSI)*. The index was 117.0 in July, down from June’s index of 119.0, based on contracts signed in July. The index was up 4.9 percent from July 2010. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
“While pending home sales dipped in July, all indications show we should continue at the current level for the next couple of months,” said C.A.R. President Beth L. Peerce. “Pending sales have been ahead of last year’s level for the past three consecutive months and should be on track to finish the year even with last year’s pace.”
Distressed housing market data:
• The total share of all distressed property types sold statewide fell to 44.5 percent in July, down from June’s 46.9 percent. The share of distressed sales also was down from a year prior, when distressed sales totaled 47.7 percent of all home sales.
• Of the distressed properties sold statewide, 17.5 percent were short sales, a decline from last month’s share of 19.3 percent and last July’s share of 20.9 percent.
• At 26.7 percent, the share of REO (real estate-owned) sales was down from June’s 27.3 percent figure, but was up slightly from the 26.3 percent reported in July 2010.
• Non-distressed sales made up the remaining share of home sales in July at 55.5 percent, up from 53.1 percent in June and 52.3 percent in July 2010.
From: http://www.car.org/newsstand/newsreleases/2011newsreleases/julpendinghmsales/
Monday, July 18, 2011
Short Sale Deficiency Law Expanded
In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.
Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
See bill 458 at www.leginfo.ca.gov.
Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
See bill 458 at www.leginfo.ca.gov.
Friday, July 15, 2011
Mortgage Rates are Great....for those that qualify.
Mortgage rates are great, if you qualify
Interest rates are near historic lows and home prices are affordable; however, many borrowers are finding they must have nearly pristine credit records and hefty down payments to get the best rates.
Making sense of the story
Since 2009, credit standards have become much tighter. For borrowers, this emphasizes the importance of paying close attention to credit scores.
New rules unveiled last week, the result of last year’s Dodd-Frank financial-services legislation, require banks and other lenders to disclose to consumers the scores used to determine interest rates charged borrowers, or to deny credit, making it easier for borrowers to see how their credit scores affect the interest rates they pay.
The FICO credit scores on loans that banks are giving out and that are backed by government agencies Fannie Mae and Freddie Mac show the new reality. Currently, the two agencies essentially finance 75 percent of all mortgages by purchasing the loans from banks, thus shaping how much it costs to borrow.
FICO scores range from 300 to 850. Prior to the decline in home prices, a score of 700 to 725 was considered solid and, a borrower could expect to be approved for a “conventional” mortgage at the lowest rates.
From 2003 to 2006, 82 percent of Fannie Mae mortgages were for borrowers with a score between 700 and 750, but so far in 2011, only 13 percent of Fannie Mae mortgages carry that score, and just 1.7 percent have a score of 700 to 725. This year, 75 percent of Fannie Mae mortgages are for FICO scores of 750 to 755, up from less than 5 percent before 2005.
These trends demonstrate the importance of understanding credit scores and ensuring credit reports are accurate. Consumers can check their credit report at AnnualCreditReport.com.
More at http://online.wsj.com/article/SB10001424052702303544604576436331698560662.html?mod=WSJ_hpp_sections_personalfinance
Interest rates are near historic lows and home prices are affordable; however, many borrowers are finding they must have nearly pristine credit records and hefty down payments to get the best rates.
Making sense of the story
Since 2009, credit standards have become much tighter. For borrowers, this emphasizes the importance of paying close attention to credit scores.
New rules unveiled last week, the result of last year’s Dodd-Frank financial-services legislation, require banks and other lenders to disclose to consumers the scores used to determine interest rates charged borrowers, or to deny credit, making it easier for borrowers to see how their credit scores affect the interest rates they pay.
The FICO credit scores on loans that banks are giving out and that are backed by government agencies Fannie Mae and Freddie Mac show the new reality. Currently, the two agencies essentially finance 75 percent of all mortgages by purchasing the loans from banks, thus shaping how much it costs to borrow.
FICO scores range from 300 to 850. Prior to the decline in home prices, a score of 700 to 725 was considered solid and, a borrower could expect to be approved for a “conventional” mortgage at the lowest rates.
From 2003 to 2006, 82 percent of Fannie Mae mortgages were for borrowers with a score between 700 and 750, but so far in 2011, only 13 percent of Fannie Mae mortgages carry that score, and just 1.7 percent have a score of 700 to 725. This year, 75 percent of Fannie Mae mortgages are for FICO scores of 750 to 755, up from less than 5 percent before 2005.
These trends demonstrate the importance of understanding credit scores and ensuring credit reports are accurate. Consumers can check their credit report at AnnualCreditReport.com.
More at http://online.wsj.com/article/SB10001424052702303544604576436331698560662.html?mod=WSJ_hpp_sections_personalfinance
Thursday, July 14, 2011
CHF Grant provides 3% towards down payment for qualified buyers!!!
The CHF Platinum Program is designed to assist low-to-moderate income homebuyers with the purchase of a home, by providing down payment and/or closing cost assistance (currently in the form of a Grant). Many times this means families and individuals can purchase a home much sooner than they thought possible.
This program is available for the purchase of an owner occupied single-family residence, agency-approved condominium or planned unit development (PUD) located in the state of California. It is not limited to first-time homebuyers.
The Grant, currently made possible through the program, is sized at 3% of the Mortgage Loan amount. The Grant funds can be used towards the homebuyer’s down payment and/or eligible closing costs on a 30-year fixed-rate full amortization FHA, VA or USDA Mortgage Loan. It is available for purchases of both new and existing homes, as long as the home will be the primary residence of the homebuyer.
You may qualify if you make less than $84,480/yr and have a credit score above 620 in most cases you will qualify.
More info at: http://www.chfloan.org/Programs/Platinum/CHF_Platinum.html
This program is available for the purchase of an owner occupied single-family residence, agency-approved condominium or planned unit development (PUD) located in the state of California. It is not limited to first-time homebuyers.
The Grant, currently made possible through the program, is sized at 3% of the Mortgage Loan amount. The Grant funds can be used towards the homebuyer’s down payment and/or eligible closing costs on a 30-year fixed-rate full amortization FHA, VA or USDA Mortgage Loan. It is available for purchases of both new and existing homes, as long as the home will be the primary residence of the homebuyer.
You may qualify if you make less than $84,480/yr and have a credit score above 620 in most cases you will qualify.
More info at: http://www.chfloan.org/Programs/Platinum/CHF_Platinum.html
Friday, July 8, 2011
Option for College Grads
With many college graduates unable to find the kinds of jobs that would allow them to save up enough money for a large down payment, which many lenders now require, some parents are helping their children buy their first home.
Parents considering this option first need to consider whether this is a viable and affordable solution to their child’s housing situation. If the answer is “yes,” then there are a variety of financial arrangements that can be arranged.
Parents can lend a down payment (or the entire mortgage) to the child.
The parents can co-sign a bank loan, enter into a shared-equity arrangement with the child, or gift the money.
Another option is for the parents to buy a house and work out a rent-to-buy arrangement with their child.
There are upsides and downsides to each of these arrangements, so parents are advised to talk to a financial planner before making the decision.
Parents considering this option first need to consider whether this is a viable and affordable solution to their child’s housing situation. If the answer is “yes,” then there are a variety of financial arrangements that can be arranged.
Parents can lend a down payment (or the entire mortgage) to the child.
The parents can co-sign a bank loan, enter into a shared-equity arrangement with the child, or gift the money.
Another option is for the parents to buy a house and work out a rent-to-buy arrangement with their child.
There are upsides and downsides to each of these arrangements, so parents are advised to talk to a financial planner before making the decision.
Tuesday, June 28, 2011
Foreclosure sales slow....is that good or bad?
Distressed properties — those in some stage of foreclosure — edged up to 28% of all U.S. residential sales in the first quarter from 27% the previous quarter, according to RealtyTrac.
The percentage would have been higher, analysts say, but overall housing demand is weak and the banks are not disposing of these assets at nearly the rate they were at the same time last year, when distressed properties made up 29% of all sales.
The numbers tell the story: In the first quarter of this year, 158,434 bank-owned properties (or those in the foreclosure pipeline) were sold, a 36% decline from the first quarter of 2010 and a 16% decrease from the fourth quarter of last year.
Compare that with the nearly 350,000 distressed properties sold in the first quarter of 2009, and you can see why the foreclosure pipeline is so bloated.
"According to our numbers, if you just look at the properties in foreclosure or on the banks' books, it will take us three years to work through that inventory at the current rate of sales," says Rick Sharga, senior vice president of RealtyTrac.
Of course, this slowdown in foreclosure sales is — at least in the short term — a good thing for the housing market, helping to keep home prices more stable, Sharga says.
"The downside is that this approach ensures that we will be in the doldrums in housing for several more years," he says.
Indeed, with such a large supply of distressed properties and foreclosures, the timing of a recovery hinges in part on how quickly banks and servicers dispose of these holdings.
Entire article:
http://realestate.msn.com/foreclosure-sales-slowdown-a-blessing-and-a-curse
The percentage would have been higher, analysts say, but overall housing demand is weak and the banks are not disposing of these assets at nearly the rate they were at the same time last year, when distressed properties made up 29% of all sales.
The numbers tell the story: In the first quarter of this year, 158,434 bank-owned properties (or those in the foreclosure pipeline) were sold, a 36% decline from the first quarter of 2010 and a 16% decrease from the fourth quarter of last year.
Compare that with the nearly 350,000 distressed properties sold in the first quarter of 2009, and you can see why the foreclosure pipeline is so bloated.
"According to our numbers, if you just look at the properties in foreclosure or on the banks' books, it will take us three years to work through that inventory at the current rate of sales," says Rick Sharga, senior vice president of RealtyTrac.
Of course, this slowdown in foreclosure sales is — at least in the short term — a good thing for the housing market, helping to keep home prices more stable, Sharga says.
"The downside is that this approach ensures that we will be in the doldrums in housing for several more years," he says.
Indeed, with such a large supply of distressed properties and foreclosures, the timing of a recovery hinges in part on how quickly banks and servicers dispose of these holdings.
Entire article:
http://realestate.msn.com/foreclosure-sales-slowdown-a-blessing-and-a-curse
Tuesday, June 21, 2011
May Pending Home Sales Increase (CA)
California pending home sales rose in May, posting the first year-over-year increase in 18 months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
Pending home sales:
Pending home sales in California rose in May, according to C.A.R.’s Pending Home Sales Index (PHSI)*. The index was 118.3 in May, up 1.6 percent from April’s revised index of 116.4, based on contracts signed in May. The index also was up 12 percent from May 2010. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
“May marked the first year-over-year increase in pending sales since November 2009 and the largest annual increase since August 2009,” said C.A.R. President Beth L. Peerce. “May’s increase in pending sales is consistent with our expectation that home sales in the second half of 2011 should be higher compared with the second half of 2010, and as a result, annual sales for all of 2011 should match or exceed last year’s annual pace.”
Distressed housing market data:
The total share of all distressed property types sold statewide was unchanged in May from April’s 48 percent, but up from 46 percent in May 2010.
Non-distressed sales made up the remaining share at 52 percent in May, unchanged from April but down from 54 percent in May 2010.
Of the distressed properties sold statewide, the total share of REO (real estate-owned) sales was 28 percent in May, unchanged from April, but up from 26 percent in May 2010.
At 19 percent, the statewide share of short sales also was unchanged in May, but down from 20 percent in May 2010.
from: http://www.car.org/newsstand/newsreleases/2011newsreleases/maypendingsalesindex/
Pending home sales:
Pending home sales in California rose in May, according to C.A.R.’s Pending Home Sales Index (PHSI)*. The index was 118.3 in May, up 1.6 percent from April’s revised index of 116.4, based on contracts signed in May. The index also was up 12 percent from May 2010. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
“May marked the first year-over-year increase in pending sales since November 2009 and the largest annual increase since August 2009,” said C.A.R. President Beth L. Peerce. “May’s increase in pending sales is consistent with our expectation that home sales in the second half of 2011 should be higher compared with the second half of 2010, and as a result, annual sales for all of 2011 should match or exceed last year’s annual pace.”
Distressed housing market data:
The total share of all distressed property types sold statewide was unchanged in May from April’s 48 percent, but up from 46 percent in May 2010.
Non-distressed sales made up the remaining share at 52 percent in May, unchanged from April but down from 54 percent in May 2010.
Of the distressed properties sold statewide, the total share of REO (real estate-owned) sales was 28 percent in May, unchanged from April, but up from 26 percent in May 2010.
At 19 percent, the statewide share of short sales also was unchanged in May, but down from 20 percent in May 2010.
from: http://www.car.org/newsstand/newsreleases/2011newsreleases/maypendingsalesindex/
Thursday, June 16, 2011
Mortgage Rates Leveling Off?
Mortgage rates leveled off this week, according to a Freddie Mac survey that found the 30-year home loan up a single notch and the 15-year mortgage down by the same amount.
The survey said lenders were offering 30-year fixed-rate loans to well-qualified borrowers at an average 4.50% compared with 4.49% last week and rates in the 4.2% range for a couple of months last fall.
The 15-year fixed loan was at 3.67%, down from 3.68%, Freddie Mac said Thursday. The borrowers would have paid an average 0.7% of the loan amount to the lenders in upfront fees and points for the fixed-rate loans.
Read entire article:
http://latimesblogs.latimes.com/money_co/2011/06/freddie-mac-30-year-mortgage-rate-levels-off-at-45.html
The survey said lenders were offering 30-year fixed-rate loans to well-qualified borrowers at an average 4.50% compared with 4.49% last week and rates in the 4.2% range for a couple of months last fall.
The 15-year fixed loan was at 3.67%, down from 3.68%, Freddie Mac said Thursday. The borrowers would have paid an average 0.7% of the loan amount to the lenders in upfront fees and points for the fixed-rate loans.
Read entire article:
http://latimesblogs.latimes.com/money_co/2011/06/freddie-mac-30-year-mortgage-rate-levels-off-at-45.html
Tuesday, May 31, 2011
Survey: Next two years is prime time for real estate investors
Real estate investors are likely to be three times more active than other types of homebuyers in their local markets within the next two years, according to a nationwide survey from Realtor.com operator Move Inc.
Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors. Data was weighted by age, sex, education, race and geographic region.
A third of real estate investors are planning to buy in the next 24 months, compared to 8.6 percent of typical homebuyers -- those planning to purchase a primary residence, vacation home or retirement property. Another 9.1 percent of typical homebuyers, and 28 percent of investors, plan to purchase between two and five years from now.
Full article at:
http://www.car.org/newsstand/newsreleases/todaysheadlines/inman/
Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors. Data was weighted by age, sex, education, race and geographic region.
A third of real estate investors are planning to buy in the next 24 months, compared to 8.6 percent of typical homebuyers -- those planning to purchase a primary residence, vacation home or retirement property. Another 9.1 percent of typical homebuyers, and 28 percent of investors, plan to purchase between two and five years from now.
Full article at:
http://www.car.org/newsstand/newsreleases/todaysheadlines/inman/
Tuesday, May 24, 2011
What is Title Insurance???
Q. “I'm buying a home and the lender insists that I buy a title insurance policy before they will give me the loan. Now my real estate agent tells me that I should buy a policy for myself, too. This seems like overkill. The house I'm buying is only five years old, and the sellers are original owners. Is the agent right, and if so, why do I need this insurance?”
A. Imagine that you've bought and settled in to this house. One day, a woman knocks on your door and says that she and her husband had split up shortly before he put the house on the market, and that he forged her name on the deed. She says the sale was invalid and that she's still the owner—and she wants you out. You and the woman go to court where she proves that her story is true. She gets the house back, and you are evicted. Meanwhile, the husband has vanished with the money from the sale.
Or imagine that you discover after closing that there are "clouds" against the title, like liens for unpaid contractor bills (called "mechanic's liens"), legal judgments or taxes. Or perhaps you learn that a former owner has a life estate in the property.
Any of these situations could happen to the buyers of any house, even relatively new ones purchased from original owners. That's why most lenders won't fund a mortgage unless the buyer purchases a title insurance policy to protect it (but not you) from losses due to such claims. And that's why we believe that you should have a separate owner’s policy too.
During a title search, a professional examiner searches through the history of recorded documents (known as a title plant), either in person or online, looking not just at the chain of ownership but also at other issues that might affect whether title can be cleanly delivered to a future owner, such as undisclosed leases or restrictive covenants that affect how a property can be used. In many cases, should a problem be found, the title company will quietly fix it. Once the title is clean or "marketable," the underwriters will issue a policy that essentially says that it will defend the policyholder's title in court should anyone challenge it.
The lender's policy is attached to the mortgage, so should you refinance, you will have to purchase them another one. The owner's policy is attached to the property, however, so you won't have to buy another one as long as you own the home. Whether the seller or buyer pays for an owner's policy is typically a matter of local custom, but it can be negotiated as part of the purchase. Since costs vary widely, it pays to shop around for the best rate.
To be sure, some people argue that because public records can be searched so easily by computer these days, title insurance is a rip-off. They maintain that because the incidence of claims is so low, the cost, which can top $1,000 in some areas (paid in a one-time premium at closing), is unconscionable. Indeed, citing high costs, Iowa has created its own title guarantee program. Other states have launched investigations into title insurance companies that give kickbacks or other inducements to agents who recommend them.
Despite these problems, we think an owner's title insurance policy is a necessary evil. Sure, it's not very likely that a wronged spouse or a long-lost heir is going to turn up at your doorstep, but if you are unlucky enough to find yourself in that situation, you will be very glad that you have that policy
If there are ever any questions in regards real estate or the surrounding market that we might be able to answer for you then please let us know…we’re always here to help!!!
A. Imagine that you've bought and settled in to this house. One day, a woman knocks on your door and says that she and her husband had split up shortly before he put the house on the market, and that he forged her name on the deed. She says the sale was invalid and that she's still the owner—and she wants you out. You and the woman go to court where she proves that her story is true. She gets the house back, and you are evicted. Meanwhile, the husband has vanished with the money from the sale.
Or imagine that you discover after closing that there are "clouds" against the title, like liens for unpaid contractor bills (called "mechanic's liens"), legal judgments or taxes. Or perhaps you learn that a former owner has a life estate in the property.
Any of these situations could happen to the buyers of any house, even relatively new ones purchased from original owners. That's why most lenders won't fund a mortgage unless the buyer purchases a title insurance policy to protect it (but not you) from losses due to such claims. And that's why we believe that you should have a separate owner’s policy too.
During a title search, a professional examiner searches through the history of recorded documents (known as a title plant), either in person or online, looking not just at the chain of ownership but also at other issues that might affect whether title can be cleanly delivered to a future owner, such as undisclosed leases or restrictive covenants that affect how a property can be used. In many cases, should a problem be found, the title company will quietly fix it. Once the title is clean or "marketable," the underwriters will issue a policy that essentially says that it will defend the policyholder's title in court should anyone challenge it.
The lender's policy is attached to the mortgage, so should you refinance, you will have to purchase them another one. The owner's policy is attached to the property, however, so you won't have to buy another one as long as you own the home. Whether the seller or buyer pays for an owner's policy is typically a matter of local custom, but it can be negotiated as part of the purchase. Since costs vary widely, it pays to shop around for the best rate.
To be sure, some people argue that because public records can be searched so easily by computer these days, title insurance is a rip-off. They maintain that because the incidence of claims is so low, the cost, which can top $1,000 in some areas (paid in a one-time premium at closing), is unconscionable. Indeed, citing high costs, Iowa has created its own title guarantee program. Other states have launched investigations into title insurance companies that give kickbacks or other inducements to agents who recommend them.
Despite these problems, we think an owner's title insurance policy is a necessary evil. Sure, it's not very likely that a wronged spouse or a long-lost heir is going to turn up at your doorstep, but if you are unlucky enough to find yourself in that situation, you will be very glad that you have that policy
If there are ever any questions in regards real estate or the surrounding market that we might be able to answer for you then please let us know…we’re always here to help!!!
Sunday, April 17, 2011
Buying a Home Still Considered a Good Investment
Despite the decline in home prices, 81 percent of U.S. adults agree that buying a home is the best long-term investment a person can make, according a nationwide Pew Research Center survey.
Home prices have declined 31 percent compared with their pre-recession peak in July 2006, according to the S&P/Case-Shiller Home Price Index. After a pause last year, prices fell again in the first quarter of 2011.
Among homeowners surveyed, 47 percent say their home is worth less now than before the recession began, 31 percent say its value has stayed the same, and 17 percent say it has risen.
Of those who say their home has lost value, 86 percent say they expect it to take at least three years for values to recover to pre-recession levels; 42 percent say it will take at least six years; and 10 percent say it will take more than 10 years.
Still, 82 percent of homeowners who say their home is worth less now than before the recession began either “strongly agree” or “somewhat agree” that homeownership is the best long-term investment a person can make. Among homeowners whose home increased in value during the recession, this confidence is even more pronounced. Half strongly and 41 percent somewhat agree with this view
Home prices have declined 31 percent compared with their pre-recession peak in July 2006, according to the S&P/Case-Shiller Home Price Index. After a pause last year, prices fell again in the first quarter of 2011.
Among homeowners surveyed, 47 percent say their home is worth less now than before the recession began, 31 percent say its value has stayed the same, and 17 percent say it has risen.
Of those who say their home has lost value, 86 percent say they expect it to take at least three years for values to recover to pre-recession levels; 42 percent say it will take at least six years; and 10 percent say it will take more than 10 years.
Still, 82 percent of homeowners who say their home is worth less now than before the recession began either “strongly agree” or “somewhat agree” that homeownership is the best long-term investment a person can make. Among homeowners whose home increased in value during the recession, this confidence is even more pronounced. Half strongly and 41 percent somewhat agree with this view
Saturday, April 2, 2011
February Home Sales Statewide
Pending home sales rose in February, as did the share of distressed properties sold, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.
Pending home sales:
Pending home sales in California increased in February, according to C.A.R.’s Pending Home Sales Index (PHSI)*. The index was 112.1 in February, rising 20.6 percent from January’s revised index of 93.0, based on contracts signed in February. The index was down 1.6 percent from February 2010, when the presence of housing tax credits played a strong role in home sales. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
“The increase in pending sales is typical for this time of year, as we usually see a seasonal improvement in the spring,” said C.A.R. President Beth L. Peerce.
Distressed housing market data:
The total share of all distressed property types sold statewide increased in February to 56 percent, up from 54 percent in January and up from 55 percent in February 2010.
Non-distressed sales made up the remaining share at 44 percent in February, down from 46 percent in January and down from 45 percent in February 2010.
Of the distressed properties sold statewide, the total share of REO (real estate-owned) sales was 33 percent in February, up from 32 percent in December, but was down from 36 percent in February 2010.
The statewide share of short sales increased to 23 percent in February, up from 22 percent in January and up from 19 percent in February 2010.
The median price of homes sold in the state differed dramatically depending on the property type, with non-distressed properties selling for much higher prices than short sales and foreclosures.
The statewide median price of non-distressed properties sold in February was $370,000, $95,000 or 34.5 percent higher than the short sale median price of $275,000 recorded in February, and $170,100 or 85.1 percent higher than the February REO median price of $199,900.
Pending home sales:
Pending home sales in California increased in February, according to C.A.R.’s Pending Home Sales Index (PHSI)*. The index was 112.1 in February, rising 20.6 percent from January’s revised index of 93.0, based on contracts signed in February. The index was down 1.6 percent from February 2010, when the presence of housing tax credits played a strong role in home sales. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
“The increase in pending sales is typical for this time of year, as we usually see a seasonal improvement in the spring,” said C.A.R. President Beth L. Peerce.
Distressed housing market data:
The total share of all distressed property types sold statewide increased in February to 56 percent, up from 54 percent in January and up from 55 percent in February 2010.
Non-distressed sales made up the remaining share at 44 percent in February, down from 46 percent in January and down from 45 percent in February 2010.
Of the distressed properties sold statewide, the total share of REO (real estate-owned) sales was 33 percent in February, up from 32 percent in December, but was down from 36 percent in February 2010.
The statewide share of short sales increased to 23 percent in February, up from 22 percent in January and up from 19 percent in February 2010.
The median price of homes sold in the state differed dramatically depending on the property type, with non-distressed properties selling for much higher prices than short sales and foreclosures.
The statewide median price of non-distressed properties sold in February was $370,000, $95,000 or 34.5 percent higher than the short sale median price of $275,000 recorded in February, and $170,100 or 85.1 percent higher than the February REO median price of $199,900.
Tuesday, March 8, 2011
On the fence? Five things to consider when buying...
Jobs: Although many areas of the country were deeply impacted by the recession, some areas were less affected by job loss. If employment stability is a concern, prospective buyers should review job-growth data from the U.S. Bureau of Labor Statistics at www.bls.gov. The data provided by the Bureau is approximately one month old and shows the direction of the local economy.
Recent Sales Activity: Housing inventory and sales volume should be taken into consideration while house hunting. A large inventory of homes with few actual transactions can be a negative indicator. On the other hand, if inventory is falling and transactions are rising, that is a good sign. In January, the CALIFORNIA ASSOCIATION OF REALTORS®’ Unsold Inventory Index stood at 6.7 months, up from 5 months in December 2010, but down from 5.7 months in January 2010. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Construction: Staying up-to-date on the number of building permits issued for local builders is useful for gauging builder sentiment and the future of housing activity. The California Building Industry Association recently announced that California homebuilders pulled 2,920 total housing permits in January, registering a 5-percent decline compared with a year ago and a 56-percent decline compared with December. However, the Construction Industry Research Board is projecting 62,000 total permits will be pulled in 2011, an increase of 38 percent compared with 2010’s total of 44,893 permits.
Mortgage Availability: Home buyers hoping to be approved for a mortgage should monitor local lending patterns. Following the financial crisis, most national banks tightened lending standards; however, some local banks haven’t been impacted as much as large lenders and are more willing to lend, even for higher-priced homes.
Anecdotal Evidence: Although buyers can access home listings online, one of the best ways to monitor the local housing market is to work with a REALTOR® and gather intelligence using their expertise and guidance.
Full Story: http://online.wsj.com/article/SB10001424052748703905404576164720668195108.html?mod=WSJ_RealEstate_LeftTopNews
Recent Sales Activity: Housing inventory and sales volume should be taken into consideration while house hunting. A large inventory of homes with few actual transactions can be a negative indicator. On the other hand, if inventory is falling and transactions are rising, that is a good sign. In January, the CALIFORNIA ASSOCIATION OF REALTORS®’ Unsold Inventory Index stood at 6.7 months, up from 5 months in December 2010, but down from 5.7 months in January 2010. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Construction: Staying up-to-date on the number of building permits issued for local builders is useful for gauging builder sentiment and the future of housing activity. The California Building Industry Association recently announced that California homebuilders pulled 2,920 total housing permits in January, registering a 5-percent decline compared with a year ago and a 56-percent decline compared with December. However, the Construction Industry Research Board is projecting 62,000 total permits will be pulled in 2011, an increase of 38 percent compared with 2010’s total of 44,893 permits.
Mortgage Availability: Home buyers hoping to be approved for a mortgage should monitor local lending patterns. Following the financial crisis, most national banks tightened lending standards; however, some local banks haven’t been impacted as much as large lenders and are more willing to lend, even for higher-priced homes.
Anecdotal Evidence: Although buyers can access home listings online, one of the best ways to monitor the local housing market is to work with a REALTOR® and gather intelligence using their expertise and guidance.
Full Story: http://online.wsj.com/article/SB10001424052748703905404576164720668195108.html?mod=WSJ_RealEstate_LeftTopNews
Thursday, March 3, 2011
How to prepare your home for sale
1. Have a home inspection
Be proactive by arranging for a pre-sale home inspection. For $250 to $400, an inspector will warn you about troubles that could make potential buyers balk. Make repairs before putting your home on the market. In some states, you may have to disclose what the inspection turns up.
2. Get replacement estimates
If your home inspection uncovers necessary repairs you can’t fund, get estimates for the work. The figures will help buyers determine if they can afford the home and the repairs. Also hunt down warranties, guarantees, and user manuals for your furnace, washer and dryer, dishwasher, and any other items you expect to remain with the house.
3. Make minor repairs
Not every repair costs a bundle. Fix as many small problems—sticky doors, torn screens, cracked caulking, dripping faucets—as you can. These may seem trivial, but they’ll give buyers the impression your house isn’t well maintained.
4. Clear the clutter
Clear your kitchen counters of just about everything. Clean your closets by packing up little-used items like out-of-season clothes and old toys. Install closet organizers to maximize space. Put at least one-third of your furniture in storage, especially large pieces, such as entertainment centers and big televisions. Pack up family photos, knickknacks, and wall hangings to depersonalize your home. Store the items you’ve packed offsite or in boxes neatly arranged in your garage or basement.
5. Do a thorough cleaning
A clean house makes a strong first impression that your home has been well cared for. If you can afford it, consider hiring a cleaning service.
If not, wash windows and leave them open to air out your rooms. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Wash light fixtures and baseboards, mop and wax floors, and give your stove and refrigerator a thorough once-over.
Pay attention to details, too. Wash fingerprints from light switch plates, clean inside the cabinets, and polish doorknobs. Don’t forget to clean your garage, too.
Be proactive by arranging for a pre-sale home inspection. For $250 to $400, an inspector will warn you about troubles that could make potential buyers balk. Make repairs before putting your home on the market. In some states, you may have to disclose what the inspection turns up.
2. Get replacement estimates
If your home inspection uncovers necessary repairs you can’t fund, get estimates for the work. The figures will help buyers determine if they can afford the home and the repairs. Also hunt down warranties, guarantees, and user manuals for your furnace, washer and dryer, dishwasher, and any other items you expect to remain with the house.
3. Make minor repairs
Not every repair costs a bundle. Fix as many small problems—sticky doors, torn screens, cracked caulking, dripping faucets—as you can. These may seem trivial, but they’ll give buyers the impression your house isn’t well maintained.
4. Clear the clutter
Clear your kitchen counters of just about everything. Clean your closets by packing up little-used items like out-of-season clothes and old toys. Install closet organizers to maximize space. Put at least one-third of your furniture in storage, especially large pieces, such as entertainment centers and big televisions. Pack up family photos, knickknacks, and wall hangings to depersonalize your home. Store the items you’ve packed offsite or in boxes neatly arranged in your garage or basement.
5. Do a thorough cleaning
A clean house makes a strong first impression that your home has been well cared for. If you can afford it, consider hiring a cleaning service.
If not, wash windows and leave them open to air out your rooms. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Wash light fixtures and baseboards, mop and wax floors, and give your stove and refrigerator a thorough once-over.
Pay attention to details, too. Wash fingerprints from light switch plates, clean inside the cabinets, and polish doorknobs. Don’t forget to clean your garage, too.
Tuesday, February 22, 2011
Consumer Confidence Index hits 3-year high
The Consumer Confidence Index rose in February to its highest point in three years as Americans are feeling more optimistic about their income prospects and the direction the economy is headed.
The Conference Board says its Consumer Confidence Index climbed to 70.4 this month, up from a revised 64.8 in January, hitting its highest level since February 2008. It was the index's fifth consecutive monthly increase.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/02/22/national/a070307S09.DTL
The Conference Board says its Consumer Confidence Index climbed to 70.4 this month, up from a revised 64.8 in January, hitting its highest level since February 2008. It was the index's fifth consecutive monthly increase.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/02/22/national/a070307S09.DTL
Wednesday, February 16, 2011
FHA Mortgage Insurance set to go up April 18th!
FHA Mortgage Insurance is set to go up from 0.9% to 1.15% on April 18th which will increase your monthly payment. If you know anyone looking to buy with an FHA loan please tell them they must be in contract and have an FHA case number assigned prior to April 18th!
What does this mean for you?
On a $200,000 purchase you will be paying $40 more every month. If you know anyone that might be looking to buy with an FHA loan then please make sure they are aware of this coming change. Thank you.
What does this mean for you?
On a $200,000 purchase you will be paying $40 more every month. If you know anyone that might be looking to buy with an FHA loan then please make sure they are aware of this coming change. Thank you.
Friday, February 4, 2011
Tax Benefits of Home Ownership
Home mortgage interest deduction: The interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home is deductible as an itemized deduction. In the early years of a home loan most of the payments consist of interest, so this deduction is particularly substantial during the first years of homeownership.
Depending on the state a buyer lives in and his or her tax bracket, this deduction can reduce the cost of borrowing by one-third or more.
Home equity loan deduction: Homeowners can borrow up to $100,000 against the equity in their home and deduct the interest as an itemized deduction. The money can be used for any purpose, such as paying off high-interest credit card debt. In contract, the interest on credit card debt is not deductible.
Property tax deduction: Homeowners also get to deduct from their federal income taxes the state and local property taxes they pay on their home. This is another itemized deduction that renters don't get.
Deductible homebuying expenses: Various closing costs ordinarily involved in a home purchase are also deductible as itemized deductions, including loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.
$250,000/$500,000 home-sale exclusion: Perhaps the greatest tax benefit of owning a home comes when a person sells it at a profit. Homeowners who lived in their home for two of the prior five years prior to its sale need pay no income tax on a substantial amount of their profit -- $250,000 for single homeowners and $500,000 for married homeowners who file jointly. This exclusion can be used once every 24 months.
Depending on the state a buyer lives in and his or her tax bracket, this deduction can reduce the cost of borrowing by one-third or more.
Home equity loan deduction: Homeowners can borrow up to $100,000 against the equity in their home and deduct the interest as an itemized deduction. The money can be used for any purpose, such as paying off high-interest credit card debt. In contract, the interest on credit card debt is not deductible.
Property tax deduction: Homeowners also get to deduct from their federal income taxes the state and local property taxes they pay on their home. This is another itemized deduction that renters don't get.
Deductible homebuying expenses: Various closing costs ordinarily involved in a home purchase are also deductible as itemized deductions, including loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.
$250,000/$500,000 home-sale exclusion: Perhaps the greatest tax benefit of owning a home comes when a person sells it at a profit. Homeowners who lived in their home for two of the prior five years prior to its sale need pay no income tax on a substantial amount of their profit -- $250,000 for single homeowners and $500,000 for married homeowners who file jointly. This exclusion can be used once every 24 months.
Friday, January 28, 2011
7 Steps to Home Ownership
1. Decide how much home you can afford
Generally, you can afford a home priced 2 to 3 times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.
2. Develop your home wish list
Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top-five must-haves and top-five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.
3. Select where you want to live
Make a list of your top-five community priorities, such as commute time, schools, and recreational facilities. Ask your REALTOR® to help you identify three to four target neighborhoods based on your priorities.
4. Start saving
Have you saved enough money to qualify for a mortgage and cover your downpayment? Ideally, you should have 20% of the purchase price set aside for a downpayment, but some lenders allow as little as 5% down. A small downpayment preserves your savings for emergencies.
However, the lower your downpayment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get.
Finally, if your downpayment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and downpayment assistance programs for first-time buyers.
5. Ask about all the costs before you sign
A downpayment is just one homebuying cost. Your REALTOR® can tell you what other costs buyers commonly pay in your area—including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.
6. Get your credit in order
A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. Most require a minimum credit score of 620 for a home mortgage.
You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt.
7. Get prequalified
Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.
If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.
Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.
Source: http://members.houselogic.com/articles/7-steps-take-you-buy-home/preview/
Generally, you can afford a home priced 2 to 3 times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.
2. Develop your home wish list
Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top-five must-haves and top-five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.
3. Select where you want to live
Make a list of your top-five community priorities, such as commute time, schools, and recreational facilities. Ask your REALTOR® to help you identify three to four target neighborhoods based on your priorities.
4. Start saving
Have you saved enough money to qualify for a mortgage and cover your downpayment? Ideally, you should have 20% of the purchase price set aside for a downpayment, but some lenders allow as little as 5% down. A small downpayment preserves your savings for emergencies.
However, the lower your downpayment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get.
Finally, if your downpayment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and downpayment assistance programs for first-time buyers.
5. Ask about all the costs before you sign
A downpayment is just one homebuying cost. Your REALTOR® can tell you what other costs buyers commonly pay in your area—including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.
6. Get your credit in order
A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. Most require a minimum credit score of 620 for a home mortgage.
You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt.
7. Get prequalified
Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.
If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.
Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.
Source: http://members.houselogic.com/articles/7-steps-take-you-buy-home/preview/
Thursday, January 20, 2011
Real Estate - Finally a Good Investment?
• Everyone hates homes - When the housing market is in the doldrums, people tend to avoid thinking about the value of their home. Sellers complain they’re not getting offers and buyers bemoan the strict lending requirements. However, prospective buyers should be contrarian and take advantage of a down housing market.
• Smart people are buying real estate - A prominent hedge-fund manager said in a speech last fall: “If you don’t own a home, buy one. If you own a home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.” He believes that interest rates and home prices will rise this year, so real estate bargains won’t last much longer.
• Real estate performs well during inflation – Convention says Treasury Inflation Protected Securities, commodities, and real estate do well in an inflationary environment. Real estate performed well during the period in the 1970s, when persistent inflation and high unemployment occurred.
• Demand may be coming back - Job creation and getting people employed are the two major factors in the housing rebound. There’s much debate about when the job market will recovery. Optimists say the recovery will happen this year, while pessimists say it won’t happen for several years.
Excerpt from:
http://www.smartmoney.com/personal-finance/real-estate/-1295050347411/
• Smart people are buying real estate - A prominent hedge-fund manager said in a speech last fall: “If you don’t own a home, buy one. If you own a home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.” He believes that interest rates and home prices will rise this year, so real estate bargains won’t last much longer.
• Real estate performs well during inflation – Convention says Treasury Inflation Protected Securities, commodities, and real estate do well in an inflationary environment. Real estate performed well during the period in the 1970s, when persistent inflation and high unemployment occurred.
• Demand may be coming back - Job creation and getting people employed are the two major factors in the housing rebound. There’s much debate about when the job market will recovery. Optimists say the recovery will happen this year, while pessimists say it won’t happen for several years.
Excerpt from:
http://www.smartmoney.com/personal-finance/real-estate/-1295050347411/
Wednesday, January 5, 2011
Price Differences: Foreclosure vs Short Sale vs Standard Sale
Housing prices vary from city to city, but even within your neighborhood or community, there may be distressed and non-distressed sub-markets with significant price differences. To illustrate, the overall median sale price of a detached existing home has been just over $300,000 throughout 2010. By comparison, the median price of a conventional non-distressed sale was about a third higher at roughly $400,000. At the other extreme, REO properties sold by banks were about a third lower than the overall median at roughly $200,000. Short sales, however, were not so steeply discounted. With a median price of roughly $270,000 over the past year, short sales were priced about 10 percent below the overall median and about 25 percent higher than REOs. What explains these differences in prices?
REO properties are sold substantially below market price because they are typically smaller in size, generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below market level.
Short sales are usually priced somewhere between REO sales and market sales. These are properties owned by “underwater borrowers” who cannot pay off the mortgage balance. To avoid incurring hefty costs from a foreclosure proceeding, lenders agree to discount the loan balance. With lenders willing to concede, short sale properties are priced below market value but above what they would have sold in foreclosure status, so lenders could minimize the financial loss that would have incurred otherwise.
source: http://www.car.org/marketdata/realestate411/re411dec2010/
REO properties are sold substantially below market price because they are typically smaller in size, generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below market level.
Short sales are usually priced somewhere between REO sales and market sales. These are properties owned by “underwater borrowers” who cannot pay off the mortgage balance. To avoid incurring hefty costs from a foreclosure proceeding, lenders agree to discount the loan balance. With lenders willing to concede, short sale properties are priced below market value but above what they would have sold in foreclosure status, so lenders could minimize the financial loss that would have incurred otherwise.
source: http://www.car.org/marketdata/realestate411/re411dec2010/
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