Happy Chinese New Year!
January 23 is Chinese New Year, and heralds the Lunar New Year of the Water Dragon, a once in every 60 years occurrence. The dragon is perceived as a mystical and auspicious creature in Chinese cultures and this year is expected to bring prosperity and transformational change.
Training Tips for the Spring Real Estate Market
Yes, why not? January is the month when every media source is urging us to get every aspect of our lives “into shape.” January is also when most buyers and sellers consider whether this is the year they will buy or sell. Here are some of the essential training and assessment areas to keep in mind, and that we can cover in more detail to address your particular concerns.
Buyers
- Weigh and measure yourself financially.
- Build financial muscle with savings.
- Reduce your debt waistline.
- Lenders are requiring lower debt-to-income ratios.
- Eliminate cellulite on your credit report by checking for errors.
- Survey the playing field: follow the market well before it’s time to buy.
- Work with personal trainers including me, your Realtor.
Sellers
- Get a physical: get inspections before starting improvement projects.
- Assess your capabilities: get a realistic view of the value of your home.
- Exercise the right muscles: work on improvements that will most strengthen the appeal of your property.
- Scout the competition: keep up with sales and value trends in your neighborhood, and similar ones.
- Keep your eye on the finish line: assess your options for your next home after the sale.
- Work with personal trainers including me, your Realtor.
Keepers
- Maintain, maintain, maintain. Don’t let your asset sag.
- Cut some flab from your mortgage payment: check on refinancing options, even if you are “underwater.”
- Reduce your caloric intake with subsidized and tax advantaged energy saving improvements.
- Challenge the referee: appeal your annual tax assessment.
- Keep up with the pack: be aware of values and trends in your neighborhood.
- Work with personal trainers including me, your Realtor.
MONTHLY MARKET SNAPSHOT
Last year closed on several positive notes when it came to the housing market, and a number of recently released reports suggest we could be seeing the market stabilizing and even gaining some momentum as we begin the New Year.
Noted housing economist Liz Ann Sonders of Charles Schwab said in a recent report that “we’re seeing a light at the end of the housing tunnel.” The senior vice president and chief investment strategist for the brokerage firm pointed out that the pending-home-sales index surged more than 7% last month to its best level since April 2010.
Sonders isn’t alone in her estimation that real estate could be bottoming out. In a report released Monday, Clear Capital, a real estate valuations company, predicted that prices in the San Francisco-Oakland-Fremont metropolitan area will remain flat this year versus a 4.7 percent drop in 2011.
The firm said Silicon Valley should see a 1.6 percent increase in home prices, compared with a 2.5 percent drop last year. “This region overall is doing pretty well,” Clear Capital research director Alex Villacorta told the San Jose Mercury News.
Nonetheless, the economic and housing news in recent months continues to trend higher and offer reason for encouragement that 2012 will truly be a “Happy New Year.”
MORTGAGE RATES
2012: Refinance Opportunities & Jumbo Financing
Historically low interest rates have carried into 2012 giving homeowners the opportunity to improve their financial future by improving their home financing. Many borrowers are able to refinance at zero cost to accomplish goals such as lowering payments, shortening the loan term, or converting from an ARM to a fixed rate mortgage. Buyers are joining existing homeowners in taking advantage of the record low rates as the combination of rates and the affordability of the housing inventory present what could be an optimal buying opportunity.
2012 also brought substantial improvements to Non-Conforming Financing, commonly referred to as Jumbo. The continued supply of private capital has caused interest rates on both fixed rate and ARM products to fall sharply for loans between $625,500 and $5,000,000. In addition to the lower rates, qualifying guidelines have continued to expand, providing increased access to the jumbo products. Many homeowners who were unable to refinance their jumbo loans in 2009 and 2010 are finding it possible to take advantage of today’s record low rates.
I hope you will find the following snapshot of local Real Estate inventory interesting.
The table represents aggregated values based on MLS data for the specified date.
If you know someone who is considering buying or selling a home, please give me a call.
I will provide professional & courteous service along with knowledgeable guidance through the process.
Thank you!
Maha
It’s the time of the Winter Solstice, the shortest day of the year and first day of winter. Fortunately our season is mild: hills blush green under mostly gentle rains rather than turn white under heavy snow.
And yet there really is a winter in the Bay Area – and it’s wet. Water intrusion can destroy the value of your home. Mostly it’s a slow process: seepage through a wall, roof leaks, fungus growth in damp areas, and down-spout flows that undermine foundations. The damage is often invisible, not discovered until there is major structural damage. Like the body, a home benefits greatly from regular check-ups. Here are some suggestions related to moisture issues, and do contact me for referrals to my favorite service providers.
Roof and gutters
WHEN: Ideally, once before the rains start and again after they stop
WHO: Licensed roofing contractor.
All wooden components
WHEN: Every two years
WHO: Licensed pest inspector. Not just an exterminator.
Sewer pipe
WHEN: Prior to sale or when you see symptoms like back-ups, or seepage and settlement in the ground
WHO: Licensed plumbing contractor
Foundation/Retaining walls
WHEN: If you see cracks, moisture seepage, dampness, or tilting
WHO: Foundation or drainage contractor, perhaps a structural engineer
Speaking of home improvements, this is your last chance to take advantage of energy conservation rebates that may expire at the end of the year. Check the sites below to see if there is a financial gift for your stocking:
Thank you for your continued readership, comments, and referrals. Questions are always welcome. I will gladly learn along with you if I don’t know or have the answer at hand. Until next year… Happy New Year to all, and to all a good night!
MONTHLY MARKET SNAPSHOT
Between the euro zone debt crisis, the sluggish economic recovery here at home and the bickering in Washington, we’ve certainly had a share of bad news this year. But there were encouraging signs in recent weeks that the tide could be turning on the economic and housing front.
Pending home sales both nationally and in California shot up in October, the most recent figures available. We also learned that the economy grew faster than expected. And unemployment actually moved lower last week as well – all very positive signs for the real estate recovery.
Nationally, pending sales rose 9.2 percent in October compared to the same month a year ago, according to the National Association of Realtors. Meanwhile, the California Association of Realtors reported that pending home sales in our state were up for the sixth straight month in October, climbing 3.1 percent from the previous month and 10.7 percent from a year ago.
A sustainable recovery in the housing market depends a great deal on the labor market bouncing back. And last week we saw signs that could be starting to happen, albeit slower than any of us would like.
The Labor Department last week announced an unexpected drop in the unemployment rate in October to 8.6 percent from 9 percent, raising hopes of a solid recovery. Although some of the improvement was due to a contraction in the labor market, the country did add 80,000 jobs, marking 13 straight months of employment gains.
Finally, U.S. manufacturing expanded at a faster rate in November than expected and the overall economy grew for the 30th consecutive month, according to a closely watched index released last week by the Institute of Supply Management.
All of this is not to suggest that the economy and the housing market are out of the woods yet. But the combination of positive economic trends – coupled with strong corporate earnings reports through much of this year – certainly gives us reason for optimism as 2011 comes to a close. If these trends continue into the new year, they will go a long way toward reigniting the housing market across the country.
One final note: Getting Congress to agree on anything these days seems virtually impossible. So it was all the more surprising – and encouraging – when the U.S. House of Representatives and the Senate pulled together a couple of weeks ago on a critical piece of legislation returning the maximum loan limit on FHA-backed mortgages to $729,750.
The bill that was passed by Congress and signed by President Obama will give more homeowners access to lower cost loans at higher limits, especially necessary in high-priced markets like the Bay Area. Moreover, it was an encouraging sign that our Congressional representatives understand how fragile the housing recovery is right now and the importance in doing whatever they can to create sustainable growth.
The limit on the loans, known as FHA-conforming loans, had been $625,500 after a temporary increase on limits expired on Oct. 1. The House voted in favor 298 to 121, with 101 Republicans voting against the bill. The Senate voted 70 to 30 in favor of the bill. The vote raising the FHA limit was a big victory for the housing industry and for consumers. Credit goes to industry groups like the National Association of Realtors and the National Association of Homebuilders for making persuasive cases on Capitol Hill in recent weeks.
“Restoring the higher loan limits for the FHA will provide homeowners and homebuyers with safe and affordable financing, while providing a much-needed boost to housing markets all around the country,” James Tobin of the National Association of Homebuilders wrote in a letter to Republican Speaker John Boehner.
As we head toward the end of 2011 and the new year, I suspect more “average” buyers will come to the same conclusion.
MORTGAGE RATES
Different day – same story. The European Union has done little to convince global investors a plan is in place to bring the euro zone crisis to an end. The lack of decisive leadership and lingering doubt about the European financial crisis has bond investors gravitating to the relative safety of US Treasuries. This may mean fractionally lower mortgage interest rates as we head into the New Year. Investors are looking to the usual macroeconomic data, but until the sovereign and bank debt concerns in Europe are put to rest, the European theater will continue to be the driving force behind the most significant market activity.
Many hopeful homeowners are waiting to hear the details behind HARP 2.0 – the government-sponsored program designed to help underwater homeowners refinance so that they can take advantage of today’s record low rates.
‘TIS THE SEASON FOR SAVING, RIGHT?
With the Holiday season in full swing, saving money may not be at the forefront of your mind. Smart Money recently published an article showing that Americans are certainly not scrooges when it comes to spending money. How is it that you’re supposed to save for a down payment on a home in an area with a median home price approaching the half-million dollar mark? The answer is, you may not have to. While buying a home with 20% down has its advantages, there are still many ways that home buyers can purchase with less than 20% down.
Most recently FHA reinstated their loan limit up to $729,750 with only 3.5% down. Thanks Santa! If your price range is a little bit more modest, conventional loans offer alternatives up to a $417,000 purchase price with only 3% down. Of course there are requirements for each, but for those of us who get carried away with Christmas cheer, it’s important to know that there are lending options out there. For more information on the requirements or a referral for a good lender, please let me know.
I hope you will find the following snapshot of local Real Estate inventory interesting. The table represents aggregated values based on MLS data for the specified date.
If you know someone who is considering buying or selling a home, please give me a call. I will provide professional & courteous service along with knowledgeable guidance through the process.
The Best Places to Celebrate the Holidays
The holiday season is fast approaching, and that brings many opportunities to give back to our community enjoying our special corner of the world.
Thanksgiving provides an occasion to reflect on the virtue of gratitude. It’s a chance to again thank you for your continued feedback, ideas, and referrals – it lights up my life. But gratitude in action is generosity. Material gifts to the less fortunate are always welcome, so if you are looking for a way to share your bounty with others during these holidays, please consider a donation to Toys for Tots and One Warm Coat.
As for Christmas, Hanukkah and Kwanzaa, the winter holidays all share imagery of light: its coming, its waning, its return, and its endurance. The Bay Area offers several festivals of lights. Consider these to entertain the young and not-so-young:
- In Palo Alto, Christmas Tree Lane
- In Fremont, Niles Merchants’ Association’s 11th Annual Festival of Lights and Parade (Nov. 25)
By the way, a greener, more sustainable way to light up your holidays is to opt for LED lights. While a bit more expensive, they burn longer, are more durable, consume about 15% of the energy used by incandescent bulbs, have more intense colors, and create less risk of fire due to their cooler temperatures.
Let the holidays begin!
What Does the New Refinance Program Mean To You?
With 30-year mortgage rates at an all-time low, refinancing your home can save you hundreds each month. But why aren’t more homeowners taking advantage? The answer lies in your LTV (loan-to-value ratio). Your LTV can be calculated very simply by dividing your total loan amount by the market value of your home.
For example: a $400,000 loan on a home with a market value of $500,000 would yield a LTV ratio of 80% (400,000/500,000 = .80)
Banks generally require a LTV ratio of 80-90% or lower to consider refinancing. If the value of your home has decreased, your ratio will skyrocket.
For example: the same loan of $400,000 and a reduced market value of $420,000 yields a LTV ratio of 95%.
The Obama administration previously increased the LTV restriction to 125% through the Home Affordable Refinance Project (HARP) but that limit still presented challenges for many homeowners who have seen a significant drop in their homes’ value. The most recent proposal, sometimes called HARP 2.0, will allow borrowers to refinance regardless of their LTV; it will also streamline the appraisal and underwriting process (assuming your loan is owned by a government agency). Click these links to see if your mortgage is owned by Fannie Mae or Freddie Mac and whether you could qualify for a HARP 2.0 refinance.
While banks will continue to operate within their own individual guidelines, lifting this restriction will most certainly provide many underwater borrowers the opportunity to reduce their mortgage payments and remain in their home.
Feel free to contact me if you would like more information regarding the market value of your home or the recent changes to refinance requirements.
Monthly Market Snapshot
While the Bay Area housing market has had its ups and downs much of this year, a couple of segments of the market remained resilient through much of 2011. In previous columns, I’ve talked about the strong rebound in the luxury market from Silicon Valley up through Marin. But one other sector has also played an important role in keeping the overall real estate market going: the investment segment.
According to DataQuick, the La Jolla-based real estate information service, absentee buyers – real estate investors for the most part – bought one out of every five single-family homes and condos in August. Buyers paying cash accounted for more than a quarter of sales. And short sales – those transactions where a home sells for less than the homeowner owes on the mortgage – added up to another 20 percent of sales.
However, real estate investors – many of whom are paying all cash for entry-level properties – are making it hard for some first-time buyers and others to compete for those homes. Given the choice, it’s understandable that a seller would opt for a cash offer that’s likely to close quickly rather than take their chance that a buyer can secure mortgage financing.
Realtors who work with these buyers say that many are first-time investors who like the long-term potential of investing in real estate over other investment vehicles. With prices and interest rates this low, they reason, there may never be a better time to jump in.
As we head toward the end of 2011 and the new year, I suspect more “average” buyers will come to the same conclusion.
Mortgage Rates
The deteriorating financial situation in the euro-zone threatens to produce a major world-wide economic crisis. As long as the threat of a euro-zone collapse prevails – dollar denominated assets will be broadly favored as a place to safely park capital – and that is good news for the prospects of steady to perhaps fractionally lower mortgage interest rates here in the States.
The latest chapters in the unfolding euro-zone debt saga include the prospects for new government formations and promises by global financers that additional rescue funds will soon be forthcoming. The nearly minute-to-minute influence of financial headlines from Europe is almost completely overshadowing U.S. economic data. Mortgage investors barely noticed last week’s data from the Labor Department indicating initial claims for government unemployment benefits posted a larger than expected decline. It was the second straight week of improvement in the labor market – certainly nothing suggesting a new trend is in place – but it is a step in the right direction.
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Mobile 510-517-7456
630 Ramona Street
Palo Alto, CA 94301
Are you looking for your dream home or planning to sell your house in the Palo Alto CA Real Estate or Fremont CA Real Estate areas? Buying or selling a home is one of the most important financial decisions that an individual or a couple can make. I take great pride in my work, which is based on integrity, relationship-building, and impeccable service. If you are looking to buy or sell a home, or have questions regarding real estate, please contact me for an initial free consultation.
I have been working with real estate clients for over 10 years now. I've resided in the Bay Area for more than 15 years and am most familiar with the local real estate landscape. I love what I do -- helping my clients buy their dream homes and sell them when they are ready to expand. I value relationships that are based on respect, trust, integrity, and communications. I am reliable and true to my word. If I may be of service, I would love to help.
DRE #01305947
