WELCOME TO WINTER… CALIFORNIA STYLE

December 23, 2011 in Uncategorized
Tags: conservation rebates

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:

• PG&E                                          
• San Mateo County                                          
• Santa Clara County                                          

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.

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