Category Archives: home buying

Mortgage Rates….Staying Low or Rising???

I wanted to ask people out there whether they feel interest rates are going to stay around 5% or rise?  I have had so many of my buyers get great interest rates with FHA loans.  It just amazes me how long they have stayed low.  If you listen to all the lenders ho are advertising they are saying to take adavantage of these “All Time Low Rates”, because they will not be here long.  When I heard this again today on the radio, I thought to myself, who knows?  I think you have to listen to the economists to understand. 

I think for the rates to rise the Obama adminstration needs to be worried about inflation.  However some economist, “moringstar analyist” are saying we are looking at a Double Dip.  This means that we are going to see home prices fall again, because the current adminstration has not been able to create enough jobs to prevent the double dip.  There is not enough income to support any price increases.

Anybody have any comments on what you think the interest rates will do?  Just a real estate agent trying to better prepare my clients for the future.

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Tax Credit Extended for California

I don’t know if everybody knows that the state of California has extended the first time home buyer and re-beat buyer tax credit.  New applications will be available on May 1st, 2010.  The federal governments tax credit will expire April 30, 2010.    There are a few difference with the State credit and the federal credit.

The state credit will have a budget of $100 million for first time home buyers and $100 million for re-beat buyers. The major difference with a budget, is you can run out of funding and the program ends.  They plan to on the $100 million cap for New Home Credit will be reduced by 70% of tax credit allocated to each buyer.  The $100 million cap First Time Home Buyer credit will be reduced 57% of the tax credit allocated as well.  This is because the state feels that many buyer will not be able to use the whole credit within 3  years.  These credit will be served on a first come basis.  Another difference is this is a credit.  That means it goes against what you owe in your taxes.  You have to use this tax over a three year period ($3,333 per year).  This tax cannot reduce regular tax below your Tax Minimum Credit (TMT).  You cannot get a refund for the amount you do not use.

The taxpayers who are first time home buyers need to purchase (close escrow) on or after May 1, 2010 and before January 1, 2011 in order to get this credit.  Repeat buyers going for the New Home Credit need to purchase on or after December 31, 2010 and before August 1, 2011

There are a few regulations on who will be aledgeable for these two credits.  Please go to the government website and too read all the rules and updates as they become available.   http://www.ftb.ca.gov/individuals/New_home_Credit.shtml

Brokers being Fined for Adding on Fees

I don’t know if any of you read the article in the Union Tribune this Sunday about how the HUD is cracking down on what realtors charge for extra.  The rule behind this is that if you are being paid a commission and that is negotiated with the seller that is all you should be paid.  They (HUD) are finding that a lot of realtor tack on extra fees above and beyond their real estate commission.  If the fees are for services that should be done to close the deal the HUD feels their is no reason the client should be paying more.  So when an agent tacks on a fee for a transaction cordinator or signage or advertising any of these fees the HUD could fine the broker for gauge their client.

They feel that advertising, paperwork, adminstrative, puting the sign on the property, and flyers need to be done in order to sale the home and should be included in the commission or flat rate negotiated at the beginning.  When I first started real estate in the Bay Area I saw a lot of agents charging their clients for things I felt were all part of the transaction.  It will be curious to see if brokers abide by the new law.

Any thoughts…..

New Guidelines for FHA Loans

The FHA (Federal Housing Association), who currently does about 30% of the current loans in today’s market, is changing a few of their rules and fees.  Three years ago, FHA loans made  up about 2% of the loan market.  One of the reasons that the FHA makes most of the loans now is that they only require the buyer to put 3.5% down to purchase a home.  With only 3.5% down, the FHA can also ask the seller to pay up to 3% in closing costs.  The catch to these loans is that they are not cheap and they require the buyer to carry PMI (property mortgage insurance) to protect the risk of such a low down payment.

The changes are as follows:

  • Increase FHA insurance premiums
  • Increase upfront cash by the borrower
  • Focus on enforcement and lender accoutability
  • Reduce the maximum seller concessions from 6% to 3%
  • Raise the minimum FICO score to qualify

I think these could be good changes — the FHA is trying to make sure that the buyer is more strongly qualified so that we don’t end up with people buying homes that they can’t afford.  If a buyer only puts 3% down and gets 6% back in closing costs, they are basically coming up with no cash.  Buying a home takes more than just a down payment; you also need to maintain the home which, overall, is more expensive monthly than renting.

We need to take accoutablility for our expdentures…

Short Sales or Modifications

I was a little stumped on what to write about today, however, something has been bothering me so I though I would share…  I meet with my tax accountant the other day and we got into the discussion of real estate, which happens a lot to me.  He mentioned that we are going to see more foreclosures and short sales in the next two years than we’ve seen over the past two years.  This was not the first time I’ve heard this!  Why would that be? The problem is that there are a large number of adjustable loans coming in to their adjusment period over the next two years. A lot of these homeowners have already lost a lot of their home’s value, and now have less incentive to modify their loans. The prediction is that a lot of these homeowners will face foreclosure or short sale their properties.

As I sit in my office, I wonder what will happen to the real estate market…  Will we see that “W” that everybody has been talking about?  Or will the market stay flat?

Let me know if you have any thoughts on the next two years in the real estate market.

Foreclosures

I’ve been talking with a lot of people in this industry over the past couple months and nobody seems to know whether the banks are going to release the REO’s all at once, or slowly release them.  The big concern in the industry is if they release them in a big clump, we could see a drop in real estate prices.  I believe this is in the back of everybody’s minds right now. 

If you buy a home now will you lose value in the next six months?  I don’t think anybody can predict this. It’s likely, however, that any amount a newly purchased home drops will be offset by the interest rate that is currently being offered. So it probably will be a wash. 

It’s going to be an interesting 1st and 2nd quarter this year. 

If you have any thoughts on this subject, share them with me! I’d be happy to respond.

Median Home Prices Show First Increase Since 2006

MEDIAN HOME PRICES SHOW FIRST INCREASE SINCE 2006

 San Diego County showed their first year increase since June of 2006, according to DataQuick yesterday.  It wasn’t a big increase however it was significant enough to show we might be at a turning point in the real estate market.

  “It’s a reflection of a market that has stabilized in many areas”. DataQuick analyst

 The overall median home price went from $350,000 to $360,000 a change of +2.9%.  We have seen a drop in prices over the past 13 months so this is very strong indicator of things to change.  Many analysts feel the government involvement has helped buyer/investors join the market, with all time lower interest rates, FHA insured loans, and the treasury department taking over Freddie mac and Fannie mae.  They have also just extended the homebuyer credit for another six months which could help the market keep its pace. 

 The one concern many analyst have is who is driving the market.  The majority of sales (36%) have involved homes foreclosed on in the previous 12 months, dataquick said.  This has become a sellers market for certain types of product in certain locations.  What would help the market even more is sales activity in higher-priced neighborhoods.  Transactions have remained low since sellers have not reduced enough and financing can be difficult in these price ranges.  If we do not see a new wave of foreclosures flood the market due to loans going bad and some movement in the higher end home prices we should be able to maintain a stabilized market.

 The overall housing picture appears to be turning around.  We have turned some major corner with increase of sales and home prices increasing slightly.  If the interest rates stay low and the supply stays steady we should see this market continue to climb