housing market

sudoadmin
October 3, 2012

San Luis Obispo housing equity turned the corner

There are a number of forward looking indexes that try to predict the future of real estate values. They all fail. The only way to have certanty about the housing market is to look backwards, which is exactly what we have done.

Every economist has been trying to call the bottom of the market – or that point at which the foreclosure debachle that put pressure on housing prices changed from getting worse to getting better. We now have the answer. It was in September 2011. You may not know this, but every foreclosure in s amatter of public record. Banks file the foreclosure notices with local government. CoreLogic is a company that collects that data from local government and leverages it to track market activity. They also use that data to provide something called an AVM, or Automated Value Model. This AVM is the tool that banks use to monitor the debt to value ratio on all current loans and on loan approvals. As we all know, home prices are largely dictated on the loan value of the mortgage. It does not matter how much a consumer wants to pay for a home, it only matters if the bank will lend against the selling price.

Below are two charts. The first shows negative equity in the San Luis Obispo region. Up until December 2011, about 20% of all homes in the area were distressed. That means that the mortgage amount owed was greater than the estimated selling price if the home were sold that day. You may have heard phrases like “1 in 5 homes are underwater.” As of June 2012, the number of homes underwater had dropped by 25%, down into the 16% range. As home prices climb, underwater homes decline. We can tell you that home prices went up month over month throughout the summer and fall. Century 21 Hometown Realty was selling around 300 homes per month, and homes on the market for any length of time saw price increases rather than price cuts. Buyer demand for housing is strong and we are getting multiple offers on listings for the first time in many years.

The second chart below shows the reversal in foreclosures. From October 2011 forward, the number of foreclosure properties have gone down each month. This correlates to the negative equity chart.

reversal of negative equity and foreclosure trends — Click Image to enlarge

Bysudoadmin
OnOctober 3, 2012

sudoadmin
July 22, 2012

5 Great Tips for Buying a Home

With great opportunities abounding in the housing market and historically-low interest rates still intact, consumers can secure record-breaking values on a home purchase, according to New York-based real estate attorney Adam Leitman Bailey.

“Incredible deals are on the market and ready to be made, but only for those buyers who know how to seize them,” says Leitman Bailey, author of the New York Times best-selling book, “Finding The Uncommon Deal” (Jon Wiley & Sons, Inc. 2010). “You can buy your dream home at the price you want if you are just willing to take the necessary steps that will give you an uncommon advantage.”

To help buy a home at the best possible price, Bailey offers his top 5 home buying tips:

Do a Credit Check—On Yourself: Check your credit report long before you start shopping for a home, as it may take several months to resolve any mistakes or complications. Challenge negative remarks in your credit report, even if they are debatably true. Under federal law, if the company placing the negative remark on your report does not respond within 30 days, the remark must be removed. If you need help, contact Century 21 Hometown and our in-house mortgage partner can help you with this with our compliments.

Know Your Total Budget: Don’t Home Shop Without It: Your budget includes the total purchase price of your new home, moving costs and your total monthly and annual expenses. Don’t forget to include real estate and local taxes and the policies that affect potential changes in local taxes. Once you know your budget, call lenders to shop for a loan and also learn about the different products available to finance your home. Again, Century 21 Hometown can help you understand how much the bank believes you can afford.

Visit the Neighborhood, Not Just the Home: Everyone and everything in town can potentially provide insight into your prospective neighborhood’s character. It’s always worth spending time and money in local coffee shops and restaurants, and participating in events and entertainment to learn more about the area. Read the community newspapers and supermarket bulletin board postings to gain further understanding of the neighborhood. Be sure to consider factors such as local community crime rates, access to medical facilities, religious venues, and any other considerations that are applicable to your personal preferences. Your Century 21 Hometown agent would be happy to provide you with a neighborhood tour.

Don’t Be Afraid to Negotiate: Ask the owners of your potential new home for the minimum price they would accept to close the deal. You may be pleasantly surprised by the answer and a deal may not be far off, especially if the property has been sitting on the market. Some items are easier to negotiate than others. If both sides are stuck on the purchase price, ask the seller to include furniture or cosmetic improvements at a certain price. For newly constructed condominiums, ask the seller to pay any taxes involved in the transfer.

Hire—and Accompany—the Inspector: Century 21 Hometown only works with experienced home inspectors. A satisfactory home inspection will play a big role in your satisfaction in the home-buying or -selling process. Cross out waivers and any limitation of liability when signing a contract with an inspector or engineer. Your inspector should be held responsible for missing any major repair items during the inspection. Also, be sure to accompany the inspector on the site visit. You will learn about your potential new home and its structure, as well as important information about the lifespan of its systems and major components. Also, make sure your inspector or engineer checks the big ticket items, which can include the HVAC or the roof.

Bysudoadmin
OnJuly 22, 2012

sudoadmin
May 9, 2012

Housing advice from Moms

Moms are the greatest. Although many moms are working today, they are still run the roost at home and have the best advise when it comes to home ownership. In honor of Mothers Day, Century 21 Hometown Realty celebrates the wisdom of mothers. Here is advice that we were able to locate from Moms.

How much can you afford?

Lenders like PrimeLending, our mortgage partner play a significant role in home ownership. They will pre-qualify you for a home loan so you know how much the bank believes that you can afford. If you are pre-approved for a $300,000 loan, mom’s advise is to look at homes for $250,000. This leaves a cushion for the unknown.

Another mom suggests buying a home as if you only have one income. Being house poor is never a great situation, especially in today’s sluggish job market. Most job seekers are in the market for 6 months today, so make sure you have some savings to manage the possibility of employment challenges.

Buy Smart!

Century 21 Hometown Realty is one of the few companies that offer consumers the ability to do deep level of research on your home purchase. Take a close look at the neighborhoods where you want to live. Give consideration to the market conditions in that neighborhood. If possible, avoid neighborhoods that have a lot of foreclosures or a lot of homes for sale – this signals a fragile marketplace where your home purchase could include a lot of downside risk.

Pick the right real estate agent and spend time with them to understand the real estate market. This is true for buyers and sellers. Take the time to look at lots of homes that are priced in your price range to understand what other buyers and sellers are looking at. Century 21 Hometown Realty agents have access to a market analytics tool called REALTORS Property Resource. Ask your agnet for an RPR report before you buy or sell a home.

Don’t Forget the Home Inspection

It really does not matter if you are buying a new home or a used home, the home inspection is really important. Ask questions about the cost of irrigation, the cost of landscaping. Find out how old the heating and ventilation is and who the service provider is. Take a close look at the roof. When was the home last painted?

Here in California, rodents and termites can do a lot of damage. Moms say that they would have delayed listing their home for sale if they had done an inspection before listing their home. Sometimes the price you list your home for does not account for repairs that are needed before the transaction closes.

Thanks Mom!

Happy Mothers Day.

View More Home Buyer Resources

View More Home Seller Resources

Bysudoadmin
OnMay 9, 2012

sudoadmin
April 18, 2012

How to adjust your underwater mortgage

Bakersfield’s real estate bust was certainly one of the worst in the country, and because of that, many homeowners have faced real challenges when evaluating the mortgage on their home. To a lesser extent, there was also plenty of pain felt by homeowners along the Central Coast too. Underwater homeowners wistfully listen to radio ads boasting refinances with ‘record low interest rates’, knowing that taking advantage of those rates in a refinance is simply out of the question.

Compounding an already impossible problem, some homeowners also have an Option ARM that has reset, or is about to.

The Federal HARP (Home Affordable Refinance Program) was announced in early 2009, but few were able to take advantage of the program and one of the primary challenges were the limitations around loan-to-value requirements.

Simply stated, if your mortgage was more than 125% of your home’s current value, you were simply out of luck. And, in many places in Bakersfield’s housing market, we’ve seen as much as 50% of property values simply disappear.

Who Is Eligible for HARP 2.0 Refinance

Reach out to your lender for specific questions or contact our mortgage partner, Prime Lending. Here are some of the things you’ll want consider to determine whether or not you might be eligible for a HARP Refinance are the following:

You cannot have made more than one late payment in the last 12 months, and none in the last 6 months
The loan amount cannot exceed current conforming loan limits. California’s upper conforming loan limit is $625,000.
Your existing loan closed prior to May 31, 2009.
You’ve not done a HARP refinance. If you took advantage of HARP 1.0, you are not eligible for HARP again.
Second mortgages are allowed, but the second must approve.
Second homes and investment properties ARE eligible.
You may not use HARP if you have an FHA loan. For those homeowners, try the FHA Streamline Refinance Program.
There is 105% loan-to-value limit if HARP is used to refinance an adjustable rate mortgage or an Option ARM. If you need help with understanding what your valuation is, do not rely on Zillow – it is very inaccurate. Contact a Century 21 Hometown Realty Agent.
Loan is guaranteed by Fannie Mae or Freddie Mac. This is has nothing to do with who you make your mortgage payments to. To find out if your is guaranteed, check Fannie Mae and check Freddie Mac.

I know this is some downright gripping reading, but I suspect if you are one of the homeowners that can benefit from a HARP refinance, you may very well be on the edge of your seat. If you have questions, if you are curious about your eligibility, don’t hesitate to reach out to us. If we don’t know, we’ll point you in the direction of the lenders we trust to help you get to the bottom of it.

Bysudoadmin
OnApril 18, 2012

sudoadmin
April 16, 2012

Foreclosure rates drop nearly 15% in San Luis Obsipo County

Here is another great sign of economic stability and home ownership stability in San Luis Obispo County. According to CoreLogic, The Foreclosure 12 – Month Percentage shows the percentage change in home foreclosures in San Luis Obispo County. CoreLogic records this data from banks and public record sources.

Foreclosure Rate in Decline for San Luis Obispo County — Data from CoreLogic

Century 21 Hometown Realty has been working with consumers on short sales and with banks to liquidate foreclosed properties for the past 5 years. It is with a deep sigh of relief that we see stability returning to the marketplace. With every foreclosure is a family that is being asked to move – something that breaks our hearts and the hearts of our community.

There are many economists that are theorizing what caused the turn around in housing, but in reality – it is likely a combination of many factors: low interest rates; changes in lending standards; population expansion, government policy, and so on. For us here on the central coast, we see inventory as the driving factor. As you can see from this next graph, there have been fewer sales.

Century 21 Hometown Realty is actively seeking listings to fulfill our buyer requests. If you are thinking of listing your home for sale, please contact one of our agents immediately. To learn more about our programs for sellers, please check out this information.

Here is a quick snapshot of real estate trends in a town like Arroyo Grande. If you would like these trends for your area, contact any of our offices or agents today.

Arroyo Grande Market Data — Arroyo Grande Public Record data from CoreLogic ePropertyWatch

Bysudoadmin
OnApril 16, 2012

sudoadmin
April 12, 2012

Aiming to sell takes focus

When selling a home in an unfavorable market, it can be hard to face some facts. Most likely, your home will not command the price you want. It might be hard to cut your losses and move on. And you may find you have more emotional ties to selling your home than logical ones.

Such feelings are not a surprise, says retirement expert Jan Cullinane, author of “The New Retirement: The Ultimate Guide to the Rest of Your Life.” Business decisions often are more emotional than we realize. But understanding some basic theories of behavioral economics—how psychology affects economic decision-making—can help us all make better financial decisions.

“Leaving a home can be very emotional,” Cullinane says. Yet, she adds, when we need to sell a home in a down market, we need to understand the obstacles and the behavioral economic factors so we can cut the emotional ties.

“We’re much more emotional, like Homer Simpson in our thinking, rather than logical like Spock from ‘Star Trek,’” Cullinane says. “When it comes time to sell our home, it helps if we are aware of these factors and how we think.”

Being aware of the following behavioral economic concepts help with this difficult decision-making:

Status quo bias. “It’s easier to do nothing than to do something,” Cullinane explains. People don’t want to change things unless there are compelling reasons.

Loss aversion. In this market, you may have to sell your home for less than you thought. On the flipside, when you buy your next property, you’re likely to buy it at a discount. But that doesn’t always make us happy. “We feel worse about a loss than we feel happy about a gain,” Cullinane says. Recognizing our loss aversion can help us come to terms with the loss and appreciate the gain.

Endowment effect. “We put a higher value on something we own than on something we don’t own,” Cullinane says. The endowment effect can create a roadblock when putting a home on the market. It also means that others won’t value our home the same way we do.

Anchor. We all have an “anchor”—a fixed price for which we think our home should sell—and we don’t want to sell it for less than that amount. Often, our anchor is based on what we paid for the house and what we feel it should be worth now, even if market conditions have changed dramatically. We need to get past that emotional anchor. “Let’s face it, your home is worth what someone is willing to pay for it,” Cullinane says.

Sunk costs. When we have put money into something that we can’t get back, we have a tough time cutting our costs and moving on. For instance, if you remodeled your deck, you may not be able to recoup that money when you sell. You need to realize that money is a sunk cost—it already has been spent and you won’t get it back—and move on.

If you’re retiring, or moving for other reasons, it helps to realize that your home is not worth now what it once was. Those high sales prices aren’t coming back any time soon, but you can get a good deal on a new purchase.

“Knowing that you feel worse about a loss than you feel happy about a gain—and recognizing that intellectually—goes a long way to getting over that emotional hurdle,” Cullinane says. “Knowledge is power.”

This article originally appeared on the Equifax website. http://blog.equifax.com/real-estate/when-selling-a-home-end-the-emotional-ties/

Bysudoadmin
OnApril 12, 2012

sudoadmin
February 13, 2012

Housing inventory in decline

Everyone knows the old supply and demand curve. As demand goes up and supply goes down and prices usually increase. Clearly there are numerous factors that have influence over this rather simple economic model. All things considered, when you have more buyers than sellers, prices rise.

If you look at supply curve of real estate inventory over the past decade, you quickly notice that the supply curve went way up for the past 6 years. The climb began in 2004 and peeked in the middle 2006. From there, the supply curve to real estate for sale has had an erratic, but slow downturn. This supply curve would indicate that inventory levels in real estate have returned to normal. This is a great indicator of health in the housing market.

There are reports that banks are holding a lot of foreclosure inventory off the market. By holding back inventory, they stabilize supply curve of the housing market and preserve home values. This bank owned inventory is called Shadow inventory.

In any case, the good news for home sellers is that low inventory puts upward pressure on home values. This is also a clear signal to potential buyers – buy now or pay more later.

Bysudoadmin
OnFebruary 13, 2012