This Weeks Market Commentary

This information is courtesy of our friends at Princeton Capital. As a reminder, I highly recommend you call upon a qualified loan professional before you even start to look at properties. By doing so, you can ensure your ability to act when you find the right one. If you have any questions about the financing process, you can contact my associate Tisha Shaffer with Princeton Capital.

This week brings us the release of three pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting and a speaking engagement with Fed Chairman Bernanke and a congressional committee. Only one of the economic reports is considered to be highly important to the markets and mortgage rates, but the others do carry enough significance to influence mortgage rates if they show a wide variance from forecasts.

 

Monday and Tuesday have nothing of importance scheduled, so look for stock movement to heavily influence bond trading and mortgage rates. Stock gains will probably pressure bonds and cause mortgage rates to move higher. If the major stock indexes show losses during the first couple days, we may see bonds thrive and mortgage rates remain unchanged or move slightly lower.

 

The National Association of Realtors will give us their Existing Home Sales report at 10:00 AM ET Wednesday. This data tracks resales of existing homes in the U.S. during April, giving us a measurement of housing sector strength. This type of data is relevant because a weakening housing sector makes a broader economic recovery less likely. Current forecasts are calling for an increase in home sales between March and April. Ideally, the bond market would prefer to see a decline, indicating housing sector weakness. A large increase in sales could lead to bond weakness and a small increase in mortgage rates Wednesday morning since a strengthening housing sector raises optimism about broader economic growth.

 

Also late Wednesday morning will be testimony from Fed Chairman Bernanke to the Joint Economic Committee of Congress. He will be updating them on the status of the economy and the Fed’s outlook for future growth and monetary policy. This will be watched closely and is one of those speaking engagements that can cause considerable movement in the financial markets and mortgage rates.

 

Furthermore, the minutes of the last FOMC meeting will be released Wednesday afternoon. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy and economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates and their current bond-buying program (QE3). Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading Wednesday.

 

April’s New Home Sales report is the sister report of the Existing Home Sales and will be released late Thursday morning. It gives us a similar measurement of housing sector strength and future mortgage credit demand, but tracks a much smaller portion of housing sales than Wednesday’s report does. Actually, it is the least important release of the week and probably will not have much of an impact on mortgage pricing unless it shows a sizable variance from forecasts. It is expected to show gains in sales from March’s level, meaning the new home portion of the housing sector also strengthened last month.

 

Friday has the week’s most important economic report with April’s Durable Goods Orders being posted. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years. It is currently expected to show an increase in new orders of approximately 1.6%, indicating the manufacturing sector remained strengthened a little last month. That would be relatively bad news for the bond market and mortgage rates, but this data is known to be quite volatile. Therefore, a small variance from forecasts would likely have little impact on Friday’s mortgage rates.

 

Overall, I believe Wednesday will be the most important day for rates, although Friday should be active also as it will be shortened due to the early close ahead of the Memorial Day holiday and has the most important report of the week. Still, Wednesday’s economic data and Chairman Bernanke’s testimony in the morning and FOMC minutes in the afternoon means we could see a couple changes to mortgage rates that day. I suspect that Tuesday will be the calmest day of the week. There is nothing to be concerned with Monday, but strong selling in bonds late Friday means there is a fairly large increase in mortgage rates waiting if your lender did not make an upward revision during afternoon trading. I don’t think we will see as much movement in rates that we saw last week, however, it is still recommended to maintain contact with your mortgage professional if you have not locked an interest rate yet.

Advertisements

Timing is Everything!

MarchRealityCheck

They say timing is everything in life. And that’s particularly true when it comes to real estate. If you’ve been thinking about selling your home but are not sure if this is the right time, think again: There may not be a better time to sell than right now.

We are experiencing a severe shortage of homes for sale in our area. Our inventory of listings is at the lowest level it has been in many years. Buyers are out there each weekend scouring the neighborhoods for homes to buy; buyers are ready to make a move when they find a house to buy.

With so few homes available in this market, if you were to sell your home now you could potentially get the highest price since the downturn of the housing market. With buyers far outnumbering available homes for sale, sellers are often getting multiple offers – sometimes a dozen or more – often closing at a price that is significantly more than their asking price.

We’re not alone here in the Sacramento/Tahoe region. The low inventory of for-sale homes is creating a seller’s market throughout the country, according to an article by the National Association of Realtors®. NAR reported that “Buyers and Agents are literally waiting for the next house” to come on the market in many cities.

According to NAR, the supply of existing homes for sale reached nearly an eight-year low in January. Nationwide, there is a 4.2-month supply of existing homes for sale and it could take some time before we reach a more balanced market. There are a number of reasons for the shortage of listings. The number of distressed houses for sale is decreasing as the foreclosure crisis recedes. New home construction is improving but still at low levels in most areas of the country. And many homeowners still believe they are too underwater on their mortgage or may not have enough equity in their property to buy their next home.

But you may be surprised at how much the tide has turned in the last year.

Multiple offers and bids over the asking price are pushing up home values in many areas. Properties that looked like they would have to sell as a short sale have ended up pricing out as a traditional equity transaction with homeowners walking away with cash from the sale. We are experiencing this change in the market every day.

In a recent Money magazine article, reporter Beth Braverman said homeowners might be wise to sell now rather than hold off. “It’s tempting to postpone selling to hold out for a better price,” she said. “But if you want to move to a larger place, act sooner rather than later.”

While you might be able to sell your home for more if you wait, there’s no way to tell what the future will hold. When more homeowners eventually decide to come into the market, the balance of supply and demand could change in favor of buyers once again. And even if prices go up in the future, the appreciation on a trade-up home could be even greater.

As we travel through life, housing needs evolve. You may have outgrown your starter home and need more space now that you have children. Perhaps you want to move to a similar home on a quieter street. You’ve decided to downsize now that the kids are on their own and you are empty nesters. Or you’re just tired of maintaining that big yard in your current home.

Whether you’re moving up, across or downsizing, whatever the reason for your move, it’s important to work with a well-qualified professional Realtor® who can help make the transition a success.

In order to get the best possible price for a home, you must expose it to the largest number of potential buyers. Start by hiring an Agent from a reputable firm who specializes in your local area.

Your Agent must be able to showcase your home in a variety of traditional and online media including professional photography, direct mail, property flyers, listing syndication, social media, and electronic communication to area Agents.

Additionally, your Agent should also identify the key selling features of the home and actively promote the property to other Agents during the brokers’ tour and to potential buyers during an open house.

Your best choice is to start by hiring the Sacramento/Tahoe region’s leading real estate services company, Coldwell Banker Residential Brokerage. Our proven marketing plan will showcase your home to the widest possible audience of qualified buyers and net you the best price possible for your property.

Selling your home can be a complicated and stressful process. But it doesn’t have to be, especially when you are working with the best. As a full-service company, we are with you every step of the way, keeping you informed about the entire transaction.

As your professional Realtor®, I can help you navigate through the process of selling your home and even help you find your next home that fits your current situation. Contact me today for a private consultation and to learn more about my comprehensive marketing program.

As they say, timing is everything.

This Reality Check is brought to you by Coldwell Banker Residential Brokerage, the leading provider of real estate services in Northern California. Coldwell Banker Residential Brokerage is home to more than 3,600 Sales Associates of the region’s most successful real estate professionals.

‘Tis The Season!

Christmas is coming!!! One of my family’s most favorite holiday traditions is to drive around town checking out Christmas Lights/Displays.  We normally do this around the 23rd- But why wait?! Elk Grove is full of folks who just don’t disappoint!

Check out This Website for a *map* of light displays for you and your family to visit 🙂

You Have Seven Options…

As a three-time certified Short Sale “Specialist,” my specialty is helping struggling home owners avoid foreclosure.  If you’re upside down on your home and you need to make a move you essentially have 7 options to choose from.  More often than not people find that a short sale is ultimately their best solution, however, it’s important that you educate yourself on all of your available options before choosing which is best for you.  If you have questions about how all of this might apply to you, please feel free to give me a call and set up a consultation.  I’m more than happy to discuss your unique situation in person.

Your 7 Options to Choose From Are:

  1. Pay down your mortgage, and sell the property.  This is an option if you have money to spare.  We can sell your home and you pay the difference between what your house sells for and what you owe your lender(s).  The positive to this is you can keep your credit intact.  The negative is that you need disposable dollars to do this with.
  2. Short Sale your property.  A short sale is where we sell your home for less than what you owe.  We need to negotiate with your lender(s) to accept less than what you owe.  Note: There can be tax ramifications depending on if you have a recourse or non-recourse loan. I can explain the difference if you give me a call.  The positive is that you can pay off your loan(s) without any money out of your pocket.  It’s important to realize that in the state of California, there is a law in place (SB458) that protects the home owner from any further recourse/liability once the lender(s) have accepted a short sale, AND you cannot be required to provide a cash contribution as a condition of acceptance of your short sale. The negative depends on how many payments you missed.  It can reduce your credit score 50-150 points.*
  3. Walk Away and allow your property to be foreclosed.  This is a situation where you just walk away from your house.  You can still have negative tax consequences and it can affect your credit by approximately 250 points.  In most cases, a short sale is a better option.*
  4. Bankruptcy.  Sometimes you will be advised to file bankruptcy.  In a lot of cases, people will suggest this because they do not know about other options as mentioned above.  This should be a last resort.  It can affect your credit by approximately 400 points and your credit for for the long-term.*
  5. Deed in Lieu of Foreclosure.  This is a situation where you basically hand the keys over to your lender.  In most cases, the last thing your lender wants is the property back, and if they do, it is normally prior to foreclosure.  At this point, your credit is probably already negatively affected by multiple missed payments.  If you were current with your payments, why would your lender take the property back?
  6. Loan Modification with your Lender.  This is a situation where you want to stay in your property, but can’t afford your current payment(s).  The lender might renegotiate interest rates or reduce your payment and add it on to the back end of your loan.
  7. Rent.  You can rent your property out until the market turns upwards.  In most cases, there will be a negative between the rent you’re able to collect and your loan payment(s).  Most of the experts feel this market will take 2-4 years to turn-around, though I feel those figures may be overly optimistic.  You should be prepared to rent out your property long term and create a budget worksheet to see if you can realistically afford to be compensating for the difference in your mortgage in addition to the cost of rent for your own home stead.

*Reductions to credit scores are estimates only.  Individual situations will produce varying results.

From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.


What Should You Expect from Your Real Estate Agent?

I am committed to providing you with more than just a successful real estate transaction.  I believe my clients are entitled to an experience that is convenient, stress-free (or as close to- as possible!) and remarkably satisfying.  Here’s how I do it:

  • Constant Communication. Communication is a key factor in every real estate transaction.  I make a point to ensure that my clients are well-informed with the progress of their transaction from start to finish.
  • Personal Attention to Every Detail.  Real estate transactions are complex by nature.  It is imperative that your agent have the ability to multitask in an organized manner so that nothing slips through the cracks.
  • Price your home competitively.  I have a deep understanding of this marketplace, and always conduct thorough research before suggesting a listing price.  In pricing your home too high, you may be essentially pricing yourself out of the market.  When buyers search for a new home, their paramount search criteria often revolves around pricing.  Even your home fits all of their other needs to a T, they will never see your listing because of the price.  Of course, the risk of improper pricing is a double-edged sword.  Under pricing your home could lead to your receiving an offer quickly, but it could also mean a missed opportunity, or worse- it could mean the bank rejects your sale in the case of a short sale.
  • Help find the right buyer for your home.  I market every listing actively, meaning I do everything possible to ensure the maximum number of prospective buyers see your listing during their search.  In cases of multiple offers, I assist my clients in deciphering the differences between them.  Most people have a natural inclination to assume that the highest offer automatically gets the property.  However, depending on the seller’s needs, price may not always be their first concern.  If the sellers are anxious to move as soon as possible, they may want to consider an all cash offer that’s slightly lower than an FHA funded offer.
  • Problem solving skills backed by experience and a strong brand name.  There are often bumps in the road to success.  Knowing how to navigate through them is key.  I pride myself on being an expert in my field.  In cases where I feel a second opinion is necessary I need only look to my amazing team.  I am fortunate enough to be a part of the Coldwell Banker Elk Grove Office- one that is highly trusted and respected, with more than 100 years of experience that I can draw upon in supporting you, the client.

If you’re in the area and looking for a real estate agent, please consider contacting me first.  If you already have an agent, make sure that person is servicing your transaction completely and thoroughly.  Please feel free to contact me if there’s anything I can do to assist you.


From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.


Home ownership in Sacramento area often a bargain vs. renting

The article below appeared in the Sacramento Bee, and it’s a great read! If you’ve been looking for a cash flowing investment, this maybe your answer. Feel free to call if you have any questions!
Published: Saturday, Jul. 23, 2011 – 12:00 am | Page 1A

Home prices in the Sacramento region keep dropping, but rents are creeping up.

The result: In many neighborhoods, it doesn’t cost much more to own a house than to rent an apartment, and often it costs less.

These shifting economics pushed Brent Pierce, 35, to buy his first house last August. Pierce, an analyst with Franklin Templeton Investments in Rancho Cordova, paid $185,000 for a Citrus Heights house that was bigger than his old apartment – plus it had a yard and a hot tub.

His $1,300 monthly mortgage payment is just $100 more than he paid in rent.

“That’s the big reason I decided to buy,” he said.

Jeff Werolin, manager of Lyon Real Estate’s Folsom office, said the price gap between renting and owning in the Sacramento region is the narrowest since the early 2000s – when the local market began its big run-up.

That’s not going to make much difference to the thousands of Sacramentans who have lost jobs, seen their incomes drop or don’t have the credit to get a loan. But for those who do have steady employment and money for a down payment, now may be the time to make the move from renting to owning.

“In anything priced under $250,000, a buyer is going to pay less in mortgage payments than renting,” said John Arvanitis, president of Sunrise Vista Mortgage Corp. in Citrus Heights.

“I’ve never seen a market like this.”

The median price for a single-family home in the city of Sacramento was $132,000 in the second quarter of 2011, a 13 percent decline from the year-earlier period, according to figures provided by San Diego-based DataQuick.

For a house at that price, a typical buyer will pay about $949 a month, including taxes and insurance, for a 30-year FHA loan with a fixed 4.5 percent interest rate.

By contrast, the average apartment rent in Sacramento for the second quarter was $885, a 0.8 percent increase from the same period in 2010.

Once the tax write-off for mortgage interest is factored in, the price of owning the median-priced home in Sacramento is often lower than the price of renting the average apartment.

Other neighborhoods have seen a similar narrowing of the rent-vs.-own price gap.

In Elk Grove, where the median home price was $208,000 during the second quarter of 2011, a typical first-time buyer would have paid about $1,500 a month.

The average rent in Elk Grove during the same period was $1,100, according to RealFacts.

Even for higher-priced homes, the rent-vs.-own economics are increasingly favoring buyers.

Three weeks ago, Intel Corp. engineer Laurent Lazard, 34, bought his first house, a four-bedroom, three-bathroom model in Folsom. He paid $355,000, and his mortgage payment, taxes and insurance will total about $1,700 a month.

Laurent, who made a 20 percent down payment, said he previously paid $1,550 a month to rent a three-bedroom house.

“I’d been sitting on the sidelines for maybe 10 years, but if you do the math, it makes sense (to buy), especially if you’re going to stay in your home for five to 10 years,” he said.

The disconnect between sales and rental prices is an unanticipated outgrowth of the housing market crash.

Rents and home prices often move in lockstep: Higher real estate prices usually lead to rent increases. When prices fall, rents typically drop.

But since 2007, roughly 67,500 homeowners – or 8.5 percent of the households in the four-county Sacramento region – have lost their homes through foreclosure.

Many of these former homeowners have gone into the rental market, driving up occupancies and average rents, real estate experts said.

According to RealFacts, the vacancy rate for Sacramento is a relatively healthy 6.3 percent, while vacancies in places like Roseville, Citrus Heights and Folsom are even lower.

Craig Powell, whose company Powell Properties LP owns several upscale apartment complexes, believes the rental market hit bottom about a year ago and is beginning to move up.

Powell said he recently raised the rents at one of his rental projects in Curtis Park after having to reduce them four times since 2007.

The newly renovated one-bedroom and studio units, with free WiFi and free heating, used to rent for $1,295 four years ago. Last year they went for $995. Powell recently increased rents to $1,095.

“We’re not close to being out of the woods, but it’s a little bit better,” he said.

Want to Buy a Home at 50% of Market Value?

Seriously- this can happen! Here’s the deal: HUD has a revitalization program known as “Good Neighbor Next Door” or “GNND” for short which is meant to promote positive changes in select communities throughout the United States.  In a nut shell, individuals who are law enforcement officers, teachers, fire fighters, or emergency medical technicians are eligible to receive a full 50% off of the sale price of a HUD owned home that is located within a revitalization area if that individual also works in that same revitalization area.

I’m sure you want to know, What’s the catch? Well, there are a few guidelines the applicant must agree to.  Here they are:

  1. Applicant must be employed as a full-time law enforcement officer, teacher, fire fighter, or emergency medical technician
  2. Applicant must plan to maintain said employment for at least one year following the purchase date
  3. Applicant (or spouse) may be a previous home owner, BUT cannot have held title to a home within 12 months prior to the bid date
  4. Applicant must agree to live in the property as a primary residence for at least 36 months after date of purchase
  5. Home must be located within a “Revitalization Area”
That’s it! Don’t believe me? Check it out for yourself at hud.gov. Happy House Hunting Good Neighbors!

Rand on Real Estate: Why Now Has Never Been a Better Time to become a Landlord

RISMEDIA, Tuesday, June 21, 2011— Greg Rand, CEO of OwnAmerica.com hosts “Rand on Real Estate” on 77WABC Radio in New York, where this week’s discussion comes from a caller from Orange County who does not believe that this is a time to buy real estate. Rand addresses a question about the effects of shadow inventory on the market and gives his recommendation to buy now, noting it has never been a better time to become a landlord. Rand also tackles the issue of high taxes making it difficult to turn profits from investments from a caller in New Jersey.

To see more clips on Rand on Real Estate, click here.

Greg Rand is the CEO of OwnAmerica, a company dedicated to teaching real estate professionals and consumers how to build wealth in American housing. “Rand on Real Estate” is a weekly video series where Rand offers his expert insights into how to grow wealth in the current real estate market. OwnAmerica also offers a web-based certification course for real estate agents who want to capture the residential investor market. Learn more about the course, “OwnAmerica Real Estate Investment Certification Program,” (OICP) by visiting OwnAmerica.com for details.
RISMedia welcomes your questions and comments. Send your e-mail to:realestatemagazinefeedback@rismedia.com.

*Credit RISMedia

From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.