Gen Y Housing Preferences

By Gino Blefari | July 27th, 2010 0 Comments

In reading up on Gen Y – loosely defined as those born between the late ‘70s and late ‘90s – something that struck me as significant was this notion that Gen Y and baby boomers view home buying as starkly different things. A baby boomer would say buying a home is an investment, whereas their younger counterpart would say it’s a lifestyle choice.

I came across an article that dove deeper into the reasoning behind why Gen Y delays home buying compared to boomers. Based on a panel discussion sponsored by the Urban Land Institute, the article mentions that most in Gen Y do not have the resources to buy a home in their 20s. They tend to take breaks from work to travel, which can cost them lost wages and earning potential at this point in their careers.

The article also looks at affordability:

“(T)he average Baby Boomer could afford a home with $48,000 annual income if they bought a home in the early 1980s whereas a Generation Y household would have to bring in $142,000 per year to afford a home today.”

Obviously, all of these things have an impact on the housing market as young, first-time buyers are essential to the move-up market.

What strikes me about this trend of Gen Y delaying home buying is that there’s not a bigger conversation going on. Is it really that Gen Y does not want to buy homes? Or is it that they can’t afford the homes that are available to them? Are they really looking for a different type of ownership than we’re used to?

I think it’s important to engage in this conversation. Statistics show that Gen Y, estimated at 70 million individuals, is even larger than the baby boomer generation. Their habits, preferences and economic situation will have a big impact on real estate.

The current slowdown we’re seeing in real estate is no doubt caused by economic forces – job loss, foreclosures, tightened credit. But in the recovery, there is this other aspect that’s not being discussed as much – this “lifestyle” choice that is a little fuzzier than what we’re used to.

The good news is that lifestyle is exactly what real estate agents are good at understanding. Who better can tell you the little things about a neighborhood or city that don’t get captured in an online listing or for-sale sign? I believe that the more we understand each other, the easier it will be to accommodate Gen Y’s lifestyle choices.

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Intero Real Estate Services, Inc. expands innovative franchise network in California and Nevada

By Teressa Francis | July 26th, 2010 0 Comments

Leading U.S. brokerage announces franchises in Discovery Bay, Brentwood, San Diego and Minden, NV

CUPERTINO, SILICON VALLEY, USA – July 26, 2010 — Intero Real Estate Services <http://interorealestate.com> , a leading U.S. real estate brokerage that has recently expanded its brand globally, as a franchisor, through Intero Franchise Services, Inc. and Intero International Franchise Services, LLC, announced its continued expansion with the conversion of a former Alain Pinel brokerage affiliate in Discovery Bay and Brentwood, CA to the Intero Real Estate brand, and the addition of new franchises in San Diego, CA, and Minden, NV.

More than forty agents will join Intero Discovery Bay and Intero Downtown Brentwood franchise. This office will complement an existing Intero franchise in Brentwood.

“We are pleased to welcome our new franchisees and agents today at a time when our competitors are retrenching,” said Intero Real Estate Services COO Tom Tognoli. “This expansion speaks to our commitment to innovate and thrive in an ever-changing business.”

LeeAnn Hogge, co-owner and manager of what will become the new Intero Discovery Bay and Downtown Brentwood offices, said: “We’re thrilled to become part of the Intero® family, and feel good knowing that we’ll have the technology and expertise needed to win in today’s market.”

Bryan Hogge, co-owner and manager of the future Intero Discovery Bay and Intero Downtown Brentwood offices, added: “We’ve worked hard to build our reputations in this market and the Intero® brand will help us grow and innovate upon that foundation.”

Intero Downtown Brentwood is the second Intero franchise to open in Brentwood, CA, joining the very first Intero franchise at 5541 Lone Tree Way, established in 2005 by owners Denise McGrew and Erin Gonzalez.

Intero also announces two new franchises in San Diego, CA and Minden, NV. Intero El Cajon, will be owned and managed by Sandy Miller, and Intero Minden Nevada, will be owned and managed by Teddy Carlson-Brown.

Discovery Bay/Downtown Brentwood

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Mortgage that Matters: COULD RATES ACTUALLY GO LOWER?

By Rick Soukoulis | July 21st, 2010 0 Comments

The past several months seem to prove that you shouldn’t always trust conventional wisdom. Most recently, conventional wisdom was that in March, the Federal Reserve would have finished buying the $1.25 trillion in mortgage backed securities they were authorized to purchase, and when this heavy buying activity ended, mortgage rates would shoot up in April, May and June.

It was simple economics. If the Fed was in there every day buying up mortgage securities, this heavy buying would drive MBS prices up and rates would go down.

This did work, and the low rates were precisely what the Administration hoped would happen to get the housing market back on its feet.

The 800 pound gorilla was the fear of what would happen when all this buying activity by the Fed ended.

Basic economics would seem to indicate that rates would have gone up and perhaps significantly.

Even worse was what would happen when the Fed started selling these securities. If they were to dump even a few billion a day, the constant selling would drive MBS prices down and mortgage rates up.

Almost everyone predicted this scenario, and many housing economists thought it would be devastating to the housing markets.

But in an economy with so many moving parts, things often turn out differently than expected.

Rates not only didn’t go up, they’ve actually gone down, and this has huge implications.

With rates dropping toward 4.5%, we are seeing a whole new wave of refinancing, and many of these loans being refinanced are in mortgage securities owned by the Fed! As a result, this $1.25 trillion in MBS the Fed owns is gradually being paid off on its own. And the more people re-finance, the more will be paid down.

The implications of this are huge. If the $1.25 trillion pays down through refinance activity to, say, $750 billion, that could open up the Fed to buying another $500 billion to get back to the $1.25 trillion number.

If you think about it, a new round of Fed buying, as they replenish their holdings, could drive rates to a level no one could have ever dreamed of.

As hard as it is to imagine rates being as low as 4.5%, a new round of Fed purchases could drive rates to 4.0% or even lower.

As Yogi Berra once said, “Who’d have ever thunk it?”

Indeed.

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Intero Insider: How’s the Market? Not So Fast

By Gino Blefari | July 20th, 2010 0 Comments

Lately, I’ve been noticing how poorly the housing market is covered by the media. And I don’t mean that the media is to blame for all our problems. What I mean is that real estate markets are varied, complex and much much smaller than you may realize.

Housing is more than a headline. When you listen to reports of national home prices increasing or demand slowing, it’s easy to get lost because they rarely go much deeper than that.

Throw in a mixture of reports – on the same day, even – and it gets all the more confusing. Case in point: last week CoreLogic reported home prices increased for the fourth straight month, while the IMF warned of a possible double-dip recession for housing. Confused?

Let’s not forget reality #1 of real estate: location is everything.

For instance, your national report may be screaming doom and gloom, but your neighbor’s house just sold for $50,000 above asking price. Or your nightly news report may say home prices are up, but meanwhile your neighbors are slashing prices. What’s going on here?

The housing market, like all markets depends on the balance between supply and demand. But in real estate, supply and demand can vary wildly not just by city and state – but by neighborhood and even street. That’s how delicate the market for real estate is and why it is so difficult to talk about at the macro level.

So there’s location to consider. But then there’s also individual circumstance. Sure, it may be a horrible time to sell your house when you read the numbers, but if you are relocating for a once-in-a-lifetime career opportunity, then it’s your time to sell.

Same for buyers. Sure, it may be the best time in the last 15 years to buy a house, but if you’re looking at a potential job loss or have no money for a downpayment, now is not a good time for you.

Think about that the next time you or someone asks, “How’s the market?”

The real question to ask is, “How’s the market in your neighborhood and under your circumstances?”

Real estate is not only local – it’s all relative.

Keep this in mind as we continue to slog through this recovery. Because the horrifying and confusing headlines will not stop anytime soon. Foreclosures are at massive levels, supply is climbing, and interest rates are at historic lows. The mixture of these news bits will make your head spin. Are things getting better? Worse?

The only people who can truly answer those questions are the buyers and sellers who are in your market right now, and the agents who know it inside out.

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Intero Foundation 7th Annual Golf Tournament

By Teressa Francis | July 20th, 2010 0 Comments

Are you ready to play?

The 7th Annual Intero Foundation Golf Tournament sponsored by Bank of America is next Thursday, July 29th from 12:30 p.m. until 6 p.m. at Cinnabar Hills Golf Club in San Jose.

We are still looking for golfers, so sign up today!

Click the registration card image below to view and print. Mail forms to Deitra Catalano c/o Intero Foundation Golf Tournament 10275 N. De Anza Blvd., Cupertino, CA 95014 or fax to 408.516.8133.

Besides golf, the day features a BBQ lunch, dinner and a raffle.

The Intero Foundation’s mission is “to create awareness in the community by demonstrating good corporate citizenship” and to support organizations that focus on assisting children, their education and their personal development.

It’s gonna be a great day, so see you there!

Thanks again Bank of America!

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Intero Insider: What We Need Are Jobs

By Gino Blefari | July 14th, 2010 0 Comments

We are now halfway through the year – a good time to reflect and to look ahead at what the rest of the year may bring.

For me, I’ve been focusing on market fundamentals and how they may guide real estate buyers over the summer and fall.

While many in our industry this past week focused on Congress’ decision to pass an extension for the Home Buyer Tax Credit – giving buyers under contract another 90 days to close and still qualify for the credit – I feel we should’ve been talking more about jobs.

Jobs should be the focus when looking at ways to fuel long-term housing demand. Jobs create incomes, which are essential to support mortgages on home sales. Without a positive job outlook, the other strong demand fundamentals already in place – rock-bottom interest rates, softened prices – can’t sustain the market alone.

Unfortunately, the news on that front has not been that great:

  • Private payroll gains weren’t as high as expected in June – meaning more small businesses cut jobs or refrained from hiring.
  • Unemployment rates eased in some cities, but increased in others. At the national level, unemployment inched up .2 percentage points to 9.3 percent from last year’s level.

I know it’s not easy to fill the employment gap as quickly as we’d like to see. But until we get positive news on jobs, the reality is that we’re looking at a long haul for housing. Sure, a new tax credit would help. And the historic low interest rates are definitely working in our favor. But those jobs really are key.

Jobs are what we need for a sustainable, healthy housing demand. Match this with record low interest rates – 4.67 percent last week on 30-year fixed-rate mortgages – and then we might have ourselves a good housing cocktail.

It’s not going to happen overnight. As with everything, we need to practice patience in this recovery and understand which market forces will really make a difference.

It may sound strange to anyone who is without a job or on shaky employment ground, but it really is a great time to be a home buyer – IF your situation is right. If you’re lucky enough to have job security and you also have the means, you are in the middle of some of the cheapest borrowing in history. And you have a lot of inventory to choose from in most markets.

So as we make our way through the second half of the year, let’s focus on the fundamentals that will not only give housing a quick lift, but more importantly sustain upward movement.

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Intero Real Estate Services, Inc. executives keynote prestigious global real estate seminars in Singapore and Hong Kong

By Teressa Francis | July 9th, 2010 0 Comments

Blefari and Moles share innovative approach to distressed property opportunity globally as well as in the U.S.

CUPERTINO, SILICON VALLEY, USA – July 1, 2010 — Intero Real Estate Services, a leading U.S. real estate brokerage that has recently expanded its brand globally, as a franchisor, through Intero Franchise Services, Inc. and Intero International Franchise Services, LLC, announced that its Chairman, Robert Moles, and CEO, Gino Blefari, recently made keynote presentations at two prestigious global real estate seminars in Singapore and Hong Kong to share insights learned from leading the exponential growth of a global brokerage company in the distressed property market.

Gino Blefari, Intero® President and CEO, spoke at the iProperty Real Estate Seminar 2010 in Singapore about distressed property opportunity both globally and in the U.S. He said that while real estate is still very much a local business, market insights and technology innovation can be shared globally to new markets and new business partners. Both factors have been critical to Intero’s own growth.

“Not all markets are distressed markets, but all markets have distressed property opportunities. California has been at the epicenter of the global housing crisis, yet Intero has grown to lead in market share in Santa Clara County, the largest market in Silicon Valley, in spite of this challenge. We did so by leveraging technology and honing a deep understanding of current market dynamics and letting those insights guide our actions,” Blefari said.

Robert Moles, Intero® Chairman, gave a keynote presentation about the global distressed property opportunities at the SMART Investment & International Property Expo in Hong Kong in June. Said Moles on the experience, “We are excited to share our story of success in distressed markets with agents and investors from across the globe as we continue the worldwide expansion of our brand.” Moles continued, “Our experience in California gives us a unique perspective on thriving in a difficult market.”

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Intero Insider: Life After the Home Buyer Tax Credit

By Gino Blefari | June 29th, 2010 0 Comments

It’s safe to say now that the action brought to the nation’s housing markets by the Homebuyer Tax Credit is over. Any buyers who wished to take advantage of this credit had to have been in contract by April 30 and now must close by June 30.

But please remain seated before exiting this ride and declaring the housing market D-O-O-M-E-D (as several headlines have cried this week). See, there is still a very key factor in place that is working in homebuyers’ favor:

Historically Low Interest Rates

This often-overlooked little fact is actually a really important point to ponder. That’s because when you look at today’s rates, which average around 4.75 percent on a 30-year fixed rate mortgage, according to the Mortgage Bankers Association’s latest survey, you realize what a win this is for borrowers – even for those who missed the tax credit deadline.

These low rates are far more significant than any tax credit in terms of savings and incentive to stoke demand. How is that? Well, let’s look at the math:

Let’s say today’s buyer is looking at a 5 percent interest rate on a 30-year fixed loan of $285,000. He’s disappointed at missing out on the tax credit, but since he’s able to lock in at a lower rate than he would’ve gotten two months ago at 5.25 percent, he’s actually saving $15,782 in interest over the life of the loan, which according to my math is significantly higher savings than what that tax credit would’ve gotten him ($8,000).

So today’s buyer nearly doubles his savings in interest compared with the April tax-credit buyers? Doesn’t spell D-O-O-M to me.

Let’s look at another scenario:

This buyer would be able to lock in a 5.25 percent rate on a 30-year fixed loan of $400,000 in July. There’s no tax credit to light a fire under his decision, but say the economic news circles expect a slight uptick in rates by the end of August. If he waits, he’ll risk increasing his rate to 5.35 percent, thereby adding $8,943 in interest to the life of his loan.

I’m not saying that rates will save the day. Remember: There are no quick fixes. But we also have to be sure we understand the forces that are working in the market’s favor.

Tax credits may come and go, but at the end of the day it’s things like historic low interest rates that will keep buyers interested.

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Intero Insider: Housing Starts Are Down? I’m Shocked. Or Not.

By Gino Blefari | June 22nd, 2010 0 Comments

Last week, the financial sector was up in arms about some seemingly surprising news. It seems that, in May, housing starts — the number of building permits that were pulled in order to start construction on new homes — were down.

With all of the homes that were purchased this spring, surely the troubles in the housing market were over. Right? In April, sales were positively booming! What on Earth could have happened to put a slowdown on things?

<Psst! Hey! The tax credit expired!>

Wait. What? What’s that you say? The tax credit expired? You mean that didn’t amp up the market and then keep it up? It wasn’t the answer to our economic recovery dreams?

No. It wasn’t.

In fact, I’ve been saying this for some time. For those who were able to take advantage, the Homebuyer Tax Credit was great. But while it gave the spring real estate market a much-needed boost, I have long theorized that the sales it produced were simply being borrowed from the future. People who had already planned to buy a home simply did so earlier.

Now that the credit is gone, the buyers have little incentive to make their decisions now.

There are far too many variables in play for buyers right now. Mortgage rates are in a constant state of flux, underwriting standards are tougher than ever, and a great many sellers are still living in Fantasy Land when it comes to their proposed list prices, so many buyers are simply choosing to sit tight and see what happens. There’s very little pressure on them.

“OK, then … so now what?”

First off, sellers need to get a handle on reality. If you need to sell your house, then understand the rules of the game. Pie-in-the-sky dreams of top-dollar prices and bidding wars will likely get you very little except mountains of frustration. Find a REALTOR in whom you have confidence. Listen to him (or her), for he/she understands the market as it is today.

Second, and most importantly, we must all exercise some patience. It took us some time to get ourselves into this morass of economic detritus, and it’s going to take some time to get out. There are no quick fixes.

The real estate market will come back. It always does. It’s one of the few constants in our economy. In the meantime, let’s learn from our mistakes. Borrowing from Peter to pay Paul isn’t going to work. Let’s use our heads and work toward real recovery, real improvement.

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Intero Insider: Homebuyer Tax Credit, ACT III

By Gino Blefari | June 15th, 2010 1 Comment

That’s right. It’s back. The homebuyer tax credit strikes again – like a string of sequels in a movie franchise.

First, there was the first-time homebuyer tax credit. It received mixed reviews, but ticket sales were good, and popular opinion encouraged a sequel. The Homebuyer Tax Credit: Part II (The Revenge), opened to great fanfare. It ran only for a limited engagement, however, and people clamored to take advantage of its benefits before the end of its run in the real estate (and economic) theater.

Many of those who were able to get in on the homebuyer tax credit, which stipulated that buyers needed to be under contract by April 30, 2010, but also close/settle by June 30, 2010, are now finding themselves in a bit of a pickle.

So many people bought homes in order to take advantage of the credit that banks, lenders, title companies, and every other body that plays a role in the settlement of real estate transactions, are having one heck of a time getting it all done by the June 30 deadline (which is approaching rapidly). They’re so backlogged that many buyers might not get their tax credit after all.

Unless Congress takes action. Quickly.

Right now, they are considering extending the time to close those transactions by as much as three months. That’s a good thing, too, because the National Association of REALTORS (NAR) estimates that if Congress takes no action, as many as 75,000 homebuyers might lose out because they can’t meet the June 30 deadline.

Regardless of your position on whether the tax credit was a good idea in the first place, I think we can all agree that everyone who was under contract in time to claim it ought to be able to do so. That the settlement process is totally backlogged isn’t their fault and they shouldn’t be punished as a result.

What will Congress do? Will they save the day for tens of thousands of Americans? Stay tuned … the credits on this story haven’t rolled just yet!

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