Archive for June, 2010

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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Intero Foundation 7th Annual Golf Tournament

By Teressa Francis | June 10th, 2010 0 Comments

Mark your calendars! It is that time of the year again for our annual Intero Foundation Golf Tournament.  

The 7th Annual Intero Foundation Golf Tournament is coming up next month on July 29th and we’re looking for sponsors. If you’re interested please email dcatalano@interorealestate.com for more information. Players keep watching for registration details soon to come.

Click the sponsor and registration card images 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 408.715.0226.

The golf tournament will be held from 12:30 p.m. until 6 p.m. Thursday, July 29th at Cinnabar Hills Golf Club in San Jose.

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!

 

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Intero Insider: Celebu-Drama & Real Estate. Who Cares?

By Gino Blefari | June 9th, 2010 0 Comments

I read a lot. Lots of news, mostly. Blogs, real estate-related news items…that sort of thing. I owe it to Intero’s clientele, as well as our team of real estate professionals, to stay abreast of the most current information. Have you looked at the “news” this morning, though? I was pretty disappointed.

Why?

Because a search of the top real estate “news” items right now returns a glut of useless stories about Jesse James & Sandra Bullock listing their home for sale. A crush of chatter about the divorce of Al & Tipper Gore and what they plan to do with their real estate holdings during the proceedings. There are even stories about how the characters from Sex & The City have risen to the upper echelons of New York real estate throughout the course of the series.

That’s just embarrassing. There are serious, weighty issues with which our industry should be dealing with and on which it should be reporting. But they’re not getting talked about all that much.

If you’ve been affected, whether by foreclosure, strategic default, or if your credit has taken body blows as a result of this mess, do you really care about Sandra Bullock’s real estate “woes”? Of course not.

You have problems of your own to deal with.

If you’ve gone through a foreclosure and have lost your home, there are several things that you should do. The first thing is to meet with a financial planner to determine a long-range plan to help you recover financially. This plan could include something as simple as setting up a plan with Consumer Credit Counseling, or as complex as declaring bankruptcy. It will certainly involve formulating a workable budget, something to which you can strictly adhere.

The next thing is making certain that you follow that plan to the letter of the law. Missed payments are not an option, as each one will hamper your ability to rebuild your credit. Without that, purchasing another home won’t be an option.

Another thing that’s imperative, especially with ever-tightening lending standards is to save, save, save. 100% financing, especially for those who have damaged credit, is a thing of the past. If you’ve got a credit score that’s less than perfect, it’s very likely that you’ll have to make a down payment of about 20% on your next home purchase, so minding your pennies is of the utmost importance.

It’s important to note that, even if your credit isn’t rock solid, lenders are looking for a consistent track record. If you’ve had problems in the past, but have been consistent in making payments and in making good on your debts, you’ll have a much better shot at securing a new mortgage in the future.

If you are concerned about how you can rebuild your credit and your financial life, talk to your financial advisor, your Intero real estate professional, or your attorney. It’s not an easy process, but it’s one, with a bit of time and effort, that can be done.

As for Sandra Bullock’s beach house? I’ll leave that to the E! News network.

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Mortgage that Matters: THE GREEK-AMERICAN AND OUR MORTGAGE MARKETS

By Rick Soukoulis | June 3rd, 2010 0 Comments

As a Greek-American, I have being watching the financial crisis and the upheaval it is creating in Greece with what I think is a different perspective than many other Americans have.  I want to share a perspective on what another Greek-American is dealing with and how his actions affect our mortgage market.

In the 1960’s a Greek economist named Andreas Papandreou was teaching economics at UC Berkeley. His American-born wife wanted to spend some time in her native country, and Andreas had the chance to be a visiting professor at Cal for several years.

The family lived in the Berkeley Hills, and their son, Georgie, played baseball with his neighbors, joined the Cub Scouts, and went to Cragmont Elementary School, one of Berkeley’s public schools.

He was a typical ten year old, carefree, living the life of an American boy, much like Tom Sawyer and every other kid.

Where is he today?

Today, he goes by George rather than Georgie, and today he has the worst job in the world: He’s the Prime Minister of Greece.  He’s often referred to in the press as The Beleaguered George Papandreou.

What’s going on over there, and why is it making the front pages with scary headlines?

Essentially, Greece ran huge deficits and is close to national bankruptcy. Like all governments, it finances itself partly by selling bonds, but their financial house is in such disorder that they might not be able to sell new bonds or refinance old ones.

Like individuals that accumulate too much debt, the Greek government is cutting expenses, but government workers are unhappy seeing their wages cut.  A general strike shut down Greek airports, tourist sites and public services and some 50,000 demonstrators marched against the planned public spending cuts and tax rises.  You’ve seen the violence on TV.

Because Greece is part of the Europeans Union (EU),  people are deeply concerned that their problems will spread to the rest of Europe. The global markets are very scared, and when this happens, nervous investors turn to the strongest currencies and deepest markets in what is referred to as a Flight to Quality.

This has meant global investors moving their money to the dollar, and in buying up U.S. Treasuries as a safe haven, bond prices have risen and rates have dropped.

What happens to Treasury bond rates almost immediately happens to mortgage rates, and you’ve already noticed how mortgage rates have dropped pretty significantly of late.

I don’t know if Greece will be kicked out of the EU or if they’ll solve their fiscal woes.

I do know that as long as there’s financial turmoil around the world, in Greece or elsewhere, people will turn to the U.S.

This should big a great summer selling season!

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Show Me the Money — Redwood City Ranks #4 in VC Spending

By Ed Gory | June 2nd, 2010 0 Comments

Good article in the Merc last week, comparing the amount of venture capital invested in startups in the region’s municipalities in 2009.

For us Redwood Citizens, this is good news, as Redwood City ranks #4, behind some pretty big “powerhouse” cities for startups.

The top 5 is as follows (along with the amount invested, in millions):

  1. San Francisco    1,013
  2. Sunnyvale              663
  3. Mountain View     574
  4. Redwood City       545
  5. Fremont                 528
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Intero Insider: Can I live here?

By Gino Blefari | June 1st, 2010 0 Comments

What are you really looking for when you decide to buy a home? Shelter, of course – a place you can call home that is comfortable, safe, and reflective of your own tastes.

And in that regard, looking for a home online can be pretty satisfying. There are hundreds, if not thousands, of websites displaying property listings today. Most of them give you basic information along with a few photos.

When you see one you like you might choose to move to the next step and contact a Realtor.

But what most buyers are looking for – and where most real estate websites fail – is an answer to a simple but important question:

Can I live here?

Answering that question requires something more than a list of properties for sale.

What you need is information that allows you to decide if the place in which a property exists meshes with the way you like to live life.

You may want to know:

Is there a good coffee house close by?

Are there day-care options near this property?

Is the elementary school within walking distance?

These are the things that get to the heart of the matter – the lifestyle factors that make a house a home.

We understand this at Intero and built technology to support this sort of decision. When you conduct a property search on Interorealestate.com you will see a clear list of properties (along with some very cool mapping tools) but you’ll also see a link on the left side of the page that says “schools, cafes, groceries and more.”

You can then choose from over two dozen types of amenities – from banks to restaurants – and display them on a map. 

Of course, the best way to truly understand a property and its neighborhood is to work closely with a good Realtor, but with this view you can get much closer to an answer to that all-important “Can I live here” question.

Happy searching!

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