Posts Tagged ‘buyers market’

Intero Insider: How to Save $67,960 on Your Next Home Purchase

By Gino Blefari | August 18th, 2011 0 Comments

Standard & Poor’s downgrade of the U.S. debt rating this month sparked speculation about what the effects would be on stock, bond and key interest rate markets. A lot of conversations centered around the prediction that interest rates for mortgages would increase dramatically, damaging an already delicate housing recovery.

So far, the opposite is true. We’re talking down, down and down again. In the tumultuous days following the S&P downgrade, rates on 30-year fixed-rate mortgages fell to 4.32%, according to Freddie Mac’s Primary Mortgage Market Survey.

I realize I’m the CEO of a real estate company so you’d expect me to say this: But, now truly is an opportune time to borrow money for real estate if your finances are in a solid, healthy state. Borrowers who lock in super low rates stand to save a substantial amount of money over the life of a mortgage.

Take this example: A borrower with a $450,000 30-year mortgage with a 4.3% interest rate would have a monthly payment of $2,227 and pay a total of $351,692 in interest. If their rate on their fixed-rate mortgage had been 5%, they’d pay $2,416 a month and $67,960 more in interest over the 30 years.

Substantial!

Could rates go even lower? Who knows? Seriously. We don’t know. However, S&P also downgraded Fannie Mae and Freddie Mac, which means borrowing could get more expensive for the mortgage giants. That increase likely gets passed on to consumers.

Even if you refinanced last year at an average 5.5%, a rate drop to below 4.5% is worth a check-in on the math of refinancing. When rates really do start moving up, you don’t want to look back and think “I wish I’d…”

Interest rates really do matter. So if you are on the fence or if you’re an agent with buyers who are on the fence, do some math to see your/your client’s total savings. It’s as good a time as any to borrow money. Talk to your mortgage advisor today!

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Intero Insider: Real Estate Is This Summer’s Biggest Blockbuster for Buyers

By Gino Blefari | June 1st, 2011 0 Comments

Summer is almost here – typically a busy season for home sales. But, what about this year? Will high gas prices and the rising cost of just about everything else from inflation dampen a typically active time of year in real estate? We’re on shaky ground, but could there be a better market for buyers? I don’t think so.

Let’s look at what we know:

  • Home prices fell to 9-year low. According to data from the S&P Case Shiller Home Price Indices, home prices are back to 2002 levels. The national index declined by 4.2% in the first quarter after falling 3.6% in the fourth quarter of 2010. This means the national index hit a new recession low.
  • Pending home sales took a pretty steep dive in April. The index tracked by the National Association of Realtors showed an 11.6% drop. The index is a forward-looking indicator based on contract signings (not closings). Since closings normally have a two-month lag from contract signings, this could mean a worse-than-expected summer.
  • Sales of new homes increased in April, for the second straight month. Sales increased 7.3% to a 323,000 unit annual rate, the highest since December, according to the Commerce Department’s report. April also marked the lowest inventory level of new homes in a year. These are certainly positive signs of underlying strength in this market segment. However, many analysts are cautious because existing home inventory is still very high and full of foreclosures.
  • Inventory of previously owned homes remains high. NAR’s numbers show there were 3.87 million previously owned homes on the market in April. But economists estimate the number could be much higher – between 7 and 8 million if foreclosed properties and those at risk of foreclosure were taken into account. It’s the “shadow inventory” effect.

As we’ve discussed here before, there are a ton of factors that can affect home sales – employment numbers, gas prices, the cost of goods and services, overall confidence in the economy, loan standards, interest rates. And also, there’s the local factor – meaning one market may be sailing along, while another is floundering. For example, here in Santa Clara County home prices haven’t dropped as drastically as the rest of the nation, they are actually higher than the Dot-Com crash days of 2002. Santa Clara County’s home prices today are more similar to pricing in 2004, averaging at $684,000. So remember real estate is local and depending on your location sales could pick up as more buyers realize conditions can’t get much better.

Buyers this summer have the best of all worlds: Low interest rates literally shave thousands of dollars off the price of a home; high inventory levels offer a shopper’s paradise in terms of choice; inventory also puts downward pressure on prices; prices are at a new recession low; and nothing major has changed “yet” in lending regulations that would cause major issues.

Calling all home shoppers: This summer is the season of your real estate dreams. The fences are buckling under your weight, and the grass is much greener on the ownership side if you’re ready. Not all homes are going at fire sale prices, of course, but for buyers in most parts of the country it really doesn’t get any better than this.

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Intero Insider: 5 Housing Trends to Watch

By Gino Blefari | March 9th, 2011 0 Comments

We’re just about to enter the spring home-buying season and a lot of forces out there are working for or against the market this year. Here are five things to watch out for:

1. Tighter, stricter lending. Lenders continue to be more and more stringent with loan qualifications. As real estate agents, we should be sure to keep our clients up to date and look for ways to help manage expectations when loan shopping. As consumers, we need to be on top of our game – keeping our credit histories in good shape, documenting income, and making sure we have solid cash for down payment.

2. Continued buyer’s market. Even as more buyers come out of the winter lull to go home shopping, the high inventory levels in many markets, strict borrowing requirements from lenders, and sluggish job market are keeping the scales tipped in buyers’ favor. More inventory + not as many qualified borrowers = a buyer’s market for most places.

3. Changes to down payment requirements. The powers that be are still grappling with instilling new down payment requirements on all types of loans, but it looks like a 10% minimum down payment requirement is imminent for FHA loans. Higher down payments is a good thing in that more money down (i.e., collateral) tends to equate to fewer foreclosures. But in the short-term it may delay some buyers from getting into the market now.

4. The end of a government-backed mortgage finance system? This of course is less of a trend and more of a major event. The Obama Administration has been searching for ways to get rid of Fannie Mae and Freddie Mac, the two government-sponsored finance companies that historically have made it possible to keep record amounts of money available for the nation’s home buyers.

Obama and others in Congress are serious about dissolving these quasi-governmental companies because tax payers essentially foot the bill when there’s a major housing fallout like the one we’ve seen in the incredible foreclosure crisis.

What does it mean for you and me? More privatization of the mortgage market, potentially the end of the 30-year mortgage, higher interest rates for most borrowers, and potentially more fees for borrowers.

5. Increased globalization. A lot of factors are making foreign real estate investors increasingly interested in buying property in coastal cities like San Francisco and surrounding areas like Silicon Valley. Intero is at the forefront of this trend and will continue to lead by expanding our presence in Asia, where a lot of these interested buyers are located. This is a trend we believe in and think will contribute positively to the housing recovery.

I’ll continue to monitor these happenings and give them time for discussion in Intero Insider throughout the year.

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Top 10 Silicon Valley Real Estate Trends for 2009

By Dawn Thomas | December 16th, 2009 0 Comments

As 2009 draws to a close – you’ll soon be reading lots of  top 10 lists for the movers, shakers, and trends of the year and the decade!   In the spirit of being just a little ahead of the crowd, here’s our list of the top Silicon Valley Real Estate trends of 2009:

1. Low Interest Rates – with More Strings –  Interest rates have been low this year, with periodic dips into historic record  ”low” territory.   These great rates, though, come with seemingly ever-changing requirements and conditions.  Selecting a great financing source who can get you great rates AND help you navigate through the process has never been more important.

2. We’ve Got to Keep It Together For Longer – With the changing lending guidelines, it’s been taking longer for properties to close escrow and having a signed purchase contract did not automatically mean a closed escrow in 2009.   Having a black belt negotiator on your real estate team has been critical this year.

3. “Turn Key” is Hotter than Ever – A few years ago – buyers could purchase a property & count on some quick appreciation to pay for a remodel in just a little time.  Now – buyers can’t count on home appreciation to finance a remodel in the near term & are looking for great condition, move-in ready homes to buy  (as if location and condition ever go out of style in the world of real estate!).  On the other hand – for buyers seeking to purchase a property in a high-demand area like Palo Alto or Cupertino – it may pay to look for properties needing some work.  If you can see the potential in a fixer – you may have fewer competing bids from other potential buyers.

4. Buying a Silicon Valley Foreclosure is not as Easy As It Sounds - Some of the busiest agents in any real estate office are the ones listing “Real Estate Owned” or REO properties for the banks.    Buying one of these properties means navigating a maze of bank-specific requirements for making the offer, competing against multiple offers (some properties are getting 20, 30 or even 50 offers), and positioning your offer against “all cash” investors.  Finding a deal & making sure it stays a “good deal” through the process is not for the faint-of-heart!

5. No Shortage of Short Sales – over the course of 2009 – we continued to see properties listed for less than what is owed to the lender(s) – resulting in a short sale requiring lender(s) approval to go through.   We’re starting to see short sale listings where the lender has approved a short listing price – allowing the whole process to go smoother and quicker.

6. The Year of the First-Time Buyer – with more affordable home prices, the First Time Home Buyer Tax Credit, and sweet interest rates – many of the homes sold in 2009 went to first time home buyers.   In the final months of the year – we are starting to see more and more “move up” buyers rousing the mid and higher-end price points.  Welcome!  Please bring friends!   This is a trend we want to see continue & grow in 2010!

7. Deal Hunting in Palo Alto – Where’s the deal on a single family home in Palo Alto for less than $300,000?  The media in 2009 did a fantastic job of painting the picture of real estate in free fall, and we went through a period in the spring where every day brought Internet inquiries looking for the extraordinary deal in Palo Alto.  According to the MLS – the least expensive Palo Alto single family home sold so far in 2009 went for $703,000 for a 67 year old, 703 square foot cottage with foundation issues.

8. Your Home May Have a Bigger Electronic Footprint than You Do - Social media sites like Facebook and Twitter are 2009 Trendsetters above and beyond the world of buying and selling dirt.  In real estate, though,  the savvy home seller now ensures that their Real Estate agent is marketing  their property through multiple Internet channels.    Wouldn’t  you want 30 million visitors at your open house – especially the ones who can’t leave foot prints on your new carpet?

9. Welcome to California! – We are working with an increasing number of clients who are relocating to Silicon Valley for a new job.  It looks like both our job market and our real estate market are picking up!   Welcome!

10. Less to Pick From, More Competition – And finally, in many areas of Silicon Valley – we are seeing fewer homes on the market.    In fact, for Silicon Valley overall – more homes are “pending sale” than are actively for sale.  For buyers – this means that there are fewer homes to consider and more competition to get  your offer accepted. For sellers – it means that there are fewer competing properties.  This sets the stage for an even brighter 2010!

We wish you the best holiday season & look forward to serving you and your referrals in 2010!

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Is the Demise of the “Buyers Market” at Hand?

By Russ Boyd | December 2nd, 2009 0 Comments

With all the information floating around about the health of the real estate market, it is wise to focus on a forward look indicator, the Pending Home Sales Index.

As reported by the National Association of Realtors®, the Pending Home Sales Index posted its 8th consecutive monthly gain in September nationwide.

demise-narpending home sales

The index now stands 21% higher than it did one year ago and Pending Home Sales are now at their highest levels since December 2006.

A Pending Home Sale is a home under contract to sell, but not yet closed.

The following Pending Home Sales Reports are taken from our October Market Metric Reports available at www.bayareamarketmetrics.com.

These graphs cover a two years period and as you can see below, San Mateo County and Santa Clara County Pending Home Sales are at their highest point in the past two years.

demise-san mateo county

demise santa clara county

As seen in these graphs, Alameda and Contra Costa Counties are reporting a steady number of Pending Sales at an elevated level when compared to two years ago.

demise alameda county

denmise-contra costa county

When the Pending Home Sales Index rises, it tells us that market activity has picked up. October’s data confirms what we’ve been noticing since February — the Buyers Market is coming to an end.

With more homes under contract in the marketplace, home buyers typically face one or more of the following:

1. Competitive, multiple-offer situations
2. Reduced purchase price leverage over sellers
3. Few if any seller concessions

Therefore, if you’re planning to buy a home in the next several months, know that the 8-month increase in Pending Sales has lead to an increase in closed sales which in turn results in higher home prices and reduced affordability.

Further evidence can be seen in this recent Case-Schiller Report.

demise case schiller

If you intend to buy while rates are low and affordability factors are still favoring buyers, you should be actively working with an agent now. If you are thinking of selling but have been holding off until the market was showing clear signs of improvement now would be the time to talk with your agent about preparing to list your home.
Whether you are considering buying or selling speak to your agent about ways to get the most of the this evolving market.

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Intero Insider: Is There An “Up” Side To All Of These Foreclosures?

By Gino Blefari | September 23rd, 2009 0 Comments

The California Real Estate Market has been hit, and hit hard. That’s no secret.

Statewide, the percentage of mortgage holders in California who have either missed several payments and are in the early states of foreclosure climbed to 9.5%. Combine this staggering figure with job losses and the recession, in general, and the state is likely to see a huge increase in the number of foreclosures.

But is there an “up” side?

Certainly, no one wants to capitalize on anyone else’s misfortune, but there is another perspective. If you’re in the market to buy a house, the news is almost entirely good.

Let’s take a look.

First off, inventory levels may be at all-time highs, and in all price ranges.

Second, sales prices are nothing short of terrific. Case in point: in August 2008, the median price paid for a home in California was $301,000. By August 2009, that number had fallen 17.3% to $249,000. For buyers, this has “good” written all over it.

Mortgage rates are at their lowest levels since the 1960s. Lower rates greatly increase a buyer’s purchasing power. Buyers will be able to get more home for their dollar — more “bang for the buck”; for families looking to upsize, this is the perfect opportunity.

There are fantastic incentives for buyers right now. Last week, we told you about the CAR Mortgage Protection Program, and we hope every home buyer knows about the First Time Home Buyer’s Tax Credit (which is set to expire on December 1st). Your Intero agent can answer any questions you might have about either of these groundbreaking programs.

Last, but by no means least, home ownership has real, sustainable value. Not just financially, but from a personal standpoint, as well. Owning a home gives you a greater sense of well-being and gives you a real sense of investment in your community.

So, yes. While it might be difficult to look at the current data on foreclosure and see a bright side, there really is one. Talk to your Intero agent today about what this can mean for you.

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