Posts Tagged ‘Gino Blefari’

« Older Entries
Newer Entries »

Intero Insider: What the Housing Affordability Index Really Says about the Market

By Gino Blefari | March 14th, 2012 0 Comments

Perhaps the single best side effect of a slow housing market is the positive impact on affordability. In the most recent affordability report from the National Association of Realtors last week we learned that housing affordability conditions in January reached the highest level since they began tracking it more than 30 years ago.

NAR’s index is based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the average family’s purchasing power. In January, the index was 206 (an index of 100 is defined as the point at which a median-income household has exactly enough income to qualify to purchase a median-priced home).

What does this mean? The obvious conclusion is that now is a great time to buy a home – if you can afford it and qualify for a mortgage, that is.

However, it’s also good to remember the context of this news and that everything’s relative (read: local) in real estate. I say that because many of our Bay Area markets have been seeing price increases, bidding wars and conditions that may make area buyers conclude that it’s really not so easy to be a buyer these days after all. Unless you’re lucky enough to be paying cash, it can still be extremely tough to get a loan that will cover the cost of an average home around here.

Affordability is an important figure, for sure. But I just want to point out that when taken at the national level, there’s not much of a story to tell. Just because housing has been deemed “most affordable” since 1970 doesn’t mean markets have hit bottom in terms of pricing. Some are actually enjoying highs above recent years. And others will continue to struggle for another year or two at least – as long as their foreclosure situations remain serious and job markets weak.

Affordability is important to the health of markets. But affordability itself really comes down to individual financial situations. Can you afford this home right now and going forward? These are the important questions buyers always need to ask – regardless of market conditions.

So if you’re a buyer or seller paying attention to news headlines like this one, remember to always think locally to find the right context. Yes, housing is the most affordable it’s been since the ’70s at the national level. But that means nothing to your city or neighborhood, which may be experiencing an amazing boom compared to years past – or still lagging behind due to other circumstances.

Affordability in real estate is always relative.

  • Get new posts via email
  • Subscribe

Intero Insider: The Fastest Way to Save $471 a Month Is Right In Your Home

By Gino Blefari | March 7th, 2012 0 Comments

We’ve been in a period of extreme low interest rates for so long now that I begin to wonder whether we’re kind of numb to it. Not long ago, a 5% rate on a long-term mortgage would’ve had many homeowners’ eyes popping out of their heads. But now, even lower rates are commonplace.

It’s baffling to see new data out that shows American homeowners may be missing out on significant savings via a mortgage refinance. An analysis of January 2012 user data by Credit Sesame found that on average, homeowners who would qualify for a refinance based on their credit situations, income and home equity, are overpaying by an average of $471 per month on their home mortgages.

When you average the savings out over 15 years, homeowners could be saving a whopping total of $84,780 per household or in 30 years, the typical length of a loan, save $169,560.

This type of savings seems like a no-brainer, yet Credit Sesame estimates about 14 million homeowners who could qualify for a refinance haven’t done so. Why is that?

Could it be that we collectively really are numb to the fact that interest rates are so low? Are Americans feeling as though rates will be at rock bottom forever? Are they strapped for the cash it takes to close a refinance?

It’s hard to know for sure, but I wanted to bring the issue to light since the savings potentially are so substantial for the average household. I think we may just have a general awareness issue. As such, here are the general things that qualify a homeowner for a refinance and signal that it may be the right financial move to make:

  1. Rate and point drop is high enough to justify it: The general rule is that a refinance is likely worth the time and effort when you can lock in an interest rate that is ½ to 1 full point lower than your existing mortgage, or when mortgage rates drop 2% below your current rate.
  2. Credit history in good standing: You’ll need just as good a credit score to refinance as you did when you first obtained your home loan.
  3. Sufficient home equity: Don’t expect to be able to refinance right out of the gate after buying your home. Lenders will be looking for a healthy amount of equity before they agree to refinance your loan. But figuring out your equity can be tricky in this market – especially if your local market is wildly different than when you first bought (which is likely even if you bought only two years ago). This is a topic all its own, so I suggest reading this thorough article on the subject on Bankrate.
  4. Cash to close the refinance: Yes, refinancing will cost you money to do, which is another reason you’ll want to thoroughly examine the math before jumping into a decision. Sometimes it may not make financial sense. Get an estimate of costs involved from your lender before making any decisions.

Refinancing isn’t always the right decision. But with the prospect of potentially saving $471 a month, it’s well worth considering!

Contact your Western Bancorp representative for refinancing information.

  • Get new posts via email
  • Subscribe

Intero Insider: Stars Are Aligning for Housing Recovery

By Gino Blefari | February 29th, 2012 0 Comments

Pending home sales reached their highest level in January in nearly two years, according to NAR’s report this week, rounding out a handful of positive news for housing markets in the last week or two.

Pending sales trending upward is an interesting trend to watch considering the recent rise in cancelled contracts. I say this because pending sales at least gives us an indicator of buyer sentiment since many of the failed contracts seem to be due to things that are out of buyers’ control like not securing financing needed to purchase the home or the appraisal coming in below the contract price. With a rise in pending sales, we at least know that buyer intent is on the rise and more folks are trying to buy homes.

NAR’s pending home sales index was up 2% to 97 in January from 95 in December, and is 8% higher than January 2011. The January index is the highest since April 2010, when it reached 111.3 as buyers were in a mad dash to take advantage of the home buyer tax credit.

Other positive happenings for housing:

Improving job market: In January, unemployment hit its lowest level in three years, continuing a five-month streak of improvement. Without jobs, people don’t buy or move so this obviously is a good thing.

Home builders are gaining confidence: Home builder sentiment, tracked by the National Association of Home Builders and Wells Fargo, in February reached its highest level in nearly five years. This basically means that home builders are more confident that market conditions are improving to the point that new home sales will be positively impacted.

Housing stocks are up: The stock market is a far-from-perfect indicator, but it at least gives a reading of how investors are feeling. The nation’s home builder companies have seen share prices increase 60% since October, according to an analysis on Time’s website.

In the Bay Area, we have all the amazing economic trickledown activity from major tech company IPOs – recently game developer Zynga and Facebook’s pending IPO in May – to look forward to in housing. In fact, some of our local markets such as San Francisco have already seen the positive housing news that comes along with that.

Overall, 2012 is looking to be a great year for housing compared to the last five or six. The presidential election likely will also ward off any major controversial policies that could negatively impact the market. With all this in mind, I think we’re looking at our big comeback year. It will be particularly good for certain segments of our local markets and marginally improved at the national level. Not a boom by any means, but we’ll take it!

  • Get new posts via email
  • Subscribe

Intero Insider: Save the Mortgage Interest Deduction!

By Gino Blefari | February 22nd, 2012 0 Comments

President Obama’s budget proposal last week attracted more than a few passionate voices from real estate who oppose elements that would limit itemized tax deductions, including the mortgage interest deduction that enables homeowners to deduct part of their mortgage interest from their overall tax bill.

In short, the budget would reduce the value of itemized deductions to 28% for married couples with incomes over $250,000 and individuals with income over $200,000. The current value of deductions could be as high as 33-35%, depending on the tax bracket the household is in. The reason it’s so vehemently opposed by real estate industry groups like the National Association of Realtors is that it’s a vital component to the housing recovery – and it feels like a penalty being put on responsible homeowners.

One of the perks of owning a home has been the ability to deduct a portion of the money paid in mortgage interest each year from an owner’s tax bill. This is part of the reason ownership makes more financial sense than renting for many families over the long-term.

Now feels like the worst possible timing for a change like this. Removing this benefit that is highly regarded by many would-be homeowners as a perk of owning versus renting likely would have a negative impact on the economic recovery.

Also, as NAR points out in a letter opposing the budget proposal, the nation’s homeowners already pay 80-90% of U.S. federal income taxes. Raising taxes on them now could seriously wear down demand, taking home values with it at a critical time for the overall health of the housing market.

Many might argue that the value of the change on the overall economic state of the nation far outweighs that of the individual homeowners who would be affected. But, the fact is that by eroding home values, the nation is affected in the end anyway. In addition, perception is a highly valuable (or dangerous) thing when it comes to real estate markets. Just the very perception that homeownership may have lost some of its luster in the often-cited tax benefits by new buyers has the potential to do damage.

And we can’t afford to lose any momentum in housing demand.

NAR is fighting against this proposed change, and so am I. Let’s save the mortgage interest tax deduction for the nation’s homeowners and incoming buyers. Now is not a good time for a change like this. Obama may not see it, but the deduction is vital to the stability of the nation’s housing markets.

  • Get new posts via email
  • Subscribe

Intero Insider: Mandated Down Payments Unfairly Impact Buyers in High-Cost Areas

By Gino Blefari | February 15th, 2012 0 Comments

The issue of mandated down payments is back in the spotlight as a recently released study found that requiring by law a minimum down payment of 20% would have a dramatic, negative short-term impact on the housing market. The study, released by the Center for Responsible Lending at the University of North Carolina, found that implementing such a mandate would push out 60% of would-be home buyers from the market.

As you can imagine, the topic has garnered criticism from both sides. While many say that requiring a minimum down payment would be better for homeowners and the economy as a whole by protecting us from defaults and stemming foreclosures, others say that it unfairly bumps out otherwise qualified home buyers. And the delicate state of the market in many areas would feel an impact from such a move.

What’s my take? I think a “back to basics” approach to housing in general is a good thing. Would-be buyers should be willing to put their own skin in the game so to speak for many reasons. For one, they’ll be starting out their ownership journey on a much better financial foot – namely, they likely won’t be ruined by the first financial curve ball that may come their way. Secondly, the more you put down the better your loan terms so the overall cost of ownership actually does decrease in most instances.

The problem though is high-cost areas like our very own Silicon Valley and the Bay Area in general. Twenty percent is no small feat for most of our local buyers, considering the median cost of a home across the Bay Area is currently around $351,000, according to DataQuick. That’s $70,200 in cash that a buyer would need, which doesn’t even include closing costs – which we’ll estimate would be another $10,000-$12,000. And let’s be realistic: that median price is quite optimistic for most people’s situations. To get a home in a safe and secure neighborhood with good schools, we’re talking much higher for most of our cities.

This is why I think a blanket minimum down payment mandate is potentially dangerous. It could seriously polarize the market in high-cost areas, leaving many otherwise qualified would-be home buyers out in the cold. And that just doesn’t feel right.

In addition, a lower down payment doesn’t always translate to loan defaults and foreclosures. How else could you explain the existence and longevity in the FHA loan program, which enables qualified buyers to buy with much less cash down?

Thankfully, while the standards for the bill that would put this mandate in place will be heavily debated over the next year, we’re not likely to see anything implemented in 2012. We can thank the election for that as politicians historically have shied away from such hot-button housing policies that have the potential to polarize voters.

I do expect this will be talked about though, and it’s not going to just go away. But if you’re in the market to buy a home in a high-cost area and don’t have the 20% in cash, you can consider it another reason to move quickly!

  • Get new posts via email
  • Subscribe

Intero Insider: Facebook’s IPO and the American Dream

By Gino Blefari | February 8th, 2012 0 Comments

By now, you’ve heard all about Facebook’s S-1 filing last week – the social networking site’s first steps toward what is expected to be a $5 billion IPO. It’s a fascinating story, and something we’re sure to hear a lot more about over the next three months leading up to the actual offering.

There is also a fascinating real estate story about to unfold. No, not the kind of story in which agents start to find wild success selling homes via Facebook. But the real kind: young Internet minds work hard to build a raving success, take the company public, and get wildly rich in the process. And what’s the inevitable next step? They buy real estate.

That’s right. Our very own Silicon Valley, which is already flush with brilliant tech minds who’ve found amazing success in their careers, is about to be flooded with even more young success stories thanks to Facebook’s IPO. The rippling effect of the wealth about to be made by Mark Zuckerberg and 3,000 Facebook employees on the local economy is expected to spark a jump in real estate sales and also boost the local economy overall for many years.

This is how we know that Americans – regardless of background, age, or current economic standing – still have a healthy appetite for owning their own homes. It’s among the first things we all do when we realize success in our careers.

News stories may have you believe that many Americans are over owning a home – that the wounds of foreclosure, financial hardship and upside down home values have created a huge disconnect in what was once the American Dream. But I’m here to tell you that it’s simply not true, and Facebook is my case in point.

Watch for evidence that the American Dream is alive and well in our local real estate market after this IPO hits Wall Street in May (and leading up to then, too).

This is why I don’t panic when personal finance gurus start to talk about shifting values among America’s young – that our kids are more interested in renting than buying. Because it’s simply not true. Give them success and a healthy income and they will buy a home.

I’m excited to see this generation of dot-coms growing and sustaining, defying the slow growth trend that’s happening in almost every other sector. This is exactly the type of positive news we need right now. Let’s embrace it!

Eight years ago, a young Zuckerberg took a chance and came out to Silicon Valley one summer while enrolled at Harvard. That chance is now paying off, and our local economy is lucky to be a part of it.

  • Get new posts via email
  • Subscribe

Intero Insider: 5 Home Purchase Cancellation Prevention Techniques

By Gino Blefari | February 1st, 2012 0 Comments

The real problem in the housing industry right now is not lagging sales or falling prices. With lots of supply and rock-bottom interest rates on mortgages, demand from buyers is shaping up. The real problem now is in cancelled contracts.

In its December Pending Home Sales Index released last week, the National Association of Realtors said that pending home sales remained strong at 96.6 – still well above the same month a year earlier when the index was at 91.5. (An index of 100 is considered to be a healthy market.)

The index measures the number of contract signings made in a month and is viewed as a forward-looking indicator because contract signings in a perfect world lead to actual sales either the following month or month after. So, with all the positive numbers here, why aren’t we seeing a boom in closed sales? The answer is  simply that deals are falling through.

NAR says that one-third of Realtors are reporting that contract failures remain a big issue. This is no small potatoes. Now that we know more buyers are ready to bite, we can’t let you get blindsided or discouraged by contract failures. Here are five home purchase cancellation prevention techniques:

1. Have enough cash: A no-brainer, I know. Lenders are much stricter these days about how much cash they want to see at closing. You should know how much you can bring – for both down payment and closing costs – well in advance of your house hunt.

2. Prepare your paperwork now: Agents say that many times contracts fall through because the buyers didn’t have their paperwork ready when it was needed. To save your deal, make sure you’ve got all your financial information in line before you make an offer: proof of income, assets, debt, and proof of down payment, and letters you may need to explain gaps in income or employment.

3. Tighten up your finances: Just because your offer was accepted doesn’t mean you’ve got the house. You still need to get a loan (unless, of course, you’re independently wealthy and plan to pay cash). Long before you go house hunting, be sure to visit with a loan officer or mortgage broker to get a picture of your finances so that you’ll know whether a bank will lend to you and how much.

4. Understand your comps: Many deals are falling through because of appraisals coming in below the purchase price. While there’s nothing an agent or home buyer can do about a low appraisal, you can do something about the offer price. Make sure you know your market inside out. Pull good comps that are similar, local and recent. Get a good inspection and be sure that any defects are accounted for in some way. You need to know about any little thing that may come up to negatively impact the appraisal the bank will use to determine the home’s value.

5. If buying a short sale or foreclosure, educate yourself on these processes in advance: These types of transactions take much longer to complete in many cases. But when they move, you need to be ready to move with them. That means you should first know what to expect before making your offer, and then follow through on what is expected of you every step of the way.

Extreme caution, hyper preparedness and highly informed home buyers are the only combination that’s going to make a dent in the large portion of contract failures the market is experiencing. While we can’t control lenders, we can control our readiness to respond.

  • Get new posts via email
  • Subscribe

Intero Insider: Why Low Interest Rates Are Still Vital to the Housing Economy

By Gino Blefari | January 17th, 2012 0 Comments

Interest rates. It’s a constant topic of conversation in real estate, and this year so far is no different than the last few: We’re kicking it off with some of the lowest interest rates on long-term mortgages that the market has ever seen. The average rate on a 30-year fixed-rate mortgage reached an all-time low of 3.89% this month, according to a survey tracked by Freddie Mac.

Two messages are important in this news for home buyers and sellers. They are:

1. Low interest rates are significant for home buyers, equating to big savings when locked in at the right time. This is a point that can actually motivate a lot of buyers to get off the fence.

For instance, let’s look at a .5% increase in a mortgage rate on a 30-year mortgage for $425,000. Say our buyers could get a 4.75% interest rate when they first start their real estate search. If they indeed buy a home and lock in a mortgage at this rate, they’ll end up paying $373,120.42 in total interest over the life of the loan.

But say these buyers get lost in their decision-making process and end up taking eight months to make a decision on a home. By the time they lock in their rate, they end up with a 5.25% interest rate on a 30-year mortgage for the same $425,000 loan. Now, they’ll end up paying $419,871.66 in interest over the life of the loan. That’s a $46,751.24 increase in the final interest bill – substantial to the average family buying a home.

Taking advantage of the lowest rates possible is a key message that will help to motivate a lot of buyers in 2012.

2. While no one can predict when interest rates will increase or by how much, we know they inevitably will increase, but can also feel comfortable that they’re not going to jump suddenly. Most analysts and industry observers expect rates to remain low as long as the economy is still in a slow recovery. That’s good news for buyers and sellers alike (more affordable borrowing means more buyers in the market, in most cases).

Low interest rates alone cannot save a housing slump, or single-handedly create a boom (remember that our last boom was also fueled by very loose loan underwriting standards that created a lot demand from market segments that would not be eligible for loans under today’s standards). But they’re still extremely important to the recovery story. They still have a vital role. Let’s not undermine that, or let that point get lost in the shuffle.

  • Get new posts via email
  • Subscribe

Intero Insider: How Sellers Can Sharpen Their Competitive Edge

By Gino Blefari | October 4th, 2011 1 Comment

Selling a home is a hyper-competitive endeavor in many markets across the country. Even here in the Bay Area where many neighborhoods are doing well, we’ve got pockets of buyers’ markets that are posing challenges for home sellers.

Does this mean it’s a terrible time to sell? Not necessarily. But it does mean that sellers need to be ready to compete when putting their homes on the market. What can a typical homeowner do to make their home more appealing in a market where buyers may be looking at dozens of other similar homes in the same neighborhood?

Here are the top 4 things sellers can do to up the ante and ensure their home is in the right condition to get the best offer:

  1. Get a bird’s eye view on how your home compares. Take a sweep through a few open houses next Sunday to see what’s on the market in your area that’s comparable to your home. Take good notes on what you notice is common in all these houses. Do they all have new carpet? New hardwood floors? A fresh coat of paint? New windows? You may not be ready to invest in a large project for your home before selling, but often something like painting or installing new carpet can pay for itself in the end – especially if all the other comparable homes for sale have these things.
  2. Remove all your clutter and store it away while your home is on the market. There’s no bigger turn-off to buyers than a house that is filled to the brim with objects and furniture. Buyers need to be able to look at your home and envision their lives in it, which includes all their own furniture and belongings. That’s much harder to do the more stuff you have in your home. This is by far one of the best things you can do to help the sale of your home.
  3. Consider staging. Staging basically means removing all your clutter as outlined above and having someone – either your real estate agent or a staging specialist – look at your home and make recommendations for how to set up the furniture and décor. Often, a stager will even remove some of your furniture and bring in other furniture to best accentuate the space of your rooms.
  4. Research your market and price accordingly. This may seem like a no-brainer, but in all my years of the real estate business, the one tactic that agents say over and over again makes the biggest difference in selling a home is how it is priced from day one. This means you need to do a lot of upfront research with the help of your agent. Look at as many comparables as possible and decide on your listing price based on what has recently sold and what is currently for sale. This is how your buyers will be calculating their offers to you so it’s best to be realistic and not try to play price games.

There are dozens of other things that sellers can do to help their homes sell quickly and at the best price. Ask your Intero Real Estate agent for pre-list tips.

  • Get new posts via email
  • Subscribe

Intero Insider: A Quick Pulse on the National Market

By Gino Blefari | September 27th, 2011 0 Comments

The housing market had a glimpse of good news this past week when the latest report on existing home sales showed an increase in sales both from the previous month and compared with a year earlier. There were a lot of things going on this report, so let’s dig in:

  • Sales of existing homes increased 7.7% to a rate of 5 million in August, up from 4.67 million in July. Sales were up 18.6% from August 2010. Obviously, this is a great sign. While many news reports early this week focused on the dismal housing starts numbers, existing home sales are a better indicator to watch because as long as there’s a glut of existing home inventory in many markets, starts will remain low. In other words, existing sales need to move first before any improvement in starts will take place.
  • Investors continue to gobble up property; the share of investors buying existing homes in August accounted for 22% of total sales, up from 18% in July and 21% in August 2010. Investors are motivated by the incredibly low cost of borrowing right now and the hot rental market that continues to see more demand and rising rents in many areas.
  • First-time buyers remained steady, accounting for 32% of home purchases in August. That was unchanged from July, and up slightly from 31% in August a year ago. This is surprising, given the many problems with contracts falling through. But again, it’s a great time to buy for those buyers who are financially ready – rock-bottom interest rates, amazing affordability, and plenty of home inventory to choose from.
  • Contract problems persist. The percent of contracts that fell through in August was 18%, up from 16% in July and 9% a year ago. Realtors say cancellations are largely due to declined mortgage applications or problems with appraised values coming back too low to support the negotiated price.

What’s the overall read? Not much has changed, despite the positive growth in sales. Low rates, bargain prices and a healthy rental market continue to lure more investors and first-time buyers. Restrictions in the lending market and problems with fluctuating home values continue to plague a lot of deals. What we’re seeing now is the slow growth many predicted and expected to happen earlier in the year.

What’s next? The Fed’s been discussing its new “Operation Twist” tactic, which basically means it’s going to be manipulating long-term interest rates by buying long-term bonds. The Fed has already said it’s keeping short-term rates low for the next two years – and at zero, they can’t even really do much more on that front. So, you guessed it – even lower interest rates may be on the horizon for home loan borrowers, which should help to fuel demand going into the traditionally slow season.

  • Get new posts via email
  • Subscribe

« Older Entries
Newer Entries »