Posts Tagged ‘Low Interest Rates’

Intero Insider: 4 Signs It’s Time to Buy a Home Now

By Gino Blefari | May 2nd, 2012 0 Comments

If ever there was a fantastic time to buy a home, it’s right now. Never mind the fact that I head a leading real estate brokerage company. Let the statistics show you why now is your best bet to get into the housing market:

1. Home values are recovering

U.S. home values rose 0.5% from February to March, the largest monthly increase since May 2006, before values at the national level peaked, according to a recent report from Zillow this month. In addition, the company said in its home value forecast that it expects 19 of the 30 markets it covers will reach a bottom in values this year. Phoenix and Miami-Ft. Lauderdale are expected to see significant home value increases.

2. Interest rates are still extraordinarily low

The cost of borrowing is still extremely attractive for buyers who qualify and are ready for the financial responsibility of a home mortgage. Saying mortgage rates have hit a new “record low” has become a bit of a broken record. At an average 4.04% in the latest Mortgage Bankers Association survey, rates on the standard 30-year fixed-rate mortgage are almost too good to be true. While there’s no sign from the Federal Reserve that rates will increase significantly anytime soon, it’s definitely a great condition for buyers right now.

3. Multiple offers are back

Demand for housing is starting to outweigh supply in some markets across the country. We covered the return of bidding wars this spring in markets like Silicon Valley, Miami, Seattle and Washington, D.C. Even despite the presence of “war” like situations, multiple offers are once again a fact of life in markets with strong economies and job prospects.

4. Rents are rising with no end in sight

The median U.S. rent was $721 per month in the first quarter, up 5.6% from the same period a year earlier, according to the Commerce Department. Altogether, rental income has increased 12% in the year ended in March. In addition to rising rent, the supply of units is the tightest in more than 10 years, with 8.8% of units vacant in the first quarter. This at a time when the demand for rental units is at the highest in 15 years. This means more buyers likely will continue to jump from that tight market into owning while the numbers make sense.

As you can see, the buyer market is about to get more crowded than it’s been the last few years. These are each solid market forces that could push more and more buyers off the fence, creating more transactions and helping to lift home values this year and next. If you think you want to buy – or know buyers who are testing the waters – now is your chance to take advantage of prime home-buying conditions.

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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.

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Intero Insider: Prices Stepping Up in California

By Gino Blefari | October 5th, 2010 0 Comments

Anyone looking to buy a home in California might feel a bit of urgency after hearing the latest news on sales trends in the state. Sales are up a bit, though not as strong as they could be – but prices are getting hotter by the minute.

The statewide median home price increased 1.2 percent from July and was up 8.6 percent from a year ago, according to a recent report from the California Association of Realtors.

This news, along with the incredibly low interest rates on long-term mortgages should be enough to push anyone off the fence. Sales are still slow enough to offer many buyers a good deal, while the price trend shows strength in our underlying market forces.

Is it a good time to buy in California? My instinct is to say “you bet it is.” Market conditions agree. But of course, this is now and always will be a highly personal question with an answer that is unique to the person asking.

Buyers today need to be prepared for a rigorous mortgage process – one that requires reams of documentation, stellar credit and an impressive cash deposit. You’ll need to have worked at this for some time (good credit and cash unfortunately don’t fall from the sky).

If you’re interested in a home in California, don’t rule it out, though, if you think you don’t qualify. FHA, for example, is still writing mortgages, which don’t require as high a downpayment as those made from private lenders.

I urge you to act – though not in haste and not alone. Today’s market is perhaps the most confusing time in our industry’s history. But don’t view this as an obstacle – view it as a potential opportunity. Enlist the help of a real estate specialist with Intero Real Estate and get the insight you need to navigate these rocky waters.

Real estate is alive and well in the Golden State. But it’s murky, slow and full of unexpected twists and turns. Don’t risk missing out, though, because it all seems so unfamiliar. Talk to an agent about your situation today.

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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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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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Intero Insider: Out of the Ashes Rises the Phoenix…Or At Least A Parakeet

By Gino Blefari | May 25th, 2010 0 Comments

I love finding the silver lining in things.

No matter how desperate a situation might look, there is almost always something positive, glimmering no matter how faintly, beneath the surface.

I have long postulated that the Federal Government’s stoppage of investment in mortgage-backed securities could result in rising interest rates. And I still believe that to be the case.

We seem, however, to have found a silvery lining in the specter of that cloud.

As you are likely aware, our friends in Europe are going through a bit of a financial crisis of their own. Greece is deeply in debt and has no earthly idea how to get out. The rest of the European Union doesn’t want to help them out, but Greece’s troubles are having a crippling effect on the, until now, untouchable Euro, whose value is dependent on the economies of all of the countries that use it.

The result? International investors, now wary of stockpiling their cash in European markets, have sent the U.S. an unexpected windfall in the form of mortgage rates that are now at near 50-year lows.

How low, do you ask?

Freddie Mac, on Friday, the 21st, said that rates averaged just 4.84% last week. Far from shabby, that’s the lowest since December 2009. In fact, I’ve heard reports of mortgage officers locking in loans with rates as low as 4.25% — fixed — which is as low a rate of which I’ve ever heard.

Did you miss out on the Homebuyer Tax Credit? As I mentioned a couple of weeks ago, it’s OK if you did. In the long run, that $8000 won’t take most people all that far. But a mortgage interest rate of below 5%? Now that is something that’ll save you some big money. A one-percentage-point decline in mortgage rates can save you hundreds of dollars each month. Over a 30-year period, that could translate into a lot of money. Real savings.

Also, lowered interest rates will increase buyers’ spending power. For each percentage point mortgage rates decline, buyers can spend about 10% more on a home. The extra bedroom or bump-out for which they’d been hoping might now be within their reach.

Take heed, though. It’s tougher now to qualify for a mortgage than it has ever been. Underwriting standards are tough. Not everyone is going to qualify, I’m afraid.

How long will things stay this way?

That’s a great question, and unfortunately one which has no answer. But I can tell you this: it’s unlikely that these rates will last for very long. If you have questions, contact your mortgage lender, your financial advisor, or your Intero real estate professional. They can point you in the right direction. If you’re looking to buy a home (or to refinance your current mortgage), it would seem that there is no time like the present.

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Intero Insider: A Delicate Balance

By Gino Blefari | February 10th, 2010 0 Comments

For the past two years or so, our nation’s economy has been floundering, doing all it could to get its head above water. The real estate industry has played — and continues to play — rather a large role in how the story pans out. But contributing to successes and failures in our own industry are untold numbers of mitigating factors, from fraudulent lending and sub-prime mortgages, to over-inflated sales prices, foreclosures, tax credits, and the some of the best sales prices in recent memory. When working together properly, these things can spur wonderful upward movement.

When something is knocked even slightly askew, however, that delicate balance can be thrown into a tailspin.

There has been great news of late, of course. Many neighborhoods across the nation have seen upticks in sales prices, many listings are, once again, seeing multiple offers, and interest rates are at astonishingly low levels.

Now, though, we are holding our collective breath, as several things that have helped spur the market along are poised to come to a halt.

First, the homebuyer tax credit. It’s been credited (no pun intended) with getting a lot of buyers into the market that wouldn’t have been otherwise. It was expanded in the Fall, but will expire this Spring.

Strike one.

Second, foreclosures. As we’ve reported already, the incidence of foreclosure continues to rise. Many homeowners in financial distress are simply making the decision to walk away from their homes, and their debts right along with them.

Strike two.

Third, we have another wrinkle. Those low interest rates that we just mentioned? They’re due in large part to Federal Reserve purchases of mortgage-backed securities. Thus far, the Fed’s purchases total almost $1.25 trillion dollars, but those purchases are due to stop near the end of March. This move will likely cause interest rates to turn upward. How much will they rise? That remains to be seen, but initial estimates have them climbing by more than a percentage point by year’s end.

Strike three.

These three factors coming together at roughly the same time could, potentially, throw the tenuous balance and modest signs of recovery we’ve seen thus far completely off kilter. The ever-changing conditions make the handling of a real estate transaction, whether for a buyer or a seller, all the more difficult. Intero’s real estate professionals stay up-to-date with the latest trends and will know which will affect you, and which won’t.

Negotiating the most important financial decisions of your life requires all of the information.  Your Intero real estate professional has that information and will help you keep things in balance.

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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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The First-Time Homebuyer Tax Credit is Likely to be Extended

By Gino Blefari | November 4th, 2009 0 Comments

Of late, all the buzz in the real estate industry — and in much of the overall news, in fact — has been about the First-Time Homebuyer Tax Credit. Credited (no pun intended) with giving the national real estate market a much-needed shot in the arm, the credit is scheduled, at the time of this writing, to go to a vote before Congress in the next few hours, and is likely to be not just extended, but expanded to benefit some current homeowners, as well.

There’s no question that the national economy is in a time of crisis. There’s no question that the real estate industry lies near the very heart of that crisis, and we all want to see its recovery.

A large part of the Federal Government’s economic stimulus package, the FTHTC is set to expire at the end of this month. Any real estate transaction that closes prior to midnight on November 30th, and whose buyers are first-time (meaning that they haven’t owned a home in 3 or more years) buyers, qualifies to receive an $8000 tax credit.

Certainly, many buyers have taken advantage of it (they would have been crazy not to).

Now, the government is set to vote on an expansion of the tax credit. The credit would not just be extended into next year, its terms would extend to homeowners who’ve been in their homes for five or more years (provided that they would be moving “up”), and would apply to buyers with higher incomes.

There are two other superstars playing roles in the real estate market right now: record-low interest rates and low, low, low home prices. Those two characters alone carry a huge amount of influence (as well they should) and should be the things motivating buyers — both new and experienced — to buy homes.

An extension of the Credit will no doubt magnify the impact of these forces.

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