Your home, your mortgage and the world economy

Tom Friedman is right, the world is hot, flat and crowed.  That means all those people in all those places have an effect on us here in the beautiful Bay Area.  Here's the news:

The Greek bailout package was passed on Monday as expected, and there was little reaction in US markets. Mixed US economic data also had little influence. Strong Treasury auctions were the biggest factor for mortgage rates this week, and rates ended the week a little lower.

Investors are beginning to focus on the price of oil. Concerns about Iran have pushed oil prices up to the highest level in nine months. Higher energy prices are bad for consumers and the economy. Since higher oil prices have two opposite effects on inflation, though, the impact on mortgage rates is uncertain. Rising energy costs add to inflation, but they also slow economic growth, which reduces inflationary pressures. It's not clear which influence will be larger over time.

The housing data released this week continued to be encouraging. January Existing Home Sales rose 4% from December to the highest level since May 2010. The inventory of listed existing homes declined 1% to the lowest level since March 2005. January New Home Sales again exceeded expectations.

Next week, Pending Home Sales will be released on Monday. Durable Orders will come out on Tuesday. Revisions to fourth quarter GDP will be released on Wednesday, along with Chicago PMI Manufacturing and the Fed's Beige Book. ISM Manufacturing and Core PCE inflation are scheduled for Thursday. Personal Income, Consumer Confidence, and Construction Spending will round out a busy week.

What that mean to you?  Well, for now interest rates remain really low and home prices are still great for buyers but trending up.  That makes it a great time to buy or if you're settled into your home you want to check and see if you have the best rate and terms for the time you plan to stay.  Either way you might want to call Spencer at 415-690-0194 and see what North Bay Realty & Loans can do for you.

Get the low down on 1% down payment homes

Hello Homebuyers,

Want a really low down payment?  Well, California has just made this possible.

Tack a state approved second onto your already low down (3.5%) FHA mortgage
and you can get into a home you'll own.

Sure, you'll have to pay the dreaded mortgage insurance but it still  might be chaeaper
than renting a home and at today's low interest rates and bargain home prices you may
be better off buying now rather than struggling to save up that 20% down payment.

Home Ownership isn't really out of reach now, call for details.

Spencer

415-690-0194

North Bay Realty & Loan

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Buying a home in a cooling market

Benefits of buying a home in a cooling market

A home is still a good investment, if you plan on staying awhile

Residential real estate, a shining star of the national economy that seemed unflappable just a couple of years ago hit a speed bump.  That’s putting it mildly.

Nationally, home price appreciation slowed down drastically from the rapid pace experienced by many markets for a few years. Is this any time to be thinking about investing in a home? Of course it is-if you're buying it for a place to live, not as a speculative investment, and can afford to take the leap.

"Owning a home is still financially not a bad deal, as long as you have the income to support the cost of homeownership," said Jim Gaines, research economist for the Real Estate Center at Texas A&M University. Another caveat: "You better figure on living there five or six years to make any kind of profit on the thing."In the Bay Area the recovery and gentle appreciation look good for the foreseeable future.

Investors who hope to profit quickly on home sales, known as property flippers, for the most part have come and gone from the market, said Raymond Sierka Jr., vice president and regional sales manager with Harris Private Bank.  At the height of the real estate boom, people would buy houses before they were built at preconstruction rates only to sell the homes for a profit a short time later, often before construction was even complete. Speculators in some markets could often sell the property for a 20% to 30% yield, he said.

People now are "buying for the right reasons," said Diana Bull, real estate agent in Santa Barbara, CA, and a regional vice president for the National Association of REALTORS. Sellers no longer hold all the cards, she said, which is creating a more balanced market.  Below are several benefits of home shopping in a cooling real estate market-the silver lining to news predicting the residential real estate party is over.

More selection

In a growing number of local markets, buyers have more time to think about a home before they make a decision on whether to purchase it. Last year, that often wasn't a likely luxury.

"Once you as a potential buyer found a house that met your needs, you had to jump on it right away," said Frank Nothaft, chief economist for Freddie Mac. "One thing that we're seeing nowadays-compared to six or 12 months ago-is many markets where homes are staying on the market longer."  That only seems to be true in Marin if the homes are overpriced listings.  Good value sells quickly.

Two or three years ago, there was a great deal of reacting in the marketplace because we had a smaller inventory pool to work with.  That's not to say that a well-priced property won't move quickly in this environment, he said, but buyers need to educate themselves so they can recognize a housing gem when they see it.

More room to negotiate

Current conditions in many markets also afford consumers a better opportunity to negotiate. Although the market is warming up it’s still a buyer’s market. This market is forcing everybody to slow down and take their time, In that time, buyers have more of a say at the bargaining table.

In fact, getting a fair deal is even more of a priority for homeowners who can no longer bank on high appreciation rates to save them if they pay too much.. If you slightly overpaid in a bidding war at the height of the real estate boom, high appreciation rates helped correct the error, he said. In many markets there is now no such safety net.

Even if you, as a buyer, have the benefit of being more of a haggler than you could have been last year, still remember to look for a place that meets your needs and your budget, Nothaft said. Do the calculations and lay the groundwork before your house hunt ever begins.

Interest rates are still historically low

It's easy to get caught up in the upward scooting of mortgage interest rates. But take the northward movement with a grain of salt.  It will happen again but no one knows when. Some people act like "Chicken Little" and feel as if the sky is falling when interest rates go up a quarter of a point.  Interest rates are still way below what they were five or six years ago, Gaines said. Even if the 30-year hits 7% by the end of the year, investors should keep in mind the double-digit rates of yesteryear.

The annual average for a 30-year fixed-rate mortgage was 16.63% in 1981, and worked its way down to 9.25% in 1991, according to Freddie Mac records. Homeowners may get rates as low as they ever will now. Relatively speaking, with housing prices and interest rates where they are now it's a great deal.  Check your options.

Your home is still a good investment

If you're in it for the long haul-that is, buying a home with the intention to live in it for years-a home is still a great investment.  Call Spencer at 415-690-0194 to find your perfect home and your best loan.

North Bay Realty & Loan

Housing Crisis to end this year

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

What does this mean to you?  If you're looking for a home or investment property it's a great time to buy.  If your lucky enough to own a nice home you love then you should refinance at today's historically low rates.  Either way now is the best time for you to get the best mortgage we'll probably see for years to come.

Get started now, call Spencer at 415-690-0194

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