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10 Real Estate Predictions for 2011…part II

Posted on 28. December 2010 by Michael McFarlane

First, to all of you who were looking to find this second installment on our sister site we apologize. Technical difficulties prevented that from being published. Therefore we are re-posting it here for you, and thank you for your patience.

Last week we covered predictions one through five (you can review them below). This week we will continue with #6.

6. Increased and/or differentiating amenities: In order to make their homes different than the next builder’s, things like outdoor kitchens, play areas, and special features indoors will come into play.

7. More high-tech: Just as you can now control your TV & entertainment system via a single remote control, entire systems for controlling the house from afar will become more prevalent. They will no longer be just toys of the nerds.

8. Smaller homes: Just as home sizes have shrunk over the last couple years, the trend will continue as people look at more ways to get more for their money from less. First time home buyers are likely to be one of the trend setters here, as the entry level mansion once again becomes a myth with responsible lending.

9. Green AND good looking: The greener trend will continue. It just won’t look (or feel) like anything has been scrimped on. As technologies get better and prices come down this concept will gain ground quickly.

10. Healthy homes: People today show allergies 5 times higher than a few years ago. Indoor air will become cleaner, and directly address this issue. As homes become greener, this will happen automatically also. Reformulating paints and adhesives will contribute greatly to healthier indoor air.

Source: RISMedia ð

The impact locally? Some of these things are happening here today, and have been for a while. Solar panels have been built into new homes. Secondary solar systems have been added to existing homes. We know of one company that does little else! Low VOC paints are available at your local home improvement and hardware stores. Retrofit heating and A/C systems are installed regularly. We believe it will continue, and is for the better.

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Merry Christmas

Posted on 25. December 2010 by Michael McFarlane

To all our friends, family, and clients.

Please view your card at ððððð

10 Real Estate Predictions for 2011

Posted on 23. December 2010 by Michael McFarlane

The new year is often a time when resolutions and predictions abound, an opportunity to reflect upon last year and investigate ways to make this year better. Real Estate is no different. Following are ten things real estate professionals see for the future.

1. New Home Building: After 3 years of almost no new homes being built, the trade is beginning to pick up speed again.

2. Apartments continue to prosper: The last few years have reminded some that renting does have some advantages, like more amenities for the money, more flexibility in housing commitments, and others. It’s not for many but for some it just works.

3. Existing homes and neighborhoods: The trend of building new cities in the middle of nowhere will diminish. Instead smaller communities in established areas will be returning as the norm, along with purchasing the resale home and remodeling and updating it.

4. Modern design: Transitional and warm-modern are expected to be the new “IN” styles this coming year. Lower maintenance and more function for the dollar are cited as drivers to this style of building.

5. Buying for the long term: The last census showed that the average person moves about 11 times. That number is expected to decrease as people get rid of the idea that a home is a short term money maker rather than a home primarily and an investment (long term) secondly.

to be continued: click into our sister site at Yuba-Sutter Home Buys (news & discussions tab) tomorrow to read the rest of the predictions.

Source: RISMedia ð

CalPERS Program Suspended!

Posted on 21. December 2010 by Michael McFarlane

Citing limited usage and rapidly increasing costs the Board of the California Public Retirement System (CalPERS) has approved the suspension of the program that offered mortgages to it’s members. They say that over the last few years there has been little use of the program.

Once the suspension is fully implemented, the board will no longer accept mortgage applications, but those already in progress or completed will not be effected. Since the program began 29 years ago, more than 136,000 loans have been approved totalling more than $22.7 Billion. Although the program took a rather conservative approach to it’s lending policies (with mostly 15- & 30-year fixed rate loans) they have felt the impact of recent economic downturn and the finance world’s problems.

CalPERS is the largest public employees pension fund in the US with approximately $218 Billion in assets. The MHLP (Member Home Loan Program) allowed members to borrow against their retirement fund to make the down payment required when purchasing a home. With a membership of 1.6 Million the program wrote an average of only 1000 to 4,500 loans a year.

The Home Value Scene is Looking Better

Posted on 16. December 2010 by Michael McFarlane

CoreLogic (a housing data firm) reported Monday that the number of underwater homes (homes which are worth less than their mortgage balance) fell this summer for the third consecutive quarter. This is actually a mixed bag of news, both good and bad.

Unfortunately, the main reason less homes are underwater is due to them being foreclosed upon, not because of home values increasing. Currently about 10.8 million homes (22.5%) are underwater. That is down from 23%, or 11 million, last quarter.

A healthy market will have about 5% in this position, so we have a ways to go. The good news is that we are getting there! Interestingly, California is not the highest in this negative equity condition. Nevada leads with 2/3, followed by Arizona, Florida, Michigan, then California.

The states showing the largest decline in homes with negative equity (underwater) were Nevada, Arizona, California, and Florida. Again, the major reason is the high rate of foreclosures. Oklahoma has the fewest homes in this category with 6%. Only nine states report less than 10%.

Source: Sacramento Bee ð

Our take? While we never like to see folks loose their home, the market is beginning to correct itself. This does not mean that prices are going back to what they were 3 years ago. NO! And that is a good thing. People working in an area must be able to afford housing in that same area. When that balance is lost, things like the recent crash are inevitable.

As the market corrects itself, employment increases, consumer confidence increases, employment increases, consumer … the cycle repeats. At this stage the local economy is healing, reaching the point of being able to sustain itself. We all prosper.

Underwater Refi’s May Be In Jeopardy

Posted on 14. December 2010 by Michael McFarlane

Housing agencies clash over mortgage relief program. The FHA (Federal Housing Agency) says the programs will help avoid foreclosures. The FHFA (Federal Housing Finance Agency) says that if extended to federally backed loans (Freddie Mac & Fannie Mae) it could create a logistical nightmare and cost too much in tax dollars.

Arguments on the pro side state that 1 in 4 homes are upside-down (or underwater, meaning their current market value is less than their mortgage balance). Allowing refinancing to the current lower rates can help many of these owners from loosing their homes. If the Fannie Mae & Freddie Mac programs are excluded, nearly 1/2 of today’s mortgages will be left out. This would of course greatly reduce the effect of the measure.

The FHFA (which oversees the Fannie Mae & Freddie Mac programs) argues that it will cost too much, and they have already lost too much money. So far they have resisted the programs.

Source: The Washington Post

How does that effect us? Our take is that FHA loans comprise a larger share of the underwater home mortgages than combining the numbers above would indicate. The estimation that 1/4 of home mortgages are upside-down includes high end homes. These loans would not be covered by FHA loans, and are not common in our area. The majority of loans in the Yuba-Sutter area are or can be FHA, so excluding them would nearly eliminate the benefit for our area. Currently there are sources available for underwater loans in our area!

Some FHA Lenders Accused of Snubbing Subprime Borrowers

Posted on 9. December 2010 by Michael McFarlane

‘Mystery shopping’ leads to complaints against 22 lenders. It’s not any secret that getting a loan is a lot harder that is was in the recent past. And considering the lender’s overzealous lending an over-reaction is not really a big surprise either.

Test cases by “mystery shoppers” have revealed that 2/3 of the lenders refused loan application for FHA guaranteed loans from applicants with credit scores under 620! These were not high risk loans. These were loans that met the qualifications and would have been guaranteed by Fannie May and Freddy Mac.

The report sited 11 lenders as refusing applications from prospective borrowers if scores were below 640! Current regulations allow potential borrowers a loan with a credit score as low as 580 if they put 3.5% down. If a buyer can manage 10% down, their credit score can be as low as 500 to qualify.

Complaints have now been filed against 22 lenders stating that this is effectively racial discrimination because the majority of minorities are in this group. That makes it a violation of the Fair Housing Laws by which ALL federally backed lenders and ALL Realtors® must abide.

Source: Inman News

Did the Fed’s Plan Actually Work?

Posted on 7. December 2010 by Michael McFarlane

Bank of America says they have met the TARP exit requirements. They say that they have sold enough of their assets to repay the government (you and me) the $45,000,000 (yes, that’s 45 billion dollars) that funded their bail-out!

According to regulators the bank has until the end of the year to make that repayment. If they do not satisfy the requirements (of the exit strategy) they will have to sell additional assets.

This is being hailed as a major coupe for all involved…the bank, the government (popularity wise as well as monetarily), us the tax payers, and the economy in general. It is touted as a major victory for the U.S. Treasury and it’s policies.

Source: CNBC Financial Times

We believe that our local real estate market is already showing signs of healing. It is far from well, but we are getting there. As the foreclosure situation is resolved and the banks get back to “normal” lending practices, the outlook keeps getting better. Prices have stabilized, even increased slightly in most areas. Public confidence level is coming up. Neighborhoods are uniting. We have even seen people smiling!

Interest Rates Continue to Rise

Posted on 30. November 2010 by Michael McFarlane

Although still quite low, interest rates have climbed again. Wednesday Freddie Mac put the 30 year fixed rate at 4.40%. Last week they reported the rate at 4.39%, and two weeks ago at 4.17%. While 4.40% is still an extremely attractive rate, we believe it shows a trend, one that will likely continue.

The 15 year fixed rate mortgage loan interest rate has also climbed; from 3.57% a few weeks ago to 3.77% last week. Again, although higher than recent rates, these are still VERY good interest rates; in fact they remain historically low since April this year.

Source: San Francisco Chronicle read MORE

What is this in real world numbers? For a home selling for $250,000 an increased interest rate from 4.17% to 4.40% could cost you an additional $12,144.86 in interest alone. Other costs will likely increase also, costs such Mortgage Insurance are directly tied to the pay-back amount, not just the purchase price of your new home. This scenario is an example only (but accurate). Your savings and costs depend on many variables such as down payment, term on loan, late payments, impounds, etc.

Like to know more? You are welcomed to use our mortgage calculators at Yuba Sutter Homes and Loans.com. To find the numbers for your situation call (530 315-2808) or email us today. We can figure in the variables that only an experienced professional can provide.