Low Mortgage Rates Linger Longer Than Expected

Good news for homebuyers: Interest rates for home loans continue to linger at historically low levels, extending a rare opportunity to get a mortgage at rates that can shave hundreds of thousands of dollars off payments over the life of the loan.

Bankers and economists last year had forecast mortgage rates to climb higher in 2014 and top 5 percent by the end of the year. But the reverse happened, and rates today on a 30-year mortgage are nearly one-half of a percentage point lower than where they stood a year earlier.

Today’s low rates give another chance at homeownership to Bay Area residents who were outbid on properties during the frenzied real estate scene of 2013 and early 2014.

Since then, the number of all-cash investors has dropped significantly and the supply of homes on the market has gradually expanded — both signaling new opportunities, especially for first-time buyers.

Freddie Mac reported late last week that 30-year fixed-rate mortgages averaged 4.12 percent, down from 4.57 percent last year at this time, and 15-year fixed-rate mortgages averaged 3.26 percent, down from 3.59 percent one year ago.

Surprisingly, mortgage rates aren’t too much higher than when they fell to a record low of 3.31 percent in November 2012. By comparison, mortgage rates averaged 7 to 9 percent in the 1990s and 10 percent in the ’80s.

Last year, Pacific Union explained how rising mortgage rates can add hundreds of thousands of dollars to total house payments over the life of a loan.

Even with increasing home prices, buyers who take advantage of today’s low mortgage rates can still find a bargain. But it’s a wise move to act fast. How long these low rates will linger is a question that even bankers and economists cannot reliably answer.



(Image: Flickr/401(K) 2012)

5 Reasons to Sell BEFORE Winter Hits

People across the country are beginning to think about what their life will look like next year. It happens every Fall. We ponder whether we should relocate to a different part of the country to find better year round weather or perhaps move across the state for better job opportunities. Homeowners in this situation must consider whether they should sell their house now or wait. If you are one of these potential sellers, here are five important reasons to do it now versus the dead of winter.




1. Demand is Strong
Foot traffic refers to the number of people out actually physically looking at home right now. The latest foot traffic numbers show that there are more prospective purchasers currently looking at homes than at any other time in the last twelve months which includes the latest spring buyers’ market. These buyers are ready, willing and able to buy…and are in the market right now!

As we get later into the year, many people have other things (weather, holidays, etc.) that distract them from searching for a home. Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now
Housing supply is still under the historical number of 6 months’ supply. This means that, in many markets, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.

Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will continue to increase over the next few months. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker
One of the biggest challenges of the 2014 housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. Any delay in the process is always prolonged during the winter holiday season. Getting your house sold and closed before those delays begin will lend itself to a smoother transaction.

4. There Will Never Be a Better Time to Move-Up
If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19% from now to 2018. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate in the low 4’s right now. Rates are projected to be over 5% by this time next year.

5. It’s Time to Move On with Your Life
Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

http://www.keepingcurrentmatters.com/2014/09/03/5-reasons-to-sell-before-winter-hits/

Bay Area Homebuyers to Benefit From Credit Agencies’ New, Relaxed Rules

More people will qualify for home loans, and at lower interest rates, thanks to recent policy changes by several U.S. credit agencies.

Fair Isaac Co.’s FICO credit-scoring system garnered top headlines last week with the news that medical bills and paid-off debts would no longer be counted against consumers in computing their FICO scores. But other credit agencies have also eased their reporting rules in recent months.

The net result will be higher credit scores — perhaps an additional 25 points, Fair Isaac said — enabling some homebuyers to qualify for a loan that otherwise would have been out of reach or at a higher interest rate.

“This move will ultimately make a real difference in the lives of millions of Americans, who have been shut out of the housing market or forced to pay higher mortgage interest rates because of flawed credit scores,” Steve Brown, president of the National Association of Realtors, said in a statement. “Since the housing crash, overly restrictive lending has been the greatest obstacle to home ownership.”

The change follows a recent study by the federal Consumer Financial Protection Bureau that showed that both paid and unpaid medical debts were unfairly penalizing consumers’ credit ratings. An estimated 64 million Americans have a medical-collection item on their credit reports, according to Nick Clements of MagnifyMoney, a personal-finance website.

Two of the nation’s biggest credit bureaus also recently changed their credit-reporting policies.

Both Experian and TransUnion have added verified rental-payment data into credit files, to be used to compute a consumer’s credit score when applying for a mortgage and other type of loan. Experian said the change especially favors consumers with little or no credit history, and a TransUnion study showed that including rental data raised credit scores by 10 points or more for 20 percent of renters.

Together, the changes at Fair Isaac, Experian, and TransUnion could make a noticeable difference in Northern California real estate markets.

Bay Area residents have some of the highest credit scores in the nation, but buyers face added loan pressures here because home prices are far above national averages.

TransUnion recently revealed that the San Jose-Sunnyvale-Santa Clara metro area is tied with the Minneapolis-St. Paul area for the highest percentage of “A” credit scores in the United States, with 23.5 percent of its residents scoring between 900 and 990 on the VantageScore rating system.

The San Francisco-Oakland-Fremont metro area had the second-highest percentage of “A” scores — 22.9 percent.

But looking at the VantageScore numbers by another metric shows the challenges still facing homebuyers here: Residents of the San Jose metro area collectively have an average score of 700 on the 501-to-990 scale — a low “C” grade in terms of credit worthiness. San Francisco metro area residents have an average score of 696 — a high “D.”

Those numbers show how even in a high-scoring region like the Bay Area, plenty of consumers — and potential homebuyers — will benefit from increased credit scores.


(Image: Flickr/401(K) 2012)

Bay Area Home Price Growth Slows but Still Among Nation’s Strongest

Bay Area home prices aren’t rising nearly as fast as they were a year ago, but that’s not to say that they have stagnated. Far from it.

Home prices in the San Francisco metro area in May — the latest monthly data available from the S&P/Case-Shiller Home Price Indices – were 15.4 percent higher than they were a year earlier, and 1.6 percent higher than they were in April, for the second-highest price increases in the U.S. both annually and monthly.

May’s year-over-year rise in Bay Area home prices is down significantly from the 24.5 percent gain recorded one year ago, but most of the nation’s major metro areas posted far weaker numbers. In fact, the composite increase among the 20 largest metro areas was just 9.3 percent annually and 1.1 percent monthly.

The only metro areas with bigger prices increases in May were Las Vegas, up 16.9 percent annually, and Tampa, Fla., up 1.8 percent monthly.

“Home prices rose at their slowest pace since February of last year,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement accompanying the latest Case-Shiller results. On average, he said, U.S. metro areas posted price gains “well below expectations.”

Nationwide, price appreciation has slowed recently as real estate markets gradually return to normalcy after the recent recession and housing crisis. In the Bay Area, April and May were the only months where the pace of annual price appreciation dipped below 20 percent in more than a year.

A deeper dive into MLS data for shows that the median price of single-family homes rose, year-over-year, in eight of Pacific Union’s nine Bay Area regions in May.

Napa County saw a 21 percent jump in the median sales price, followed closely by a 20.5 percent rise in our Mid-Peninsula region. The only decrease was in our Sonoma Valley region, where the median price fell 8 percent.








(Image: Flickr/Bhautikjoshi)

San Francisco-Area Annual Home Price Growth Slackens in April

The San Francisco metro area boasted the second largest monthly home price gain in the country in April, the most recent S&P/Case Shiller Home Price Indices show. But for the first time in more than a year, the pace of annual appreciation dipped below 20 percent.
Home prices in our region increased by 2.3 percent month over month, down slightly from March but still twice the rate of appreciation measured across the Indices’ 20-city composite. The report says San Francisco-area prices have risen for the past six months straight.

But prices are slowing on an annual basis, Case Shiller’s data shows, with 19 of the 20 metro areas seeing smaller gains in April than in March.

Year over year, the 20-city composite posted a price increase of 10.8 percent, but past reports indicate that annual appreciation has been declining each month since November 2013. The report says April’s 20-city composite price was back to levels recorded in the summer of 2004 but remains nearly 20 percent short of its 2006 peak.
“Although home prices rose in April, the annual gains weakened,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement. “Overall prices are rising month-to-month but at a slower rate.”

Slowing price gains across the country might actually benefit the housing market in the long run, columnist Neil Irwin writes in The New York Times. Irwin contends that if double-digit price gains persist, homes could become heavily overvalued.

Home prices in the San Francisco region were up 18.2 percent year over year, second only to the Las Vegas metro area. The rate of annual appreciation in our region has dropped each month so far this year and was the lowest in April since January 2013.
A look at MLS data as of June 25 shows that year-over-year single-family home price gains slowed from March to April in seven of Pacific Union’s eight Bay Area regions.

In March four of our regions showed annual returns of more than 20 percent, with Sonoma Valley posting 42 percent year-over-year price hikes. But in April, gains ranged from 15 percent in Contra Costa County to 6 percent in Sonoma Valley.

San Francisco was the lone Pacific Union region where yearly price appreciation was higher in April (10 percent) than in March (8 percent).

Bay Area Home Price Growth and Sales Volume Cool in May

After several months of solid price and sales volume gains, real estate activity across the nine-county Bay Area slowed a bit in May, though prices were still at their highest levels in nearly seven years.
According to the California Association of Realtors just-released May home sales and price report, the median price for a single-family home in the Bay Area rose a barely noticeable $800 – 0.1 percent – from April to May. The median price currently stands at $768,910, the largest since October 2007.
Year over year, home prices across the region were up 6.9 percent, the first month in 2014 that the rate of annual appreciation has dipped into the single-digit range.
Bay Area sales volume grew by 7.2 percent in May – nowhere near the amounts observed in the previous two months, when home sales jumped by about 30 percent. Still, sales growth in our region was decidedly more robust than it was across the state, where it declined by about half of a percentage point.
Napa and San Mateo were the only Bay Area counties to post double-digit month-over-month price gains in May. At nearly $603,000, Napa County’s median price reached the highest levels recorded since November 2007. San Mateo County prices climbed above $1.1 million, overtaking Marin as California’s most expensive county for homebuyers.
CAR’s data shows that monthly price gains across the rest of the Bay Area were more moderate, ranging from 0.5 percent in Contra Costa and Solano counties to 4.3 percent in Alameda County. Santa Clara was the only local county where home prices decreased from April to May.
The months’ supply of inventory across the nine-county region expanded slightly to 2.5 in May, but the Bay Area real estate market still strongly favors seller – just as it did last spring. By comparison, the MSI across California has grown considerably over the past year and is now nearing a more balanced state.
Buyer demand still far outpaces supply in five of our local counties, which boast the smallest inventory pools in the state. Santa Clara County had the fewest number of homes for sale in California, followed by San Mateo, Alameda, Marin, and San Francisco counties.


(Photo: Flickr/Colin Harris ADE)