IS IT A BUYER’S MARKET?

Buyer’s market helps buyers!

With the abundance of homes available and new home developments offering so many concessions, buyers have their choice of homes. Not like last year when a buyer had to make a split decision or lose the house. Also with the abundance of homes, buyers aren’t over paying and losing equity right off. At the same time since sellers have equity in their homes; it’s still a good time to sell.

I hear the market has gone down is that true?

The market has changed. Over the past 5 years, we have been in a white-hot, highly appreciating, rising market. Interest rates were at 40+ year lows. Currently, we are transitioning into what is called a “normal” market. There is a large supply of available homes for sale, and a substantial pool of ready willing and able buyers looking to purchase. The actual number of sales has slowed from the record highs of the past few years, but sales continue to be made. Prices are not skyrocketing monthly as they did over the past 5 years. Some sellers continue to list their homes based upon last year’s appreciation, and buyers are rejecting their inflated asking prices, which causes the impression that prices are falling. They are not; prices are adjusting to meet buyer demand which is a healthy, normal market.

 

Carol Perdew
(209) 239-7979

www.CentralValleyHomes.com

BUYING VS RENTING

THIS IS AN INFORMATIVE ARTICLE FROM YAHOO FINANCE ABOUT BUYING VS RENTING. THERE ARE GREAT ADVANTAGES TO HOMEOWNERSHIP. THIS IS A GREAT TIME TO BUY AND TAKE ADVANTAGES OF LOW PRICES AND AFFORDABLE INTEREST RATES. 

ADVANTAGES OF BUYING VS RENTING

A home is one of the most expensive purchases most of us will ever make during our lifetime. Whether you decide to rent or buy, either choice comes with its own rewards and risks. Homeownership offers many advantages over renting including:

ADVANTAGES OF BUYING VS RENTING

BUYING	RENTING
Tax write-off	No tax write-off
You can upgrade your home as you see fit	Need permission to make any changes
Build equity in your home as value appreciates	Your money goes toward the landlords equity
Control of loan payment options	Rent can increase periodically
Pride of homeownership	You have no ownership

While owning your own home has many benefits, there are still risks to consider:

DISADVANGAGES OF BUYING VS RENTING

BUYING	RENTING
You’re responsible for property maintenance	Your landlord or manager handles general repairs
Need to sell, rent or lease property in order to re-locate. May have to wait until market conditions are right	Freedom to move once your lease expires
You pay for all your own utilities, property taxes and insurance	May include utilities, property taxes, and property insurance
Home improvement upgrades can run into thousands of dollars	You’re not financially responsible for improvements

However, all things considered, homeownership is by far one of the best single investments you can make given the potential long-term benefits.

WHEN DOES IS MAKES SENSE TO BUY?

People, who have generally rented their whole lives, purchase a home for various reasons. Owning something of value with a chance of watching their investment appreciate is one reason. Purchasing a home to save money over the long-term is another.

Example

Let’s say you’re currently renting a two-bedroom, two-bath apartment. Your monthly rent is $1,000. You find a two-bedroom, two-bath at a market price of $250,000 (roughly the national average.) You have $25,000 saved – enough for a 10 percent down payment. For the purpose of this example, you’re looking to finance $225,000, which includes closing costs.

Using one of several mortgage calculators on the Internet, your monthly payment would be approximately $1,385 for a 30-year fixed loan at an APR of 6.20 percent (the national average). After taxes and appreciation in equity, your monthly payment over five years would average $499 per month.

COST SAVINGS OF BUYING VS RENTING

Calculations	Rent	Purchase
Monthly rent/estimated mortgage payment	$1,000	$1,385
Purchase price of home		$250,000
Percentage of down payment		25,000
Length of loan term (years)		30
Interest rate		6.2%
Years you plan to stay in the home		5
Yearly property tax rate		1%
Yearly home value appreciation rate		4%
Results
Price of home after appreciation		$304,163
Remaining balance after 5 years		209,887
Equity in house		94,276
Tax savings (28% bracket)		23,030
Avg. monthly payment over time	1,047	499
Total payments (over 5 years)	$62,820	$29,973
Total savings if buying		$32,847
Source: Ginniemae.gov. These calculations are estimates only. You should always seek the guidance of financial or tax experts before making any buying decisions.

The outcome could dramatically change should an unforeseen economic downturn or financial hardship occur (e.g., home improvement costs, catastrophic damage, etc.). While, no one can predict if home appreciation values will spiral downward, or if mortgage interest rates will rise, it’s clear that under the right circumstances home ownership can be financially rewarding.

Thanks,

CAROL PERDEW

(209) 239-7979
www.CentralValleyHomes.com

JUNE HOMEBUYER MONTH

A Statement on Homeownership Month from Brian Montgomery, the Federal Housing Commissioner

June is Homeownership Month and this year our theme is Back to Basics. Uncertainties in the housing market require back-to-basics solutions that break the cycle of foreclosure and add clarity to the homebuying process. Americans need to better understand what goes into homeownership, how to own a home they can afford, and to learn about steps the federal government is taking to help struggling homeowners keep their homes. The Federal Housing Administration was created during the Great Depression to provide liquidity to the financial market while promoting homeownership. The FHA of 1934 was the leader in the industry, providing innovative programs during a time of great financial hardship that strengthened our communities and families. Over the last 74 years, the FHA has enabled over 34 million families to become homeowners, providing a safe and secure environment for children to learn and grow and the means for families to grow wealth. In today’s uncertain housing market many families are once again turning to the FHA. In fact, more than 200,000 families have refinanced their mortgage through the FHASecure program, an innovative program that enables families with non-FHA insured loans to refinance from expensive, exotic mortgages into a safe and secure FHA loan. At FHA we are not just concerned with getting families in a home but keeping them in their home. We are committed to providing a means to a stronger and more secure future. Uncertain economic conditions and instability do not have to result in foreclosure. Foreclosures have alternatives and at FHA we are helping struggling homeowners find alternatives. Through good times and bad economic times the FHA provides homeowners peace of mind. We not only prepare families to become homeowners through our homebuyer education program, but we also strive to keep them in their home through our premier Loss Mitigation Program. Please join us this month as we work to make homeownership and home retention possible for families throughout America.

CENTRAL VALLEY SUMMER COMMUNITY EVENTS

 

Take a look at these upcoming events happening in the Central Valley area. Pick an event that interests you and make time to attend. There is plenty happening in our local area that you don’t want to miss.  

 

LATIN ESSENCE PLAYS IN TRACY

The band Latin Essence will play a variety of Latin rock, old school oldies at the Tracy’s Music in the Park Event starts at 7:00 on Thursday, June 26, in Lincoln Park. This event is free of charge. Music lovers are encouraged to bring a blanket and a picnic dinner. For more information call (209) 831-6295.

 

“TOP CHEFS” JOIN HOME EXPO

 

The San Joaquin County Culinary, Home and Garden Expo will be held Saturday, Sept 13. This event will feature celebrity chefs Marisa Churchill and Mike Midgley of “Top Chefts” and Cheryl Lew of “Ace of Cakes”. There will be demonstrations and much more. The expo will be held at the San Joaquin County Fairgrounds at 1658 Airport Way. For more information call (209) 823-7229.

 

HOST FAMILIES ARE NEEDED

 

ASSE International Student Exchange Program is seeking host families for international high school boys and girls, age 15 to 18, who are coming to the area for a year or semester. Exchange students arrive to their county shortly before the start of the school year.  For more information call 1-800-733-2773.

 

If you have any community events that you would like to be a feature, call CAROL PERDEW at (209) 239-7979 or go to www.CentralValleyHomes.com.

When Is the Best Time to Buy a Home?

Today’s real estate market has tremendous opportunities with rising foreclosures and bank owned homes. This is a great time to buy a home in the Central Valley in California. This article gives some great advice for home buying today.

Best Times to Buy

Provided by Zillow.com

A Conventional wisdom says that you need to stay in a home a minimum of five years to ensure that you recoup your purchasing costs. But with some markets soaring, this advice doesn’t always apply.

It’s All About the Market

Market conditions play a huge part in any decision about when to buy. Housing market values have varied widely from region to region in recent years. While the Florida market has seen meteoric rises in home values, Ohio has seen its real estate prices go into negative territory in the last year.

Do not buy high and sell low – if your market is softening or has hit its peak and is heading south, you may want to wait on your purchase.

The magazine Smart Money has created a worksheet to compare the costs of renting vs. buying using market appreciation calculations to determine at what point you come out ahead. Plugging in the price, down payment, your income bracket, interest rate, and current market appreciation rates, the worksheet will break out what you will gain.

For example, say you were to buy a $400,000 house in Boulder, Colorado and you estimate the market will soften from the current 11% appreciation to about 9 percent annually. If you stayed in the house three years, you would recover $88,750 in equity at the end of that period; if you stayed five years, you’d realize $120,360.

It’s All About You

The top three reasons people file for bankruptcy are change of job status, divorce, and unforeseen health expenses. If you face any of these challenges and don’t have a financial cushion, this may negatively impact your ability to pay a mortgage. Big life events dictate your readiness to buy now or to wait for a little more stability.

Signs you should not buy right now:

• Will you be moving within the next five years?
• Will you be having kids soon?
• Will you be making a job change?
• Have you recently filed for bankruptcy or is your credit score below 630?

If you answered yes to any of these questions, or you are experiencing other life-changing events like illness, marriage, divorce, or breakup, you may want to wait.

Your Financial Future

Aside from life events contributing to your decision, getting your financial house in order before you begin your home search is key. Even with all the programs available for buyers with a low-or-no down payment, if your debts are growing steadily and you don’t foresee an increase in your income, you are putting yourself in greater financial risk by taking on a mortgage.

With only a few exceptions, many loans for people who are still repairing their credit or recovering from bankruptcy carry higher rates than those available once your credit is in better shape. So the question comes down to this: Do you buy now, before prices appreciate higher than you can afford, but do so with an expensive loan? Or do you wait and repair your credit, then get a favorable loan, and pay more for your home?

That’s the sort of analysis you need to go over with a financial counselor or mortgage broker before you start hitting open houses.

Ways to Cushion the Blow

On the other hand, if you are willing to buy a home that needs a bit of work and, over time, you can afford to get it done, your home could appreciate faster, strengthening your financial position. If you are willing to take on a roommate or renter, you can also soften the expense of a mortgage, which almost always costs more than rent. Buying a home is a risk, and it’s worth asking yourself hard questions about what you’re willing to do to protect yourself from getting in over your head.

If you answered “no” the life-change questions, and have the down payment or equity from your current home, you still need to look at interest rates and at how buying affects your taxes. You can’t time the stock market, but you can time interest rate hikes, as they are a little easier to predict. If they are going up fast, you can jump in before they rise too far; if they are already high, you will have to calculate how refinancing in the future affects your budget.

What to Do First

If you are anxious to get moving, be patient. You have a few things to do first:

• Go to open houses – get the lay of the land
• Talk to a mortgage broker to get pre-approved
• Interview agents (You may want to find an agent at the same time as you look for a mortgage broker – a good agent can recommend reputable brokers and help you make sense of the terms of
  the loan)
• Review credit report and scores with mortgage broker to determine if any repairs are needed
• Use Zillow.com to find info on neighborhoods that interest you and then use the Home Q and A feature to ask current homeowners

Call Carol Perdew at (209) 239-7979 for Real Estate Information. Search for Homes at www.CentralValleyHomes.com 

BANK OWNED HOMES

 

There is an abundance of Bank Owned Homes and REO (Real Estate Owned) homes on the resale market.  Lenders price their properties at the lower end or below market value to encourage multiple offers and a quicker sale.

 

Banks typically are looking for closer to asking price on homes that are new on the market. Multiple offers sometimes push up the price above asking price.

 

Bank Owned Homes that have been on the market for thirty days or longer usually have more room to negotiate. Banks are more willing to look at lower offers the longer the home is on the market.

 

Check the history on a Bank Owned Home to find out if there have been any lower price adjustments. Banks typically will not accept lower offers after a recent price change.

 

Take a look at homes that have do not have any pictures or only a front picture.  Homes without pictures often get less showings causing the bank to be open to negotiation.  

 

Don’t let a poor exterior condition of dead grass and weeds mislead you because often hidden from view is a desirable home inside that has plenty of potential.

 

Take a look at Bank Owned Homes throughout the Central Valley In San Joaquin County, Stanislaus County and Merced County at:

http://carolperdew.com/index.php/page/bank-ownedrealestate

 

Foreclosure Filings Surge 48%

Our real estate market is affected by the soaring foreclosures filings and foreclosed homes. With the surge in foreclosure filings, bank owned homes continue to dominate the resale market.  Since bank owned homes are typically priced around 20% below market, this is a great time to buy real estate! Take a look at this article with the latest news.

 

 

US Foreclosure Filings Surge 48 Percent in May By Alan Zibel, AP Business Writer

Housing crisis worsens as number of US homes facing foreclosure in May up 48 percent

WASHINGTON (AP) — Soaring foreclosures are continuing to raise questions about the mortgage industry’s claims that lenders are making a dent in the housing crisis.

Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.

The latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren’t keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

“It’s clear that these voluntary efforts in and of themselves cannot really make a dent,” said Allen Fishbein, director of credit and housing policy at the Consumer Federation of America. “Government intervention is going to be necessary.”

Mark Zandi, chief economist of Moody’s Economy.com and an adviser to Republican John McCain’s presidential campaign, wrote earlier this week that “the Bush administration’s efforts to encourage loan modifications and delay foreclosures are being completely overwhelmed.”

A Credit Suisse report from this spring predicted that 6.5 million loans will fall into foreclosure over the next five years, reaching more than 8 percent of all U.S. homes.

Sobering statistics like these are leading to more calls for government intervention, especially from lawmakers pushing a plan for the government to guarantee as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.

A new government report released Wednesday found that among mortgages held by nine large banks, including Bank of America and Citigroup Inc., foreclosures climbed to 1.23 percent of all loans in March from 0.9 percent in October.

In a speech, Comptroller of the Currency John Dugan said the federal agency conducted its own examination of foreclosures and loan modifications after finding “significant limitations” with data collected by trade groups like Hope Now.

“Virtually none of the data had been subjected to a rigorous process to check for consistency and completeness,” Dugan said. “They were typically responses to surveys that produced aggregate, unverified results from individual firms.”

The comptroller’s report found that 2.7 percent of seriously delinquent mortgages had been modified as of March, up from 1.8 percent in November 2007.

The industry has continued to favor repayment plans, which help borrowers get back on track after missing a few payments, rather than permanent loan modifications, such as lower interest rates.

Faith Schwartz, executive director of Hope Now, said in an e-mailed statement that the group’s statistics “encompass more member data and provide a broader view of the range of solutions delivered by a larger number of mortgage servicers.”

Rep. Barney Frank, D-Mass., said this week that Dugan’ analysis shows that “much more aggressive action is needed.”

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can’t find buyers or owe more than their home is worth and can’t get refinanced into an affordable loan.

Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.

According to the RealtyTrac report, one in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.

In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.

Rick Sharga, RealtyTrac’s vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. “I don’t think we’ve seen the high point,” he said.

About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest are likely to be able to sell or refinance.

As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.

Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody’s Economy.com.

In some neighborhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers. While that’s a positive for the real estate market, buyers in other parts of the country are still holding back.

“I think a lot of people are waiting to see if we really have hit the bottom,” Sharga said.

Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be “feeble.”

Average Sales Prices Have Dropped

California’s Central Valley real estate market has been affected by the mortgage crisis that has brought
about the large amount of foreclosures and bank owned properties. The hard hit real estate market has
resulted in the downward trend of sales prices.

 

Average homes prices have dropped in San Joaquin County from $396,500 to $245,000, Stanislaus County from $350,000 to $225,000, Merced County from $314,000 to $186,000 and Sacramento from $345,000 to $232,000. The price adjustments vary some from city to city.

Data Quick tables are available listing median homes prices in California cities and counties. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS throughout the state. MLS median price and sales data for condominiums are based on a survey of more than a 60 associations. The median price for detached homes and condominiums represent the closed escrow sales.

 

April 2008 homes sales increased 2.5 percent compared with April 2007, ending a 30 month trend of percentage decreases that began in October 2005. Credit tightening as the result of the increasing defaults and foreclosure has not disappeared. Loan underwriting standards requiring higher standards tend to constrain sales.

 

The increased homes sales gives hope that the real estate market is beginning the path to recovery. Though there is great anticipation the market is beginning the way back, most agree the steps to recovery will be a slow process. 

 

To view the current tables of the Central Valley average homes sale prices go to : http://carolperdew.com/index.php/page/medianhousingapr2008. 

 

Homes Sales Raise 2.5%

Here is an interesting article from the California Association of Realtors about California Real Estate Sales in April.  This Is encouraging news for the real estate market. 

Friday, May 23, 2008

C.A.R. reports sales increased 2.5 percent, median home price fell 32 percent in April

LOS ANGELES (May 23) – Home sales increased 2.5 percent in April in California compared with the same period a year ago, while the median price of an existing home fell 32 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“Home sales registered a 2.5 percent year-to-year gain compared with April 2007, ending a 30-month string of year-to-year percentage decreases that began in October 2005,” said C.A.R. President William E. Brown. “This is not to say that the credit crunch that has contributed to the sales decline has disappeared. Both tighter underwriting standards and the ongoing effects of the credit/liquidity crunch continue to constrain sales.”

Closed escrow sales of existing, single-family detached homes in California totaled 366,720 in April at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 2.5 percent from the revised 357,640 sales pace recorded in April 2007.

The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the April pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during April 2008 was $403,870, a 32 percent decrease from the revised $594,110 median for April 2007, C.A.R. reported. The April 2008 median price fell 2.6 percent compared with March’s revised $414,640 median price.

“Significant price declines are spurring home sales to bargain hunters and first-time buyers at the middle- and low-end of the market, especially in areas with a concentration of distressed properties,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.

 “A year ago, homes for sale under $500,000 accounted for 40 percent of sales, the middle segment ($500,000 to $1 million) made up 45 percent, and the over $1 million segment captured 15 percent of the market. As of April 2008, that has shifted to 64 percent, 26 percent, and 10 percent, respectively, as the crunch severely constrained funding to the market over $500,000, with a correspondingly dramatic decline in sales.”

Thanks,
Carol Perdew
(209) 239-7979
www.CarolPerdew.com