Brad Inman's Comments on A Realtor's Everyday Risks

Not pleasant but true: Realtors DO work hard and risk much in the ordinary course of their business. Click here http://inman.com/blogger/bradinman.aspx for his comments of August 20, 2004:

"Murder and Realtors
This summer, Garland Taylor in New Mexico and Deede Keller in Southern California were both murdered. It is ridiculous to come to any conclusions or connections between the industry and these two senseless acts.
However, it has always been intriguing to me how the average Realtor is fearless compared to other types of professionals. They put their home phones and their pictures on their business cards. They stand watch alone at well-advertised open houses, often in expensive homes with costly stuff lying around.
Why?
They are independent contractors who must fight for their money. No one supports them.
Plus, homebuyers expect Realtors to be 24/7 servants in the home buying process, always accessible and ready to respond.
The every-day agent is not murdered but they take their share of abuse, just doing their job.
-- Bradley Inman"

See My Site For Open House This Weekend

Julia's website.

Unsold inventory increases

Buyers can breath a little easier, more inventory on the market and more price reductions in some areas. The price reductions may be seen as a "market correction", not necessary as a huge drop in teh future of the median price. In July, the unsold inventory index increased to 3 months on a statewide level, meaning it would take that long to deplete the current housing supply on the market. For more, click on the CAR article here.

Los Angeles County Home Sales Cooled a Little in July

The last two weeks in June the inventory dramatically increased in certain local markets, Long Beach being one of them. Consequently, homes are sitting on the market longer as buyers have more to choose from, as long as 60 days or more, depending on the property. Southern California overall has had about a 5% decrease in sales from June to July, 2004. California overall has fewer foreclosures but they also are resorting to adjustable mortgages and 100% financing as the buyer index lowers to 18% statewide. As of November, 2003, more than 50% of the buyers were turning to adjustable mortgages. See this chart for more information on Dataquick, as well as links to more information.

Rates Are Lower - Again

Bankrate.com says according to their 8/18/2004 national survey that the 30-year fixed is 5.82%. That makes the monthly payment for a $165,000 loan about $9.50 lower than it was last week. "Rates on 30-year fixed mortgages didn't drop below 6 percent between February 1966 and January 2003, according to Federal Housing Administration and Bankrate data. That should put into perspective the rarity of today's low long-term mortgage rates." Read more about how the current tame inflation leads to lower mortgage rates.

Does A 0% Down Mortgage Cost You Less?

In a hot market which is pretty much what we've been having for quite a while, sellers are more apt to carefully review the buyer's down payment, loan source and interest rate. After all, the seller wants to make sure the buyer IS getting the loan and closing escrow. If you're a buyer, is a zero down loan a good idea? It's probably not if the property you're interested in is turnkey and just came on the market. A property like that will attract a lot of interest, and your 100% financing offer won't stand up next to a buyer who has 20% down or more.

Also, do you understand all the terms of your loan? A "no-cost" mortgage does not include payments by the lender for: Per diem interest, which is interest from the closing date to the first day of the following month, isn’t included because it is not known until the exact closing date is set; Escrows for taxes and insurance, which are borrower funds set aside to assure payment of the borrower’s future obligations, are not covered because they are not a cost of the transaction; Homeowners’ insurance is not covered because, while required by the lender, it also benefits the borrower; Owner’s title insurance is not covered because it is optional or paid by the seller; Transfer taxes, if any, are not covered because the amount is sometimes uncertain, and it is set by a governmental entity. The following article explains much more about this type of loan.

Why Is There More on the Market Right Now?

If you're driving around your area, you've probably noticed a lot more open house signs. If you've been trying to buy, that may be a welcome sign, but why didn't that happen earlier in the year when you kept getting outbid on everything, especially when the median price of a home keeps going up in California? The statewide median price of a single family home for June was $469,000, a 25.3% increase from June 2003, but sales also increased. To find out about the increase in inventory in June, read about the changing interest rate.

Difference in Mortgage Rates-Then and Now

By now many of us know that yesterday the interest rates were raised. Banks have already anticipated this raise in a lot of cases and raised their 30-year rates a short time ago. Rates on adjustable mortgages will be the most sensitive to yesterday's action by the Federal Reserve. Depending on your credit score and other loan factors such as your debt ratios, your loan rate will vary, but generally it's around 6% for a 30-year fixed. In 2001, that same rate was at 7%, and some analysts are projecting we will again be close to that rate by the end of the year.

So if you have a mortgage of $180,000, let's say, take a look at the difference between getting a 6% rate now and a 7% rate in the future:
6%, your monthly P&I payment is $1079.19; at 7% it's $1197.54. See the difference? This chart shows key interest rate moves since 2001. A 30-year fixed is not your only loan option, for example, on an interest-only loan, that $1197 would be reduced to $1050.

To put things in a 10-year perspective, view this chart.

Will Rates Go Up or Not?

It's hard to tell, whether lagging job growth and a drop in consumer spending will impact rates. Some believe that deflation has waned, in spite of recent slow activity. Click here for more.

Interest Rates Are Still Very Good

According to this article the 30-year fixed is at 5.99 percent with a partial point, but a local lender is reporting conforming loan rates to the $333,700 amount at 5.750% at 0 points.

California's New Home Growth Not Enough

According to the National Home Building Industry, the current supply of new homes in California is not enough. The industry is still trying to catch up to the deficit from the mid-90's when fewer housing permits were issued. The total building permits issued as of June, 2004 is the first time production has reached that level since 1989. Besides providing more home ownership opportunity, "a recent study determined that homebuilding generates approximately $60 billion a year to the California economy and creates an estimated 526,000 jobs statewide", according to this NHBI article. Other housing studies in recent months discuss that one of the reasons California's market is the one of the highest in the country is also due to the limited supply of housing in light of the current need. A lot of information about what created the housing demand is in this 44-page lengthy article (you get the main points by reading the first few pages) on the State of the Nation's Housing.