One Stop Shopping

This is increasingly popular: You find a Realtor and then use their lender, or their escrow, or their title affiliation, all in one place. It saves time and decision-making, but is there more to it? In the wake of probes of questionable practices by certain title companies, Colorado initiated a bill, now withdrawn. Under a federal Act known as RESPA (Real Estate Settlement Procedures Act) which binds agents and others in the real estate industry to specific guidelines, these company affiliations are legal. But some have not followed those guidelines. What many consumers don't know is that using the real estate broker's escrow company means you aren't necessarily using an independantly licensed company, but one that may be operating under that real estate broker's license. Escrow companies are required to be a neutral 3rd party in a transaction, but are they if they are not independantly licensed? There are conveniences to one-stop shopping, but the consumer should also know more. Read here for more.

Demand for California Housing

Where will the tradeoff be between interest rate increases and continued demand for housing? Housing production may exceed 200,000 new homes and apartments for the second year in a row, and builders still may not be meeting the needs of a growing population. Last year alone 210,000 new units were built, the highest number since 1989. Historic lows in rates continues which compensates for the current market prices. So where will it level off? Rising interest rates will eventually impact selling prices, but a growing population will still fuel housing demand, while a continued positive employment outlook will sustain the current level of housing prices. See this article.

When Rates Fall- or Go Up

Rates on 30-year fixed rate mortgages have fallen for three straight weeks to 5.8 or less. Although there have been frequent predictions for months, and even years, that rates will once again rise to 7 percent within a year, these predictions are also tempered with recognition about other factors. Such as, dollars earned in foreign trade would stop flowing into U.S. Treasury securities, one cause of lower U.S. interest rates, or the Federal Reserve may adopt more aggressive credit tightening to fight inflation. But, as long as rates stay low, home sales march on at a pace beyond this year's expectations. Read here for more.

Are Lenders and Buyers Too Close to the Edge?

Today's loans were not available 15 years ago, and most were not available 5 years ago. The shift in the market has underlined the necessity of getting first-time buyers a way into homeownership. In the 1990's, a zero-down loan was very expensive and very difficult to qualify for and the few sources available were very restrictive. Now, it's a different story because lenders qualify a buyer on their FICO score, a kind of universal credit risk number which they feel is a very reliable indicator of risk. But are lenders taking too much risk? Trillions of dollars are riding on a single number, and while there is still an active, very active, real estate market, a more conservative spending profile, especially for younger adults, would only be a good thing. There will be a greater return on a real estate investment than there will be on a new SUV. Read Are lenders getting too lenient? - Apr. 22, 2005.

Dataquick's March Summary

It's the usual story: record sales in Southern California, but surprisingly, when adjusted for inflation, homeowner payments at $1983/month were still 8% lower than in 1989. Foreclosures in California are low, the single family median price for Southern California was $439,000. So far, the real estate bubble and subsequent crash isn't on the horizon--in fact, NAR president David Lereah believes the real estate market overall for the next 5 years will remain strong. Read DQNews - Southern California Press Release for more.

Prices Still Offering Above Average Returns

The national median price of existing homes is expected to grow 6.3 percent this year, according to the National Association of Realtors. The sale of existing homes will slow by 2.4 percent, second to last year's record 6.78 million sales. The supply of homes remains tight, and that imbalance puts pressure on home prices still. The CPI may rise 3 percent this year, more than its normal rate of inflation, but home prices are still expected to experience above average returns in 2005. As for some time now, interest rates are again projected to rise to 6.8 percent by the end of the year. So what does a .8 percent increase mean to your monthly payment? It could mean $141 more in principal and interest for the same $300,000 property with the same loan amount. Click here for more.

Average new-home prices rise 39% in California

Population increase and land supply are two of the strongest reasons for home price increases.

Meritage Homes Corp. today announced a new records for its new orders and closings. CEO John R. Landon reports strong demand for Meritage's homes in the several states in which it builds. Compared to Arizona and Nevada, California has risen higher. 'Rising population and housing demand, combined with a restricted land supply, are pushing prices higher in the California market. In our California division, the average price of homes ordered during the first quarter 2005 increased 39 percent over the first quarter a year ago. We attribute this increase to several premium-priced communities in California that were either not open for sales a year ago or which had significant increases in sales rates over last year and to generally increasing pricing levels.'

Tax Advantages for Homeowners vs. Renters

California Association of Realtors Briefing Paper reminds us of the advantages of owning. Buyers may fear they are buying at the wrong time -- a constantly recurring fear no matter what the market is -- so it is important to keep things in perspective. Mortgage interest and property tax deductions reduce your tax amount by thousands -- a benefit not received by most renters. A homeowner gains market equity over time, or equity through reduction of the loan principal. With the median price home in California at $471,000, and a 20 percent down payment, an owners may have up to $32,000 in deductions which would translate into about $8,000 of tax savings assuming a 25 percent tax bracket. See the Tax value of homeownership and the link to the entire briefing paper.

2005 Buyer Survey on Internet Use

It's no surprise that Buyers use the Internet to acquaint themselves with the homebuying process. The percentage increases every year: according to this survey it's up to 62 percent. Buyers do count on their REALTORS to provide interpretation, judgment and expertise about the market. Six out of 10 Internet buyers said information gathered from the Internet was less useful than that provided by their REALTORS. In my own personal experience I currently receive inquiries from prospective buyers who less current about market prices compared to inquiries of about 5 years ago. More information on the Internet does not add up to more informed buyers--just the opposite may be true as there is more information to decipher and more time required to find it. Read about the 2005 "Internet Versus Traditional Buyer Survey" for additional interesting facts about buyers.

Interest Rates Continue Upward

Rates continue upward, but rates also vary by region. However, in the words of Freddie Mac vice president: "Although mortgage rates have risen these past six weeks, they still remain at very affordable levels." That means they still compare to rates of several decades ago. Also, if you're applying for a loan, your FICO score and other personal financial factors may get you a lower rate, or a higher one. Read this article for more.