Compare Interest Rate Trends

If you're a buyer or a seller looking for a buyer, the graphs on various interest rates should be of interest to you. Look at the trends since 2000/2001 to the present, and the trend is easily seen. the LIBOR and 11th District COFI are used in mortgage lending, but they all reveal the same story. By looking at the tables, it's easy to see specific interest rates and specific times. What is most noticeable is the steady upward trend over 2005-2o06.

What a Rate Increase Does to Your Mortgage Payment

More mortgage rate increases are still on the horizon; don't wait if you have the opportunity to act in the near future. This time last year (see linked article) the overal 30-year fixed rate was at 5.63 percent, this time a year later, it's 6.62% with .5 point, meaning it would be a little higher if you paid no points. The difference to you the borrower on a $350,000 loan amount is over $200/month. At 5.63 percent, your monthly principal/interest payment last year was approximately $2015.90, and at 6.62 percent this year, your payment is approximately $2239.93. See my website at http://www.juliahuntsman.com for a property search on our local MLS, and more financial information.

Public Not Buying Housing "Crisis", At Least Not In Texas

From Real Estate Center Online News:

COLLEGE STATION – Despite media reports that the housing market faces imminent collapse, a study released this week shows consumers are confident real estate values will remain solid even if mortgage rates increase.

Three-quarters of respondents to ING Direct's most recent homeowner study said they had very little concern about the future value of their homes. The study is based on a national survey conducted by Synovate, a global research firm.

Most survey respondents (85 percent) believe their homes increased in value during the last three years. While homeowners felt their homes have increased in value by approximately 6 percent in the last year, they only expect values to increase by about 4 percent in the next 12 months.

Real Estate Center Chief Economist Mark Dotzour said the survey shows many Americans are smart enough not to believe everything they see on television, such as media reports that a housing bubble is about to burst.

Dotzour said that not only is the housing market not tanking, but home price appreciation is a red-hot 12.54 percent for the entire nation.

“This is still extraordinary price movement,” he said. “You have to go back to 1979 to find this level of appreciation prior to the current boom.

“While the nation’s inventory of unsold homes was six months in April, homes typically continue to increase in value when inventories are at this level. Texas inventory levels are lower than the national average. With a five-month inventory, Texas homes are likely to continue their recent appreciation trends."

What's a Seller To Do?

In a market where inventory is building up and sellers are waiting a little longer for an offer, it's time for sellers to think once again about the best improvements to make--and not to make--to get their homes sold. Pools, for the post-baby boomer generation, may not be the right improvement--geographic demand, location, lot size, and maintenance should all be considered. According to the National Association of Realtors, house siding, and kitchen and bathroom upgrades are among the top four best improvements for bringing the best return. Surprisingly, a home office did not bring as high a return on the investment. Regular maintenance is very important, as buyers will move more quickly on a home that does not have deferred issues. In a somewhat slower moving market, a return to standard preparation for home selling will obtain a better offer and a more satisfied buyer.

1031 Exchange: Have You Thought About It?

Do you find yourself saying:

“Why should I sell – Uncle Sam would get all the profit!”
“I’d sell, but I wouldn’t have enough left after taxes to buy another property!”
“I want to get rid of this property, but the taxes would eat me alive!”

Do you want to be rid of a management headache?
Have you thought about acquiring property in a newer and appreciating area?

Please call or e-mail me for updated information on doing a 1031 exchange. You have possibilities – let me tell you the benefits of doing an exchange and how it becomes a financial planning tool. Call me direct at 562-896-2609 or e-mail me at ocean@surfside.net, or see me online at www.juliahuntsman.com.

California's Median Price for April

The statewide median price is 10.2 percent higher than April, 2005, even though number of residential sales is less. And, according to Dataquick, there was no drop in the median price for single family homes from March, 2006; there was a .1 percent increase in the median price of a condo from March, 2006. See my earlier post about the median price of the six Southern California counties as reported through Dataquick, which is lower than the statewide median.
If Orange County economist Gary Watt is to be believed, the buyer affordability index is based on assumptions about 40 years old because there were only 3 types of loans then, one being a standard conventional loan required a much higher down payment than conventional loans on the market today, including a no down payment loan which was unthinkable back then. So yes, there's a decrease in numbers of sales, but remember medians and averages don't always tell the local story. In fact, 339 out of 401 cities and communities still show an increase in their median prices from one year ago. Just click on the link for more information through the California Association of Realtors. For an MLS property search go to http://www.juliahuntsman.com.

Housing Forecasts Unpredictable

Marcie Geffner at Inman News says: "A look back at housing market forecasts over the last five or six years makes the point. Forecasters consistently under-estimated the strength of the housing boom and predicted year after year that the housing markets were headed into a period of fewer sales. That prediction may be realized this year, yet any forecast can come true eventually if the time horizon is long enough, particularly when a market is known to have been cyclical in the past."
Local market information within the larger picture is what the buyer or seller really needs to know to take action. Believing that the market is going to come down 20 percent in price is not believable at this point, yet many people continue to wait for the end of the current year believing the magic point in time will occur, and they will be ready to buy. Yet they will lose tax advantages by doing that, and an increase in interest rates may offset any reduction in market price. The best time to take action is when you're thinking about it, future events are unknown. The best plan is one that builds in contingencies for best-case or worst-case scenarios, in other words, be prepared. AS Ms. Geffner says, "Forecasts should encourage people to think ahead about what might happen and how they could prepare to make the best of whatever occurs."

Realtor vs. real estate agent -- Tune In

Yes, there is a difference, and this week's advertisements in different spots around the state talk about just that. Click here to listen: http://www.car.org/index.php?id=MzE4NzE= . The real estate industry technology whizzes who work to make real estate "data" so available to the consumer really build from the work actually performed by the Realtor professional who effects the listing and sale of property. The foundation of expertise is provided by such Realtor professionals, and all that they must do to maintain their knowledge and their skills. Consumers benefit directly from work with a Realtor who has a commitment to the service of their clients.

The median price paid for a home in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties was $485,000 last month. That was down 0.2 percent from a revised $486,000 in March and up 9.0 percent from $445,000 in April a year ago. Buyers who are looking for a huge decrease in price overall are probably not going to find that at all this year, but are more likely to find more inventory to choose from as the numbers of homes sold is lower than the same time last year. As Dataquick points out, indicators of market distress (i.e., large increase in number of foreclosures) are largely absent. "The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,354 last month, up from $2,315 for the previous month, and up from $2,076 for April a year ago." At this point, decreases in home price will be balanced out by a gradual interest rate increase.

Direction of Housing Market

It's official -- the federal funds rate has been upped another quarter point to 5 percent, the rate at which banks borrow money from each other. Usually, the mortgage rate has already risen in anticipation of that increase. Apparently, our gas price increases are not enough to counteract inflation, and the housing market's slower activity, among other things, is cited as having a cooling effect on the economy. It's not the end of the world, but something to think about if you're thinking of buying or selling this year. The NAR's May forecast predicts a rise to 7 percent this summer in 30-year-fixed rates, but is still holding to the prediction of a rise in the national median home price by 5.7 percent, California’s price was expected to appreciation about 5-6 percent over 2005 prices, and we now have “equilibrium” in the housing market, price vs. supply. Over all, locally, residential properties including condos, houses and income properties up to 4 units are selling, since 3/10/2006, on average, in 52 days within 2 percent of the list price at time of beginning escrow.