Market Update - Stephanie Witt's Blog on Marin County Real Estate

Failing to Refinance at Low Rates Could Cost You Thousands of Dollars

Stephanie Witt - Thursday, October 09, 2014

October 3, 2014 by Pacific Union

File this story under “Woulda, coulda, shoulda.”

In December 2010, 20 percent of U.S. homeowners could have refinanced their mortgages and saved an average of $45,000 each over the life of their loans, but they failed to do so.

The National Bureau of Economic Research analyzed 1 million fixed-rate mortgages from that month and estimated that, in all, millions of Americans with fixed-rate mortgages failed to take advantage of money-saving refinancing opportunities that month, when interest rates hovered near record lows. 

Some homeowners later said they were unaware of the potential savings from refinancing or were unwilling to follow through on the necessary paperwork, according to an article in The Washington Post. Some said they simply failed to open mail that offered once-in-a-lifetime refinacing deals.

Even more amazing than the behavior of homeowners in December 2010 is that fact that interest rates today are lower than they were back then: Freddie Mac reported Thursday that current 30-year fixed-rate mortgages averaged  4.19 percent — lower than the average 4.3 percent in December 2010 and close to the record low of 3.31 percent set in November 2012.

Still some homeowners today are still nervous about refinancing, even when it can save them thousands of dollars.

Andrew Celis, who teaches financial literacy classes at Neighborhood Housing Services of Chicago, told the Post that some homeowners don’t refinance because they’re afraid that making changes will jeopardize their mortgage.

“A lot of homeowners that we communicate with on this issue sort of have just held their eyes to the ground, and have said, ‘I’m going to do whatever I need to do to make my payments monthly,’ ” Celis said.

Today’s low interest rates won’t last forever, however. It’s worth remembering that the average interest rate on a 30-year, fixed-rate mortgage in the 1990s averaged 8.12 percent, and in October 1981, mortgage rates peaked at more than 18 percent.

(Image: Flickr/Mark Moz)

    California, Bay Area Housing Markets Nearly Stable, Says Freddie Mac

    Stephanie Witt - Friday, October 03, 2014

    October 2, 2014 by Pacific Union

    Over the past year, the U.S. real estate market has continued to stabilize, a Freddie Mac index says. That’s also true here in California and the Bay Area, with several of our local markets recovering faster than the nation.puzzle_up_arrow

    Freddie Mac’s Multi-Indicator Market Index (MiMi) gauges housing stability by assessing four factors: home-purchase applications, payment-to-income ratios, the number of owners who are current on their mortgage payments, and employment rates. The MiMi then classifies a market as weak, stable, or elevated based on those criteria.

    The latest MiMi data, which covers activity through July, gives the national housing market an index value of 73.4, still shy of the stable range of 80 to 120. The U.S. market  trended up over the previous year, with a gain of 5.4 percent on the MiMi scale. According to the index’s historical data, the U.S. housing market was last in the stable range in November 2008.

    The MiMi gives California’s real estate market an index value of 77.5, up 9.1 percent from a year ago. The statewide market was last in MiMi’s stable range in August 2008. Freddie Mac’s statistics show that payment-to-income ratios and employment levels have both stabilized in California, with respective index values of 98.3 and 95.3.

    Freddie Mac’s index also breaks out data for the 50 largest metro areas in the U.S., including San Francisco-Oakland-Fremont and San Jose-Sunnyvale-Santa Clara.

    With an index value of 78.4, San Francisco is the closest of the California regions still in the index’s weak range to achieving stability. Currently, the only California region that Freddie Mac deems stable is Los Angeles.

    San Francisco’s index value increased 7.8 percent on an annual basis. As is true across the state, San Francisco received stable scores for payment-to-income ratios (100.5) and employment rates (96.8). However, purchase applications were a weak spot, with an index value of 38.9, much lower than the national average.

    The San Jose housing market is also headed toward firmer ground, with an index value of 75.5, up 6.5 percent from a year earlier. San Jose ranked as stable for payment-to-income levels (84.3),  current mortgage payments (80.4), and jobs (99), but still has a weak amount of purchase applications (38.3).

    The MiMi says that San Francisco and San Jose real estate markets were last in the stable range in August 2008.

    (Photo: Flickr/Horla Varlan)

    San Francisco Metro Area Still Posting Double-Digit Percent Annual Home Price Gains

    Stephanie Witt - Thursday, October 02, 2014
    • October 1, 2014 by Pacific Union

      The San Francisco metro area is one of just three major U.S. regions where year-over-year home prices are still growing by double-digit percentage points, according to the latest S&P/Case-Shiller Home Price IndicesHome prices rising

      S&P/Case-Shiller’s data says that annual home prices in the San Francisco region increased by 10.3 percent in July, the third-largest gains of the 20 major U.S. metro areas included in the index. Across the index’s 20-city composite, home prices grew by 6.7 percent from July 2013.

      Still, the rate of annual appreciation in the San Francisco metro area has slowed significantly since earlier in the year; as recently as March, home prices in the region were up year over year by more than 20 percent as measured by the index.

      San Francisco was also the only metro area included in the 20-city composite to post a monthly decline from June to July, with home prices falling by 0.4 percent.

      “At the bottom was San Francisco with its first decline this year and the only city in the red,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement. The report notes that July’s month-over-month price drop was the largest recorded in the region since February 2012.

      A look at MLS data reveals that the median single-family home price increased in every one of Pacific Union’s Bay Area regions year over year in July. Annual home price gains were largest in Sonoma Valley, up 41 percent from July 2013. At $750,000, Sonoma Valley’s July median sales price reached a two-year high.

      Home price growth across our other regions ranged from 25 percent in San Francisco to 4 percent in Marin County.



      (Photo: Flickr/Andrew_Writer)

      Bay Area Homebuyers Get a Break: Lower Interest Rates for Jumbo Loans

      Stephanie Witt - Wednesday, October 01, 2014

      September 30, 2014 by Pacific Union

      We all know that the Bay Area has some of the highest home prices in the nation. But did you also know that the so-called “jumbo loans” needed to buy many of these homes come with interest rates that are less than that of smaller “conforming” loans?Mortgage sign

      It’s true. All summer long, in fact, interest rates on jumbo loans have been lower than what average borrowers pay.

      And in some cases, buyers who take out jumbo loans don’t even have to worry about a large down payment or mortgage insurance, according to a recent CNNMoney report.

      For example, the average rate on jumbo loans last week was 4.30 percent, compared with 4.39 percent for a 30-year, fixed-rate conventional mortgage, the Mortgage Bankers Association reported.

      In some cases, lenders also have reduced their down payment requirements as well, requiring as little as 10 percent, which is about half the normal rate. Some lenders are waiving the private mortgage insurance requirement, too.

      Conforming loans — those guaranteed by Fannie Mae and Freddie Mac — are currently capped at $417,000 across much of the country, although in costlier regions such as the Bay Area the maximum loan amount limits are higher.

      Fannie Mae and Freddie Mac guarantee mortgages up to $625,000 in San FranciscoAlamedaContra CostaMarin, and San Mateo counties and up to $592,250 in Napa County and $520,950 in Sonoma County. Federal Housing Administration loans have higher limits: $729,750 in San Francisco, Alameda, Contra Costa, Marin, San Mateo, and Napa counties and $662,500 in Sonoma County.

      In the Tahoe/Truckee region, all conforming loans are capped at $477,250 in Nevada County and $474,950 in Placer County.

      Banks are on the hunt for jumbo customers in order to win them over as clients for other banking services, such as retirement planning, Malcolm Hollensteiner, head of retail lending for TD Bank, told CNNMoney. Jumbo borrowers tend to have better track records in repaying their loans and have lower default rates, so more banks are willing to take the gamble on them.

      CNNMoney also reported that many banks have lowered their credit standards for jumbo loans in 2014, Many jumbo borrowers used to need at least a 700 credit score to qualify, but some lenders reportedly are considering applicants with credit scores of 650.

      If you are in the market for a mortgage, take a look at these helpful mortgage tips, posted on Pacific Union’s blog earlier this year. 

      And if you plan to buy a home in the Bay Area or the Tahoe/Truckee region, Pacific Union’s mortgage partner, Mortgage Services Professionals, can offer loan advice and consultation to help make your purchase a success.

      (Image: Flickr/401(K) 2012)

      Planning to Sell? Get Cleaning, Get a Stager.

      Stephanie Witt - Saturday, September 27, 2014

      The decision to sell your home may come after many months of deliberation, but once you’ve made the decision and have talked with a real estate professional, give yourself some additional time to prepare the property.

      Spending a few hundred or a few thousand dollars to spruce up your home – from a thorough cleaning to repairs, painting, and staging – can add many times that amount to the final sale price.

      It’s Cleaning Time
      The first and most important task in preparing a home for sale is a top-to-bottom cleaning.

      Wash the walls and the windows. Clean the bathroom and put out fresh towels. Close the lid on the toilets and make sure the bathroom mirrors sparkle. Open the windows and let fresh air in – few things are less inviting to a prospective homebuyer than the smell of cat litter boxes or old dog beds. Or old dogs.

      If rooms are painted garish colors, repaint them in subdued hues with broad appeal. Replace dirty drapes and window blinds.

      If It’s Broken, Fix It
      If the plumbing or electrical systems need repairs, get it done. Is the doorbell broken? Fix it. Stop toilets from gurgling. Fix leaky faucets.

      Repairs to larger systems, such as a furnace or air conditioning, may be a negotiable point with the buyer, but not minor repairs. Evidence of slipshod upkeep will drive buyers away.

      Control Clutter
      The importance of clearing clutter cannot be emphasized too strongly. Move all unnecessary items into storage. A house or apartment with minimal furniture looks bigger than it really is.

      And put away family photos and personal items. You want a prospective buyer to imagine themselves at home there instead of feeling like they’re intruding in your space.

      Water and mow the grass, trim bushes, remove dead leaves, and plant flowers. A trim and tidy yard adds immeasurably to curb appeal.

      Hire a home stager
      Most real estate professionals recommend home staging. It can be something simple like putting out fresh flowers or rearranging furniture for better sight lines, but consider an outside opinion from someone who makes it their business to make homes more attractive to buyers.

      If you have the time and resources, consider moving to a temporary residence and allow a professional stager to present your home to its best advantage, with furniture and furnishings chosen to complement your home’s design possibilities.

      And talk with your real estate professional. He or she has been through the vagaries of home preparation many times before and is working on your behalf. Together, you’ll make a winning team.

      (Photo by Boulderite, via Flickr.)

        Bay Area’s Dubious Honor: Tightest Real Estate Market in U.S.

        Stephanie Witt - Friday, September 26, 2014
        September 25, 2014 by Pacific Union

        Just how competitive is the Bay Area real estate market? Data released Wednesday shows the San Francisco metropolitan area had the tightest supply of homes for sale of any region in the United States last month.

        Illustration of a person in front of a for-sale signThat dubious distinction comes even as we reported last week that the inventory of Bay Area homes rose slightly in August. Any increase is welcome, of course, but our region needs more than a trickle of additional homes to meet the demand of eager buyers.

        The latest numbers, from the research firm Redfin, show the San Francisco market* with a 1.2-month supply of homes for sale. (Put another way, that’s how long it would take for all the homes now on the market to sell, given the current sales volume.)

        The San Jose metropolitan area has the second-tightest market, according to Redfin’s data, with a 1.3-month supply, and both regions were four times more competitive than the national average of 5 months’ supply.

        The numbers mean the Bay Area remains overwhelmingly a sellers’ market, as it has for two years now. Generally, anything below a four-month supply favors sellers; the market begins to skew toward buyers with a six-month supply or more.

        Other data from Redfin shows the median sales price for homes in the San Francisco metro area was $875,000 in August, down 2.8 percent from July but up 7.9 percent from one year earlier.

        In the San Jose area, the median sales price was $746,000, up 0.7 percent from July and up 10.5 percent from last year.

        The number of homes sold, meanwhile, dropped in both regions. In San Francisco, 1,300 homes sold in August, down 9.5 percent from July and 9.9 percent from August 2013. In San Jose, 1,350 homes sold, down 12.8 percent from the previous month and 16.6 percent on an annual basis.

        Looking ahead, Redfin predicted that home prices will continue to soften in the next few months as investors and all-cash buyers continue to retreat from the market.

        “Strong demand and short supply lay the groundwork for an unusual twist to sales activity in September and October,” Redfin noted. “As the housing market continues to normalize, we anticipate a fall selling season marked by both slower price growth and more transactions than last year in many metro areas across the country.”

        * The San Francisco metropolitan area includes San Francisco, Marin, San Mateo, Alameda, and Contra Costa counties. The San Jose metro area includes Santa Clara and San Benito counties. 

        (Image: Flickr/Scott Maxwell)

        Some Great Home Maintenance Advice from Home Advisor

        Stephanie Witt - Saturday, September 20, 2014

        Top 10 Questions to Ask Your Contractor

        Bay Area Home Inventory Inches Up in August

        Stephanie Witt - Thursday, September 18, 2014
        September 17, 2014 by Pacific Union

        The amount of homes on the market increased modestly across the Bay Area as summer came to a close, while prices and sales volume headed in the opposite direction.rowofhouses

        According to the California Association of Realtors’ August home sales and price report, the months’ supply of inventory (MSI) for single-family homes across the nine-county Bay Area rose to 2.6 in August, up from 2.4 in July and 2.3 from one year ago.

        Across California, the MSI increased to from 3.8 in July to 4.0 in August, indicating that the statewide real estate market is beginning to reach a more balanced condition. Generally speaking, an MSI below 4 is considered favorable to sellers. It begins to skew toward buyers once it rises above 6.

        Inventory expanded in every Bay Area county from July to August, although gains in most regions were slight. Napa County saw the largest month-over-month inventory spike, with the MSI moving from 4.8 to 6.7. In most counties, inventory was also up year over year, excluding Marin and San Mateo Counties, where the MSI declined.

        Despite the trickle of extra homes for sale, five Bay Area counties still have the lowest supply in California. San Mateo County had the fewest available homes for sale in the state in August, with an MSI of 1.9. Alameda and Santa Clara counties tied for the second smallest MSI in California – 2.2 – followed by Contra Costa (2.4), Marin (2.8), and San Francisco (2.9) counties.

        A few more homes on the market in August didn’t translate into more sales, with sales volume down 10.6 percent from July across the nine-county region. Homes sales decreased in every Bay Area county from July to August, ranging from 27.7 percent in Napa County to 1.4 percent in Marin County. With the exception of Contra Costa County, sales volume is also down in all local counties from August 2013.

        The median home sales price dipped 2.3 percent in the Bay Area from July to August, landing at $742,900. Seven counties saw the median sales price slip from July to August, with only Alameda and Santa Clara reporting slight appreciation.

        But the modest month-over-month price declines were not enough to dethrone our local counties as the most expensive in California for homebuyers. San Mateo County had the highest median sales price in the state in August, at exactly $1,000,000. Marin County ranked No. 2, with a median sales price of $977,460, followed by San Francisco ($900,910) and Santa Clara ($865,000) counties.

        (Photo: Flickr/Woodleywonderworks)

        Low Mortgage Rates Linger Longer Than Expected

        Stephanie Witt - Wednesday, September 17, 2014
        September 16, 2014 by Pacific Union

        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.Illustration of a house made of hundred-dollar bills

        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 dollarsto 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)

        Real Estate Roundup: Inventory, Affordability Stifle Bay Area Home Sales in August

        Stephanie Witt - Tuesday, September 16, 2014
        September 15, 2014 by Pacific Union

        Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious:

        A slim supply of available homes, high prices, and abnormalities in the mortgage market combined to constrict sales volume in August across the nine-county Bay Area, according to a recent CoreLogic DataQuick report.down_arrow

        The company’s data shows that 7,578 Bay Area homes and condominiums sold in August, a year-over-year decline of 12 percent. Sales volume was down in every Bay Area county last month, ranging from 20.3 percent in San Francisco to 1.3 percent in San Mateo.

        On an annual basis, the Bay Area median sales price rose just about as much as volume decreased: 12.4 percent, according to CoreLogic DataQuick. All local counties showed year-over-year price increases, from 19.1 percent in Alamedato 1.6 percent in Napa.

        The median sales price across the nine-county region reached $607,000 in August, about $60,000 shy of its summer 2007 peak as measured by the company.

        recent study by online real estate portal Movoto underscores what we here in the Bay Area have always believed: Our region is the best place to live in California.

        Using a combination of statistics – including low unemployment and poverty levels and high income and median home sales price – Movoto ranked Marin County as the state’s best. Beyond the numbers, the company pointed to Marin’s lifestyle perks, including its spectacular scenery and varied cultural offerings.

        San Mateo County was rated the No. 2 best county in California, followed by Santa Clara County. Napa County tied for the state’s seventh finest, while San Francisco County came in at No. 10.

        Food enthusiasts are changing the way homes are built, according to an article in The Wall Street Journal, with one Healdsburg home exemplifying the trend.

        The article provides a glimpse into the residence of Sonoma County couple Bruce Aidells and Nancy Oakes, both Bay Area culinary professionals. Built in 2007, their 4,200-square foot Healdsburg home features a large commercial-grade kitchen, an outdoor pizza oven, a dedicated sausage-making kitchen, and a thriving vegetable garden.

        While the couple wouldn’t divulge how much it cost to build their home, a local real estate professional told the Journal that a comparable property in the area would list in the $5-million-to-$7-million range.

        A Southern California-based MLS has been signing data-sharing agreements with others throughout the state, with the hopes of creating a unified MLS.

        According to an Inman News report, California Regional MLS, headquartered in San Dimas, agreed to share data with Sunnyvale-based MLSListings in April. The agreement allows each MLS to access the other’s data and display the listings on their respective websites.

        Since then, California Regional MLS has inked similar deals with four other MLSs based in the southern part of the state. Inman News says that California Regional MLS will roll out a marketing program in October in hopes of persuading other MLSs to join its data-sharing program.

         (Photo: Flickr/Judy_and_ed)

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