2015 sees changes to homebuyer affordability, says Freddie Mac

As 2014 is coming to and end, we’ve seen another year of low interest rates, increased housing affordability and double-digit house appreciation. It seems that the seller’s market conditions that we have become used to in Silicon Valley are becoming the ‘norm.’

How will things shape up for 2015? Here’s a quick prediction by Freddie Mac:

“If you are planning to buy a home in the next year, it’s better to do it sooner rather than later,” Frank Nothaft, Freddie Mac’s chief economist, said in the video commentary embedded here.

Since Freddie Mac sees interest rates increasing, with an average around 4.6% next year, it’s cheaper to purchase a home now with lower mortgage interest rates than when rates begin to rise. An increase of just 1% in rate can mean the difference of spending nearly another $100,000 in total interest over the first 10 years of the loan!

But rising rates don’t necessarily mean that our housing market will cool off; the job market and consumer confidence are up concerning homeownership, and Freddie Mac sees continued appreciation trends through the next few years nationally. Locally in Silicon Valley, we’re probably looking at another year of double-digit, or close to, appreciation for most communities fueled by the high affordability buyers have in our marketplace. And with our local tech-giants continuing to expand and grow their employee-base, housing choices will only continue to slim.

Contact me for a further discussion regarding the 2015 real estate market outlook in your community.

To Sell or Not to Sell During the Holidays

Interested in selling before the end of the year but not sure about the timing over the Holidays? 

staged_for-christmas-home

It used to be a simple answer: In the days of past, home purchases dwindled during the holidays, homebuyer traffic dropped drastically, and it was more worth a seller’s (and a Realtor’s) time to get the sign out of the yard, save on advertising, and enjoy the holidays with their families.

That was then…times have changed; today is a different story. With the use of technology, buyers can now shop for homes at all hours of the day, in all weather, from their laptops or mobile devices and the buying season has become a year-round event. The Internet also cuts down on the amount of time that it takes to buy a home because many buyers do their shopping online. In reality, people are always looking for homes – before, during and after the holidays.

More important to consider is that most sellers prefer not to sell during the holidays, meaning more sellers will put their homes back on the market in January and the supply of homes goes up dramatically, which translates to less demand for your particular home and less money as well.

So, although the Holiday Season, between mid-November to beginning of January, may not be considered the best time to sell, here’s our top reasons why selling over the Holidays can still make sense: 

1. People who look for a home during the Holidays are more serious buyers!

2. Serious buyers have fewer houses to choose from during the Holidays and less competition means more money for you!

3. Buyers have more time to look for a home during the Holidays during the weekdays!

4. January is traditionally the month for employees to begin new jobs. Since transferees cannot wait until Spring to buy, you must be on the market now to capture that market!

5. Some buyers have to buyer before the end of the year for tax reasons.

6. You can still be on the market, but you have the option to restrict showings during the six or seven days during the Holidays!

7. You can sell now for more money and we will provide for a delayed closing or extended occupancy until early next year!

Gorgeous Remodel with Chef’s Dream Kitchen in South County

1061 Clark Way, Gilroy, CA  |  4 beds, 2 baths, 1,474 Sq. Ft.  |  Offered at $479,000

Beautifully remodeled from top-to-bottom with a chef’s dream kitchen and a backyard oasis featuring a black-bottom pool and cabana, this home will surely be your summertime escape!

Built in 1980, this home offers a spacious 1,474 SF of immaculate living space with an open floor plan, vaulted ceiling and an abundance of natural lighting. Highlights include a fully renovated kitchen, recently updated bathrooms, inside laundry room, 2-car garage; an amazing backyard with swimming pool and cabana and RV & boat parking.

The “chef’s dream” gourmet kitchen is just “stunning” and features top-of-the-line stainless steel appliances including a 36″ Kitchen-Aid 6-burner dual fuel oven/range; an over-sized center island with breakfast bar; and chocolate-cherry wood Kraftmaid custom cabinetry with crown moulding, under-mount lighting & soft close cupboards & drawers; all accentuated by gorgeous beveled Alaska Denali granite slab countertops, full-height mosaic glass tile back splash, and 18″ ceramic tiled flooring.

This home is situated on a tree-lined street in a charming and well established neighborhood in the south-western part of Gilroy; and walking distance to schools and several community parks, including Christmas Hill Park which is home to the Gilroy Garlic Festival. Great public schools are also associated with this adress.

 

The city of Gilroy is conveniently located off Highway 101 and within 30 minutes commute to many of the Valley’s hi-tech companies…this great community has a small town atmosphere with a quaint historical downtown area offering many great dining and shopping options…other community highlights include Gilroy Gardens (a great family oriented theme park); Eagle Ridge golf course (with 18-hole golf course with tree-lined fairways); the Gilroy shopping outlets and many award winning local wineries!

Housing in Recovery? Or Housing Bubble? – Spring 2013 Market Outlook

There’s a lot of growing speculation among first time homebuyers that we may be experiencing another “housing bubble,” but if we are, it surely won’t be of proportion to that seen in 2006. In the not too distant past there was a time when anyone with a pulse could qualify for a home mortgage, purchase financing was available to those with little to no income or down payments, and all premised on the buyer making interest only payments with an adjustable interest rate. No wonder the housing market crashed in 2007…there was no sustainable gain being made.

Now let’s look at today’s market…Today’s engine in the housing recovery is being driven by buyers purchasing with fixed financing options, large down payments, and fully underwitten loan applications. Housing rents are increasing and home affordability hasn’t been this high for a long time…so why wouldn’t we expect a run on housing?

Welcome to the housing recovery…going strong since Spring of 2012. The current levels of appreciation seem very sustainable for the short term, especially given the continual scarce inventory available for sale, the current increased housing affordability and the incredibly low mortgage interest rates. And as long as housing affordability remains at it’s current levels, and potential homebuyers will prefer to own rather then rent, I don’t think we’re going to see a slow down.

This is especially true of Silicon Valley. Not only is our inventory naturally limited due to the geography of the South Bay Area, creating a natural imbalance between supply and demand to begin with, but there is scarce new lands available for any major new housing developments. Sure we have some small scale infill developments scattered throughout the valley, which are seeing unprecedented interest as new releases are selling out in hours rather than weeks, but our inventory for the most part is dependent on the resale of existing homes which is currently around 50% of normal inventory levels.

So let’s look at the major contributing factors that have led to our quick housing recovery. Outside of the governments interactions in our housing market that has shrunk inventory levels, the freezing of foreclosures last year and appearance of large investors purchasing pools of foreclosed homes directly from banks, there were many strong economic gains made as well. Did you know that there were 42,000 new jobs created in SIlicon Valley in 2012 alone? And according to the Index of Silicon Valley for 2012 (published by Joint Venture Silicon Valley) it seems that our innovative “tech-giants” are just getting started as there was a drastic rise in the amount of venture capital seed money available last year, an increase in patent registrations, and of course, release of new IPO’s (Facebook for example).

So, with the already limited supply of inventory and continued increase in qualified buyers entering the housing market, what may be considered to be “overbidding” on a home today could be seen as “a deal” in another few months. Compared to last summer, the “overbidding” in San Jose was close to 2-3% over asking price, while today we’re seeing close between 10-15% or more…

My two-cents…If it makes financial sense for a prospective homebuyer to own versus renting, considering their monthly housing payments and out of pocket expenses, and the purchase will be for long-term holding, then what difference does it make in the long run if they paid an extra $10k, $20k, or more out of pocket…the same opportunities today are not guaranteed to be around tomorrow. I know that I’d personally rather lock in a housing payment for 30 years at a very low rate versus leaving myself open to the ever fluctuating rental market. And if it meant putting more down from savings, again what’s the difference if my savings account is earning 0% anyways?

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Top Reasons for Buyers to Hire a Real Estate Professional in a Seller’s Market

Did you know that home sellers who used a real estate agent are 50% more successful at getting their homes sold than unrepresented sellers (Statistic from researchers at HomeGain.com)?

Well the same is also true for homebuyers, especially given the painfully low inventories we’re currently experiencing in San Jose and the greater Santa Clara County. So, in an effort to save some buyers unwanted troubles, I have quickly listed some of the top reasons that homebuyers should choose to work with a qualified real estate professional, preferably a REALTOR® when embarking on their home journey.

Getting a purchase closed in today’s market is complex and filled with buyer traps.

Today’s buyers face many more hurdles including stricter financing and a confusing marketplace of listed homes, such as for-sale-by-owner homes, foreclosures, short sales, investor flips and off-market listings. Added the incredibly low inventory and many buyers, due to the fierce competition when submitting offers, will undoubtedly “throw caution to the wind” by waiving some or all of their purchase contingencies in order to gain an advantage over other competing offers …something that just 12-16 months ago would have been unnecessary and incomprehensible. So having a professional looking after your best interests, assisting you in reviewing seller disclosures and property inspection reports, will improve your chances of both having an offer accepted, and more importantly, help to avoid unwanted surprises during escrow.

Finding inventory is tough.
Gone are the days when a would-be homebuyer was being solicited every five-minutes to purchase a home. Now there aren’t enough houses available to meet the insatiable demand created by the low mortgage rates and high affordability. In fact, we’ve got less than 50% of the inventory available than we did 12 months ago, and homes are selling three times faster, sometime in just days after being listed.

So how can your Realtor® help you find a property when homes are selling so quickly? Many experienced agents have built a vast network with their fellow real estate professionals, and most communicate with their networks, or participate in social events in order to identify upcoming listings. Although most of these properties will make it to the market before being sold, the benefit of working with a well connected real estate professional means that they are more likely to get the real inside scoop on how to get an offer accepted.

Real Estate Agents will navigate you through the home buying process.
To my knowledge, no one walks into their own surgery and operates on themselves…so when buying a home, why would it be any different? Once you find the house you want, the work for your Realtor® really begins as you’ll need help navigating negotiations, loan approval, seller’s disclosures, inspections, repairs, and much more. As your agent, I have a fiduciary duty to protect you from foreseen risks and defects in the property, so knowing that I will also share your risk you can count on me making sure that you go into any home purchase with your eyes wide open.

A professional is more likely to help you close on the home of your dreams.
In order to take advantage of today’s near-record low interest rates, attractive affordability levels, and still lower than record prices, its more important than ever to work with a professional to help you win the bidding war without opening yourself to unwanted liability or risks. This is where an experienced real estate professional that understands the current market conditions, as well the people skills to get your offer accepted at the best price and terms….even in this market, I’ve been able to successfully save my clients tens of thousands of dollars off the final sales price by presenting the picture of a more stable and committed buyer.

Best of all, real estate professionals work primarily on commission.
In most instances it won’t cost you anything to hire a professional to assist you with your real estate purchase. In fact, your real estate agent is paid a commission from the sales proceeds of the home, which comes from the seller’s pocket. And since your agent won’t be earning any income until they have found your dream home, they will be motivated to assist you with all aspects of your purchase transaction.

But, it also means that if the deal of the century is about to come on the market, who do you think your agent will tell? The buyer who thinks he’ll get a better deal by working every agent, or the buyer who is loyal?  And it’s common courtesy to work with only one agent per area that you are looking; and if it’s customary in that area, don’t be reluctant to sign a buyer’s representation agreement with your agent once you have chosen the right agent to represent you in your transaction.

A buyer representation agreement (which is always an option) will help spell out the specific duties that your buyer’s agent will perform, meaning you will receive a higher level of service since the buyer’s agent has a formal commitment that you will utilize their services should you purchase a home in their market area. Just be sure to discuss the agreement at length so you and your agent have a clear understanding on expectations…and most agreements allow for the termination of the contract should you become unsatisfied with your chosen agent’s performance.

And lastly, be sure to stay in contact with your agent. If you want to look at open houses or builder homes, invite your agent to come along. If they happen to not be available, show your loyalty by telling the salespeople you meet that you are already represented.

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