Market on the Upswing

Reports indicate steady, positive trends for the U.S. housing market, with 19 markets fully recovered!

This is great news for homeowners who have been waiting and waiting for their equity to return.  It is important to note, however, that while it is true that home prices are rising upward, it is happening gradually and will take time for many homeowners to regain the equity they watched disappear during the recession   For some homeowners, though, prices are high enough now where they are able to sell without having to do a short sale. 

 

Not having to short sale is significant because even though the seller may not be recouping all of their equity, they will not have to take a hit on their credit which comes with selling a home on a short sale.

 

With this fairly recent reversal of the market, we can now cautiously say that we are in a seller's market.  The reason that I say this cautiously is for a couple of reasons.  First, there are still a lot of cash buyers out there.  Most cash buyers want to feel like they are getting a discount.  In many cases, unless the home is in the lowest price range, they expect the seller to negotiate on the price. Secondly, interest rates are going up and the monthly payment that a buyer would have to make a month or two ago has gone up. For many buyers, this has decreased the amount of loan that they will be able to qualify for.

 

 

If you are a seller right now and you accept an offer on your home, I strongly advise that you ask the buyer to "update" their pre-approval letter.  Since they have already been working with their lender, this should a simple and quick process and will assure you that your buyer is still, in fact, qualified to buy your home.

 

As always, if you have any questions concerning your property, give me a call. I always enjoy hearing from you!

 

Nancy Puder is the broker/owner at Signature Properties  in Arroyo Grande, CA. You may contact her at Nancy@NancyPuder.com or (805)710-2415. She always enjoys hearing from you!

Owning a Home Still the American Dream

The dream of owning a home remains alive and well in the minds of many Americans.  The current homeownership rate in the United States is 65.3%. Although the housing market has been challenging for many homeowners over the last few years, homeownership remains a top goal for many Americans.

In spite of the recession, 96% of all Americans still say that homeownership is "important", including 77% of 25 to 34 year olds and 78% of 35 to 44 year olds who say that it's "very important."

About 97% say that homeownership gives them more control over their living spaces.  This means that when you own home, you can make improvements whenever you want and no one can make you move as long as you are making your mortgage payments.

The average home seller nowadays has lived in the home for an median of 9 years.  The majority of homes that show well and are priced right are selling within a month of putting the home on the market

The tide has turned and we are now in a sellers' market in most areas of the U.S. including here on the Central Coast.  If you have any questions about the current real estate market or your own property, please call or email.   I always enjoy hearing from you!

Nancy Puder is the owner/broker of Signature Properties, a prestigious real estate firm in Arroyo Grande, CA. You may contact her at Nancy@NancyPuder.com or (805)710-2415. She always enjoys hearing from you!

Fewer Delinquencies as Bad Loans Fade Away

 

 

 

Delinquencies are dropping as bad boom loans fade away.  Fewer problem loans are being made and declining levels of negative equity along with shrinking inventories of bad loans from the boom era are contributing to the the reduction in mortgage delinquencies by the largest decline since 2002.

 

According to the May mortgage monitor report from Lender Processing Services, the national delinquency rate continued to fall in May and is down 15 percent since the end of December 2012.

 

Senior VP Herb Blecher at LPS explains that much of this improvement is supported by the fact that new problem loan rates are approaching the pre-crisis average.  Although they are still approximately 1.4 times what they were, on average during the 1995-2005 period, delinquencies have come down significantly from their January 2010 peak.  Blecher goes on to say that fewer problem loans are coming into the system and the existing inventories are working their way through the pipeline.

 

Yes, The market is finally turning around,  but it is important to take the time necessary to plan your home purchase and to keep an eye on interest rates.  

 

Rates have increased recently and the general consensus is that they will continue to do so.   It may be worth it to pay a little more for the property you have your eye on than wait another month or so and possibly pay a higher interest rate.  

 

The rise in interest rates will affect your monthly payment.  Check with your lender to see how this might change the pre-approval letter that you may already have.

 

Nancy Puder is the real estate owner and broker of Signature Properties, in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 She always enjoys hearing from you!

 

 

 

 

First-time buyers shut out of the market?

 

You may have heard the new term "Gen Rent,” referring to would-be buyers in their 20s and 30s who have been priced out of the housing market.  While this age group is still forming households and would prefer to buy, the lack of supply is preventing them from being able to purchase.  That shortage of inventory along with rising interest rates, makes it harder to qualify for a loan.

 

Another challenge today for the first time homebuyer is the emergence of cash buyers.  Cash buyers who opt to pay cash instead of getting a loan, are snatching up the best buys on the market and the buyer who requires financing cannot compete.

 

First-time buyers will be challenged even further when the Fed decides to stop buying bonds in order to keep rates artificially low. Federal Reserve Chairman Ben Bernanke has said that if the economy keeps growing and unemployment falls, the Fed will begin “tapering” its bond purchases this year, and could wrap them up altogether next year.

 

In the meanwhile, home prices continue to gradually rise. According to the chief economist of the California Association of Realtors, Leslie Appleton-Young, the median home price will increase from $319,300 in 2012 to $354,800 in 2013 (an 11.1 percent increase). 

 

My advice to first time homebuyers is to save as much cash for your down payment as you can.  Seller's feel more secure when the buyer is coming in with more cash down.  Don't give up.  You may have to make offers on several homes before you find a seller who is willing to work with you instead of a cash buyer.  The good news is that this does still happen.  

 

Stay in close touch with your lender to be sure that you still qualify because of the rise in interest rates.  Your payment could be affected substantially from what you thought it would be when you first started looking. And remember, it is not always the best answer to get the highest loan you can qualify for.  Be sure to allow for and set aside emergency funds in case you need them!

 

Nancy Puder is a real estate broker in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 She always enjoys hearing from you!

Short Term Mortgages Become Popular

Lenders are reporting lately that up to 28% of their refinance business involves shorter term mortgages.  Among people refinancing 30-year mortgages, nearly one-third switched to shorter term replacement loans.

 

Some community banks say they are surprised that 10-year mortgages, once an insignificant niche option, are accounting for increasingly large chunks of their business.

 

Though 15-year mortgages have been popular for years among homeowners who want to pay off their balances quickly, lenders say the 10-year loan — targeted directly at the demographic tsunami of baby boomers who are still employed but planning to retire in the coming decade — is on the upswing.

 

"There's a lot of interest in this [10-year] product," said Victoria Stumpf, a loan officer with Third Federal Savings and Loan in Cleveland.

 

Why the growing attraction to going short? Start with interest rates.  With an almost certain increase in rates on the horizon, the average 10-year fixed rate mortgage goes for 3% with a fifth of a point cost (point equals 1% of the loan amount).  Some community banks and smaller lenders quote even lower than that.

 

For community lending institutions such as these around the country, 10-year loans tend to be portfolio investments. Rather than selling the mortgages to Freddie Mac, Fannie Mae or other investors, lenders retain them in-house. Partially as a result, rates can be lower. And since lenders who specialize in 10-year mortgages want to keep risks as low as possible on their in-house investments, they typically require borrowers to have solid credit histories and significant equity or down payments.

 

•Monthly payments. Here's where the shorter term and faster payoff of principal available through the 10-year mortgage can be a budget issue for some borrowers. The monthly total for principal and interest on the 30-year loan is just $715. On the 15-year it's $1,054. But on the 10-year it's nearly double what you'd pay on the 30-year — $1,406. Though over the term of the loan you pay substantially less in total interest charges, on a monthly basis the 10-year requires the most out of pocket of the three.

 

The bottom line is that if you are looking ahead, can afford to pay the higher monthly payment, you can pay your home off completely in 10 years!  Imagine being owning your home outright in this relatively short period of time!

 

I recommend that you speak to your lender regarding a shorter mortgage period when purchasing your next home or applying for a refinance.  Knowledge is power and it could be the right choice for you.

 

Nancy Puder is a real estate broker in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 She always enjoys hearing from you!