I know a young woman who owns a condo. She purchased it back in 2006 when of course it looked like a great deal. No one would have criticized her for the purchase at the time. She is now deeply under water. But she still has her job, and can still make the payments. She wants to buy a house. Houses are now going for less money then she paid for her condo. She wants to walk, but of course if she does that, she won’t qualify for a loan. Who would want to lend to a person who just walked from her obligation?
She can afford to rent the unit out, and her negative would only be 400 a month, seems like a perfect solution, doesn’t it? Rent it out, buy the house, and in time rent will make it a great investment. Trouble is though she has over 100,000 invested in the unit, she has no equity. The new Fannie Mae requirements are that you have a 30% equity in your rental, plus a years lease. So she is in the perfect catch 22, where she cannot hold it (and buy), nor can she walk away and move.
Thursday, February 24, 2011
Thursday, October 21, 2010
The Current Home Loan Market
We were talking in the car, the other day and my wife admitted to me that she was glad she listened to me a few years ago. We had refinanced our mortgage, and I wanted a variable loan, and she wanted a fixed rate loan.
The fixed rate seemed conservative, as the rates seemed likely to go back up. Our first loan was at 17%, so 7% seemed rather desirable. Currently our variable loan rate is in the low 4’s.
Speaking to my loan broker, Brian McNamara, -hmbloans @ aol.com- rates may be at an historic low in January. This coupled with the low cost of housing, the best I have seen in 20 years, makes the next few months look like an historic opportunity for buyers.
Brian tells me, “Rates for loans above $417,000k to 729,750k are very close in rate to the conforming loans below 417k”, but he says that qualifying is much tighter then the “bad” old days. “lenders want to see income and taxes, and minimum credit scores are higher”.
Still I wouldn’t own a house today, if I hadn’t taken the plunge, so long ago, i.e. 17%. And variable rate loans and “negative amortization” still hold a fond place in my heart.
The fixed rate seemed conservative, as the rates seemed likely to go back up. Our first loan was at 17%, so 7% seemed rather desirable. Currently our variable loan rate is in the low 4’s.
Speaking to my loan broker, Brian McNamara, -hmbloans @ aol.com- rates may be at an historic low in January. This coupled with the low cost of housing, the best I have seen in 20 years, makes the next few months look like an historic opportunity for buyers.
Brian tells me, “Rates for loans above $417,000k to 729,750k are very close in rate to the conforming loans below 417k”, but he says that qualifying is much tighter then the “bad” old days. “lenders want to see income and taxes, and minimum credit scores are higher”.
Still I wouldn’t own a house today, if I hadn’t taken the plunge, so long ago, i.e. 17%. And variable rate loans and “negative amortization” still hold a fond place in my heart.
Tuesday, October 12, 2010
San Mateo County Housing Values Stabilizing
Zillow sent me the link below about average housing prices in Moss Beach since 2006. I thought it was interesting, because I had just made a similar chart from MLS statistics for my open house last weekend. http://www.zillow.com/local-info/CA-Moss-Beach-home-value/r_53424/?scid=emm-101110_OctLocalPROClaim-bab
My chart is for the San Mateo Coastside so the data may be a little better; since the sampling is a larger slice of the pie, and I notice both curves show a leveling of values over the last few quarters.
Now I don’t really believe the average value (median) of housing in Moss Beach was ever 900k, which leads to the old notion of Lying with statistics. My data includes condos and places like Pacifica, which don’t always command the highest values. I have noticed over the course of time that often Moss Beach‘s average value is relatively higher then the rest of the Coastside.
I don’t believe that this means that a ‘70‘s build 2000 sq ft house in Moss Beach commands any more money then a similar one in HMB, but rather that since the sample is smaller, Moss Beach’s average values are more readily effected by a couple large ticket sales then other areas of the Coastside. Moss Beach has more cliff side, and acreage properties relative to more normal housing then other places on the Coastside.
I hope you find this interesting, and I want to express again that it appears the value of homes, not just on the Coastside, but throughout San Mateo County have leveled out, and appear to be stable, since early 2009.
My chart is for the San Mateo Coastside so the data may be a little better; since the sampling is a larger slice of the pie, and I notice both curves show a leveling of values over the last few quarters.
Now I don’t really believe the average value (median) of housing in Moss Beach was ever 900k, which leads to the old notion of Lying with statistics. My data includes condos and places like Pacifica, which don’t always command the highest values. I have noticed over the course of time that often Moss Beach‘s average value is relatively higher then the rest of the Coastside.
I don’t believe that this means that a ‘70‘s build 2000 sq ft house in Moss Beach commands any more money then a similar one in HMB, but rather that since the sample is smaller, Moss Beach’s average values are more readily effected by a couple large ticket sales then other areas of the Coastside. Moss Beach has more cliff side, and acreage properties relative to more normal housing then other places on the Coastside.
I hope you find this interesting, and I want to express again that it appears the value of homes, not just on the Coastside, but throughout San Mateo County have leveled out, and appear to be stable, since early 2009.
Thursday, September 9, 2010
Half Moon Bay's Pumpkin Festival
This year’s 40th festival will be held on October 16-17 from 9 a.m. to 5 p.m. Admission is free. For you that don’t know, this is a huge street fair, the largest of the year in Half Moon Bay. This would not be the day you wanted to look at property on the Coastside. The highlight of the fair is a pumpkin weigh off. Individual pumpkins are brought in one at a time on flat bed trucks. These monster pumpkins, weighing in excess of 1,000 lbs, often brought in from Oregon or further, will be carved after they are weighed. They are surreal items, and quite interesting to see. There is also a pie eating contest, and Half Moon Bay winery serves it’s “pumpkin" wine at the event.
Saturday, July 10, 2010
The Tunnel at Devil's Slide
I read in the Chronicle June 2010 that the tunnel at Devil’s Slide is on schedule to be complete and open in the fall of 2010. Caltrans is quietly fighting a lot more water then they expected, which may still hold them up. It is not clear to me if the tunnel has been dug completely through at the time of this writing.
People always ask me if the tunnel will bring home pricing up in Montara and the Mid-coast. I believe it will, partly due to timing, and partly due to the increasing cost of the Golden Gate and that commute.
When the Bridge tolls went up to five dollars we saw an increased number of sales and interest in Pacifica, which arguably is the most affordable area on the Peninsula. Since the toll went up, inventory in Pacifica has dropped to about half of it’s historic amount.
Many have always been reluctant to look further south, not wishing to commute on Devil’s Slide. This is partly because the traffic on the Slide is so heavy during the weekends, particularly, the good weather weekends. Also many don’t like driving on the windy road next to the water’s edge. Truth is most days’ commuters travel at the limit off the Coastside, with their cruise control on, as they are so used to the road.
I don’t see the tunnel helping ease the minds of those who don’t like to drive twisty roads, but since San Mateo County is generally in recovery, and Montara tends to lag but follow the County’s trend, I think the opening of the tunnel may serendipitously help Mid-coast look like a real value. The toll again has risen again on the Golden Gate, six dollars. This may make the Mid-coast the new bright value of the Peninsula.
People always ask me if the tunnel will bring home pricing up in Montara and the Mid-coast. I believe it will, partly due to timing, and partly due to the increasing cost of the Golden Gate and that commute.
When the Bridge tolls went up to five dollars we saw an increased number of sales and interest in Pacifica, which arguably is the most affordable area on the Peninsula. Since the toll went up, inventory in Pacifica has dropped to about half of it’s historic amount.
Many have always been reluctant to look further south, not wishing to commute on Devil’s Slide. This is partly because the traffic on the Slide is so heavy during the weekends, particularly, the good weather weekends. Also many don’t like driving on the windy road next to the water’s edge. Truth is most days’ commuters travel at the limit off the Coastside, with their cruise control on, as they are so used to the road.
I don’t see the tunnel helping ease the minds of those who don’t like to drive twisty roads, but since San Mateo County is generally in recovery, and Montara tends to lag but follow the County’s trend, I think the opening of the tunnel may serendipitously help Mid-coast look like a real value. The toll again has risen again on the Golden Gate, six dollars. This may make the Mid-coast the new bright value of the Peninsula.
Monday, May 10, 2010
Cypress Point Road
This tastefully updated Ocean Colony home overlooking the golf course is highlighted by elegant style and superior attention to detail. Welcoming entry opens to bright formal living room with French doors leading to professionally landscaped backyard. Spacious separate dining room adjacent to beautifully remodeled kitchen with breakfast nook. Ground floor master bedroom has; a fireplace, and marble bath with spa tub.
Frustration About Short Sales
The trend lines for this week continue to suggest that the Active inventory is declining while demand is increasing. Prices may have bottomed out and some factors are in place to see a potential reversal of the downward pricing spiral. As stated in this blog frequently, it is important to note that the pricing and subsequent market value of homes varies dramatically from neighborhood to neighborhood and the condition and amenities of each home.
This week the number of homes in Active status is lower by 1.7% than last week and is 10.62% lower than last year at this same time period. The number of homes in the Pending status is 58.64% higher than last year at this time. Closed sales for April 2010 are 10.53% higher than last April. The number of Closed sales skew the number for Pending sales because longer escrows are required for, including but not limited to; the short sales, tighter lending requirements for buyers and tougher lender requirements for the home.
Below are the numbers by cities and the count of short sales and bank owned properties:
City Active Status Pending Status Closed Escrows
Short Sale/REO Short Sale/REO Short Sale/REO
Belmont 1/2 1/1 7/3
Burlingame 6/0 8/0 2/0
Foster City 2/1 3/0 4/0
Hillsborough 2/1 4/10 0/0
Redwood Shores 1/1 1/2 0/1
San Mateo 26/5 57/10 4/0
Pay particular attention the statistics for the City of San Mateo. 57 Pending sales are short sales, yet there were only 4 of the 44 Closed sales that were reported as Short sales. 10 in San Mateo’s Pending sales were REO and no REO’s were reported as Closed in San Mateo in April. tThese figures would clearly indicate to me that I would pay a nominal premium in price to purchase a home that is not a short sale because once I remove my contingencies, I know the home is mine. But it is unlikely that most buyers will take this advice as everyone is out of the “deal”. And many times they will be missing out of other opportunities while waiting for the bank short pay approval. It will be interesting to see which markets, if any, will be negatively impacted by unemployment, short sales, bank-owned properties, and most likely, interest rates.
Lawrence Yun, Chief Economist of the National Association of Realtors stated in their May 2010 issue; “Mortgage interest rates have been historically low for a long time, but expect them to start climbing soon. Thirty-year fixed rates may rise to 6 percent by December and to about 6.5 percent at the end of 2011; rates were about 5 percent in early April.
It’s tempting to think the Federal Reserve’s recent pullback from mortgage-backed securities purchases will drive interest rates higher.
But since it ended those purchases at the end of March, as it had planned to do, the impact on rates has been negligible. By all appearances, private investors have filled the void and are absorbing the MBS supply, keeping rates down. Predictable macro-economic factors – the continuing high U.S. budget deficit and the recovering economy – are the main reasons rates are likely to climb.”
I have been told that historically, but I haven’t verified, that the market activity increases just as rates start to go up because people want to lock in the low rates before they go higher. The tax credits have been attributed to the surge in first time home buyers along with the affordability factor. Will an increase in rates fuel the market as our economy improves?
This week the number of homes in Active status is lower by 1.7% than last week and is 10.62% lower than last year at this same time period. The number of homes in the Pending status is 58.64% higher than last year at this time. Closed sales for April 2010 are 10.53% higher than last April. The number of Closed sales skew the number for Pending sales because longer escrows are required for, including but not limited to; the short sales, tighter lending requirements for buyers and tougher lender requirements for the home.
Below are the numbers by cities and the count of short sales and bank owned properties:
City Active Status Pending Status Closed Escrows
Short Sale/REO Short Sale/REO Short Sale/REO
Belmont 1/2 1/1 7/3
Burlingame 6/0 8/0 2/0
Foster City 2/1 3/0 4/0
Hillsborough 2/1 4/10 0/0
Redwood Shores 1/1 1/2 0/1
San Mateo 26/5 57/10 4/0
Pay particular attention the statistics for the City of San Mateo. 57 Pending sales are short sales, yet there were only 4 of the 44 Closed sales that were reported as Short sales. 10 in San Mateo’s Pending sales were REO and no REO’s were reported as Closed in San Mateo in April. tThese figures would clearly indicate to me that I would pay a nominal premium in price to purchase a home that is not a short sale because once I remove my contingencies, I know the home is mine. But it is unlikely that most buyers will take this advice as everyone is out of the “deal”. And many times they will be missing out of other opportunities while waiting for the bank short pay approval. It will be interesting to see which markets, if any, will be negatively impacted by unemployment, short sales, bank-owned properties, and most likely, interest rates.
Lawrence Yun, Chief Economist of the National Association of Realtors stated in their May 2010 issue; “Mortgage interest rates have been historically low for a long time, but expect them to start climbing soon. Thirty-year fixed rates may rise to 6 percent by December and to about 6.5 percent at the end of 2011; rates were about 5 percent in early April.
It’s tempting to think the Federal Reserve’s recent pullback from mortgage-backed securities purchases will drive interest rates higher.
But since it ended those purchases at the end of March, as it had planned to do, the impact on rates has been negligible. By all appearances, private investors have filled the void and are absorbing the MBS supply, keeping rates down. Predictable macro-economic factors – the continuing high U.S. budget deficit and the recovering economy – are the main reasons rates are likely to climb.”
I have been told that historically, but I haven’t verified, that the market activity increases just as rates start to go up because people want to lock in the low rates before they go higher. The tax credits have been attributed to the surge in first time home buyers along with the affordability factor. Will an increase in rates fuel the market as our economy improves?
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