Wednesday, July 31, 2013
Wednesday, July 24, 2013
Student-Loan Debt Keeps Buyers Out of the Market
Student-Loan Debt Keeps Buyers Out of the Market
As we hear that Congress struggles with the "student loans" question, it is good to put it in perspective with a few facts. I thought the article below was kind of important to keep in mind.
The impact of student-loan debt on the nation's housing
market has real estate analysts worried due to the importance of first-time
buyers to the health of the market. Questions linger about whether the housing
recovery will be limited as deeply indebted college graduates struggle to
stabilize their finances, which means young, first-time purchasers are not
entering into homeownership at traditional rates.
As we hear that Congress struggles with the "student loans" question, it is good to put it in perspective with a few facts. I thought the article below was kind of important to keep in mind.
- According to the NATIONAL ASSOCIATION OF REALTORS®, first-time buyers comprised just 28 percent of purchases in the resale market during May. For comparison, typically these buyers make up 40 percent of purchases. The lower rate is not surprising when one considers the statistic that college graduates on average carry $21,402 in student loan debt, and troublingly, only 39 percent are in a capacity to repay. Clearly, many college graduates have no choice but to postpone the purchase of a home due to heavy debts from student loans.
- The homeownership rate for those individuals who are still paying off student loans is 36 percent lower than among their peers who have no student debt, according to research from the One Wisconsin Institute.
- Student-loan debt will remain a long-term issue because the average payoff
time is 21 years, ranging from 17 years for those who attended college but did
not get a degree to 23 years for those with graduate degrees.
- The country’s total outstanding student debt has surpassed $1.1 trillion. For recent graduates, the debt load averages just under $27,000, but an estimated 13 percent of outstanding balances range from $54,000 to $100,000.
Do you have any thoughts on the subject? Feel free to chime in!
Francis
Silicon Valley real estate
Local market: Smart graphs
Current mortgage rates
Wednesday, July 10, 2013
Is this a safe neighborhood?
“Is this a safe neighborhood”? ... is a
question that we as Realtors® often hear from clients. (side note: a Realtor® is
a real estate agent who is a member of the National Association of Realtors®,
who adheres de facto to a very strict code of ethics - not all agents are
Realtors®).
What people typically do not know is that as
Realtors®, we are not allowed to answer such a question: it could be construed
as discrimination. Also, the opinion about how safe an area is can be so
personal and relative!
I find that the best way to answer such a concern is to advise my clients to come back at different times of the day and walk around in the neighborhood, and talk with the neighbors as much as possible. I would add that I believe it is always a good idea to do so, no matter how pretty or ugly an area may look. You can learn a lot about a street, a block or a group of blocks by talking with the people living directly in the area.
Finally one has to remember that conditions change
all the time: I live in an area that is fairly uneventful when it comes to
crime, except that in the past few weeks there have been a well publicized
increase in break-ins and thefts in that general part of Mountain View. So the
best way to answer such a question is to check for yourself with the police
department and get a crime report, to talk to the neighbors (who will often tell
you a lot about what happens nearby - and sometimes more than you want…), and
also look at some internet resources on the subject. Here are, below, some of
the sites that I have come across in the past; but I recommend to check
carefully how they collect their information, and what exactly they cover and do
not cover.
Local market trends
Current Mortgage rates ... Higher!!
What people typically do not know is that as
Realtors®, we are not allowed to answer such a question: it could be construed
as discrimination. Also, the opinion about how safe an area is can be so
personal and relative!I find that the best way to answer such a concern is to advise my clients to come back at different times of the day and walk around in the neighborhood, and talk with the neighbors as much as possible. I would add that I believe it is always a good idea to do so, no matter how pretty or ugly an area may look. You can learn a lot about a street, a block or a group of blocks by talking with the people living directly in the area.
Finally one has to remember that conditions change
all the time: I live in an area that is fairly uneventful when it comes to
crime, except that in the past few weeks there have been a well publicized
increase in break-ins and thefts in that general part of Mountain View. So the
best way to answer such a question is to check for yourself with the police
department and get a crime report, to talk to the neighbors (who will often tell
you a lot about what happens nearby - and sometimes more than you want…), and
also look at some internet resources on the subject. Here are, below, some of
the sites that I have come across in the past; but I recommend to check
carefully how they collect their information, and what exactly they cover and do
not cover.
Some good information may also
be found in the local newspaper. For instance in the Mountain View Voice under
"Crime Brief" or "Police Log", and for Palo Alto "the Pulse" (PA Weekly). Each
local paper has a similar section. One may need to check the evolution over a
period of time to better judge a neighborhood.
Thanks for reading,
as always!,
Francis
Current Mortgage rates ... Higher!!
Monday, July 1, 2013
Price increase in the Silicon Valley
To piggy up on my last blog (is the market slowing down?) here is the evolution of sales
prices of houses and CID's (common interest development = condos and
townhouses).
These graphs that I just pulled show the amount of increase in average prices in a year and a half, and illustrate how indeed this is a factor in a possible slow-down of the activity.
They also show something that is unusual: prices did not really go down a lot at the end of 2012. On previous studies I showed how prices really adjusted towards the end of the year, in 2011 and 2010. But the market stayed strong at the end of 2012.
Finally these graphs show that indeed prices are (somewhat) flattening at this point, at least in the case of the County of Santa Clara.
Local market trends
Current Mortgage rates
Non-profit organization worth noting: Partners for New Generations.
These graphs that I just pulled show the amount of increase in average prices in a year and a half, and illustrate how indeed this is a factor in a possible slow-down of the activity.
They also show something that is unusual: prices did not really go down a lot at the end of 2012. On previous studies I showed how prices really adjusted towards the end of the year, in 2011 and 2010. But the market stayed strong at the end of 2012.
Finally these graphs show that indeed prices are (somewhat) flattening at this point, at least in the case of the County of Santa Clara.
If you have any area
of interest, very local or at the City level, let me know and I will publish it
for you.
Thanks for reading,
as always!,
Francis
Current Mortgage rates
Non-profit organization worth noting: Partners for New Generations.
Thursday, June 27, 2013
Is the market slowing down?
Is the market slowing down right now?
Ask an agent who is full-time involved in the market,
on the buy and on the sell side, and you will probably hear
that it looks that way.
About a year and a half ago, in the middle of January 2012, suddenly in just a matter of a week or two you could tell if you were actively involved in sales that something was changing: properties were not available any longer to place an offer on, or offers were just going to be heard that evening with 2 or 3 offers expected, or it was too late by a day etc... So we would go to the next best one, and it was gone too, with multiple offers.
In a similar way today little signs appear here and there: a property comes back on the market a few days after being in contract, or we see "offer dates" pass with no offers brought in. Also the inventory (finally!) increases a bit so that there is actually some choice for potential buyers. I also hear sometimes that after a few days on the market very few people have actually looked at the disclosures online. A month ago you would already have had by the start of the week-end most interested buyers checking out the disclosures.
If I had a guess I would say that in general, going forward, we should expect prices to reach somewhat of a plateau, a market of muted price increase. .. well, so there is my crystal ball. Do you want to try yours out in a comment?
Thank you for reading,
Francis
Local real estate
updated loan rates Rates are up mostly, except for the 1-yr adjustable
About a year and a half ago, in the middle of January 2012, suddenly in just a matter of a week or two you could tell if you were actively involved in sales that something was changing: properties were not available any longer to place an offer on, or offers were just going to be heard that evening with 2 or 3 offers expected, or it was too late by a day etc... So we would go to the next best one, and it was gone too, with multiple offers.
In a similar way today little signs appear here and there: a property comes back on the market a few days after being in contract, or we see "offer dates" pass with no offers brought in. Also the inventory (finally!) increases a bit so that there is actually some choice for potential buyers. I also hear sometimes that after a few days on the market very few people have actually looked at the disclosures online. A month ago you would already have had by the start of the week-end most interested buyers checking out the disclosures.
So yes, it seems to me that
the market is slowing down. Sales figures in a month or two will tell us if
this is correct. I would attribute this slight slow-down to factors
like:
- Buyers are jaded by so many unsuccessful bids they may have placed,
- Prices have gone up significantly for the same type of house, certainly so in the eyes of buyers, and if the asking price is too close to the last comparable sale, another 10 or 15% jump from that high becomes too intimidating,
- With higher values have also come on the market properties which may not be the same high quality as those who just commended such high prices,
- A sense, at least for some would-be buyers, that they just do not know where prices should be any longer, after the many extreme bids that all can see in the MLS (hence the need for a good Realtor...),
- .. And last but not least, the rise in mortgage interest rates that have shot up in the past 2 weeks, effectively pricing out those buyers who were at the top of their borrowing power.
Let’s qualify those remarks though: in the areas with good
schools, for properties priced lower than the last sales, there are still
multiple offers, no doubt. For areas with very little inventory, the demand
which has gone unsatisfied for so long is still there, and even only one offer
will often bring a much higher price than the asking price. The market is still very much a sellers’
market. But in areas where inventory
is larger, the new prices coupled with more choices will give a break to buyers
who can still qualify.
The
future will depend a lot on:
<!--[if !supportLists]-->-
<!--[endif]-->The
inventory (going up, going down again??)
<!--[if !supportLists]-->-
<!--[endif]-->The interest
rates
<!--[if !supportLists]-->-
<!--[endif]-->Seasonality
to a certain degree. There are fewer
people around during summer.
If I had a guess I would say that in general, going forward, we should expect prices to reach somewhat of a plateau, a market of muted price increase. .. well, so there is my crystal ball. Do you want to try yours out in a comment?
Thank you for reading,
Francis
Local real estate
updated loan rates Rates are up mostly, except for the 1-yr adjustable
Monday, June 17, 2013
Not enough money for your downpayment?
Not enough money for a
downpayment?
Let’s imagine that you really, really want to
purchase a home, you have the income to do it, and you’re ready, willing and
able (all 3 conditions that as Realtors we always check for). But there is a little problem: you do not
have enough money for the downpayment.
The typical options are: - to get some gift
money (it’s got to be from a relative to be acceptable by the bank making the
big loan), - or get a second, in the form of an equity line of credit (just
making their come back now), - or win at the
lotto...
There is however an other option, that I have
personally never seen used, but that I just read about and is worth
mentioning:
REX HomeBuyer, a form of shared appreciation
(or depreciation).
The principle of this option is that a group
of investors get together, and loan you money to help with the downpayment on
our purchase.
If the property has appreciated when you sell
it, they share in the profit.
If the property has depreciated when you sell
it, they share in the loss.
This is a good option for people who need
some help with a downpayment, and feel shy going it alone on their purchase; it
is reassuring in a way to have someone else share in the risks of the market
variations. And all the while you own
the house the advantage is that you have used the downpayment money to actually
buy a home and live in it, - and for a lot cheaper than if you had to borrow the
whole amount. (remember that when you
borrow a 90% amount on a house, you have to pay PMI –Private Mortgage insurance
– and this is not cheap: about 1 to 1.5% of the amount you pay, every time you
pay anything it seems).
In that option, you do not pay interest on
the money that made the rest of the downpayment. It is like having a friend co-buy with you
but without the hassle to draw a complicated “separation agreement” for when you
want to be on your own later. Here it is done from the start, in a clear
way.
More on this interesting idea on this Los Angeles times article by Lew
Sichelman.
As
always with financial arrangements, run this by an advisor or an attorney if you
are considering trying it...
Francis
Friday, June 7, 2013
Tax break disappears as housing values rise
As property values have
been going up sharply in the Silicon Valley, so are the assessors' values of our
houses, throughout the area. We can expect therefore to pay more in property
taxes, come November and December of 2013.
During the past 4 years I have prepared
updated market analysis for several of my clients, in order to justify a lower
value to be sent to the tax assessor's office. The goal of course was to pay a
lot less in property tax, and I am glad to have been incidental to huge tax
reductions in several instances. It is very unlikely that this is going to be
possible going forward, as for most of the local area values have gone back to
the highs of 2007, and sometimes higher yet. There are some small pockets in the
County which would still be lower but there are fewer and fewer of
them.
Nonetheless, if you feel that you are being assessed too much, do not hesitate to call on me to double check on it!
An article on the subject was recently published in the Mercury News, stating that "tens of thousands of homeowners will see their property taxes go up significantly this year as rising home values
restore some or all of their homes’ lost
equity".
Do you feel you are being assessed unfairly this year? Let me know.
Thanks for reading,
Francis
Local real estate
updated loan rates Rates are up mostly, except for the 1-yr adjustable
Week ending 6/6/2013 (Source: Freddie Mac)
30-yr. fixed: 3.91% fees/points: 0.7%
15-yr. fixed: 3.03% fees/points: 0.7%
1-yr. adjustable: 2.58% Fees/points: 0.4%
Nonetheless, if you feel that you are being assessed too much, do not hesitate to call on me to double check on it!
An article on the subject was recently published in the Mercury News, stating that "tens of thousands of homeowners will see their property taxes go up significantly this year as rising home values
Do you feel you are being assessed unfairly this year? Let me know.
Thanks for reading,
Francis
Local real estate
updated loan rates Rates are up mostly, except for the 1-yr adjustable
Week ending 6/6/2013 (Source: Freddie Mac)
30-yr. fixed: 3.91% fees/points: 0.7%
15-yr. fixed: 3.03% fees/points: 0.7%
1-yr. adjustable: 2.58% Fees/points: 0.4%
Thursday, May 30, 2013
Where the mortgage deduction really pays
Where the mortgage deduction really pays... an
interesting article.
The mortgage interest deduction is one of the most-expensive tax breaks on
the books, but its benefits are distributed unevenly across the country,
according to a new, comprehensive report by the Pew Charitable Trusts.
In 2010, the year that Pew analyzed, the mortgage
deduction resulted in $80 billion of forgone revenue to the federal government.
Over five years, the tax break is expected to reduce revenue by about $380
billion.
This article by Jeanne Sahadi @CNNMoney shows however who really benefits from the tax break (and who benefits from other tax breaks), while these report and maps look at the geographical distribution of the mortgage interest deduction.
Make sure to look at the interactive maps, from the Fiscal Federalism Initiative, showing how widely mortgage interest claim rates and average deductions vary, both across and within states. They show in particular some key findings like:
- Average deduction per filer, by state,
- the Claim rate, by zip code,
- the average deduction per filer by zip code.
Local info:
Look at the average deduction per household in your local area.
Simply fascinating!...
Thanks for reading,
Francis
Silicon Valley real estate specialist
Detailed, local trends etc...
In 2010, the year that Pew analyzed, the mortgage
deduction resulted in $80 billion of forgone revenue to the federal government.
Over five years, the tax break is expected to reduce revenue by about $380
billion. This article by Jeanne Sahadi @CNNMoney shows however who really benefits from the tax break (and who benefits from other tax breaks), while these report and maps look at the geographical distribution of the mortgage interest deduction.
Make sure to look at the interactive maps, from the Fiscal Federalism Initiative, showing how widely mortgage interest claim rates and average deductions vary, both across and within states. They show in particular some key findings like:
- Average deduction per filer, by state,
- the Claim rate, by zip code,
- the average deduction per filer by zip code.
Local info:
Look at the average deduction per household in your local area.
Simply fascinating!...
Thanks for reading,
Francis
Silicon Valley real estate specialist
Detailed, local trends etc...
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