San Joaquin Homes Community Blog

With home prices in many areas declining to the point where owning a home is a more affordable option than renting, especially in the West, many potential home buyers appear to be getting off the fence and starting to purchase. Add affordable prices to record-low interest rates and the demand for housing has reached a pivotal turning point.

· Home prices in some areas of California have dropped so much that monthly mortgage payments on single-family homes are comparable to apartment rents, according to recent data. Mollie Carmichael, a senior vice president with John Burns Real Estate Consulting, says that in the Inland Empire , the average monthly rent for an apartment is $1,157. Carmichael adds that the average after-tax monthly mortgage payment on a median-priced single-family detached home is $1,154 in the same area.

· The large number of distressed properties has led to a surge in home sales around the country. Existing home sales across the U.S. rose 6.5 percent to an annual rate of 4.74 million units in December, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). A senior director of housing economics at Moody’s Economy.com believes the latest NAR report means sales have reach bottom.

· Interest rates on 30-year, fixed-rate mortgages averaged 5.12 percent for the week ending Jan. 22, which is almost 1 percentage point lower than the average rate in late November 2008, according to Freddie Mac. The prior week, 30-year mortgage rates average 4.96 percent, the lowest since Freddie Mac began its weekly survey in 1971.

Homeowners thinking of remodeling are advised to start seeking bids now, as the faltering economy is allowing many homeowners to save a significant amount of money on various projects.  As one homeowner found, an exterior paint job that was originally quoted in 2005 has now dropped by more than half.

Posted 2-21-09

·      Converting to energy-efficient appliances and lifestyles during an economic slow down can be a challenge, but there are some relatively inexpensive ways to achieve this goal without hurting the pocketbook.  One way is to install low-flow showerheads and faucets that limit the volume of water received and thus help to lower water, electric, or gas bills.  Most low-flow showerheads cost about $30, while faucet aerators start at $2.  The payback is almost immediate for aerators in energy-bill savings, while for showerheads the payback can be a few months.

With home prices down approximately 25 percent from their peak levels in some markets, many first-time home buyers are finding they now can purchase a home that previously may have been out of reach. According to a recent survey from the NATIONAL ASSOCIATION OF REALTORS®, first-time home buyers accounted for 41 percent of all buyers at the end of 2008, up from 36 percent in 2006.

· As homes stay on the market longer, some sellers are becoming more willing to negotiate the sales price than they were a few months ago. This is providing home buyers, especially first-time home buyers, with more opportunities than were previously available. Nationwide in 2008, the typical first-time home buyer purchased a home costing $165,000 nationwide.

· Although lower home prices mean more options for home buyers, it is important that home buyers still meet the minimum qualifications to qualify for a mortgage loan. Qualifications may include a FICO score of 720 or higher, and a 20 percent down payment.

· In California , 59 percent of the state’s households could afford to purchase an entry level home in the fourth quarter, compared with only 33 percent during the same time period the year before. The median price of an entry-level home during the fourth quarterly was $248,030. Typically, first-time home buyers purchase a home equal to 85 percent of the prevailing median price.

Posted 2-21-09

As more homeowners find themselves underwater -- owing more on their mortgage than their home is currently worth -- and unable to make the monthly mortgage payments, many are turning to short sales, which allows a homeowner to sell their home for less than owed on the mortgage. With the lender’s approval, home buyers can purchase properties in desirable neighborhoods and at favorable prices.

· According to real estate Web site Zillow.com, 14 percent of homeowners nationwide are currently underwater. In some areas, especially those hardest-hit by foreclosures thathave experienced the greatest price declines, more than 50 percent of homeowners would owe more than their home is worth if they sold today.

· Unlike foreclosed properties, which may be run-down and vacant for many months, short-sell properties are likely to be better maintained as many owners may still live in the home.

· In a short sale, the homeowner must receive approval from the lender before the sale of the property can proceed. With many lenders overwhelmed by short-sale transactions, it can take between two and six months to execute.

· Working with a REALTOR® who has experience with short sales can help both sellers and home buyers during the transaction. A seasoned REALTOR® will be able to serve as the mediator between the seller and the lender and lead to a successful transaction, while a buyer’s agent can help with offers, counter offers, home inspections, closing, and more.

· It is important to remember that although the seller may be anxious about selling the property and willing to accept any offer, it is ultimately up to the lender to determine if, and at what price, the property can be sold. Therefore, home buyers should work closely with their REALTOR® to submit a realistic offer.

· According to REALTOR® Loni Parmelly, author of Success in Short Sales, buyers should ask the lender to pay for all closing costs as part of the contract. The contract also should specify that the buyer will not conduct an appraisal or inspection of the property until the offer is approved. This added guarantee can protect home buyers from spending money on a home they may not purchase.

· The report states that nearly 62 percent of the nation’s 381 metropolitan areas will have experienced double-digit-percent declines in home prices, peak-to-trough, before bottoming out.

· Housing inventories are falling, sales are rising, and home prices are becoming better aligned with incomes, which will help lead to a housing correction. Although lawmakers are working on plans to help stabilize the market, the report forecasts that even with further government intervention, the recession will keep the housing market from fully recovering until the end of the year.

· According to the report, home sales will have declined by 40 percent and housing starts by 70 percent nationwide from peak to trough. However, California ’s home sales tell a different story. C.A.R. economists project sales for 2009 to increase 12.5 percent to 445,000 units, compared with 395,600 units (projected) in 2008.

Feb. 13, 2009

Late this evening, the U.S. Senate passed the American Recovery and Reinvestment Act of 2009 by a 60 to 38 vote. Earlier today, the stimulus package passed the U.S. House of Representatives in a 246 to 183 vote. Today’s votes followed several days of negotiations by the House, Senate, and White House, with the final tab for the stimulus bill coming in at $787.2 billion.

On the housing front, the good news is that the legislation resets the conforming loan limit cap at $729,750, up from $625,500. Numerous counties in California experienced a marked decrease in their conforming loan and FHA limits on Jan. 1, and the stimulus bill reinstates 2008 loan limits through Dec. 31, 2009.

The bill also increases the first-time home buyer credit from $7,500 to $8,000, and removes the requirement that the credit be paid back if the buyer stays in the home for at least three years. It also extends the expiration date for the credit from July 1 to Dec. 1, 2009.  Homebuyers must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009, to be eligible for the $8,000 credit.

The stimulus package also contains $308.3 billion in appropriations spending, including $120 billion on infrastructure and science and more than $30 billion on energy-related infrastructure projects. It also allocated an additional $267 billion for direct spending, including increased unemployment benefits and food stamps; and provides $212 billion in tax breaks for individuals and businesses.

·      Homeowners not wanting to refinance into a new 30-year loan, because they plan to pay off the house in full, should consider making biweekly payments rather than monthly mortgage payments.  Sending in half the monthly payment every two weeks instead of once a month will cancel out years of mortgage payments later on because it speeds up paying off the principal.  A homeowner who makes biweekly payments on a $500,000, 30-year, fixed-rate loan with a 6.5 percent interest rate would shorten the loan by five years and pay $150,000 less in interest over the life of the loan.