Thursday, July 27, 2017

Could Rising Home Mortgage Interest Rates 

Cause Another Housing Crash?

It’s been 10 years since the last housing crash of 2007, where property values declined for the next 6 years. If you bought a house between the years 2005 – 2008 I’m sure you remember how quickly your equity disappeared and how you felt. So, if you are even thinking about selling your house in the next few years here is some information you might want to consider.
Most people, including news sources, especially the Daily News, which I used to read back then, real estate agents, and economists didn’t want to believe, or didn’t want you to believe, that we were in a housing bubble then and half the country doesn’t believe we’re in one now. Hou
Currently housing prices are near or even exceeding the pre-2007 housing crash. Every month prices seem to be hitting record highs while mortgage rates still remain at historic lows. But what happens when rates start climbing? How does this affect affordability and equity? Check out the chart below that I put together a couple of months ago.
The following illustration demonstrates what a mortgage interest rate increase of just 1% can mean for the housing market. Single family housing statistics for June 2017 in San Fernando Valley showed a median listing price of $800,000. The illustration uses the same income, 20% down payment and debt ratios with variable mortgage interest rates.

As you can see higher interest rates directly affects lower buying power/affordability. Although prices have been climbing overall sales have been decreasing. A couple of factors are in play here; one is a lack of inventory and the other is affordability. 
In April of 2016 interest rates hovered around 3.64%. In April 2017 interest rates averaged 4.25% after a Fed rate increase in March 2017.  Rates have been a bit volatile during the last couple of months even after the Feds slightly increased rates in June. They have signaled that there will be more increases this year, perhaps as early as September.
Although the Great Recession is officially over, according to Pew Research in 2015, Americans are still 40% poorer today than they were in 2007, the year before the global financial crisis.
So, what does all this mean for you? Well if you are a prospective home buyer and can afford a down payment and qualify for a loan now may be the time to act while rates remain relatively low. If you are a prospective home seller and are considering moving in the next couple of years this may be the time for you to sell.
While I’m sure we all wish we had a crystal ball no one can accurately predict what will happen in the future. There is an old adage in real estate that says; timing is everything.  But not many of us can predict the top of the market or the bottom of the market. 

Tuesday, January 26, 2016

Making Buyers Comfortable

The Proper Home Seller Etiquette
Daily Real Estate News | Tuesday, January 26, 2016 

What unwritten etiquette rules should home sellers follow to show their home to potential buyers?® recently highlighted a few of these must-follow etiquette tips.

Don’t stay for showings. Home owners who lurk during an open house or showing can unnerve buyers. “Buyers don’t feel as comfortable when the owner is at the home watching their every move, Get out of their way so that they can start to picture themselves living there instead of being spied on.” If there are unique features of the home you may want to point them out and then leave.

Keep your car out of the way. “Make it easy for visitors to park and view the home,” Kensington notes. “No one likes parking issues. Having them is a sure way to get a viewing off to a bad start.” 

Take the pets with you when you go. Not everyone likes pets. What’s more, some home buyers will have allergies and your pet could make them sick. “Imagine, as a buyer, having the background music set to ‘barking dog’ while you are trying to take in the home’s nuances that you, as the seller, have worked so hard to hone,” A potential home buyer may be frightened of animals which could prove to be very distracting and leaving a poor impression.

Have some refreshments available. “Putting out a few small bottled waters in a small bowl of ice is always appreciated, along with some light, easy grab-and-go sort of refreshments like mints or cookies,” 

Don’t be stubborn. Sellers who are unwilling to negotiate will likely see their home linger on the market. “Focusing on your bottom line is always important, but greed can lead to disaster,” Remember; you can’t go broke making a profit.

Consider This

Dos and don'ts of home selling
By: By Dian Hymer

An energetic real estate agent can have your home on the market in a day. However, to provide the kind of marketing exposure you need to sell in today's market takes a little longer, unless your home is photo-ready when you list.
Ideally, you should start planning for your home sale months before you want your home to be on the market. First, find an agent to represent you. Then, create a game plan together for the premarketing phase of the process.
Use your agent as a resource. Walk through your home with your agent to get feedback on work, decluttering, and rearranging that needs to be done before the house is photographed for advertising and shown to prospective buyers. If your agent doesn't have a good eye for design, ask for a recommendation of a staging decorator.
HOUSE HUNTING TIP: Preferably, your home should not be submitted to the multiple listing service (MLS) or home-sale Internet sites without photos. Studies have shown that many buyers don't consider a listing that doesn't have photos.
Some sellers have presale inspections done to find out if repairs should be made before the property goes on the market. This wasn't as important several years ago when buyers were enthusiastic about the prospect of making money in the residential real estate market. Now buyers are much more cautious, and property condition is a critical variable. One seller did a beautiful job fixing up her house for sale. She ordered a termite report and had some of the work done. But she didn't hire a home inspector to inspect the house. The interior was top-notch. In fact, more money was spent on this than was necessary. The listing agent was hired after the work had been done so the seller didn't benefit from the agent's advice about how much to spend and on what. The house sold with multiple offers. However, the buyer's home inspection report revealed that the house needed a new foundation. Fortunately, there was a backup buyer. But, the price was negotiated down significantly. In hindsight, it would have been better to have fixed the foundation and done a less expensive redo of the interior.
[Another] couple sold a similar home. They worked with their agent for months before the house was marketed. They did presale inspections and got estimates for painting, staging, and furnace replacement, making necessary structural modifications and fixing miscellaneous defects referenced in the termite report. Then, they prioritized, with input from their agent, and had the most critical repairs and enhancements done before the listing hit the MLS. There was no renegotiation necessary with the buyers after they completed their inspections.
Make sure buyers receive copies of proposals and paid invoices for work you did to your home so they know which items in your presale inspection reports have been repaired. Another couple, who plan to move in a few years, decided to get their home ready to sell now. They put in a new master bathroom, refinished floors and plan to replace a dry-rotted deck. They will enjoy the improvements for the remaining years they stay in the house. Most sellers wait until the last minute to get their house ready for sale. It can be very stressful trying to get all the work done in a short time frame.
Doing work gradually over time is a saner approach. Sadly, most homes never look as good as they do when they're sold.
THE CLOSING: Now is a good time to have work done. A lot of contractors are looking for work. You might receive more competitive bids and be able to have the work done when you want.
Dian Hymer is a nationally syndicated real estate columnist

Friday, November 13, 2015

You have to see this elegant West Hollywood condo located in a fantastic  walking neighborhood convenient to restaurants, shopping, theaters, Kings Rd. park. This unit is priced under current market comps.Owner has relocated and wants a quick sale. There will be an Open House this Sunday, November 15th from 1- 4pm.

Friday, July 17, 2015

More Than Half of Homes Sold at a Discount

More Than Half of Homes Sold at a Discount

Prices may be on the rise, but about 63 percent of homes sold at a discount compared to the list price in May, according to the 2015 REALTORS® Confidence Index Survey. The discount averaged in the 1 to 11 percent range.
Read more: REALTORS® Stay Upbeat in Market Outlook
The longer a property lingers on the market, it becomes more likely the home will end up selling at a discount. Eighty-four percent of homes that sold after 12 months were sold at a discount. On the other hand, 24 percent of homes that sold within a month sold at a premium.
Staging a home may help a listing to fetch more, according to the National Association of REALTORS®' 2015 Profile of Home Staging. The survey found that 32 percent of buyers' agents say that staged homes increases the dollar value a home buyer is willing to offer by one to five percent.
Source: "Despite Rising Prices, 63 Percent of Properties Sold at Discount in May 2015," National Association of REALTORS® Economists' Outlook blog (July 13, 2015)

More Owners Fall Into an Equity Sweet Spot

More Owners Fall Into an Equity Sweet Spot

As home prices rise, home owners equity is growing at the fastest quarterly rate since 2013, according to the National Association of REALTORS® Economists’ Outlook blog. The total value of household equity has bloomed to $11.7 trillion – $5.6 trillion higher than it was at the bottom of the housing crisis. This equates to about $63,000 per property, according to NAR.
Read more: NAR's Inside Look at the Home Equity Picture
Home owner equity peaked in 2005 when the value of U.S. homes (measured in market value less debt) soared to $13.1 trillion. But the financial crisis caused millions of home owners to see their equity slip away as home values plunged. This meant that, even with falling rates, many could not refinance and others couldn’t sell without bringing cash to closing. As such, home owners stayed put or were forced to face a short sale or foreclosure.
Between 2011 and 2014, the home owner equity picture has gradually changed. Home equity levels may likely return to 2005 levels by the end of this year or mid-2016. With more equity, home owners will have better options, such as the ability to sell or even take out home equity lines of credit by borrowing against their homes. The improvement in home equity is also leading to fewer foreclosure starts.
Source: “Returning Equity Boosts Real Estate Markets,” RealtyTrac (July 9, 2015) and “Home Owner Equity as a Share of the Value of Real Estate Could Normalize Within the Year,” National Association of REALTORS® Economists’ Outlook blog (June 18, 2015)