Wednesday, January 29, 2014

Home Improvements - ROI

How much should you expect to get back on a given home improvement?
 
It turns out that it depends on where you are, as much as the type of improvement you are planning to make.  Below are two infographics - 1 showing projects with not such great returns, and one showing those that have the best returns; these are provided by the California Association of Realtors and therefore are more appropriate for California. 
 
However, my experience is that here in the Bay Area of San Francisco, the returns are better than what would be typical anywhere else in the US.  In fact, this is something that one can verify by going to the "cost vs Value" web site link from this page out of the online Realtor magazine , and looking for instance at the "Pacific zone" and in particular " San Francisco", where the return for a kitchen remodel or a 2nd bath remodel will indeed be in most cases over the cost of the improvement.


(Click on the picture to enlarge)


 
 
As always, thank you so much for reading, and if you like what you read, let your friends know!
 
Francis
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView


Thursday, January 23, 2014

Adjustable-rate mortgages regain popularity as prices, rates rise

Adjustable-rate mortgages are again gaining in popularity despite practically vanishing during the housing bust. Since home prices and interest rates rose last year, more people have turned to adjustable mortgages to keep their monthly payments affordable, with such mortgages offering a lower initial rate. However, careful! - the rate can rise over time with market changes.

Read the article from the LA times by Andrew Khouri.

Also, Households saved just 4.2 percent of the after-tax income in November. The average was close to 6 percent from 2009 until 2011. Wealth gains from existing assets, such as rising home values, may explain why households are saving less, according to this blog from the Wall Street Journal.

Are we back to what I call "aggressive financial living"? Hum, a trend to keep an eye on...

Thanks for reading!
Francis


Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations.

Friday, January 17, 2014

Effect of interest rates on affordability...


December 2013 U.S. Economic and Housing Market Outlook
Freddie Mac released its U.S. Economic and Housing Market Outlook for December showing that housing affordability is being challenged as the year comes to an end.

Highlights from the Freddie Mac Study show that:


  • At a 4.4 percent interest rate for a 30-year fixed-rate mortgage that prevailed in the third quarter of 2013, more than 70 percent of the country remained affordable. All of the North Central region remained affordable, while just 36 percent of the West remained affordable.
  • At a 5 percent rate (and no change in prices/income) approximately 63 percent of the country would be affordable, at 6 percent mortgage rates 55 percent would be affordable, and at 7 percent mortgage rates only 35 percent of the country would be affordable.
  • On the plus side, existing homeowners' housing payment-to-income ratio has fallen to an average of 7.9 percent, its lowest level since 1980, a positive sign for sustainable homeownership.
See an interactive map of housing affordability, depending on interest rates.

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Great local Nonprofit in the Valley:  Community Services Agency.

Friday, January 10, 2014

New Homes Sales vs Interest Rates - opposite direction...

The rise in interest rates may be a challenge for the real estate market in 2014, (although I have to point out: this is nationwide):

  • During 2013, increases in mortgage rates corresponded with declines in home buying, and in light of shifts in the Federal Reserve’s monetary stimulus effort, the trend is expected to continue.
  • When the Fed first announced it would consider scaling back its bond-buying program, mortgage interest rates spiked in May. As a result, the seasonally adjusted annual rate of new home sales dropped by 4 percent from the prior month.
  • In contrast, mortgage rates dropped by three-tenths of a percentage point during October just as new home sales surged 18 percent.
  • In mid-December, the Fed announced that it will begin tapering its asset purchase program, but the Fed is only reducing its monthly buys of mortgage securities and Treasuries by just $10 billion.
-  If mortgage interest rates increase a little, some analysts have stressed that any such rate increases will see the recovery slow rather than reverse.
  • The interest rate on U.S. Treasury notes is also increasing, which could signal higher interest rates ahead because it is used as a reference point for the cost of borrowed money for U.S. consumers and businesses.

See the corresponding graphs on this page of the Wall Street Journal.

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations.

Friday, January 3, 2014

To keep in perspective: Sales Price Graphs 2012-2013

To piggy back on my last blog, let's look at values in our part of the Bay Area of San Francisco (Silicon Valley).

To keep some perspective on the market in our counties, let's look at the graphs (past 2 years) of the average sales price for residential housing (houses, and PUD's combined, which include all townhouses and condominiums),
in the County of Santa Clara first:

(click on the graph to enlarge)
 For this County, the ratio of the Sales Price to the List Price follows the curve below, which shows that from March to May of 2013, the market was the most heated:
 
------------------

Looking at the County of San Mateo, for the same statistics:
 ... and the ratio of Sales Price to List Price, which shows that in that County the market remained even more heated and unbalanced than in the County of Santa Clara, for the 2nd half of 2013.
 
 A few things to note: 
- another thing to remember when looking for a home in both Counties is that as an average, prices are higher in San Mateo County than in Santa Clara County;
- the overbidding was just starting to warm up in 2012;
- finally, something that is noticeable from the stats is that prices did not go down much at the end of each year, from the highs of the middle of the year.  This is somewhat of a new phenomenon that I had mentioned in an earlier blog (last year in November).
 
Interested in local statistics for your own neighborhood, and the value of your assets?  Just let me know, I'll be glad to study it.
 
Thanks for reading!
Francis
 
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

To keep in perspective: California families struggle...

To keep things in perspective, which is always nice when you live in the Bay Area of San Francisco, I thought this article was worth reading.


According to the California Budget Project, a nonpartisan research group, many California families are struggling from paycheck to paycheck, and expensive housing, high childcare costs and rising healthcare expenses are the main factors.

Nearly one-third of households in the state spent at least half their income on rent.
Full article from the LA times, which also includes links to the richest and poorest cities in the US.  Source: LA Times - by Shan Li.

Happy New Year! and thank you for reading,
Francis
 
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates