The Marriage of Weddings and Real Estate...

 Many couples about to tie the knot are doing a different type of wedding registry nowadays, one that allows them to collect cash for a down payment on a home, according to a recent article in The Washington Times.

Dana Ostomel, founder of Deposit a Gift in New York City, says that about 15 % of their registries are to raise down-payment funds for a home and another 15 % are for home-improvement funds to pay for upgrades like a new roof or furniture. "Given that 75 % of today’s engaged couples already live together and are older, very often they are already established with the household basics that you find on a traditional registry," Ostomel said. "What they want is the gift of big-ticket items and longer term goals, like the gift of home ownership.”

The FHA permits gifts from a wedding to be used as a down payment, but lenders are required to document that the funds are gifts. About 27 % of first-time home buyers use gift money from relatives and friends for a down payment, according to a 2010 National Association of REALTORS® Profile of Home Buyers and Sellers survey. Source: The Washington Times

Francis Rolland

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

1st 10 Months, 2010 and 2011...

Curious to see the evolution of average prices, from one year to the next?
It turns out it is pretty similar.

Here looking at the compared graphs of both the County of San Mateo, and Santa Clara, from one year to the next:

The one thing that appears at this point is a slight decrease in prices of single family residences in the County of Santa Clara. But this happened too at the end of 2010. Overall the curves are fairly similar.

What is also apparent in these graphs is that the average values are higher in the County of San Mateo than in the County of Santa Clara. 
Finally, the end of the year is looking up for the San Mateo County so far.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Real Estate Eye Candy...

The digital edition of the Previews Magazine winter issue has just been released. Click to see some of the most spectacular homes Northern California has to offer.

Francis Rolland

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Bay Area Investors...

Investors: the trend continues in the Bay Area with a lot of buyers investors:

- 17% in the County of Santa Clara,

- 21% in San Mateo County - 27.5% in Solano County
- 25% Contra Costa County.

Over 20% of all purchases are all cash, with no loan involved.

In fact, an interesting phenomenon occurs in some depressed areas:
in some condominium complexes, where over 15% of the units are delinquent, (typical) banks will not lend…  So this leaves only cash buyers as potential buyers of these properties.  Obviously these buyers purchase the units for the long term, hoping that the real estate market will improve enough that the complex will go up in value.  The rents have increased so much in the past 2 years that the return on investment makes it a very viable deal.

An other problem can occur there though: if more than 50% of the units in a complex are non owner-occupied, loan are also almost impossible to obtain - or more expensive.  One of the rules of most lenders is that this important percentage has to be over 50%.  So that would leave future buyers and future homeowners in those complexes with a difficult situation: potential buyers who need a loan may not want to pay the extra fees and rates in order to get these loans.

Do not underestimate the need for good advice when you purchase a condominium.  A seasoned agent is a must, to make sure you are informed.  Here is a good informational page on this "condominium"subject.

Thanks for reading.
Francis

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Silicon Valley: housing inventory

To keep things in perspective, it is good to keep an eye on the inventory of homes for sale at a given point in time.  Here is the inventory of all properties for sale (houses + PUD/condos) both in the whole County of Santa Clara, and in the area limited to the five Cities: Los Altos, Los Altos Hills, Palo Alto, Mountain View, and Menlo Park:

Lower inventory = tendency for prices to be sustained, or rise. 
There are signifcantly fewer properties for sale now than last year.  It is also interesting to note that the luxury market (over $1 million) has fewer homes on the market, which is reflecting the fact that the market has been more active in the past months.

Here in the Bay Area, as noted many times, demand is showing pretty strong fairly consistently.

As agents, we note that open houses are very busy, especially for houses, and certainly all the time for houses in the good school districts. In Palo Alto, multiple offers are the rule, as with all properties priced at market value, in good school districts.

It is worth noting again that about 30% of houses sell for over asking price in the County of Santa Clara.
A lot of them are foreclosures.  - A foreclosure sale does not always mean that it is a fabulous deal, moneywise.

Interested in the same figures for only condominiums for instance? Let me know.
Francis Rolland

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Buy now with 3.5% down payment...

If you have a stable income and if you are paying too much for rent, it can definitely make sense to buy with an FHA loan. 
Many people believe that to even think of becoming a homeowner you must secure a 20% down payment.  This is difficult to do for a lot of aspiring-to-be-homeowners.  But there is another way:

think: " FHA loans ".

FHA facts to keep in mind:

- 3.5% down.  Low down payment - less money out of pocket and 96.5% loan-to-value.

- 100% Gift allowed for down payment and closing costs,

- Any buyer can buy like this, not just first-time home buyers,

- minimum FICO 640,

- Long term financing:  30 year fixed, or adjustable,

- Loan limits up to $625,500, depending on the County,

- Non occupant co-borrowers are ok

- Purchase and "refis" are allowed,

Prior bankruptcies?: yes very possibly.  See the specific rules, but on-time payments allow FHA borrowing fairly quickly afterwards.



  There are some very nice homes that one can buy for less than $500,000 in Santa Clara for instance, and you'd only need ... about $20k.  With an FHA loan you do pay what is called mortgage insurance, a way for the lender to be insured against potential future defaults.  But even with this mortgage insurance, these loans can be pretty attractive when everything is said and done, because banks do not mind doing such loans: they have ... mortgage insurance.  Hence the very attractive rates.

If this gives you food for thoughts, let me know: I can help!  ...or for someone you know, pass it along!.. 

Francis

Silicon Valley Real Estate

Local market trends

useful links

PS:  Mortgage rates: Week ending 11/3/2011

- 30-yr. fixed: 4.0 fees/points: 0.7%

- 15-yr. fixed: 3.31 fees/points: 0.7%

- 1-yr. adjustable: 2.88% Fees/points: 0.6%
(Source: Freddie Mac)

Who does not cringe at rejection?..

Triggers for rejection. - Loan rejection that is.

Last year, more than two million people were turned down for homes, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more rigorous in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection.

• Insufficient income: well, this is straightforward… But also, lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.

• Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.

• Poor credit: Lenders typically reject applicants with FICO scores below 620.

• Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low. If this is the case, the bank will often loan less, which can create a problem for the cash-tight buyers.

• Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.

• Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

The full story can be accessed here.

If you need any lender referrals, don't hesitate to contact me. When you buy a home or refinance, you rely a lot on your loan agent.
Thanks for reading!...
Francis

Silicon Valley Real Estate

Local market trends

frolland.com

PS:  Mortgage rates: Week ending 10/27/2011
- 30-yr. fixed: 4.11 fees/points: 0.8%
- 15-yr. fixed: 3.38 fees/points: 0.8%-
- 1-yr. adjustable: 2.94% Fees/points: 0.6%
(Source: Freddie Mac)

Refinancing & the Economy .. A Missing Link ...

There is a lot of noise right now about the “occupy wall street” movement. And the economy is giving ulcers to everyone. The world is full of catch 22’s in many important areas. Consider the following situation if you have a second with me, and tell me if this is not illogical:

Someone wants to refinance their property but the value has gone down so much that it is under the value of the loan. The rules of the banks, the way they are right now, are such that the bank will not allow the borrower to refinance the same amount of loan as before (because of the “loan-to-value ratios” rules). How does that make sense? The lender is taking a much bigger risk in most cases by leaving someone obligated to pay a high interest rate that will sink them, when they could pay a lower rate and have a better chance of affording their loan.

The borrower, in front of such an illogical catch 22, decides to stop paying and to go to foreclosure. If you look at my previous blog, it is clear to many analysts that a lot of these borrowers are not inherently a “bad risk”, just because they decided to default on a loan that they cannot change. When these borrowers have only one default on their record, and it is this kind of default, they are often ready to buy something else, at today’s value, with today’s interest rate. It is often cheaper than to rent. But they cannot do it because of their credit history (since they just defaulted on a loan).

The system is blocked. It is thought that many people, if they were allowed to buy a new property, would prefer that option to renting.

  - 1/ the market would be a lot less depressed, as many properties would sell instead of sitting forever,

  - 2/ because more properties would sell, the market values would be more sustained and in many cases would slightly go up. This in turn would help the banks, since the total market value of their distressed properties would be higher.

This blog does not go into judging anyone, or deciding if it would be fair to do this or that. But the difficulty to refinance falls under rules that are counter-intuitive in my opinion.

As I write this I learn that the HARP program (see one of my previous blogs on refinancing) has just been expanded to the end of 2013, and removed the 125% ceiling on “loan-to-value” cap for fixed rate mortgages backed by Fannie Mae and Freddie Mac. More on this PDF from the Federal Housing Finance Agency.  However, I need to underline that it is for mortgages backed by FNMA and Freddie Mac only...

Still, it is estimated that between 1.5 and 2 million people may take advantage of these new rules.  (just heard on NPR).

Couldn't all the banks think in the same manner, for their own ultimate good? And couldn't they waive some qualifying rules on a case-by-case basis? - It would make a lot of "cents" to them in the end.

Thanks for reading,

Francis

Silicon Valley Real Estate

Local market trends

useful links