Voters place high value on homeownership !

Voters place high value on homeownership.

By an overwhelming margin, American voters strongly value homeownership and would oppose efforts to weaken or eliminate the mortgage interest deduction or diminish a federal role to help qualified home buyers obtain affordable 30-year mortgages, according to a national survey conducted on behalf of the National Association of Home Builders. The survey gauged voters’ attitudes towards homeownership and housing policy issues.
The poll shows that three out of four voters – both owners and renters -- believe it is appropriate and reasonable for the federal government to provide tax incentives to promote homeownership. This sentiment cuts across regional and party line.

Highlights of the survey include:
Two-thirds of respondents say that the federal government should help home buyers to afford a long-term or 30-year, fixed-rate mortgage.

Nearly 75 percent of voters oppose eliminating the mortgage interest deduction.

Sixty-eight percent would be less likely to vote for a congressional candidate who proposed to abolish the deduction.

Ninety-six percent of homeowners are happy with their decision to own, and 84 percent who are “underwater” expressed the same sentiment.

Job uncertainty and saving for a downpayment and closing costs are the biggest barriers to buying a home.

More info on this article from the National Association of Home Builders.

Thanks for reading !
Francis

Silicon Valley Real Estate

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Housing Taxed to Pay for Extension of Benefits...

Housing Taxed to Pay for Extension of Benefits  .. things that go under the radar if you don't pay attention ...

The law signed by President Obama two weeks ago to extend the payroll tax cut and maintain Medicare payments and unemployment benefits uses increases in the fees charged by Fannie Mae and Freddie Mac to guarantee mortgages to help offset its costs. The law also uses funds from premiums charged for insurance on FHA loans. As a result, the Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to increase their guarantee fees effective April 1 and will remain in effect through September 30, 2021.

The National Association of REALTORS® (NAR) opposed the increase in fees to pay for non-housing-related purposes. Lenders who choose to pass this increase on to borrowers will likely increase the rate offered to a borrower by .1 percent sometime before April 1. Analysts estimate the increase in cost over 30 years to be between $4,000 and $5,400 on a $200,000 loan, or $11-15 per month.

Well, it's always better to be informed..

Francis

Silicon Valley Real Estate

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Refinance Program for Underwater Borrowers - more info...

To add more info to one of my previous blogs ( "Refinancing problems? Here is a suggestion" ) on the refinancing options for people owing more than the value of their home, I'd like to reproduce the information I just received from Joan Fischer from First American Home Buyers Protection (a home protection plan company), which originates from DSNews.com (Authors: Krista Franks and Carrie Bay).
A little long, but of great interest for some people.

Francis

Rental market is tight here in the Silicon Valley

I have been exposed to the rental market recently through 2 properties that I have put on the market for rent locally, one in Palo Alto, and one in Redwood City.  (Not all agents deal with rentals BTW...).

I have experienced first hand what has been known for a while now: that the rental market is difficult in the Bay Area (for renters), and prices have gone up since last year - if I had to guess I would say by about 10% easily.  In each instance these properties had several applications within a few days of being on MLS.

Several reasons can explain this increase:
- a better economic outlook in the Valley, leading more people to come here than people leaving the area, (which, incidentally, is also tied to registration in some schools such as the French-American schools and the German-American schools of the Bay)

- a significant number of people loosing their home (i.e. short sales and foreclosures) who find themselves renters suddenly,
- a relative lack of new construction - although there are some new projects being built around which will  somewhat address this penury.

Although this is true in general nationwide, it is more accute in Cities like San Jose, as described in this recently published article in the Business Journal, which goes over a few of these figures and facts.

Thanks for reading !
Francis

Silicon Valley Real Estate

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Appraisal problems in the real estate world ..

Appraisals have always been a large part of the normal real estate transaction: 

while a sales price is negotiated between the seller and the buyer, the bank has its say: they will lend to the buyer a percentage of the lower of the two figures: negotiated sales price, or appraised value. 

If they do not think that the property is worth the negotiated price, they will lend less.  But the thing is that real estate is not an exact science, and if you have 2 appraisals done on a property by two different appraisers, they will come up with 2 different values. With the crisis the way it has unfolded, appraisals have become very stringent, very conservative.  Let's just say that the banks are a lot more careful with how they lend money.

It is apparently a big problems for builders too:

one out of three builders reported losing signed sales contracts during the preceding six months because appraisals on their homes were less than the contract sales price, according to a survey by the National Association of Home Builders (NAHB).

Builders claim that due to faulty appraisal practices, brand new homes with upgrades get compared to distressed properties that have been sitting vacant and in disrepair. The result, in many cases, has been that the new house gets appraised at less than the cost of construction.

According to the NAHB survey, 60 % of respondents reported they were experiencing appraisals coming in below their contract sales price. Of those reporting that they had encountered this problem, 53 % said the appraisal amount was actually less than the cost of building the home.

This has some very real consequences:

In normal times, housing accounts for more than 17 % of the nation’s GDP. Constructing 100 new homes generates more than 300 full-time jobs and $8.9 million in local, state and federal tax revenue that supports local schools and communities across the land.

More than half of the single-family builders and developers surveyed by NAHB indicated they had decided to put any new construction or land activity on hold until the financing climate improves.

One last word to buyers and sellers alike: unless the property sold is very desirable, and the buyer does not need a loan, this appraisal question may influence the outcome of the real estate transaction.

Francis Rolland

Silicon Valley Real Estate

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Foreclosure Evictions Temporarily Suspended

Foreclosure Evictions Temporarily Suspended

Both Freddie Mac and Fannie Mae are temporarily suspending all scheduled evictions involving foreclosed occupied single-family 1- to 4- unit residences with owned mortgages beginning December 19, 2011 through January 2, 2012.

The suspension will apply only to eviction lockouts related to Freddie Ma and Fannie Mae owned REO properties and will not affect other pre- or post-foreclosure processes. During this period, legal and administrative proceedings for evictions may continue, but families living in foreclosed properties will be permitted to remain in the home.

Francis

Silicon Valley Real Estate

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Silicon Valley Counties: real estate activity

To keep in perspective: a lot is being said in the press about real estate in the Bay Area, including a lot of foreclosures and short sales happening all the time. But really, when you add all properties combined, (houses and condominiums, townhouses, PUD’s etc…), what really happened to the market in our area in the past 3 years? I think simple graphs can help us understand how we fare here in the Silicon Valley. In the Counties of San Mateo & Santa Clara, let us look at a simple measure: the average sales price:
 

Individual Cities can be very different. For instance Palo Alto has the following history in the same 3 years, showing here in blue the average time to sell a home:

the variations in sales prices are not as steep as the averages in the County.

Let me know and I will prepare a study of your own City/ neighborhood.
Thanks for reading !
Francis

Silicon Valley Real Estate

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On the local political front, a little note on Sunnyvale...

The Silicon Valley Association of Realtors (SILVAR) Opposes Sunnyvale Plan to Regulate Real Estate Transactions

As part of the development of Sunnyvale's Climate Action Plan, the city is considering prohibiting the sale of property until an energy and water efficiency inspection is completed for owner occupied homes and energy efficiency retrofits are made to commercial property. The proposals were discussed as part of a city council study session this week.

SILVAR opposes this proposal because of the detrimental impact it will have on property owners and the ability to close transactions in Sunnyvale. Also, because the mandates would only impact properties at the time of sale, it would take decades before it would impact a significant amount of the housing stock.

SILVAR presented written testimony in opposition to the proposed mandate to the council, and SILVAR Past President Mark Burns had previously spoken at a meeting and asked the council to remove the recommendation from the draft report.

None of the council members spoke in favor of keeping the time of sale mandate in the draft. Council Member Chris Moylan made a strong statement in opposition to the recommendation. The draft climate action plan will be out for public comment and review over the next several months, so stay tuned for updates.
Thanks for reading.
Francis

Silicon Valley Real Estate

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