Financial Tips for Homebuyers & Prospective Homebuyers.

A colleague on the other side of the Land shared this information with me, and I thought there was a lot of good info there:


Financial Tips for Homebuyers & Prospective Homebuyers.

On June 2nd, on her radio program, “Eye on Real Estate with Dottie Herman”, Dottie Herman, CEO of Prudential Douglas Elliman, one of New York’s premiere residential brokerages, featured guest Eric Tyson, a personal finance expert, an economist and a bestselling author.

During the interview, Dottie asked Eric if there were some key financial tips (from Eric’s books) that will help you, whether you are thinking about purchasing a home or if you have already bought your home.

FOR THE PROSPECTIVE BUYER

• Your Personal Circumstances – nobody knows your situation better than you do. You know what loans you have to pay back, what it will cost to put your kids through school, to care for elderly parents, etc.

• The Affordability – this is a great time to buy a home but you must take an honest and serious look at your overall financial situation to figure out how much you can realistically afford to spend. Use a worksheet to help you make your decision.

• YOUR Comfort Level – What will you be comfortable with (be realistic)? Your decision making process should be as stress free as possible.

• Research – Do your research. You may or may not need to use all of them, but you can use an expert, who is effective and up to date on all the latest changes in the law - real estate agent, mortgage broker, a real estate attorney (to check the documents), an insurance agent and a financial planner (to assist you plan financially). Be responsible. “Learn enough so that you can evaluate these people and make “a good hiring decision”.

• Mortgage Insurance –Buy a classic life insurance policy as opposed to buying a mortgage insurance policy, recommends Tyson. “The life insurance decision comes down to how many years worth of your income are you trying to replace?”

• “Take Time to Smell the Roses” - Tyson mentions this in reference to Buyer’s Remorse. This is probably the biggest decision that you will make in your lifetime. “It is extremely important to buy something within your comfort level and to practice self – preservation in the process”.

FOR THE HOMEOWNER

Congratulations on taking that giant step to purchasing your own home. Now that you've signed on the "dotted line" and it's a done deal, the handholding is over even though you may still need a little guidance.

• Beware of Solicitors - they want to offer solutions by attempting to sell add on services and products.

• Effective Financial Planner – should do just what the title indicates, help you plan your financials for the coming years

• Electronic Payments – late payments, missing payments, can be quite detrimental to your credit score and can affect future interest rates. Tyson said that he is wary of this but electronic payments are the way to go. “Clearly, automated payments ensure that they are going to be sent on time.”

• Home Receipts – Hang on to ALL of your homeowners documents. Always put them in a place that is easy for you to remember. This is especially helpful for long time homeowners who live in a ‘high cost area’ like New York to “minimize the capital gains tax, should you sell for a profit”.

• Set Aside Cash – Or as the elders used to say “a rainy day fund”. Is there a standard rule of thumb for emergency funds? How much is enough? Tyson stated, “the minimum you want to set aside is 3 months of living expenses. “ If things are more volatile, you should consider at least 6 months worth of living expenses”.

• Tax Assessment – Pay attention to your property taxes, especially if you live in an area where taxes are reassessed periodically and your home value is based on current market values. You can protest your property taxes, “sometimes local towns and municipalities get it wrong”.

• Refinancing – With interest rates so low, people are asking should they refinance. Historically, the motivation to refinance was due to the ability to save money. Refinancing is “a situation that is complicated by all the financing options available”. What you need to determine is 1) is this a worthwhile trade-off? and 2) how many years will it take me to recoup the financing cost (refinancing always cost you money)?


These are just a few helpful tips to help make you aware of what you need to know about buying a home and after you have bought your home.

Eric Tyson worked as a financial advisor in the 1990s, assisting large Fortune 500 companies. Two of Eric’s five national best sellers are “Personal Finance for Dummies” and “Investing for Dummies”. He is the only person to have four out of those five books published simultaneously on Business Week’s book bestseller list.

I hope some of these tips may be of help to you at some point,
Thanks,
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Luxury Market - Silicon Valley - an update...

Silicon Valley’s Luxury Home Sales Soar Again in May

Posted on June 20, 2012  - from our Coldwell Banker posts.
Silicon Valley’s luxury housing market turned in another stellar month in May as high-end property sales soared from the previous month and year-ago levels, according to a new report by Coldwell Banker Residential Brokerage.

A total of 148 homes sold for more than $1.5 million in May, up a whopping 59 percent from May 2011, when 93 high-end properties changed hands. Last month’s sales were also nearly 16 percent higher than April’s total. May had the most monthly sales since last November.

The upper end of the luxury market also turned in an extremely strong performance in May with 57 sales above $2 million compared to 42 a year ago, and 14 transactions over $3 million, nearly double the eight sales at that price range last year.

The median sale price for a luxury home was essentially flat from a year ago, measuring $1,887,500 last month and $1.9 million in May 2011.

The figures were derived from Multiple Listing Service data of all homes that sold for more than $1.5 million last month in Santa Clara County.

“Silicon Valley is showing all of the signs of a classic seller’s market with strong buyer demand, a severe shortage of home listings to choose from, and multiple offers on many properties,” said Rick Turley, president of Coldwell Banker Residential Brokerage. “With inventory levels remaining near record lows, I suspect we’ll continue to see this scenario play out, at least for the near term.”

In many areas of the South Bay, inventory is down 30-50 percent from just a year ago, leaving the scales of supply and demand tipped heavily in favor of sellers. Multiple offers are becoming the norm in a number of communities and homes are often selling for more than the asking price – sometimes much more.

Some key findings from this month’s Coldwell Banker Residential Brokerage luxury report:

■The most expensive sale in Silicon Valley last month was a six-bedroom, seven-bath 4,500-square-foot home in Palo Alto that sold for $5,098,000;
■Palo Alto and Los Altos tied for the most luxury sales with 40 apiece, followed by Saratoga with 23, and San Jose and Los Gatos with 15 each;
■Homes sold in an average of 36 days compared to 41 days a year ago and 35 days the previous month;
■Sellers on average received 103 percent of their asking price compared to 101 percent the previous month and 99 percent a year ago.

The Silicon Valley Luxury Housing Market Report is a monthly report by Coldwell Banker Residential Brokerage, a specialist in high-end real estate sales. Through its internationally renowned Coldwell Banker Previews® program, the company is recognized around the world for its expertise in the luxury housing market.

Thanks for reading!
Francis
http://www.frolland.com/

What's going on downtown Los Altos?

People ask me all the time what is going on downtown Los Altos, as it seems the whole town has been a work in progress since last year.
The City started redoing the corners of the downtown streets at the end of last year, 2011, but there are a lot more things that were started then.

I thought I would show something published by the Town Crier about a year ago, which I find myself copying often and sending to the curious inquirers  - ok, this is not recent, but still gives a better idea to the occasional visitor ;-)    Please see below:

and:

Kind regards,
Francis

Useful links

... More Perspective on the Market - Silicon Valley...

Following up on my previous blog of last year, entitled "Some Perspective on the Silicon Valley Market", I updated the graphs for this year for both the County of Santa Clara and the County of San Mateo, to reflect again pretty much the same story of rising prices as the year advances.

The comparison between last year and this year is also fairly similar, in that prices are slightly higher this year than last year, as an average.

When looking at some specific Cities though we do know that some areas are much higher this year than last year.  This will be coming in my next blog(s).

This set of figures begs for the question: "what's the story of: both houses and condominiums, combined"?
This is shown below:

... not very different, in fact.

Curious about your area?  Do let me know and I will study it for you.
Thank you,
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Local Housing: Quarterly Prices: a perspective...

Here is a graph that I update regularly for the Cities around here:
Quarterly prices of houses since 2007 in the Valley:

Although we have to be careful with any statistical figures, one can definitely see a trend for the Cities of Los Altos and Palo Alto.
The average price of homes in a given area can be influenced by several factors: just because the graph points upwards, it does not necessarily mean that prices are going up. Instead, you could have just a few large and very expensive homes raising the average in a tight market where few homes have sold.
Conversely, you could have a lot of entry-level houses sold and fewer more expensive ones, which would keep the average price low, even though you may have an actual up-market.

However, in this case these graphs confirm what we have been seeing in the past few months: a large demand, not satisfied by enough inventory, resulting in a sharp rise in housing prices.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Community Services Agency - worthy of interest...

A roof over your head...

There are several types of roof that you can have over your head, -hopefully you only need one ;-)

Cost and durability are not the same of course.

- The most typical type of roof might be the “composition shingle” roof. It is a combination of thick tar-paper-like material, and something that looks like rough sand on top of it. The sand/stone material that covers it is in fact to protect the material itself from sunlight. If not protected, the material would age a lot faster. New materials make these roofs attractive, with various duration spans – 25, 35 and 45 year materials.

- Wood shake, with wood shingles of various thickness. This type of roof is not allowed any longer in some Counties because of the heightened fire risk. These roofs are more expensive than the former and can last up to 50 years; they are considered more attractive because of “natural” materials – wood.

- Another very typical type of roof, for Eichler homes for instance and houses that have flat roofs: “tar and gravel”, which as the name indicates, is made of a thick tar paper layered in such a way as to make a water proof protective barrier on top of the roof. The tar is melted when the layers are put down, and at the edges. There again there is gravel on top of the roof, not to make it more attractive, but mainly to protect the tar paper. This is a fragile roof, as cracks develop easily with hot/cold variations and the aging of tar. But they are economic.  Needless to say that all these roofs have to be installed by good professionals...

- Along the same lines, (mostly seen on Eichlers), there is another type of roof that is very prized (and more expensive): the foam roof. There, special foam is layed / blown over the roof with elaborate machines, and a protective layer is put on top of it. It makes for a great roof insulation on these otherwise lightly built houses. The coating has to be renewed every 5 years or so, there again to protect from the UV and harsh solar treatment. That type of roof is more expensive.

- Clay tiles and concrete. Do you picture these Italian roofs, redish in color and so stylish? Clay tiles last a long time (50 to 100 years) and can be fragile.

- Metal roof: in the various forms of tiles, or panels. They are quite expensive especially if you go to copper. This will last also between 50 to 100 years. Beware of the rain noise on it though…

- Slate: do you picture one of those old European houses, with slate roofs that last for a century or two? The slates can be thick on some of those, and heavy. This type of roof on modern houses is elegant and durable (and thiner), .. and expensive too…

- Dirt. Yes, dirt, with plants on top of the house. Energy efficient and green. Mostly on flat roofs. You need to make sure that under that dirt, there is a good waterproof membrane to cover the roof of the house.

- Solar shingles. New materials are being created that enable to incorporate some shingles that create electricity (solar panels) with other shingles. Some of those can be seen on the roofs of the new houses at the Enclave in Mountain View, on Levin. Are these the roofs of the future of Earth? It is an elegant concept.

- Tin. as in tin roof in shanty towns...  Many, many people on earth only have a cheap layer of metal above their heads as a roof.  .. as a thought here, just to remember to appreciate what we have...  This being said, metal roofs (under which category "tin roof" falls) can be made of many different types of metal, like tin, or aluminum, or galvanized steel, and they can last a long time if well installed.

Here is an example where you can see 3 types of roofs together: tin, wood shakes, and slates:

Let me know if you need a few names of professional roofers around here.

Thanks for reading!

Francis

Silicon Valley Real Estate

Local market trends

useful links

Our Brother's Home - a non-profit organization worthy of interest.

Will you want some cash with that ?...

Freddie Mac reported this week that 79 % of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table in the first quarter of 2012.

Of these borrowers, 58 percent maintained about the same loan amount, and 21 percent of refinancing homeowners reduced their principal balance; the share of borrowers that kept about the same loan amount was the highest in the 26-year history of the analysis.

“Cash-out" borrowers, those who increased their loan balance by at least 5%, represented 21% of all refinance loans; the weighted average cash-out share during the 1985 to 2008 period was 50 percent.

The median interest rate reduction for a 30-year fixed-rate mortgage was about

1.5 % points, or a savings of about 27 % in interest rate, the largest percent reduction recorded in the 27 years of analysis. Over the first year of the refinance loan life, the median borrower will save about $2,900 in interest payments on a $200,000 loan.

More info on this Freddie Mac article.

Francis Rolland

Silicon Valley Real Estate

Local market trends

Francis - on Trulia

Current Mortgage rates

Some perspective on the market...

Finally, after a long waiting, CAR - the California Association of Realtors - released the figures that enable me to make my yearly update of the following graphs.

One set of figures is missing as the information is compiled in a different way: the median price for the Bay Area (comprised of the nine Counties around the Bay Area).

Still, interesting to have some perspective on prices over such a long period of time....

Thanks for reading,
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates