Moving in with parents - more common for the middle-aged.

Due to the effects of the sluggish economy, older people are quietly moving in with their parents at twice the rate of their younger counterparts. The number of Californians aged 50 to 64 who live in their parents' homes swelled 67.6 percent to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.
Readthe article from the LA times   From Walter Hamilton (April 2014).

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Francis

Silicon Valley real estate
Smart local statistics

All cash buyers... some perspective

It is quite well known that a lot of residential purchases in the US are now made without a loan, all cash.
But what is the real story, in fact? 

Overall, all-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, according to a new report from RealtyTrac, a company that collects and analyzes housing data.   Several factors are at play here, including the fact that institutional investors, more numerous, have bought up many homes with cash, and that many average buyers have remained constrained by unusually tight lending standards.

A few facts, from the January article of “PlanetMoney” (shared in a blog from NPR):

• All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from a revised 38.1 percent in November, and up from 18.0 percent in December 2012.
• States where all-cash sales accounted for more than 50 percent of all residential sales in December included Florida (62.5 percent), Wisconsin (59.8 percent), Alabama (55.7 percent), South Carolina (51.3 percent), and Georgia (51.3 percent).  - so, it's not only California... 
• For all of 2013, 29.1 percent of U.S. residential sales were all-cash purchases, but the percentage
  
  trended substantially higher in the second half of the year. The 29.1 percent in 2013 was up from 19.4 percent in 2012 and 20.6 percent in 2011.
• Institutional investor purchases accounted for 7.9 percent of all U.S. residential sales in December, up from 7.2 percent the previous month and up from 7.8 percent in December 2012.
• For all of 2013, institutional investor purchases accounted for 7.3 percent of all U.S. residential property purchases, up from 5.8 percent in 2012 and 5.1 percent in 2011.

Thanks for reading!

Francis
Silicon Valley real estate
Local market: Smart graphs

Local real estate - some perspective.

Here is a simple summary of what real estate did lately, and in the past few years, in the Counties of the Bay Area of San Francisco.  Coming directly from the MLS (Multiple Listing Service):

Francis Rolland

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Five advantages to owning a home...

To piggy-back on my last blog, I thought this blog post from Redfin  from April 21, 2014 was interesting.  It says it very well.

Five advantages to owning a home:

Your home is your castle, but there are also many financial advantages of owning a home. Here are five ways that owning can be better than renting.

1. As a Hedge Against Inflation
Your rent will go up on a regular basis, while your payment on a 30-year fixed mortgage will always remain the same.

Let’s say your monthly rent is $1,800. Assuming inflation (your rent increase) is 3 percent, in five years your monthly rent will be $2,026. By then, you will have paid about $115,000 of your landlord’s mortgage.

2. To Build Your Personal Wealth
Stop paying your landlord’s mortgage. When you own your home, your mortgage amount is going down and your property value is going up.

No other investment, asset or debt is as misunderstood as a home. A home can be a wonderful and lucrative investment, but like any investment, it needs to be regularly reviewed, maintained and, when appropriate, sold. Even if your home is paid off, you still pay costs for repairs and upkeep, taxes and insurance. But like any investment, if you own it long term, take care of it and sell when the market is right, you stand to make a great gain.

3. Tax Savings (Federal and State)
Under Section 163 of the IRS code, interest on loans used to acquire, construct or improve real estate is deductible on up to a $1,000,000 mortgage.

Interest on loans tied to real estate for any reason is deductible on up to a $100,000 mortgage. For example, interest on the first $100,000 of a home equity line of credit (HELOC) is tax deductible.

Let’s say you make $100,000 per year and rent a home for $1,800 per month. You would have to pay taxes on your entire income of $100,000 when you are renting that home. If you purchase a home with a monthly payment of $1,800, you only have to pay taxes on $78,400 of your annual income because the interest you paid on your mortgage can be used as a tax deduction.

4. Asset Diversification
Unlike with a 401(k) or IRA, when you invest in a home you can live in it while the investment grows.

Owning a home over an extended period of time is usually more lucrative than renting. With good planning and execution, you can learn to minimize the cost of homeownership and maximize the ability to create real wealth. Many small business owners have a home office and can use the home office as a tax deduction while they are earning income. Other homeowners will rent out a bedroom and use the rent to pay down their mortgage and gain equity faster.

5. Forced Savings
Monthly mortgage payments lower your mortgage, essentially creating a forced savings account.

In five years with a $1,800 monthly mortgage payment, you will have paid $29,331 of the principal on your mortgage. That would be money in your pocket if you choose to sell. For this example we use a $345,000 mortgage loan amount at a 4.75 percent interest rate, 4.881 percent APR and use a standard amortization table to come up with the principal pay down.

To: view the original article.  

Thank you 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

Some advice to home buyers.

Some advice to home buyers:

 
There is plenty of advice around, available to new homebuyers, - no shortage of good words, must-do's, encouragements, explanations and training, etc...  I do not mean to be comprehensive in this blog, but I just wanted to say a few things coming to mind, in light of what is going on out there: the current local market, fast-going environment, competitive to the extreme, sometimes ruthless.


Taking a bit of perspective, I just wanted to throw some ideas out there and remind of some basic main ideas:

• Home buying doesn’t begin with home searching; it begins with a mortgage pre-approval.  Often, first-time home buyers fear getting pre-approved because they’re
  
  afraid the lender may tell them they do not qualify for a mortgage or they qualify for a loan smaller than expected.  However, by getting preapproved, buyers will make a financial decision rather than an emotion one.  Also, knowing that they can qualify for a certain loan (depending on the terms of the loan), they will feel more confident in their endeavor, as they will be sure of what they can really buy (in $), as they are looking at homes.
• Home buyers need to think of a house as a long-term commitment.  If a buyer may have to switch jobs in a year or two and may have to move for the job, they should think twice about buying a house.  Ideally, buyers should picture themselves living in the house for five to seven years.
• Should a buyer have to move after a few years, following the above train of thoughts, they may want to think in terms of an investment for the long term: a "retirement account" - they could rent out the property.  Just saying it is a possibility for people thinking "long term".  (see this article from the LA Times)
• Some first-time buyers make the mistake of spending all of their savings on the down
  
  payment and closing costs, and sometimes borrow on their 401K.  However, it is not good to be left with no savings at all for home repairs and other unexpected expenses.  It could make more sense to get in the market with a smaller property, i.e. a condominium/townhouse, and move up 3 to 5 years later.

 

• Should there be a lot of competition for the chosen house, give it your very best. 1/ there will be no regrets should it not pan out, 2/ chances are that in a year or two, you will not remember exactly the price you paid, 3/ there is a cost in searching for too long a time, both psychological and monetary; or I should say there is "savings" in just getting it done earlier rather than later: interest rates can go up, prices can go up, and moving into your new home is much better than looking for it week after week.

 

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

Offers over asking price in California.

To keep in perspective:

How many houses sell for over their asking price throughout California, over time?  This may answer your questions on this matter:

 

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

America's Rental Housing

America's Rental Housing.

It is no secret that finding a place to call home in the Bay Area has become a problem, both as a purchase and as a rental.  Rents have gone up very significantly in the past 3 to 4 years, with a steep acceleration as early as mid 2012.  The front page of the San Jose Mercury News today 4/16/14 talks about it and prints: " Region's average asking rent is now $2,043 after three years of double-digit annual growth".

But this is not limited at all to our area. Nationwide, there is a similar problem, as studied and explained in the Rental Housing Report of the Harvard’s Joint Center for Housing Studies (Dec. of 2013). In many ways, the situation has to give us pause.

• Half of US renters pay more than 30% of their income on rent,
• 19% of  all renters 10 years ago were paying more than ½ their income on rent; they represent 27% now.
• 31 % of Americans were renting in 2004, they are 35% in 2012.
• Between 2000 and 2013, median rents nationally (adjusted for inflation) increased by 6%, while the median income of renters dropped by 13%. 
• The shortfall in the number of units affordable to extremely low-income renters in the U.S. (those earning no more than 30 percent of the area median) more than doubled from 1.9 million in 2001 to 4.9 million in 2011.

Harvard's Joint Center for Housing Studies Article.
If you want a copy of the SJ Merc. article let me know.

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

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

Privacy trees...

I recently sold a house for which a row of privacy trees was quite important, as a brand new development of apartments is slated to be built on the back side of the lot.

This “privacy screen” turned out to be quite useful in this case, as it will continue to grow and provide a clear separation between the new buyers’ home and the large complex in the back.

What kind of trees can you use to build such a protection, both from sight and from noise?  I thought that this page from the “fast-growing-trees.com” web site was quite informative, as well as their blog.

Do you have any local suggestions for any specific trees that work well here in the Bay Area?

Thanks for reading,

Francis

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