As Rates Fall, Loan Demand Rises

September 26th, 2013

Mortgage applications bounced back in the most recent week as interest rates fell, offering some temporary relief to borrowers, the Mortgage Bankers Association reported Wednesday.

The MBA’s index of mortgage application activity, which reflects both refinancing and home purchase demand, increased 5.5 percent for the week ending Sept. 13. The previous week the index had posted an 11.2 percent gain.

This week, the purchase index, viewed as a leading indicator of future home sales, jumped 7 percent during the week.

Meanwhile, the refinancing index increased 4.9 percent. Two weeks ago, the refinancing index had dropped to its lowest level since June 2009 as mortgage rates had risen.

The MBA reports that the 30-year fixed-rate mortgage eased 13 basis points last week, averaging 4.62 percent. Earlier this month, 30-year rates had matched a 4.8 percent high for the year.

Source: “U.S. mortgage applications gain as rates slip – MBA,” Reuters (Sept. 25, 2013) and “U.S. Mortgage Applications Rose 5.5% Last Week,” The Wall Street Journal (Sept. 25, 2013)

June Market Update

June 7th, 2013

The latest news regarding the real estate market is a bit different this month. Some of you may have noticed that the market has slowed a bit. This is in part due to mortgage interest rates rising. Interest rates have increased from 3.74 to 3.99% in the past week. What does this mean for buyers? If you see a rate that you like, lock it in while you can.

How does this affect sellers? Well, if you are considering selling right now, there is less competition than there was last week. Buyers are still looking, so your best chance would be to sell while inventory is low. The attached image indicates that the country is coming back from the recession, not just the Bay Area. This further indicates that the housing market in the Bay Area is NOT a bubble. This is great news, as we can breathe a bit easier with the knowledge that this strong market may be around for a while.

Half of the year is already gone, make sure that you make the best of the second half! Until next month, here are a few articles relating to interest rates and current market trends:

Mortgage rates soar; has refi window shut?

4 Real Estate Trends for Summer 2013

Are we in a housing bubble? Not even close, Trulia Says

Buyers won’t rush to beat rising mortgage rates

Investors: 2013 may be your last opportunity!

February 1st, 2013

Please take a moment to read this update written by my boss. I work with quite a few individual investors, and we’ve discussed REO’s being purchased as rentals but with the market being so hot, it is hard to get your hands on one. Gino makes a very good point, and I must reiterate that this MAY be the last year for small investors to get into the rental market. With the number of REOs being swooped up by big investment firms growing drastically, the smaller investors may get pushed out. Keep this in mind if you are thinking next year may be your time. There is no better time than now, dont risk missing the boat!

Rental housing in high demand

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

Just as housing is expected to grow this year in most markets across the country, rental demand continues to increase and is expected to grow even larger over the next few years. This could actually help fuel some needed changes in the ownership market.

Rental demand is expected to increase by 6.6 million units through 2016, boosted by 4.2 million new renters entering the market. With investors and others now paying attention to this, there was an interesting bit of news last week that shows how the housing and rental markets may be changing this year.

REO-to-rental housing was cited as the hottest emerging asset class at a recent securitization event in Las Vegas. At its core, this means they expect more REOs to be converted to rental units this year as demand for this type of housing increases steadily.

It’s interesting to think about this when you consider that many markets struggle with inventory for home buyers – especially first-time buyers. But the important way to frame this is to think about the cyclical nature of housing and how all the different moving parts affect one another.

For instance, rental housing has proven to be an important first step on the way to home ownership. When you have local economies that are gradually improving, you tend to see more young people moving out on their own. This type of household formation is important to project and fulfill future demand in the for-sale market.

In addition, many rental markets have struggled to keep up with added demand from those who exited the ownership market in recent years.

Converting REOs to rentals makes a lot of sense for keeping up with demand. But it also could help alleviate some of the downward pressure that still exists on home values in some markets. We’re seeing a natural shift of the market, which will eventually shift back over to home sales.

The one thing this does change going forward is the opportunity. For investors, the rental market has spelled opportunity for years. Whether you’re a mom and pop landlord or a larger institutional investment company, it’s had a big target on it, inviting people in. It seems that 2013 may be the last year to take advantage of that as the demand numbers will lure even more of the big players in.

So if you’re looking to buy an investment rental property, the time is now.

The Time To Buy Is Now!!

January 26th, 2013

A look below at the first chart shows they are predicting that US home prices will rise 21% from 2103 to 2016. This is excellent news for anyone who recently bought a home or who plans to buy in 2013. Now is the time to get in!!! This study was done by an independent research/consulting firm John Burns Real Estate Consulting. He is a trusted resource to some of the analysts that I follow on a regular basis.

The second chart shows the Affordability Index for home buyers will rise gradually through 2016, but still remain well below the historic average for a healthy housing market. A number above 5 means that housing is overpriced or susceptible to home values declining, and a number below 5 means its underpriced likely that home values will rise. Basically this means housing is very affordable for the average buyer right now and will remain that way despite the projected 21% increase in home values though 2016. Looking at the charts below you can see affordability was very low in 1999 when home values started to rise rapidly. Then went right though in 2005, 2006, and 2007 where affordability hit a peek. We all know what happened to home values after
2007. Then as home prices declined affordability got better. You can see in 2012 and 2013 is likely to be the trough in affordability meaning that this is about the best time to buy a home in 2012 and 2013. Take a look at the chart below.

Luxury Insider: A Happy Real Estate Year

December 31st, 2012

We, human beings, have a calendar imprinted in our brain cells. No matter where we stand within a twelve month period, we are waiting for January 1 to effect a major change in the way we work. We are conditioned to believing that January 1 is the magic time for absolution for whatever we did not accomplish, and time to use a joker card to start a new year with grand expectations, as if given another chance to be perfect this time.

Well, here we are again. In just five days, 2012 will be no more… Just as well because we are all so anxious to clean the slate, reset the clock and start with a big Bang. Business plans have been drafted and reviewed for weeks, and now is the time to get on with business and execute on objectives, commitments and resolutions.

Before we put the year to bed, once and for all, let’s reflect on what it has been like in the residential real estate arena and principally at the high end. What can be said, generally speaking, about this year?…What we can say is that it was “a good year”, that’s about it. The best part of course is that it officially became the year of the recovery, putting an end to many years of an agonizing crisis which changed the real estate valuation landscape from one coast to the other, creating a lot of hardship in US households in the process.

Among many more marks that characterized 2012, I will mention 3 which, in my opinion, are most important:

It has been an opportune time for investors of all sizes looking for value, whether at the low end or at the top of the price ladder. The cost of mortgage money, at record lows, added means & motivation to the buying frenzy.
The high end came roaring back, as a clear sign that we made it past the end of the tunnel. It quickly became the locomotive that pulled the market as a whole, and the deeper we went into the year, the more we saw multi million dollar homes listed and moving rapidly off the books.
Never has the high end market been so incredibly globalized. At a time when wealthy American buyers shrunk in total numbers as well as individual net worth, foreigners from most continents rushed to buy luxury properties, cash in hands. Their contribution filled the gap and more, most notably at the top end of the luxury market. In my opinion, this is the most significant factor that all Realtors need to integrate to remain active players in the game.

As we said all year long, the recovery has been very uneven on the national map. Some regions have not been invited to the party. The West coast benefited the most and Silicon Valley led the pack, particularly as it pertains to the luxury market. Case in point, year over year through November, Intero registered an increase of 73% of listings sold over $1.5M, the entry level to tier 1 of “Prestigio”, the estates program which we launched in the Spring. Even more significant is the fact that the higher the price and the greater the increase vs. the year before.

As we are about to switch the calendar, the market improvement is becoming more visible in other regions. The Boston suburbs, as I see in the excellent Raveis Housing Newsletter, are turning the corner: sales are up and so is the median price. Buyers beware. Time to wake up and act. The same picture can be seen in the “money markets” of Florida. In Tennessee, our friend Don Day, who is running the Intero office in Greater Nashville, is reporting that million dollar properties are moving swiftly in the South & West of Nashville. Yesterday’s buyers’ markets, such as Las Vegas and Phoenix, are becoming sellers’ markets… With few exceptions, such as pockets of the Mid-West, home prices have stabilized and are trending up. Confidence is back.

Yes, 2012 has been a good year. It could have been a great one. Something was missing to make it so: listings! Much of the year, in the most vibrant zip codes, buyers have been chasing too few properties. It takes two to tango. Maybe sellers did not get the memo about the fast improving market conditions. Many have been -and still are- waiting for better times. I wish them well but still would like to remind them that the best time to sell, most of the time, is “Yesterday”. It is urgent NOT to wait!

By: Alain Pinel

For more information, contact Mike Ramos @ 408-342-3125

Intero Insider: Taxes Once Again on Mortgage Debt Relief

December 19th, 2012

As we near the end of the year, one of the things that will change in 2013 related to housing is the ability to avoid taxes on mortgage debt that’s been discharged.

A provision in the Mortgage Debt Relief Act of 2007 that has allowed borrowers to avoid paying tax on housing debt that was either reduced or relieved through mortgage restructuring or foreclosure, will no longer be in effect as of January 1.

Essentially, when you owe debt to someone and they cancel or forgive that debt, the canceled amount may be taxable. Taxpayers, generally, have been able to skip paying this tax around mortgage debt forgiven in the years 2007 through 2012, thanks to the Mortgage Debt Relief Act provision.

From the IRS:

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

This likely has fed the 35% increase in short sale volume across the U.S. over the last year, as Socketsite points out. Whether or not you think this actually could’ve or should’ve been a higher number doesn’t matter as much as the evidence that this particular tax relief project at least worked to push through a big chunk of loan restructuring and foreclosure.

With the rate of short sales and foreclosures now reversing, this would seem another obvious signal that we are indeed moving into an entirely different phase of recovery. The first phase had to put all the debt back into the market – and spread the pain involved in doing that. Now the second phase is about seizing opportunities to ride the rebuild.

2013 will be a year of building, not recovering. New initiatives should be about stimulus, not relief. Here’s to a growth year!

By: Gino Blefari ( Intero CEO)
For more information, please contract Mike @ 408-342-3125

Peeking Into the 2013 Market

December 3rd, 2012

Now is the time people start wondering how the 2013 housing market will be. The current market condition is great as most of us already know, but will it continue to improve as we roll over to a new year? Lately I’ve been asked the same question from many of my clients. The conversation starts by discussing homes they are interested in and how the market condition is, then the question arises. “What will the market be like in 2013″, says one client to another. From my perspective as a realtor, there is no doubt that the 2013 market will start off fantastic. However, we must know that everything we buy comes with the risk of losing or gaining value in the item we purchase. It’s the same concept with anything we buy. We wait for something to go on sale because we want to make the most of what we pay for. It’s understandable, but in some cases other people might purchase it before you.

Speaking with experience in this industry, I have seen so many people pass up great opportunities as they wait and wait for the market to rise. Of course getting a home for a good deal is ideal, but what is more important is purchasing a home you love. For those of you who need another professional perspective with the 2013 market before you think about buying, continue with your reading below by my good friend of mine, Gino Blefari:

What better end to the year could housing ask for? Home sales and prices are up on average across markets. Inventory is low, but housing stats are up. Mortgage rates remain at rock bottom – and the Fed said at its meeting this month that it doesn’t anticipate raising rates any time soon.

The stars have aligned. The door to recovery is now wide open.

The September Home Price Index tracked by Lender Processing Services showed a 3.6% year-over-year increase since last September. In addition, the index rose 4.9% since the beginning of the year.

California and New York led the states with a 0.4% month-over-month increase, and Washington, D.C. led metros with a 0.6% increase from August. The largest monthly increases in the home price index took place in Arizona, Washington, D.C., Georgia, Delaware and Maryland, with Arizona holding the largest year-to-date increase at 14.4% since January.

In mortgage rates, we continue to see fantastic borrowing rates for home buyers. Average rates on a 30-year fixed-rate mortgage hit a new low of 3.31% last week, and average rates on a 15-year fixed-rate mortgage also hit a new record low of 2.63%, Freddie Mac said in its latest weekly report.

In its quest to use monetary policy to help the recovery, the Federal Reserve board indicated at its November meeting that it would not be raising rates in the foreseeable future. In fact, Fed Chairman Ben Bernanke suggested that the Fed will keep trying to push down long-term interest rates through 2013.

As we enter 2013, inventory will be of concern in many markets that have struggled to keep up with demand. But things will be looking up next year in most markets. In fact, Daren Bloomquist of RealtyTrac said at a housing symposium in San Francisco this month that underwater homeowners are more likely to sell as prices rise next year, which will help inventory levels.

At the same symposium, Ken Rosen, an economics professor at UC Berkeley, declared housing is in recovery mode now and through next year, though he’s not anticipating a boom in sales.

Things to watch next year will be jobs and income levels, both of which have the strongest impact on housing than any other indicator.

The forecast, overall, is looking optimistic for real estate. Some markets, like ours here in Silicon Valley are already enjoying near-peak activity and pricing. Others are just starting to pull themselves up. Either way, 2013 is going to be a solid year for housing.

For an update of the market, contact Mike @ 408-342-3125.

Intero Insider: Gratitude and Optimism for Real Estate

November 26th, 2012

Some of the best housing news we’ve heard all year landed on Monday as the stock market rallied after a new home builder index showed higher confidence and Congress hinted that a deal may be reached soon on the fiscal cliff problem.

Home builder confidence climbed in November for the seventh straight month to the highest level in more than six years, according to a housing index released by the National Association of Home Builders/Wells Fargo. The index increased 5 points to a seasonally adjusted level of 46, the highest point since May 2006.

Builder confidence has always been a closely watched market indicator. It was one of the first housing indicators to improve, rising from 19 in November a year ago.

In a second round of good news on Monday, the National Association of Realtors reported existing home sales were up 2.1% in October from the previous month and up 10.9% from the same month a year ago to a seasonally adjusted annual rate of 4.79 million. At the same time, the national median existing home price for all housing types was $178,600 in October, 11.1% above a year ago, and the eighth consecutive month of year-over-year increases.

NAR notes that the rise in home prices is working to create substantial growth in home equity, resulting in a total growth of $760 billion in home equity over the past year.

The news to watch coming out of NAR this week also is total housing inventory. Many markets have struggled with low inventory levels this year, which has created tight conditions for first-time buyers. Total housing inventory at the end of October fell 1.4% to 2.14 million existing homes for sale, a 5.4-month supply, according to NAR. This represents a 21.9% decline from a year ago, when housing supply stood at 7.6 months.

Aside from overall economic and fiscal concerns, supply is the potential wildcard going into the 2013 housing and mortgage market. With record low interest rates holding steady, buying will continue to draw a lot of buyers to market next year. Some markets may continue to struggle, though, with the amount of homes for sale. Buyers can also expect a steady appetite from investors, which could make it even more difficult in some markets.

With builder sentiment up, though, we’ll likely see much more new home building activity across the country.

All of this is shaping up to make 2013 look like it could be the home seller’s year – the first in far too long.

By: Gino Blefari (Intero Founder)
For a market analysis of your home, call Michael @ 408-342-3125

Intero Insider: Silicon Valley Home to Some of the Strongest Housing Markets in U.S

November 19th, 2012

Silicon Valley corporate behemoths like Google, Salesforce and Oracle didn’t get that way by following the herd. Breakout tech success more often comes from a “go against the grain” mentality. Disrupt a market, gain huge market share and go down in history as one of the richest companies of your time.

This is why it’s no surprise that even our housing market is bucking trends and seeking a category all its own. While many markets across the country are just starting to pull up from market bottom, Silicon Valley is home to some of the strongest housing markets in the nation right now.

Los Altos, Palo Alto and Burlingame have shown the strongest comebacks, with home prices just several percentage points away from peak levels in 2008, according to data compiled by DataQuick.

In addition, median prices per square foot in Sunnyvale, Cupertino and Mountain View were within 10% of their highest levels in the third quarter.

Los Altos was highlighted as one of the strongest recoveries in Silicon Valley with a median price per square foot at $810, just 1.3% below the peak price in 2008, according to DataQuick. And the median price of homes in the third quarter was $1.97 million, up 1% from $1.95 million in 2008.

What’s behind this knockout success? Jobs, obviously. Silicon Valley is home to many of the top-performing companies in the nation – and world – and has also unleashed some major technology IPOs in the past year. There’s a lot of money floating around these parts.

But also, like many other markets, the inventory of homes for sale is low, with some owners refraining from selling while prices play out their recovery. That and you have increased demand from the influx of young workers.

I think it’s safe to say that fairly soon, we’ll start seeing more move-up buyers jumping in to sell as prices reach those highs and demand continues to build. That means exciting days are ahead for all of us in the real estate business.

Silicon Valley is such an interesting piece in the overall housing story. On the one hand, it shows us just how localized and unique one market can be from the next (even when in the same state). And it also shows us the inseparable relationship between local economies and housing. Strong economies equate to strong real estate markets.

Silicon Valley’s economy has pushed forward with great intensity even during the recession. That strength keeps demand strong and market fundamentals in place – even when it seems impossible compared to what other markets are experiencing.

It’s all in where you sit – and we are lucky enough to call this place home. Let’s hope more local economies pick up and help to strengthen local housing markets just as much.

By: Gino Blefari (Intero Founder)
For more information on the market, please call 408-342-3125

An Unrivaled Real Estate Trifecta

November 12th, 2012