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Foreclosure Rates are Dropping!

Foreclosure inventory declined by 24.3 percent and completed foreclosures declined by 17.6 percent compared with September 2014, according to the recently released CoreLogic® September 2015 National Foreclosure Report. The number of foreclosures nationwide decreased year over year from 67,000 in September 2014 to 55,000 in September 2015. The number of completed foreclosures in September 2015 is a decrease of 52.8 percent from the peak of 117,438 in September 2010.

Completed foreclosures reflect the total number of homes lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 6 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been about 8 million homes lost to foreclosure.

As of September 2015, the national foreclosure inventory included approximately 470,000, or 1.2 percent, of all homes with a mortgage compared with 621,000 homes, or 1.6 percent, in September 2014.

Economic update for the week ending September 19, 2015

Stocks drop after Fed leaves rates unchanged – Stocks were up this week until the Federal Reserve left rates unchanged. Many investors feared a rate increase because higher rates increase borrowing costs which cut into profits. It has been widely felt that the Federal Reserve would have begun rising rates because the economy was on solid footing. Stocks had dropped over the past couple of months partially on fears on a rate increase; however, stocks dropped further when the Fed announced they were not going to increase rates! The Fed’s statement made investors feel the economy was weaker than the data indicates, fearing that future growth may not materialize as expected. The Dow Jones Industrial Average closed the week at 16,384.79, down from last week’s close of 16,433.09  The S&P 500 closed the week at  1,958.03, almost unchanged from last Friday’s close of 1,961.05. The NASDAQ closed the week at 4,827.23, also just about the same as last week’s close of 4,822.34.

Federal Reserve leaves rates unchanged – The Fed chose to leave rates unchanged. In one sense this was good news for investors that had expected the first rate increase since 2006. However, this decision, and their statement spooked investors. The Fed’s statement included that The U.S. was currently the worlds strongest economy, but the risk to future growth in the economy is very high due to weakness throughout the world. It further ran through a bunch of data that showed why they are concerned. Some included: a drop in exports, inflation well below the 2% target range, a stabilizing housing market, and stagnant wages. Strong employment growth was cited as a positive. They left room to raise rates as soon as the next meeting, but added that with inflation so low that even if they did begin to raise rates they would keep rates lower than “normal levels” for a prolonged period of time due to low inflation which they said could persist for as long as a decade. Many experts took these statements to mean that the economy was not as strong as they thought. Stocks sold off on Thursday and Friday after the report was digested on fears that The Fed fears the economy may weaken.  This would affect sales which would affect future corporate profits. All in all, the one thing that investors agreed upon is that the Fed’s decision not to raise rates, which have been at near zero since 2008 to stimulate the economy, creates an environment of uncertainty. Markets fear uncertainty.

Mortgage just under 4%  –  The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00for loans over $417,000.  The 15 year fixed rate loans are about 3.25% for loans up to $417,000, and around 3.375% for loans over $417,000. The 5 Year-ARM rate is around 2.75% and 1 Year-ARM mortgages are about 2.50%. 

Treasury Bond yields slightly lower this week – The 10 year Treasury bond yield closed week at 2.13%, down from 2.20% last Friday.  The 30 year treasury bond yield closed Friday at 2.93%, almost unchanged from last week’s close of 2.95%. Mortgage rates follow bond yields so these are closely watched.

California employers add 36,200 non-farm jobs – The state’s unemployment rate dropped to 6.1% in August from 6.2% in July. Unemployment is at its lowest level since January 2008 in California according to the Bureau of Labor Statistics. Since August of 2014 the state has gained 470,000 jobs. That represents an annual growth rate of 3% which has outpaced the national average of 2.1% for the 50 states. 

California existing home sales and prices beginning to level The California Association of Realtors reported that the number of homes sold in August dropped 3.8% on an annualized level from the number of homes sold in July. Sales were still up 9.3% from the annualized number of homes sold last August. This year the number of sales have been much higher than last year which was the lowest number of sales in decades, but those increases did moderate in August. Prices are beginning to level as well, according to The California Association of Realtors. The statewide median price in August was up 1% from July, and up only 2.5% from August 2014. That marks the lowest year over year price increase in 3 1/2 years. Unsold inventory ticked up to a 3.6 month supply from a 3.3 month supply in July. This is still a very low number. A normal market has a 6-7 month supply. It’s unusual to see prices stabilize with such a low number of homes on the market. The assumption is that prices have risen to a level that buyers have pulled back on their home purchases. Either inventory can rise quickly or prices can begin to rise more quickly in this environment. Unfortunately, we won’t know for sure until one or the other happens!

Finance_Law

It’s Easier to Get Financing! Here’s Why

Finance_LawYou may have heard that it is extremely difficult to get approved for a home loan to buy or refinance a condominium. That was the case for several years after the housing market crashed, but lenders finally have loosened the rules on condo financing.

Borrowers seeking to get a condo loan these days will find more lenders to choose from and more condominiums that are eligible for financing. Mortgage giants Fannie Mae and Freddie Mac have eased some of the requirements on loans for condos, and a growing number of lenders offer loans that go outside the box of the condo rules in conventional financing, says industry experts.

You’ll still need good credit and stable income to qualify for a condo loan — just as you would with a loan to buy a house. But you are less likely to face restrictions relating to the property itself. When approving a condo loan, the lender wants to make sure the building is financially stable. Because the financial stability of a condo project depends on the owners paying their bills, lenders tend to view condo loans as a riskier investment than a house. Lenders are more flexible when analyzing condominiums’ financial stability.

Late in 2014, Fannie issued new guidelines to lenders allowing them to issue loans in developments where up to 15 percent of the owners were 60 days past due on monthly payments. The threshold had been 30 days. Another change made it easier to finance condos in new developments. Still, many condo buildings don’t meet Fannie and Freddie’s requirements; however, there are several options that have now become available for portfolio lending, as well.

Economic update for the week ending May 23, 2015

Stocks mostly unchanged this week –  The Dow Jones Industrial Average closed the week at 18,232.02, almost unchanged from 18,272.56 last week. The Nasdaq closed at 5,089.39,  up slightly from 5,048.29 last Friday. The S&P 500 closed at 2,126.06, also about the same as last Friday’s close of 2,122.73.

Bond yields were volatile  again this week   –  The 10 year U.S. Treasury Bond closed the week at a 2.21% yield, up from 2.14%  last week.  The 30 year U.S. Treasury Bond closed Friday yielding 2.99%, slightly up from 2.93%  last Friday. Yields dropped Thursday after minutes from the last meeting of The Federal Reserve were released which ruled out a rate hike at the June Fed meeting. On Wednesday the 10 year closed at 2.26% and the 30 year closed at 3.06%. Fortunately they dropped on Thursday. Mortgage rates usually follow treasury bond rate trends.

Mortgage Rates  –  The 30 year fixed rate ended the week around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000.  The 15 year fixed rate loans are about 3.25% for loans up to $417,000, and around 3.50% for loans over $417,000. The 5 Year-ARM rates are around 3.00%.  1 Year-ARM mortgages are around 2.50%.  Last week’s Freddie Mac Primary Mortgage Survey showed rates as follows: 30 year fixed rates at 3.84%. 15 year fixed at 3.05%. 5/1 YR ARM at 2.88% and 1 YR ARM at 2.51%.

Inflation report shows prices rising – The labor Department said on Friday that its Consumer Price Index (CPI) rose 0.1% last month. The core inflation figure which discounts food and energy costs were up 0.3%, its largest gain since January 2013. Experts still feel that this is really not a number that would show a strong economy.

Housing Starts rise 20% in April – The Commerce Department reported Tuesday that privately owned housing starts increased in April 20.2% from March. The level was the highest since November 2007. Building permits which is a good gage of future construction also increased 10.1% from March to the highest level since June 2008.

So Cal home prices continue to rise  Home inventory level droppingCoreLogic / DataQuick released its Sothern California Home Resale Activity Report for April which showed that the median price in their six county Los Angeles metropolitan area climbed 6.2% from last April. The report also showed that the number of sales in the six county area increased 8.5% from last April. One cause for concern in the report was that there is only a 3.6 month supply of homes. This could cause the number of sales to drop in coming months, and lead to higher prices.

Nationwide home prices up – The National Association of Realtors reported that the median price paid for a home in the U.S. in April rose 8.9% compared to one year ago. April marked the 38th consecutive month of year over year home price gains. On the negative side the number of sales dropped 3.3%. This is a sign that tighter home inventory levels are resulting in fewer sales.

California’s housing market shows strong resultsThe California Association of Realtors reported that sales of existing homes in California rose in April. The number of homes sold in California rose 9.2% from March. Year over year the number of sales were 9.3% higher than last April. It was the largest year over year sales gain since May 2012. The median price paid for a home in California was up 2.8% from March and 7.4% from last April. Home inventory levels continued to drop. There was only a 3.5 month supply of homes for sale in April, compared a 3.8 month supply in March.

California’s Jobless rate falls to 6.3% –  The California Employment Development Department reported that California employers added 28,500 non-farm payroll jobs in April. Although this was lower than the 40,500 jobs added in March unemployment reached its lowest level in April since 2008.

Many Retirees Upsize thanks to the “Freedom Threshold”

By age 61, the majority of people feel free to choose where they most want to live, according to a new study by Merrill Lynch, “Home in Retirement: More Freedom, New Choices.”

“Throughout most of people’s lives, where they live is determined by their responsibilities,” according to the report. “Most careers demand that people live within a reasonable commuting distance from where they and/or their spouse work. However, as people enter their 50s and 60s, they begin to cross what this study reveals to be the ‘Freedom Threshold.'”

That’s the age when people say they can finally choose where they want to live, according to the survey of more than 3,600 retirees.

Indeed, two-thirds of the retirees surveyed say they are now living in the best home of their lives. Most retirees move at least once during retirement. But surprisingly, only half choose to downsize into a smaller home.

Three in ten of retirees decide to upsize into a larger home. The top reason to upsize: They want to have a home that’s comfortable enough for family members to visit and stay with them, according to the survey.

“Retirees often find their homes become places for family to come together and reconnect, particularly during holidays or summer vacations,” according to the report. Some choose to upsize so that family members can live with them too.

Source: Merrill Lynch 

It’s more affordable to buy a home today than 15 years ago!

It’s more affordable to buy a home now in most U.S. metros than it was 15 years ago, even for millennials putting down less money on a home, according to a Zillow analysis of third-quarter income and home value data.

Renters, however, continue to pay an increasing share of their income to their landlords as rents soar and incomes remain flat.

On average, homebuyers making the nation’s median income and purchasing the typical U.S. home spend 15.3% of their income on their monthly house payment, down from the historical norm of 22.1% during the pre-bubble period from 1985 to 1999. In contrast, renters spent 29.9% of their monthly income on rent in the third quarter of 2014, up from 24.9% historically. Younger buyers, earning less money in many areas and making smaller down payments on a home, should expect to spend slightly more of their income on mortgage payments – 17.4%.

Homes for younger buyers remain affordable thanks to continued low mortgage interest rates and their tendency to shop for less expensive homes. Continuously rising rents across the country could drive more people into the home-buying market, but they also make it more difficult for first-time buyers to save for a down payment.

“Despite rising home values, homeownership remains very accessible for buyers that can scrape together a down payment – even if that down payment is relatively modest – find a home to buy and secure financing,” said Zillow Chief Economist Stan Humphries. “But what keeps me up at night is the fact that it still remains so difficult for so many potential buyers to make those particular stars align, largely because renting is so unaffordable these days. It’s very difficult to come up with a down payment when so much of your monthly paycheck – especially on an entry-level salary – is going to your landlord instead of into your savings. Buying conditions are getting better every day, and in time the allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into homeownership.”

Source: HousingWire

Have we hit the bottom?

It is not often that we go out on a limb and make a prediction about the future. That is because one of our favorite sayings is — you can’t predict the future. However, sometimes we just can’t resist. What bottom are we predicting? The rate of home ownership in America. It has been falling for nearly a decade and in the fourth quarter of 2014, it hit the lowest level in over two decades at 63.9 percent, according to the National Association of Realtors.

The peak for the home ownership rate was just under 70% during the real estate boom. Why is it going up from here? There is a plethora of reasons. For one, it is getting easier to own a home because credit standards are lower. Secondly, the cost of renting keeps going up and it just makes more economic sense to own. When renting is more expensive than owning, before the benefits of tax deductions and the forced savings of principal reduction are taken into account, then the economic message can’t be ignored.

The most important reason? The time is right. More jobs are being created and that means the rate of household formation is increasing. A report recently issued by the Lusk Center For Real Estate at the University of Southern California indicates that we are now at pre-recessions levels of household formulations. That means that the Millennials are moving out and they will need places to live. The first quarter of 2015 statistics have not been released yet, but we think we are at or near the bottom and the rate of ownership will rise from here unless there is a major intervening economic variable.

March 13 Real Estate Report

The Jobs Report Surprises Again

Daylight Savings Time is the official start of the spring real estate selling season. With the weather we have had during February, we are sure this early rite of spring caught many by surprise. But in our experience we know that things can heat up quickly. The markets will be monitoring how busy traffic is at open houses, builder sites and more when people are able to go out and drive again in certain areas of the country. 

Of course, the markets are also monitoring the jobs data closely as well. The jobs data has been so strong lately that analysts now seem to be expecting around 250,000 jobs to be added each month. In February, the numbers did not disappoint these prognosticators, as the economy added just under 300,000 jobs for the month. The unemployment rate slipped to 5.5% from 5.7%, which was also better news than forecasted.

There were some aspects of the report which were considered not as strong. For one, the rise in hourly earnings was disappointing. This is good news with a meeting of the Federal Reserve Board coming up next week. The Fed will be considering the issue of raising rates and the lack of wage inflation takes some pressure off. Of course, this is bad news for workers. Also on the weaker side was the drop in the labor force participation rate. Some are theorizing that the bad weather in February may have discouraged some from coming back into the labor force. Bottom line, the economy continues to improve. Now about that weather…

Interest Rate Overview

The Markets.  Fixed rates fell for the first time in nearly a month in the past week. These numbers were released one day before the jobs report came out and pushed rates higher. Freddie Mac announced that for the week ending March 5, 30-year fixed rates decreased to 3.75% from 3.80% the week before. The average for 15-year loans fell to 3.03%. Adjustables were mixed, with the average for one-year adjustables unchanged at 2.44% and five-year adjustables decreasing to 2.96%. A year ago, 30-year fixed rates were at 4.28%, which continues to be approximately 0.50% higher than today’s levels. Attributed to Len Kiefer, deputy chief economist, Freddie Mac — “Rates on home loans fell across the board, with the 30-year fixed rate reading 3.75 percent this week. Real GDP growth for the fourth quarter was revised down to 2.2 percent. Consumer prices fell more than expected in January, tumbling 0.7 percent.”  Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.  

 

Current Indices For Adjustable Rate Mortgages
Updated March 6, 2015 

 

Daily Value

Monthly Value

 

March 5

February

6-month Treasury Security

 0.08%

 0.07%

1-year Treasury Security

 0.25%

 0.22%

3-year Treasury Security

 1.05%

 0.99%

5-year Treasury Security

 1.57%

 1.47%

10-year Treasury Security

 2.11%

 1.98%

12-month LIBOR

 

 0.660% (Feb)

12-month MTA

 

 0.136% (Feb)

11th District Cost of Funds

 

 0.698% (Jan)

Prime Rate

 

 3.25%

Real Estate News

America’s fragile housing recovery is getting a boost from military buyers using VA loans as the U.S. draws down troops after more than a decade of combat in Iraq and Afghanistan. About 4.7 million full-time troops and reservists served during the wars and many are now able to take advantage of one of the easiest and cheapest paths to homeownership. The program’s share of new home loans, at a 20-year high, is also increasing as other types of government-backed loans have grown more costly. “The reduction in uncertainty for the returning vets allows them the freedom to spend more, including buying housing,” said Sam Khater, deputy chief economist at CoreLogic Inc., an Irvine, California-based property-data firm. “VA buyers are coming into the market in higher and higher proportions and tend to be first-time buyers, one of the missing drivers in the recovery in housing demand.” VA loans accounted for approximately 8.0 percent of home loans made in 2014, up from 6.9 percent in 2013 and less than 2 percent a decade ago, according to preliminary industry statistics. There are more than 2 million VA loans, with balances in excess of $370 billion, after six years of increasing volumes. Unlike the Federal Housing Administration (FHA), which allows down payments as little as 3.5 percent, the VA doesn’t charge monthly insurance premiums, and the relatively moderate upfront cost can be rolled into loan balances. About 90 percent of VA loans don’t have down payments at all. Source: Bloomberg

Pending home sales in January surged to the highest level since August 2013 after a steep drop last month, according to the National Association of Realtors. All major regions, except for the Midwest, saw gains in activity in January thanks to improved buyer demand at the beginning of 2015. The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 1.7% to 104.2 in January, from an upwardly revised 102.5 in December, and is now 8.4% above January 2014 (96.1). This marks the fifth consecutive month of year-over-year gains with each month accelerating the previous month’s gain. Lawrence Yun, NAR chief economist, says that for the most part buyers in January were able to overcome tight supply to sign contracts at a pace that highlights the underlying demand that exists in today’s market. “Contract activity is convincingly up compared to a year ago despite comparable inventory levels,” he said. “The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.” Yun also points to more favorable conditions for traditional buyers entering the market. All-cash sales and sales to investors are both down from a year ago, creating less competition and some relief for buyers who still face the challenge of limited homes available for sale. Source: The National Association of Realtors

Home owners are remodeling their homes at levels that haven’t been seen in decades. In fact, the home improvement business could reach record levels this year, according to a new report from the Joint Center for Housing Studies of Harvard University. What’s behind the increase? Potential trade-up home buyers are fixing up their existing homes for sale, federal and state subsidies are increasing the desire for energy-efficient upgrades, and landlords are sprucing up their properties to justify raising rents, the report notes. A strengthening job market is also helping to lead more home owners to take on home remodeling projects, following years of delaying projects. Spending on discretionary home improvement projects jumped by nearly $6 billion between 2011 and 2013 — the first rise since 2007, according to the report. The top remodeling projects continue to target the kitchen and adding a new bathroom, but baby boomers also are increasingly retrofitting their homes for better accessibility and with age-in-place features. Also, more home owners are tackling home projects centered on energy efficient upgrades, such as for windows and heating and cooling systems. Source: CNBC 

buyahome

5 Reasons to Buy a Home or Condo NOW!

buyahomeBased on increasing home prices, fluctuating mortgage rates, increased population and soaring rents, there may never be a better time in real estate to purchase a San Fernando Valley home or condo than right now. Here are five major reasons purchasers should consider buying now.

1. Competition is about to Increase for the best home or condo available in the best location at the best price.

Every spring a huge surge of prospective purchasers enter the San Fernando Valley housing market. All these potential home buyers will want the best home available in the best location and at the best price. They will be competing for the “steals and the deals” in the market. Missing any opportunity to get that “once-in-a-lifetime deal today” that “will no longer will be available tomorrow” will only increase as the market heats up.

2. Price Increases Are on the Horizon

In Southern California, Core Logic reported home prices on average are expected to appreciate by 4-5% in 2015. For first time home buyers, it will most likely cost them more both in price and in interest rate if they continue to wait on the sidelines. First time buyers need patience and guidance to better understand the real estate inventory available to them and the long term benefits of home ownership. For move-up buyers, it will wind-up costing them more in real dollars as the home they want to buy will appreciate at approximately the same rate as the house they own now, especially if they own a smaller “starter” home and they want a bigger “family” home.

3. Owning a Home Helps Create Family Wealth

Upfront, the decision is whether to be a landlord or live in the home. In either case, most likely, a mortgage is required. The benefits of being a landlord are that the tenants pay the mortgage when they pay their rent. And the benefit of not being a landlord, and paying the mortgage by oneself, is the pride and joy that comes with maintaining a valuable piece of appreciating property. The Federal Reserve, in a recent study, revealed that the net worth of the average homeowner is 30 times greater than that of a renter.

4. Interest Rates Are Projected to Rise

The Mortgage Bankers Association, the National Association of Realtors, Freddie Mac and Fannie Mae have all projected that the 30-year mortgage interest rate will sit comfortably in the 4% range by the spring of 2015. That is an increase of almost .500% of a point over current rates. That’s a difference of over $30 for every $100,000 borrowed.

5. Buy Low, Sell High

The benefits of owning real estate come down to long term capital appreciation. Most would all agree that when buying, “buy at the lowest possible price and sell at the highest possible price”. Housing can create family wealth as long as this simple principle is followed. Today’s real estate market is selling at relatively low prices compared to where it will be next year and the year after that. So, now really is the time to buy.

Today’s Trends in Saving for your first home

save for first homeFor many Americans, the jump into the new year marks an important step forward toward achieving a New Year’s resolution, and saving for a down payment to buy a home may be among them. But that goal can take some time, and lots of savings commitment.

Thirty-seven percent of recent home buyers say it took them six months or less to save for a down payment to buy a home; 15 percent saved for six to 12 months; and 10 percent say they saved for 12 to 18 months for a down payment, according to the 2014 Profile of Home Buyers and Sellers Survey, published by the National Association of Realtors®.

Saving for home ownership often requires some sacrifices too, recent buyers reported. Seventy-two percent of home buyers say they cut spending on luxury or non-essential items in order to save for a down payment, 56 percent reduced their spending on entertainment, and 45 percent trimmed their clothing budget in order to save more.

But there is hope: Many buyers often find out they may not need as much down payment as they originally thought to purchase a home. For first-time home buyers, the median down payment is 6 percent, and 13 percent for repeat buyers. “There’s still misperception out there that a much higher down payment is needed, while that’s not the reality,” said Lawrence Yun, NAR’s chief economist.

What’s more, for Americans who are able to save for a down payment to purchase a home, they often find meeting this New Year’s resolution has a big payoff in the end. “Seventy-nine percent of recent buyers believe their home is a good financial investment, and many believe it is a better financial investment then stocks,” Yun notes about NAR’s survey findings at a recent blog post at NAR’s Economists’ Outlook blog. Source: NAR

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