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Rate Hike Postponed But Not Cancelled

Blog, Market Updates   |   Dunham Stewart   |   November 20, 2015

mortgage-analysis-2_573x300Interest rates on mortgages moved slightly lower this week ahead of the Thanksgiving holiday. Meanwhile, markets are anticipating a move from the Federal Reserve at next month’s policy-setting meeting. One of the uncertainties that the housing market will face for the rest of the year and the upcoming 2016 is timing and size of the federal funds rate increase. With the economy picking up steam this year and the unemployment rate falling, a rate hike was widely anticipated last month. Instead the Federal Reserve has decided to hold off on raising interest rates. The Fed’s move was not a complete suprise, but there were many that belieed that the economy has improved enough to compel the Fed to raise rates.

 The likelihood of a December rate hike received a bump when, according to Reuters, San Francisco Fed President John Williams said Saturday that as long as economic data continue to be favorable, “there’s a strong case to be made in December to raise rates.” The Fed’s goal is to have stable inflation and full unemployment. Inflation has not been a problem so far. But the labor market is a concern despite the fact that the unemployment rate is approaching the Fed’s goal of full employment. Recent signs of global economic slowdown is the primary reason for not implementing a rate hike.

There is a strong possibility that the Federal Reserve will begin the rate normalization in December. The words “next meeting” were in a sentence about determining whether or not it will be appropriate to raise rates when the Fed meets again. These two words were surrounded by decidedly tempered  economic rationale that said we are not where we need to be and may not be there anytime soon, but the odds makers interpreted “next meeting”  as rate hike ready. In fact, Bloomberg reported that traders had increased the odds for a December rate hike form 37% to 48% following the release of the Fed statement. The odds makers at Goldman Sachs see a 60% chance for a Fed rate hike at the December meeting.

Here’s the thing; if you are buying a house or planning on buying a house, if refinancing your current mortgage is in your near term plans, these Fed rate hike odds makers are playing with your money.  Not because rates are higher, but because market makers are trying to guess when they will be, even when they are wrong. Clearly the markets and market participants want and need interest rates to begin to ascend to real world norms. If the normalization process takes place gradually throughout the next two years, modestly higher interest rates should not present much of a direct challenge for our real estate market which remains strong although signs of cooling trend are begining to appear.

 

Yes There is an App for That

Blog, Real Estate Tips   |   Dunham Stewart   |   October 30, 2015

mobile real estateYou don’t know what you don’t know, so how many homebuyers or home-sellers know they can use their smart phones to get smarter about the process? It doesn’t matter how far along in your home-buying process you’ve come, you can always tweak things to simplify your life. Adding these nifty apps to your smart phone frees up some of your time to find just the right home.

HomeSnap

Available for both Apple and Android phones, this app features unique technology that instantly tells you all about any home you snap a picture of. You can learn how much it is worth, when it last sold and even how much it sold for. You’ll see information about the number of bedrooms, bathrooms and garage spaces. You can see the lot size and even the school district. The app gives you access to information about more than 90 million homes across the United States. For homes currently on the market, you may even have access to interior photos.

Using HomeSnap helps you narrow down your home search before you go to the effort to take home tours.

House Hunter

The HouseHunter app allows you to keep track of your entire search for your dream home. It stores information, notes and pictures for every home you look at and even allows a rating system so you can evaluate and compare each home you tour. Score each home based on requirements you specify with House Hunter’s proprietary scorecard system. View images of multiple homes at once to help you remember which house is which.

AroundMe

Not just for real estate, the AroundMe app shows you what you can find in any area. So, if your find the home of your dreams, you can also see the nearby hot spots, where to find the dry cleaners, restaurants and even hospitals. It can connect you with taxi services, points of interest and a plethora of other nearby information so that you can learn about a potential neighborhood quickly without having to do exhaustive searches.

Dictionary of Real Estate Terms

Every industry has its own language and LD Real Estate Dictionary is the app that can help you. From “points” to “policy” this app has more than 2000 common real estate terms and their definitions in common English. Navigate the massive paperwork with ease and understanding with this app.

Our mobile-friendly site

Best of all, our own mobile-friendly responsive website can keep you connected to the latest listings so you can check them out on your way home from work. Check out the new listings, view stunning images and connect with us all from the mobile site.

3 Reason to List Your House This Fall

Blog, Real Estate Tips   |   Dunham Stewart   |   October 13, 2015

Many sellers feel that spring is the best time for selling a house because buyer demand increases at that time of year. This is true, however, the fall and winter have their own advantages. Here are three reasons to sell your home now:

  1.  Buyer Demand Continues to Outpace the Supply of Homes For Sale

According to the National Association of REALTORS’ (NAR) Foot Traffic report, there are more buyers out in the market right now than at any other time in the past three years. Interest rates are still historically low compared to years past. This is good for buyers today and it’s good for buying your next home. It is predicted that they will rise by 2016. The graph below shows the significant increase in foot traffic experienced this year compared to 2014.

Demand-KCM

2. Less Competition

Right now inventory IS up in our region. There was an unusually high surge of new listings in Spring 2015. However, they do start to slow down in August. Also, many spring sellers take their houses off the market if they do not sell by the end of summer, which was the case this year due to high inventory. The good news is that sales prices are still maintaining (give or take) and home sales are still up in our area. As the fall moves on and winter nears, the number of new listings will continue to drop. The choices for buyers become more limited.

3. The Process Will be Quicker

One of the biggest challenges during the 2013 into 2014 housing market was the length of time from contract to closing due to bank requirements and document processing. It’s not necessarily harder to qualify for a mortgage, it’s just that more verification is now required. Furthermore, with the steady appreciation of home values over the past three years, banks have been inundated with both purchase and refinancing loan requests. Both of these tend to slow in the winter cutting timelines and frustration to both buyers and sellers.

The Upside of Downsizing Your Home

Blog, Real Estate Tips   |   Dunham Stewart   |   September 21, 2015

Downsizing your homeMost people think of downsizing as something you do in retirement. It can happen when the kids leave home or retirement looms or your first grandchild is born hundreds of miles away. You start to think about leaving a house that’s now too big for you and downsizing to a smaller house or condo or a retirement community. So, you sell the large family home to moving to a smaller, retirement-style home, free up some cash and have more to spend on leisure.

To many, downsizing is a negative: smaller house, less space, cutting back. But, downsizing can be an important step in “upsizing” your life.

You just have to determine what “downsizing” means to you. Smaller Space, Bigger Life Moving to a smaller space (as in “fewer square feet”) doesn’t have to mean that you have less living space. Many family homes have large square-footage cut up into little spaces to house multiple family members. When downsizing from a large family home, look for a layout that maximizes the living space so that you don’t feel closed in. That might mean an open floor plan, more windows, adding outdoor living space, foregoing formal spaces or even choosing a wall-less loft.

An important idea to keep in mind is that downsizing shouldn’t mean moving into a smaller version of what you already have. Moving from a four-bedroom/three-bath 5000 square-foot home into a four-bedroom/three-bath 1800 square-foot home just feels cramped and crowded. Moving your living area, home office and master bedroom into an 1800 square-foot two bedroom, open floor plan, however, can seem like a mansion. In fact, some people find that fewer rooms mean more living area to enjoy.

Less space doesn’t necessarily translate into less money. For example, you may long to live downtown, You may find the lifestyle you want in an active-adult community or a continuing-care retirement community

Freed-Up Cash? Or, Freed-Up Life?

Okay, yes, for some people, the purpose of downsizing is to free up cash for other things. If however, freeing up cash isn’t your aim—for example, if you need to reinvest all the money from the sale of your family-sized home as part of your financial plan—downsizing into an upscale high-rise condominium or townhome in your favorite urban area can massively upgrade your lifestyle.

Think of it … spend your evening at the theatre, dining out or entertaining friends at the rooftop pool. Just being able to lock the door and head to the airport for some long-anticipated trip without having to arrange for a house-sitter, lawn-care and yard work, or the myriad other requirements of property frees you to travel on a whim, be spontaneous, grab a good deal on a weekend cruise or visit the kids and grandkids as often as you like.

Even if you can’t afford a luxury place, where you locate your new home can free up your life from the tedious efforts of maintaining a larger property. If having freedom to do other things is important to your new life goals, make certain your real estate professional knows: lifestyle options may exist that you’ve never thought of.

If you’ve thought about downsizing, your real estate professional can help you determine the best options for your lifestyle and goals.

How Accurate is That Zestimate

Blog, Real Estate Tips   |   Dunham Stewart   |   September 3, 2015

zestimateI am often asked about the accuracy of home valuations available online. I generally reply that Zillow and the other sites are a good place to start if you want to get a general estimate of what your home is worth. A “Zestimate” will give you a property value range, based on public records of the property’s:

  • Physical attributes
  • tax assessments
  • Prior transaction data

The drawback? These estimates are generated by a computer, not a knowledgeable real estate professional. Improvements and defects are not taken into consideration. Intangible features like ocean view, curb appeal, high-traffic streets and other factors are not considered. The estimate is really more of a snapshot of the overall market than an accurate estimate of a particular homes value.

If you are serious about selling, you will need more than a general estimate. Your homes unique features will need to be considered in order to reach an accurate estimate of its current value. An accurate comparable market analysis is based on:

  • Property type and size
  • Number of bedrooms and bathrooms
  • Age, condition and style
  • Location and appeal

To gather the data necessary for an accurate analysis it is necessary to research the Multiple Listing Service data, preview comparable properties or view online photos and compare that data to the subject property. Zillow and other home valuation tools are important in today’s market and certainly make interesting reading, but they are not a replacement for a professional opinion.

Are you thinking about selling your home? Call me today for a comparable market analysis. I will do the necessary research to determine an accurate valuation of your property. Of course there is no cost for the service or obligation.

Eco Friendly Home Tech That Really Works – Run Your Home on a Battery

Blog, Real Estate Tips   |   Dunham Stewart   |   August 19, 2015

tesla-powerwallThe biggest challenge to solar energy is the inability to both capture it and store it in any meaningful way. In fact, while efficiency in capturing solar power has increased from about 15 percent of most solar panel models to 35 percent efficiency in the higher ends, even when captured the energy grid is unable to store and regulate its flow throughout the day.

Enter the Tesla Powerwall

Elon Musk, CEO of electric carmaker Tesla Motors, announced earlier this year that Tesla’s new Powerwall for the home and Powerpack for commercial use already garnered 38,000 preorders. The Tesla Powerwall offers 92 percent efficiency in DC round-trip power.

Here are the basics: The Powerwall home battery charges via electricity generated by solar panels. As solar energy wanes throughout the evening or on a cloudy day, the battery supplies energy back to your home instead of pushing it into the public power grid. The Powerwall also offers energy during a power outage, so homeowners in storm-prone areas or country homes with unreliable utility service can access emergency power.

The Powerwall utilizes a lithium ion battery with technology similar to that in Tesla automobiles and installs on the wall of your garage, basement or even outdoors. The sleek-looking unit is shipped in a self-contained, space-saving unit that can be mounted up on any wall, even in a closet. One can combine two or more batteries to get even more power. The fact that it is wall-mounted is vital, because it means you don’t have to have a battery room … filled with nasty batteries … It’s designed to work very well with solar systems right out of the box.

For larger homes, or those with higher power consumption requirements, multiple batteries can be installed together with up to 90 kWh total available power. Each battery in its weather resistant enclosure is just 51.2 inches by 33.9 inches and only 7.1 inches deep.  The system uses rooftop solar panels connected to the Powerwall and an inverter that directs current from both the solar panels and the Powerwall battery into your home’s alternating current power system.

For an example of how much energy your home uses in the day, consider that your refrigerator consumption is commonly 4.8 kWh/day (kilowatt hour per day) while your washer and dryer together equal about 5.6 kWh/day. Add to that your lights, laptop, flat screen television or stereo and you’re looking at about 2.5 kWh/day additional consumption. Of course, the first question that comes to mind for a cutting –edge home technology like this is the cost. According to Tesla Motors specifications, the home-sized batteries cost just $3000 for the 7-kWh model and $3500 for the 10-kWh version. Each comes with a 10-year warranty. If you’re looking for an energy efficient home that conforms to the requirements for solar panels, let your real estate professional know. We can optimize your search so that you find the home that is just right for you and your power needs.

Are We Nearing Another Real Estate Bubble?

Blog, Real Estate News   |   Dunham Stewart   |   August 5, 2015

The “bubble” word has reentered the real estate conversation and with it, much worried comparison between current market conditions and those of the mid-2000s housing bubble.

It’s easy to see why the word has been resuscitated: thanks to low inventory levels coupled with burgeoning buyer demand, many markets are indeed becoming frothy. Bidding wars have erupted in the most desirable neighborhoods and some buyers have started adopting pre-2007 tricks to win those face-offs including worrisome non-contingent offers at full asking price or higher.

Last week, the National Association of Realtors (NAR) released their Existing Home Sales Report. The report announced that the median existing-home price in June surpassed the peak median sales price set in July 2006. This revelation created many headlines in the Wall Street Journal and USA Today exclaiming that home prices had hit a “new record”.

PrickDoes this mean we have another problem on our hands? Not really… Even after adjusting for inflation, median prices aren’t a great barometer because they can be distorted by the “mix” of what’s selling. In 2009, for example, median prices plunged in part because an unusually large share of homes were selling out of foreclosure. Bank-owned homes tended to cluster at lower price points both because they weren’t as well maintained and mortgage companies were motivated to sell quickly to cut any losses. Prices were already falling, of course, but looking at changes in median prices probably overstated the rate of decline. There may be other reasons to worry abo ut housing affordability by comparing prices with incomes or prices with rents for a given market. But crude comparisons of nominal home prices with their 2006 and 2007 levels shouldn’t be used to make claims about a new bubble.

But before we start worrying about unsustainable home prices and the future bubble they could inflate, let’s take a look at several factors emerging now that will likely make that worrisome run-up in home prices slow down in coming months.

  1. Inventory Levels Won’t Stay Tight – As prices increase more owners become right-sided on their mortgages, a financial factor that enables them to more easily list and sell their homes. Confidence among prospective sellers is rising, with 40% of Americans believing now is a good time to sell, according to a Fannie Mae survey
  2. The Mix Of Homes Is Changing – Both that dwindling supply and the subsequent rise in prices have led to a decrease in distressed sales. Simultaneously, as distressed activity ebbs, luxury sales have surged, also pushing median prices higher.
  3. Mortgage Rates Are Rising – While those rising rates will do little to actually derail housing’s recovery, they will put downward pressure on the dramatic run-up in home prices.

Bottom line, home values are appreciating. However, they are not increasing at a rate that we should have fears of a new housing bubble around the corner.

Home Buyers Interested in Down Payment

Blog, Real Estate News   |   Dunham Stewart   |   July 22, 2015

lower down paymentChanges in down payment requirements have more influence over home buyers’ willingness to buy than changes in mortgage rates, according to a new study published by economists at the New York Federal Reserve.

Federal Reserve Bank of New York’s Survey of Consumer Expectations found evidence that buyers and renters impact of interest rates is highly overrated compared to the impact of even small changes in down payment requirements. The study found that decreasing the required down payment from 20% to 5% increases the willingness to purchase on the average about 15% among all buyers and 40% among renters.  Decreasing interest rate on a 30-year fixed rate mortgage, though it would save the buyer much more than the lower down payment, raised the willingness to purchase a home by only 5% on average.

A key takeaway is that the effect of a change in down payment requirements on housing demand strongly depends on households’ financial situation. For instance, a loosening of down payment requirements will have little effect on the willingness to purchase for a new home of current owners with substantial equity, or of renters with substantial liquid savings.  The results also imply that macroprudential measures such as a loan-to-value (LTV) cap may predominantly affect the lower end of the housing market, and that the effect on house prices will depend on the state of the economy and other asset markets,” said economists Andreas Fuster and Basit Zafar of the New York Federal Reserve.

Wealthy Chinese Flood Market With Special Federal Program

Blog   |   Dunham Stewart   |   July 6, 2015

chinese real estate investorsThe Chinese are coming here with their money, and, often, with their families. Rather than seeing China as the land of opportunity, more Chinese have been establishing homes in America, particularly in California, where they account for roughly one-third of foreign homebuyers, with upward of 70 percent paying cash. Overall Chinese investment in U.S. real estate has grown from $50 million in 2000 to $14 billion in 2013, surpassing all other foreign investors.

Chinese are buying U.S. homes and investing in U.S. mega-developments. Chinese home shoppers spent $28.6 billion on U.S. homes in the year ending in March, double the amount two years earlier, the National Association of Realtors reported. At least $10 billion of that went to buying homes in California.

In addition, Chinese citizens seeking green cards are a growing source of cash for housing and commercial developments under a federal program known as EB-5. The program allows foreign investors to get permanent U.S. residency for themselves, their spouse and children under 21 if they invest enough to create at least 10 jobs here. EB-5 investors in 2014 claimed the full 10,000-visa allotment by August. This year’s allotment was gone by May. More than 80 percent of the visas are going to Chinese citizens.

Since most foreign investors don’t have the ability to create their own businesses, designated organizations pool cash from multiple investors, funneling the money into job-creating development projects. Minimum investments range from $500,000 to $1 million. The most recent data available shows EB-5 investments totaled almost $2 billion in 2013, of which $317 million was spent in residential and commercial real estate development, according to Invest in the USA, an industry trade group.

EB-5 spending in the county, totaled $25.1 million in 2013, up from $2.1 million, Invest in the USA reported. “It’s very hard to get residency here. EB-5 is a foolproof way,” Fieldstone said. EB-5 money also is helping to finance the Hunters Point Shipyard and Treasure Island projects, two San Francisco housing developments managed by Orange County-based FivePoint Communities, he said.

Is Another Housing Bubble Forming?

Blog, Real Estate News   |   Dunham Stewart   |   July 1, 2015

Housing_Bubble_articleA lot of forces came together in the early 2000s to fuel the US housing boom while putting it at risk of its ultimate crash. Two trends related to loose lending standards stand out: 1) lots of new homebuyers were able to get mortgages, and 2) many of those new borrowers were able to do so by putting very little money up front. Combining these two forces, you got a massively leveraged housing market.

After the housing market bust we experienced in 2008, many experts have been quick to warn that a new bubble may be forming in some areas of the country. There’s not yet a bubble, despite factors reminiscent of the last housing bubble, including low interest rates and somewhat lax rules on down payments for first time buyers. But this is no longer the case. And this lower leverage may be the most important difference between the housing market today and the housing bubble because it reduces the risk of a major downturn.

The biggest challenge facing the housing market right now is the lack of inventory available for sale. Prices are determined by supply and demand. If prices continue to outpace inflation and income in these areas, that can eventually become a problem. Right now buyer demand is out-pacing seller supply, across many price ranges, driving prices up.Current homeowners list their home to either trade up or downsize, opening up inventory for first-time buyers to come in. One can’t happen without the other. But current homeowners aren’t flooding the market with “For Sale” signs. Some are worried they won’t be able to find a new house or they’re still waiting to recoup their home’s value lost in the crash.

If you are a homeowner debating listing your home for sale this, now is the time, meet with a local real estate professional who can guide you through the process.

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