Real Estate Tips

With more millionaires and billionaires in the world than ever before, pent-up demand and increasing consumer confidence, luxury real estate sales have been surging around the world. Luxury properties are once again one of the hottest real estate market trends, as London, New York and Los Angeles report a burgeoning luxury housing market. According to Spectrem’s Millionaire Corner Affluent Market Insights report for 2014, the number of Millionaire households in the U.S. has reached a record of over 9 million. There are 132,000 households with a net worth over $25 million.

Christies International Real Estate released its second annual Luxury Residential Property Market report, looking at the market in 10 of the world’s major markets – Cote d’Azur, Hong Kong, London, Los Angeles, Miami, New York, Paris, San Francisco, Sydney and Toronto. Those markets were compared against each other in terms of sales price, prices per square foot, percentage of non-local and international buyers, and the number of luxury listings per population.

London was rated No. 1 based on its top sale of a property for $101.5 million, and it also had the top per square foot sales average of $4,683. New York and Los Angeles were second and third, respectively, with a significant growth in luxury sales volume. Here in Los Angeles, the mega mansion Fleur de Lys just sold for more than any other house in Los Angeles County ever: $102 million. In an all-cash sale

What are my Top 5 Tips for First Time Home Sellers?

1. Remember that the outside is just as important and in some ways more important than the inside. The outside is the first impression and sets the tone for the property tour inside.

2. Be prepared to spend some money on repairs.  You will be expected to address some items needing repairs. In some cases,  a little money can go a long way.

3. Know the number and know your bottom line.  Make sure you know what your mortgage payoff really is and what your closing costs will be.  You also want to make sure you know your numbers if you are going to be buying as well.  If you are selling and buying something else you need to meet with a lender on the purchase before you sell your home because it will effect your negotiating ability.

5. Be prepared for showings.  Make some preparations and plan ahead of time for last minute showings and certain days of the week.  Maybe let you spouse be in charge of some days and you the others if you both work or be sure to enlist the help of a stay at home mom or friend if you need pets removed during showings and you can’t always get home.  A little preparation and planning on the front end will make a world of difference in getting those buyers in your home.  And after all we have to get them in to get it sold!

Fueling this seller’s market are several factors that have unexpectedly converged: For-sale listings are limited, which is pushing prices up at the same time that mortgage rates are rising. That’s created a sense of urgency among buyers, many of whom fear that the door to affordable real estate in their market may be closing.Many sellers are still hesitant about putting their house up for sale. Where are prices headed? Where are interest rates headed? Can buyers qualify for a mortgage? These are all valid questions. However, there are several reasons to sell your home sooner rather than later. Here are five of those reasons.

1. The Most Serious Buyers Are Out Now

Most people realize that the housing market is hottest from April through June. The most serious buyers are well aware of this and, for that reason, come out in early spring in order to beat the heavy competition. These buyers are ready, willing and able to buy…and are in the market right now!

2. There Is Less Competition Now

Housing supply always grows from the spring through the early summer. The choices buyers have will continue to increase over the next few months. Don’t wait until all the other potential sellers in your market put their homes up for sale.

3. The Process Will Be Quicker

One of the biggest challenges of the 2014 housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. As the market heats up, banks will be inundated with loan inquiries causing closing timelines to lengthen. Selling now will make the process quicker and simpler.

4. There Will Never Be a Better Time to Move-UpIf you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19% from now to 2018. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate at about 4.5% right now. Rates are projected to be well over 5% by this time next year.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and decide whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

You already know the answers to the questions we just asked. You have the power to take back control of the situation by pricing your home to guarantee it sells. The time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

The majority of housing markets are entering the 2014 home buying season in significantly better shape than they were one year ago. The outlook for a more abundant, more affordable selection of homes for sale this spring improved considerably in February. This is signaling growing seller optimism and a strong, early start to the spring home-buying season. Sellers in most markets are responding to the price increases of the past year, suggesting they are increasingly optimistic about the housing recovery and the underlying strength of market demand through 2014, according to the latest February data from realor.com.

While February inventories remain low by historic standards, following seasonal patterns, they will probably continue grow over the next two months with the coming of spring. With the spring buying season around the corner, inventories of new listings are growing. Despite the increase in inventory, the median list price jumped by more than 2 percent in February. These list price increases are another sign of seller confidence going into the selling season as sellers price their homes in anticipation of market conditions in the coming months.

There are positive signs that the market is more balanced and that we will not see a repeat of last year’s overheated markets, soaring prices and multiple bid situations. On a year-over-year basis, the median list price and the size of the for-sale inventory were up by 7.57% and 10.14 percent, respectively. Record low inventories last January set the stage for a selling season featuring soaring prices, bidding wars and the outbreak of price bubbles in several California markets. The improved conditions for sellers prompted many to list their homes, but not enough to measurable improve the inventory picture as real estate markets go into hibernation to prepare for the 2014 season.

Vastly improved home prices over the past five years have changed the landscape of California’s distressed housing market, which is now just a fraction of what it was during the Great Recession, the California Association of Realtors said today. The number of short sales and bank-sold homes is down. Way down. The numbers have dropped from 69.5 percent of all homes sold in 2009 to 15.6 percent today. During the same time period, California’s median home price has soared more than 64 percent. Significant home price appreciation over the past five years has lifted the market value of many underwater homes, and as a result, many homeowners have gained significant equity in their homes, resulting in fewer short sales and foreclosures. The statewide share of equity sales hit a high of 86.4 percent in November 2013 and has been above 80 percent for the past seven months.

A recent survey of over 100 real estate experts and investment and market strategists asked panelists to predict the path of home values through 2018. Even the pessimists expect home prices to rise for the next five years. The idea that homes are a good stable investment has largely been debunked, in particular by Yale economist Robert Shiller. As usual, he is reluctant to declare that home prices had bottomed. With that said, home prices are impressively up 23% from their March 2012 lows.

On average, panelists say they expected nationwide home value appreciation of 4.5 percent this year, with a steady slowdown in appreciation rates each year through 2018. But it’s worth noting that the most pessimistic quartile of those surveyed also see prices going up. It’s a modest amount, but they see prices going up a cumulative 10.9% through 2018. That’s a 2.1% rate annualized. Based on current expectations for home value appreciation during the next five years, panelists predicted that overall U.S. home values could exceed their April 2007 peak by the first quarter of 2018

Should we be worried that almost no one sees prices falling? The good news is that all of these home price bulls don’t see prices accelerating to bubble-era rates. Throughout the recovery, large-scale investors have purchased thousands of homes nationwide, particularly lower-priced vacant and foreclosed homes, fixing them up and keeping them in their portfolios as rental properties. This investor activity helped put a floor under sales volumes during the depth of the housing recession, but also created competition for many would-be buyers and contributed to rapid price spikes in some areas.

Panelists were also asked when the Federal Reserve should end its ongoing stimulus efforts, known as “quantitative easing.” Since September 2012, the Fed has been purchasing tens of billions of dollars worth of Treasury bonds and mortgage securities each month, which has helped keep mortgage interest rates low and stimulate demand. The program is now being wound down. More than 70 percent of the experts want to see the monetary stimulus reduced to zero before the end of this year, and the current pace of tapering will get us there.

So you’ve saved up your down payment, rates are about as low as you think they’ll go, and you’re ready to start home shopping, but it’s winter – and your pals are telling you that should what till spring. Is that really true? Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five reasons purchasers should consider buying before the spring market arrives:

Supply Of Homes For Sale Is Shrinking

With inventory declining, there will be fewer homes on the market, finding a home of your dreams may become more difficult going forward. There are buyers in more and more markets surprised that there is no longer a large assortment of houses to choose from. Sellers willing to keep their house on the market in winter may be more flexible in negotiating the terms of an offer; extending the time to close or agreeing to other concessions.

Home Prices Are Increasing

Home prices have been on the rise for the last couple years, and prices are projected to appreciate by over 25% from now to 2018. First time home buyers will probably pay more both in price and interest rate if they wait until the spring. Even if you are a move-up buyer, it will wind-up costing you more in net dollars as the home you will buy will appreciate at approximately the same rate as the house you are in now.

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 be over 5% by the spring. That is an increase of almost one full point over current rates.

Owning a Home Helps Create Family Wealth

Whether you are rent or you own the home you are living in, you are paying a mortgage. Either you are paying your mortgage or your landlord’s. The Fed, in a recent study, revealed that the net worth of the average homeowner is 30 times greater than that of a renter.

Buy Low, Sell High

We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’ compared to where it will be in the coming years. It’s time to buy

Hybrid ARMs continued to be the most popular loan product offered by lenders and chosen by ARM borrowers according to Freddie Mac’s 30th Annual Adjustable-Rate Mortgage (ARM) Survey of prime loan offerings, which was conducted January 6 to January 10,

Homebuyers have preferred fixed-rate mortgages the past few years because of the low interest rates and the certainty of the monthly principal and interest payment. As longer-term rates rise, ARMs with their lower initial interest rates will become more appealing to loan applicants. Hybrid ARMs are particularly attractive because they have an initial extended fixed-rate period of 3 to 10 years — and then adjust annually thereafter. Nearly all of the ARM lenders participating in the survey offered a hybrid. The 5/1 hybrid (a five-year fixed-rate initial period before the rate resets annually) was by far the most common, followed by the 3/1, 7/1 and 10/1. Far less common were ARMs where the re-pricing frequency was fixed for the life of loan, such as a one-year adjustable, a 3/3 ARM (which adjusts once every three years), or a 5/5 ARM (which adjusts every fifth year).

Banks are definitely doing more ARMs because they’re selling the consumer what they’re asking for, which is a lower monthly payment. In early January 2014, the interest rate savings for the 5/1 hybrid ARM with a 30-year term — the most common ARM offered in today’s market — compared to the 30-year fixed-rate mortgage amounted to about 1.36 percentage points. For a $250,000 loan, the monthly principal and interest payment on a 5/1 hybrid would be about $194 less than on the 30-year fixed-rate loan over the first five years of the loan.

Many borrowers with adjustable-rate mortgages were among the first to default during the downturn. When their rates adjusted after an initial teaser period, they were unable to refinance and got stuck owing sharply higher payments. This time around will be different, lenders say, because underwriting standards are tougher for hybrid ARMs, so borrowers will be less likely to get squeezed when interest rates reset. Moreover, regulators have all but banned the interest-only and balloon payment features that made ARMs ticking time bombs during the financial crisis.

For many, it makes a lot of sense to take a shorter-term mortgage, If the borrower is in a situation where they’re not going to be in that home for more than seven years, it would be incorrect for them to take the fixed rate when the ARM is giving them a benefit of lower monthly payments.

Record low inventories last January set the stage for a selling season featuring soaring prices, bidding wars and the outbreak of price bubbles in several California markets. The improved conditions for sellers prompted many to list their homes, but not enough to measurable improve the inventory picture as real estate markets go into hibernation to prepare for the 2014 season. November listings were only 0.18 percent above levels of November 2012, when inventories in the Realtor.com database had already begun the dramatic decline that culminated in the spring, 2013 shortages. With inventory levels enter the winter at virtually the same level last year, should sellers remain leery of the market, inventories may not restock sufficiently to meet buyer demand next spring, setting the stage for a repeat of last year’s wild spring and summer conditions. Despite the remarkable price gains in 2013-exceeding 13 percent through the third quarter in the latest Case-Shiller numbers and the freeing of millions of owners from negative equity sellers seem to be pulling back. Recent consumer surveys have tracked a significant decline in consumer confidence in home price expectations. In addition, the share of those who expect mortgage rates to climb in the next 12 months remained at an elevated level since it spiked in June.

More home owners will be are edging above water with their mortgages 2014. The number of underwater homes continues to shrink , regaining equity during the third quarter. A house is said to have negative equity or be underwater when more is owed on the mortgage than the market value of the property. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both. Currently, about 13 percent of homes with a mortgage remain in negative equity compared to 14.7 percent the end of the second quarter. An estimated 42.6 million homes in the U.S. have positive equity. About 20 percent of those homes, however, have less than 20 percent of equity or what is considered “under-equitied”. This according to CoreLogic’s latest negative equity analysis reports. The majority of the homes that have positive equity are in the high-end housing market. Rising home prices continued to help homeowners regain their lost equity in the third quarter of 2013. “We should see a further rebound in consumer confidence and economic growth in 2014 as more homeowners escape the negative equity trap,” said Anand Nallathambi, president and CEO of CoreLogic.