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June 7, 2019

Market Update: May 2019

California Association of Realtors Market Snapshot

Top 5 Reasons You Should Become a Homeowner

Buying a home is a complicated process. Even finding the right home can be difficult in California’s inventory constrained market. Once you do, there is the negotiation process, contracts, inspections, appraisals, financing, and myriad other issues that pop up along the way. In many cases, your monthly mortgage payment when you do purchase a home can be more expensive than your rent, and that’s without considering the upfront cost of a down payment.

Taking all of this into account, why should you invest in home ownership? First, and perhaps most important, home ownership is the one tried and true way that Americans have actually managed to generate wealth in this society. In part, this is because home prices appreciate over time—even after adjusting for inflation. Back in 1980, the typical home in California cost less than $100,000. Today, that number is more than $600,000.

However, price appreciation is only part of the story. The leveraged/collateralized nature of the investment is also critical. Let’s face it, if you walked into your local bank branch tomorrow and asked for $500,000 because you had a hot stock tip, the conversation probably wouldn’t last very long. However, if you ask that same bank for money to invest in buying your own home, there’s a much higher probability of getting that loan. And, you are only required to produce a fraction of the upfront costs yourself—in some cases as low as 3.5%. However, when it comes time to sell, the bank does not require a 96.5% split of your profits—you keep it all despite putting a much smaller amount down.

Next, your rent will continue to increase, but your mortgage payment won’t. Aside from wealth creation, locking in a fixed-rate mortgage is one of the best ways to hedge against housing inflation. Since the 1980s, rents have more than tripled nationwide. In California, the typical apartment ranges from roughly $1,200/month for a studio to as much as $3,000 for a 4 bedroom unit. In some coastal metros, rents are significantly higher than that. Locking in a fixed payment now can generate significant savings over the course of 30+ years.

Also, interest rates are almost as low as ever. Today, the median-priced home in California exceeds $600,000, but rates have fallen back down to 4%. It has never been more affordable in modern history to borrow for home ownership than in the past few years. Although rates are not forecasted to rise rapidly, even a small increase to 5% will cost you significantly more over time. At 4%, the monthly mortgage payment for a median-priced home is $2,713 including taxes and insurance. At just 5%, that monthly payment goes up by $259 per month—costing you an additional $93,240, over the life of the loan.

Finally, your kids will lead better lives. Not only will your future generations benefit from the wealth creation and savings generated by your decision to purchase a home, but studies have shown that even after controlling for parents’ incomes, race, education levels, and other socioeconomic factors, home ownership has a positive impact on children’s health, high school graduation rates, and college attendance.

Home ownership has big paybacks for the economy as well as society at large. However, you don’t need to be altruistic for home ownership to make sense—you will give yourself a springboard that you and your family will continue to benefit from for generations.

Posted in Local Market
May 31, 2019

Staged Homes Sell Best

Staged Homes Sell Best

Posted in Tips and Tricks
May 24, 2019

Outdated Real Estate Advice

Outdated Real Estate Advice

Posted in Tips and Tricks
May 17, 2019

Buyer Foot Traffic Report

Buyer traffic is starting out slightly sluggish this spring, but may pick up in the later spring months due to rising inventory.

California Real Estate Foot Traffic for March 2019

Every month SentriLock, LLC. provides NAR with data on the number of properties shown by a REALTOR®. SentriLock Lockboxes are used in roughly a third of home showings across the nation. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future.

Posted in Local Market
May 10, 2019

Market Update: April 2019

California Association of Realtors Market Snapshot

Goldilocks Housing Season – Good Time to Buy and Sell?

The housing market in California remained soft in March with sales dropping and prices leveling off at the end of the first quarter. Home sales have been declining on a year-over-year basis for 11 consecutive months and the average decrease over that time frame was 8.3 percent. The state housing market, however, retained some of the momentum that we observed in February, as the decline in sales remained moderate for the second straight month. Compared to last year, home sales in March dropped 6.3 percent and registered a seasonally-adjusted annualized rate of 397,210 units. The sales figure was virtually unchanged from February as it only dipped 0.2 percent month-over-month.

The bounce back in sales in February and March suggests that the declining trend in interest rates that started at the end of 2018 is having a positive impact on housing demand. Mortgage rates had been trending down, reaching the lowest point since January 2018, before bouncing back in recent weeks. The average 30-year fixed-rate mortgage (FRM) reported by Freddie Mac in March 2019 was, in fact, 0.2 percent lower than that observed in the same month of last year.

Meanwhile, the growth in home prices continued to decelerate and registered the smallest year-over-year increase in seven years. The state housing market recorded a median price of $565,880 for existing single-family homes in March, an increase of 5.9 percent from the prior month but only a 0.2 percent increase from March 2018. The flattening in home prices was anticipated as price growth has been softening since it reached its recent peak in mid2018. With the statewide median price growing less than two percent each month in four of the last five months, home prices in California could hit a plateau before the end of the spring home buying season.

The current housing market condition is good news for home buyers. Prices leveling off, coupled with interest rates hitting the level last seen since early 2018 improves housing affordability and provides an opportunity for people who want to buy. The monthly mortgage payment of a median-priced home in California fell 1.8 percent from last year’s level and was the first year-over-year drop in 32 months. Home buyers took notes and some have already seized the opportunity, as pending home sales rose for the first time since January 2018.

Homeowners who are eager to sell should also feel enthusiastic about the lower-rate environment, especially if their houses have been sitting on the market for a longer-than-expected time period, and they had to make any price concessions. As costs of housing remain relatively low, the increase in home buying power will lead to greater market potential for sales. With interest rates expected to remain below last year’s levels in the next few months, housing demand should improve in the short term as buyers who had given up on home ownership are motivated to re-enter the market.

Mortgage Payment Declined for the 1st time in 32 months

Posted in Local Market
May 3, 2019

How likely is it that your smart home will be hacked?

How likely is it that your smart home be hacked?

Posted in Tips and Tricks
May 1, 2019

3d Tour: 1655 North California Boulevard, Unit 225, Walnut Creek, CA

1655 N California 225 Walnut Creek Virtual Tour

Read the seller interview and watch the 3d tour here: https://www.elizabethrusso.com/contra-costa/walnut-creek/listing-agent/sold-homes-near-1655-north-california-boulevard-unit-225-walnut-creek-ca-94596/


2 BD    2 FULL BA    1,198 SqFt    $632 per month HOA     40863465 MLS

Posted in Listings
April 26, 2019

Mortgage Industry Update April 2019

Hello again!    

   Interest rates have dipped slightly in the past several weeks which is good news for you in a real estate market that seems to be going through a correction.  If you got a loan in the late summer 2018, you may want to explore refinancing to a better rate.   If you are already in the adjustable phase of an older ARM you are seeing your rate reset above 5% now, so it's a good idea to explore refinancing to a fixed product, which of course I can help with.

Low down/zero down buyers? -  The CalHFA program offers loan programs with no down and no closing costs!  Ask for details, in a less competitive market if you're a buyer this may give you a good opportunity to buy NOW!

Self employed borrowers - 12 month bank statements programs to qualify using deposits and NOT looking at income tax returns, let me know if you're a buyer like this.

   Available to my office-  HIGH balance up to $726,525 to 90% LTV even in NON high cost counties, like San Joaquin, Stanislaus, Sacramento, Solano, so basically ANY county in California that didn't have the high cost limit, is now eligible for a high balance limit up to $726,525.  This product is only available to a very select group of brokers, and I have it.  Call me for the details.

CONDO's in litigation- YES I can do them, construction defects etc..   let me know your scenario.

  As always, have a safe and successful weekend and let me know how I can assist you in smooth, efficient and timely loan closing!  Also, let me know Elizabeth Russo sent you too!

Thank you,

Eric Chauhan Sr. Loan Officer  Associated Mortgage GroupEric Chauhan
Sr. Loan Officer
Associated Mortgage Group
39180 Liberty St #101
Fremont, Ca 94538
PH: 510-494-2625
CELL: 510-676-8939
FAX: 510-744-9835
BRE: 01314394
NMLS: 240203


Posted in Local Market
April 19, 2019

Calling In The Inspection Experts

Calling In The Inspection Experts

Posted in Tips and Tricks
April 5, 2019

Market Update: March 2019

California Association of Realtors Market Snapshot

Tight Supply » Low Affordability » Outmigration

Outmigration continues to be a big concern for the California housing market. Caused by the state’s housing affordability issue, outmigration has resulted in about 800,000 people leaving California since 2010. As of the fourth quarter of 2018, only 28 percent of California households could afford to purchase the median-priced home. While this number is up from 27 percent in the third quarter of 2018, it is down from 29 percent one year ago. The high cost of housing is forcing Californians out of their current county or out of the state entirely.

Those who are leaving California are mostly middle class and almost entirely comprised of people who make less than $100,000. In 2017, the minimum income required to buy a median-priced home in California was $110,890, while the annual mean wage for a variety of professions, including Registered Nurse ($102,700), Police and Sheriff’s Patrol Officer ($93,550), Elementary School Teacher ($77,990), and Firefighter ($73,860) was well below that minimum.

Outmigration is even more problematic in areas that have poor affordability, most notably the Bay Area. In San Francisco the minimum income required to buy a median-priced home reached $290,630 in 2017, while the income of those same professions did not even reach half the income requirement.

Outmigration is a direct consequence of tight inventory in the housing market in California. Home building has not kept pace with housing demand in the last 12 years. Between 2005 and 2016, California only added 270 units for every 1,000 new inhabitants, and the Golden State lagged other states in housing per capita by as much as 40 percent. The more California “underbuilds”, the higher prices grow, and the lower homeownership rate becomes. In fact, California is ranked the second lowest in homeownership across all states, out ranked by only New York.

Because of the state’s low housing affordability and its difficulty in achieving homeownership, Californians are leaving and headed to more affordable states such as Texas, Arizona, Nevada, and Oregon. Businesses and jobs follow the California exodus as well, with companies such as Toyota, Jamba Juice, and Comcast leaving the state, resulting in fewer jobs for those still in the state, higher income inequality, and a reduction in the access of less skilled workers to high-wage labor markets.

That said, California is still a place where people want to live. Results from a recent poll of those who live in California show that 63 percent would not be willing to move out of California to achieve homeownership. In addition, 31 percent of home buyers surveyed in the California Association of REALTORS® 2018 Consumer Survey said they did consider purchasing a home in another state that met their needs but ultimately ended up staying in California because they like the city that they live in/like living in California as a whole (38%), didn’t want to leave their job or friends and family (20%), and California is either their home state or they have deep familiarity with the area (11%).

Housing Units Added Per Capita (2005-2016).png

Posted in Local Market