Before the statistics come out, Realtors judge the status of the market by how much the phone is ringing, how many appointments we have and how many people show up at open houses. We all agree the market is thawing. Buyers have been frozen with fear and concern for months. It seems, however temporary it may be, that their confidence has improved.
The Media In Real Estate
It almost doesn’t matter what the reality of the market is; it’s what the media says the market is. We’ve been seeing multiple offers in certain neighborhoods and price ranges for about two months now. But most of us only watch and hear the national media, not the local reports on the real estate market. To really find out what’s happening in your neighborhood, it’s important to speak to your local Realtor.
Absorption Rates
The absorption rate is a quick way to see if the number of homes for sale in San Mateo County is going up or down. It’s just one of the statistics used to evaluate pricing.
What you’re looking at is how many months’ inventory there is on the market. The assumption is that it will take X number of months for all of the houses currently on the market to sell. More inventory = longer to sell.
You can also see if the area is a buyer or a sellers’ market. The National Association of Realtors defines a balanced market as one is which there is 6 months of inventory. More than 6 months, it’s a buyers’ market; less is a sellers’ market.
The absorption rate is a quick way to see if the number of homes for sale in San Mateo County is going up or down. It’s just one of the statistics used to evaluate pricing.
What you’re looking at is how many months’ inventory there is on the market. The assumption is that it will take X number of months for all of the houses currently on the market to sell. More inventory = longer to sell.
You can also see if the area is a buyer or a sellers’ market. The National Association of Realtors defines a balanced market as one is which there is 6 months of inventory. More than 6 months, it’s a buyers’ market; less is a sellers’ market.
Got a San Mateo County real estate question? Call me at 650.888.9268 or send me an email Vicki [at] CallVicki.com. If you like what you’ve read, subscribe to the San Mateo Real Estate Blog feed.
This Old House reports, “Single women are the fastest growing segment of the real estate market. In fact, they are buying homes at more than twice the rate of single men, snatching up one out of every five properties sold in the U.S.”
The long awaited new conforming loan limits for San Mateo County and other high-cost areas are now available to home buyers, Wells Fargo announced this week, with other banks to follow in the coming days.
Jumbo vs Conforming
There are two types of loans: conforming and jumbo. The difference is cost. Remember, the higher the risk, the higher the cost in interest rates to you. The interest rates on jumbo loans is higher – more risk.
With the new conforming loan limit of $729,750, more buyers will be able to afford a higher loan amount, making homes more affordable.
For A Limited Time
This new program has restrictions and it’s only available until the 1st of December of this year. So be sure to talk with your mortgage broker to find out if you qualify.
Interest rates depend on a lot of factors. It’s not like shopping for a vacuum cleaner. Basically the bigger the risk for the bank, the higher your interest rate. In other words: got a high credit score? That means big risk for the bank and a high rate for you.
I’ve been hearing for a while now that buyers are waiting for the bottom of the real estate market before they buy. IMO – not smart. I watch the market every day. I couldn’t tell you when we’ll hit bottom – we might have already, which is my opinion as of today. But I’ve thought that before.
So you wait until you think it’s the bottom of the market before you buy. That only takes into consideration the price of the house. What about interest rates?
I don’t know if you’re listening to the rumbling out there but the next thing to hit this country is going to be inflation. What does that mean to home buyers? Higher interest rates = More expensive houses.
Think of this way: You’re not buying a house; you’re buying a loan.
For the sake of this conversations, I’m going to use a median. Uh-oh.
The current median home price in San Mateo County is $580,000. Make it easy on me – forget the down payment for these examples.
Year
Average Interest Rate
Price of House
Monthly Payment
2009
5.06
580,000
3134.87
2008
6.03
580,000
3488.59
2007
6.34
580,000
3605.18
2006
6.41
580,000
3631.73
2005
5.87
580,000
3429.07
2004
5.84
580,000
3417.96
2003
5.83
580,000
3414.26
2002
6.54
580,000
3681.27
2001
6.97
580,000
3847.08
2000
8.05
580,000
4276.07
See what I mean? The difference between 5.83 and 5.84% is a cup of Starbucks. But the difference between 8.05 of 2000 and the 6.97 rate of 2001 might be a car payment.
Got a San Mateo County real estate question? Ask it here! If you’re wondering, somebody else probably is too.
Well, that depends. It depends on you. If you plan to live in your home until we get through this real estate cycle – 5 to 7 years – now could be the right time for you. There are some great arguments for buying a home now but if it’s not the right time, then it’s not the right time.
Some are waiting for the bottom of the market. I’ll tell you what, I watch the housing market every day, I can’t tell you if we’ve hit the bottom or not. I wish I could and so does everyone else. Timing is about you. If you’re ready, read on.
Answer these questions:
Yes
No
Are you married and is your modified adjusted gross income less than $150,000?
Have you and your spouse had NO home ownership in the past three years?
Do you plan to stay in the new home for at least three years?
If you answered Yes to all three of these questions, you may be eligible for the $8,000 first-time buyers tax credit.
Reasons to Buy NOW
First-time buyers get up to an $8,000 tax credit that doesn’t have to be repaid
Tax savings, appreciation, and amortization dramatically reduce the monthly cost of ownership
Selection of homes is still good and prices are lower giving you a greater opportunity to find the home you want
Interest rates are lower than they’ve been in 50 years allowing you a lower cost of ownership
This is a revision of the tax credit first established in 2008. A very important change is that if the home is purchased between January 1, 2009 and December 1, 2009, the tax credit doesn’t have to be repaid. However, if the home ceases to be your principal residence within three years of purchase, the tax credit must be completely recaptured. This would include converting the home to rental property.
Many people don’t understand the significance between a tax deduction and a tax credit. A tax deduction reduces income subject to tax but a tax credit is a dollar for dollar reduction in tax liability. An $8,000 tax deduction would result in $2,240 tax savings for a 28% taxpayer. Whereas an $8,000 tax credit would result in $8,000 in tax savings for the same 28% taxpayer.
For more information, see Form 5405 available on www.IRS.gov. This information is not intended to substitute for professional tax advice.
San Mateo County is a high-cost area? Surprised? Me either. Fannie Mae gets it too.
High-cost is a technical term <smirk> that’s been calculated based on the median price of homes in a given Metropolitan Statistical Area (MSA).
Last year a temporary high-limit loan called the jumbo-conforming was implemented. We were hoping that the product would become permanent and off to lobby Realtors went. It was not to be – it expired.
Then The Housing and Economic Recovery Act of 2008 brought the high-loan limit back to life. We’ve been waiting for months for it to actually become available to buyers. We thought March was the magic month but…
We had to wait for Fannie to give the green light – which they just did. Now word is that Wells Fargo is “retooling” their computers to roll it out. No date has been given but we’re closer.
There are restrictions so be sure to talk with your mortgage broker to see if you qualify.
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To help provide first-time home buyers with peace of mind when purchasing a home, the C.A.R. Housing Affordability Fund (C.A.R.H.A.F.) is offering a new mortgage protection program to first-time home buyers.
Just In Case You Get Laid Off
Through the Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a monthly benefit of $750 per month for up to six months.
More Benefits
Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program this year, and estimates that up to 3,000 families will benefit from the program throughout 2009.
How To
To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer – someone who has not owned a home in the last three years
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)
Contact Your Realtor
First-time home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®.
