This Week in Real Estate - 10/30/2015 - Housing Bubble ???

A housing bubble again ???

One of the most common questions I get is whether or not I believe we are in a housing bubble. I do not think that we are in a bubble, but it is always great when someone smarter than you tells why in an article.

This was published by Housing Wire yesterday from the economist Mike Fratantoni.

http://www.housingwire.com/blogs/1-rewired/post/35485-worries-about-the-housing-market-are-overblown

HousingWire

Worries about the housing market are overblown

There are limits, after all

Mike Fratantoni

October 29, 2015

Lynn Effinger recently wrote an opinion piece here on HousingWire in which he surmised that we are in a housing bubble. He suggests that Fannie Mae and Freddie Mac (the GSEs), the Federal Housing Administration and the Federal Reserve are once again “setting the stage” for another housing crisis.

If anything, the overcorrection by regulators and trepidation by lenders has created an environment where borrowers and private capital are both left sitting on the sidelines, and access to credit remains quite tight relative to historical norms.

There is no question that the government remains a larger force in the housing market and is focused on protecting consumers. However recent actions by the FHA, the Department of Justice and the Consumer Financial Protection Bureau are more likely to constrain rather than expand the availability of credit.

They have levied significant penalties to hold lenders accountable and ensure that the mistakes made in the run up to the crisis never happen again. And as such, they have overcompensated and created an environment where qualified, responsible buyers are being kept from the home purchase market. 

In fact, the homeownership rate remains near a 26-year low in this country, and credit still remains tight. The Mortgage Bankers Association's Mortgage Credit Availability Index  reinforces the notion that although credit has improved marginally over the last year, primarily for borrowers seeking jumbo loans, it is nowhere near where it was during the housing bubble (Chart here: MCAI Longview).

Furthermore, the CFPB’s Ability to Repay/Qualified Mortgage rules have effectively eliminated the unsustainable lending products and instruments that substantially contributed to the 2005-2007 boom, including no-doc loans, subprime, negative amortization, extended term loans, balloons, ARMs with deep teaser rates, among others.

Housing markets are driven by underlying changes in housing supply and demand.  While new construction has picked up, we remain just above the pace of single-family starts seen at the worst point in the 1990-1991 recession. And inventories of homes remain extremely tight in many markets.

Housing demand is driven by the job market and demographics.

With an unemployment rate of 5.1%, we are approaching full employment. In terms of demographics, the Millennial generation, the largest in history, is now moving out of their parents homes and into their own.

With the oldest millennials being in their early 30's, simple math dictates a tectonic sea change is afoot. More housing, both rentals and owner occupied, will be required to meet the needs of the approximate 1.4 million new households annually for the decade ahead.

Compared to the roughly 600k households formed annually during the recession, this huge increase will require new homes that will need mortgages. (Household Formation). And incidentally MBA's forecast calls for a slow but steady increase to meet this significant demand (Forecast).

It is not surprising that, given the depths of the last housing bubble, some are looking for an opportunity to predict the next one. A stopped clock is right twice a day.  However in this case, the current regulatory environment and household formation trends reveals a different reality.

I know it was a little long, but a great read.

-Kris

Home Tips for Halloween.

We all know the tips for kids and parents trick or treating, http://www.safekids.org/tip/halloween-safety-tips, but do you know the tips to keep kids safe while approaching your home?

http://www.safewise.com/blog/9-ways-prepare-house-safe-halloween/

1. Secure railings.

Young children, and the adults who often accompany them, will need the security and support of railings while climbing steps to get to your front door. If you’ve been putting off fixing that rickety railing, it’s time to get out the toolbox and make it secure.

2. Clear walkways.

Trick-or-treaters are too busy counting candy to pay close attention to where they’re walking, so it’s critical to survey your yard for potential trip and slip hazards. Be sure your yard is free of tripping hazards like hoses and sprinklers, clear walkways of loose gravel, and be sure to clean moss off steps. If your home has an irrigation system, turn the system off well in advance of the big night so your lawn and walkways have a chance to dry.

3. Avoid using candles.

A glowing jack-o’-lantern makes your home warm and welcoming to candy seekers, but using a candle to illuminate a pumpkin can be dangerous. Costumes, paper decorations and ornamental straw can easily catch on fire. Instead of a traditional candle, use one powered by batteries.

4. Consider candy choices.

No doubt buying Halloween candy is fun, but keep in mind that not all candy is appropriate for every child. Avoid candy that poses a choking hazard for toddlers, and keep in mind that a number of children have peanut allergies. Even if the candy doesn’t contain peanuts, it could be made in a facility that handles peanuts. Check the candy bag’s label for a peanut allergy warning.

5. Use lots of lights.

A dimly lit entryway helps set the spooky mood of Halloween, but it’s also increases the chance of an accident. Make sure the exterior lights of your home are working, and consider turning on flood lights to illuminate the darkest areas of your yard. Even if you’re not going to be home, leave on lights for safety reasons and to dissuade unsavory characters from vandalizing your home. And, if you won’t be there, make sure you set your security system, just to be safe.

6. Contain your pets.

Barking dogs not only scare trick-or-treaters of every age away, they also present a danger. A dog that breaks away from your home might not bite, but he could knock down a toddler or scare a teen right into the street, causing even more danger. Keep all pets securely confined inside your home until the hustle and bustle of the night has passed.

7. Don’t put out candy.

Maybe you won’t be home on Halloween or perhaps it’s difficult for you to answer the door, so you’ve put out a bowl of candy for kids to help themselves. While this seems like the right thing to do, someone could taint the candy. It’s probably unlikely, but it’s definitely not worth taking the chance.

8. Make room in the garage.

If you’re headed out on Halloween, clean out the garage and store your car securely in it. From teen antics to serious vehicle vandalism and theft, your car is best kept in the garage on Halloween.

9. Use discretion when opening the door.

While nearly all trick-or-treaters are innocent kids out to collect as much candy as they can possibly carry, you must still be cautious of whom you open the door for. If you have an uneasy feeling about the person approaching your door, don’t open it. And as the barrage of trick-or-treaters fades to just a few here and there, it’s a good idea to stop opening the door for the night.

This week in Real Estate - 10-23-20015 - Affordability is falling, but there is help

The affordability is dropping.

There are many factors that are included in the Housing Affordability Index (HAI), but Median Income, Median Price and Interest rates are the three that have the most impact on the index.

As you know, prices are increasing. Up nearly 80% since the low in 2012.

Interest rates are up as well. You may not believe it, but 4% interest rates are still incredibly low as compared to historical averages, but they are up from the 3.25-3.5% rates we had in the beginning of 2013.

And incomes are up, but not that much. The results, affordability has dropped significantly.

In Q2 2012, the Housing Affordability Index (HAI) for Napa County was 50% in Solano County it was 77%. The latest report for Q2 2015 has the HAI for Napa County at 23% and Solano County at 46%

-Kris

Helping with Affordability

The Cities of Napa, American Canyon, Calistoga and Yountville all have GREAT opportunities for down payment assistance programs for first time home buyers

In Napa, you can get up to $150,000 or 30% of you purchase price. In American Canyon you can get up to $100,000.

They have programs for people trying to purchase mobile homes as well!

The money is always in the form of a silent second (NO PAYMENTS) and some of the loans are forgiven/dismissed if you live in the property for the entire length of the loan!

In addition they have programs to help low income families repair the homes they are currently living in.

These programs are great, but there is an income restriction catch. For a household of 2 people you need to make less than $52,750 for a household of 4 people it is $65,900.

If those income qualifications take you out of the running there is a county program that just may work as well.

The County will lend you up to 10% of the purchase price.

You have to work in Napa County and the home you purchase must be within 20 mile radius (as the crow flies) of your work.

The good news the income for a household of 2 people less than $82,680 for a household of 4 people it is $102,320.

These are both great programs and the money will not be available for ever, so get shopping.

For more information regarding these programs please email me.

-Kris

This Week in Real Estate - 10-16-2015 - Harvesting Fall Sales

Selling you home in the fall.

Fall, the season of falling leaves and prices … not so fast.

There are a lot of reasons people list their homes in the fall, most of them do not have to deal with desperation. So don’t get trapped in that mentality. Right now we are still in a seller’s market. Inventory is down and buyers are approaching me every day. I have 100s of buyers in waiting. Waiting for their next home that we haven’t found yet.

Follow these top five staging tips for autumn planning:

1. Focus on Fall Curb Appeal. When your house is on the market, your top priority should be your home's curb appeal. Unfortunately, however, keeping an attractive-looking yard gets tougher in the fall. Your summer flowers will have already come and gone, so make sure you dress up your front steps with pots of brightly colored mums, and a few pumpkins as soon as they're available.

You'll also want to make sure your yard and beds are kept clean of falling leaves. Keeping up with falling leaves can be a chore, especially when they start falling during peak season. Raking is no job for a perfectionist, and a few leaves here and there are okay. Overall, however, you need to be sure that potential buyers see your yard and home, not dim shapes covered up by three inches of leaves.

2. Don't Go Overboard. Now that we've covered priority No. 1, remember the importance of moderation. As important as staging is, the key to success is to keep yourself in check and know when to stop. You don't want to break your personal budget, and you don't want to over-decorate your home. Between the weather, fall sports, and holidays, autumn is full of tempting reasons to decorate too much.

It's easy to go overboard, and plenty of people will make this mistake. Don't be one of them. Put a simple wreath on the door, grab a few potted mums for inside, and leave it at that. Remember, you want your buyers to remember the house, not your great fall or Halloween decorations. You just want some accents that make potential buyers realize what they could do if they owned your home.

3. Focus on Comfort. It might not be sweater weather yet, but we all want to be in a cozy home. Once you've drawn potential buyers in, make them realize how comfortable they'd be during fall--and year-round. Highlight the coziness of your home. Stack firewood in the fireplace so it's "ready to go," at least in your buyers' minds. Add some comfy touches like laying out your favorite blanket.

4. Brighten up Your House. Autumn days get shorter and shorter, and the early sunset can weigh down emotions and lead to some tired house shoppers coming to your home experiencing seasonal affective disorder symptoms. So brighten your home, and their day.

Make sure you have bright, warm light bulbs in all of your lamps and fixtures. If it's even a little dark outside or getting slightly dim in a room, turn on your lamps. If you have a room that gets strong afternoon sun or has a great angle at sunset, make sure the shades are wide open at the right time. No matter what time it is, your home should look bright, clean, and open.

5. Change Your Bedding. Don't let the warm and cozy theme stop on the main floor of your home. Your shoppers will be upstairs checking out the bedroom, so make sure it's just as cozy as every other room - if not more.

If your quilt is old and battered, change it for a new one. You can still sleep under your favorite quilt, but show off with a thick and luxurious one, even if it's just temporary. The bed is the focal point of the room, and the comforter sets the tone and establishes how the room will feel. It's crucial for you to make it warm, relaxing, and inviting.

Fall is a season of change, and if your home is still on the market, it just means you need to switch up your plan. Change the feel of your home by making it feel warm and cozy for the fall season, and you'll be more likely to draw interest from potential buyers.

-Kris

PS. Save the date – December 3, 2015 5:30 – 8:30 Toy Drive at Compadres to support Napa’s Salvation Army Angels and Toys for Tots.

This week in Real Estate 10-9-2015 - 3rd Quarter trends

Trend report for the 3^rd quarter of 2015

The numbers are in and they look great. When looking for trends, I like to look at quarterly data. With the books closed on the third quarter of 2015 here is a great glimpse at what we have been seeing. All the data is from BAREIS MLS, Napa County. But these figures echo what is happening in Sonoma and Solano counties as well.

Let’s start by looking at the Percentage change in Median Price of Quarter 12 months previous. (eg. Q3 2014 vs Q3 2013)

As you can see the dramatic turn around started in 2012. Though our growth in the median price has slowed down, we are still averaging double digit increases. This slowdown is a good thing for long sustainable growth.

Median Prices

The median price is climbing. Up 9.3% from Q3 2014 $550,000 and slightly above the $586,000 last quarter.

Supply is still remaining very tight. We have been hovering around 2 months of inventory for the last few quarters.

Inventory:

Months of inventory:

If you would like a FREE home evaluation, please do not hesitate to call. You may have more equity in your home than you think.

-Kris

PS. Save the date – December 3, 2015 5:30 – 8:30 Toy Drive at Compadres to support Napa’s Salvation Army Angels and Toys for Tots.

Home Tip of the week

Interest rates remained low this week after a weaker than expected jobs report.

Rates have been a little volatile this past few weeks with the Federal Reserve meetings and Janet Yellen speeches. It is still a great time to take advantage of refinancing or purchasing with rates in the high 3s and low 4s.

This Week In Real Estate - 10-2-2015 - TRID in Effect

TRID in effect

Effective October 3, 2015 new lending rules called the “Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure,” TRID for short takes effect.

In short the government is requiring more time for consumers to review all the documents sent before the lenders can issue loan documents or fund loans. The addition to regulations will add about 6 business days in a standard purchase.

So for buyers and sellers, a financed offer that normally has a 30 day escrow, we will likely have to begin to get used to 40-45 day escrows. As escrow, lenders, REALTORS, and buyers get accustom to the new forms and procedures.

If you would like help falling asleep, you can see the complete rule and the Official Interpretations are available at:

http://www.consumerfinance.gov/regulations/integrated-mortgage-disclosures-under-the-real-estate-settlement-procedures-act-regulation-x-and-the-truth-in-lending-act-regulation-z/

First, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate. Similar to those forms, the new Loan Estimate form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application. Second, the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) have been combined into another new form, the Closing Disclosure, which is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction.

-Kris