This Week in Real Estate 12-25-2015

Merry Christmas.

Santa brought Lucy drums.  He brought us ear plugs.

Hope you and your family have a safe and wonderful holiday.

-Kris

This Week in Real Estate 12-18-2015 - Fed Reserve raised rates

The Fed raised rates.

For the first time in 9 years the Federal Reserve raised the short term borrowing rate. It went from 0.00% to 0.25%. This increase has been talked about for 2 years. The increase had been delayed many times as well. Initially the thought was that rates would increase in February 2015.

But it happened. And guess what? The financial markets reacted by going UP more than 200 points on Wednesday.

"I feel confident about the fundamentals driving the U.S. economy, the health of U.S. households, and domestic spending," Fed chief Janet Yellen said during a press conference. "There are pressures on some sectors of the economy, particularly manufacturing, and the energy sector...but the underlying health of the U.S. economy I consider to be quite sound."

The Fed telegraphed it will be patient with future rate increases so as not to kill the economic recovery. The central bank's statement said the economy will only merit "gradual increases" in rates, which are likely to remain low "for some time." Yellen repeatedly said during the press conference that future rate hikes will be "gradual."

CNN wrote a great article talking about the impact of these moves.

http://money.cnn.com/2015/12/14/news/economy/what-a-fed-rate-hike-means-for-you/index.html?iid=surge-stack-dom

The Federal Reserve’s official press release

http://www.federalreserve.gov/newsevents/press/monetary/20151216a.htm

-Kris

This Week in Real Estate 12-11-2015 - Rental Market Crisis

Rental Market Crisis

The alarms of increasing rents have been ringing for nearly 3 years. Now a report from Harvard really is shocking. http://www.jchs.harvard.edu/americas-rental-housing

·         On average renters are spending 30% of their income on rent up from a historical average of 21%

o   50% are rent burdened spending more than 33% on rent

o   25% are severely rent burdened spending more than 50% rent

·         There are 9 Million more rental households today than 10 years ago

·         Homeownership is at the low for the past century (63%)

·         The household starts, mostly young people and millennials, are in a rental situation

·         Rental prices are way beyond the previous peak

It still might be the best bet to lock in your “rent” with a 30 year fixed mortgage on a home you own that will build equity with every monthly payment.

-Kris

This Week in Real Estate 12-4-2015 Negative Equity still a Problem

Property Tax bills

If you don’t want to pay a 10% penalty on your property tax bill make sure you have your payment to the county by December 10^th. PLEASE DO NOT MAIL it is not the post mark date. It needs to be received by the county by December 10, 2015.

Negative Equity still a problem.

I read this great article from CNBC regarding the negative equity effects still in our marketplace.

As a nation nearly two thirds of all homes have a mortgage. In California the figure is slightly higher with a little over 70%.

On average 10% of homes with mortgages (7% overall) in the bay area are underwater or have negative equity. The problem with the negative equity is that it creates a shortage of homes for sale. If you can’t sell at a profit, as a homeowner, you are stuck.

The recent study found that the majority of homes with negative equity are the less expensive homes that are below the median price for the area. Often these homes are the entry-level or starter homes.

Also the number of repeat buyers has dropped dramatically in the last decade, owing to negative equity, but when combined with tighter underwriting standards, the options for these buyers is even worse. Lenders today require higher levels of income compared to debt, and Americans in mid-tier FICO credit ranges have had increasing difficulty qualifying for loans.

While the market is much stronger and a key part of the growth of the overall economy, the prediction is that it may be 3-4 years before the “negative equity” effect is behind us.

-Kris

Toys for Tots Client appreciation party recap

I wanted to thank everyone who came out last night. We had a blast and were able to give over 200 toys to Toys for Tots.

THANK YOU.