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Archive for June, 2013

Ross_BR_sustainCan the housing market sustain the craziness of the last six months? That’s the question that everyone in the industry, buyers and sellers are now asking. The similarities between now and the early 2000’s are startling. The old saying ” If you don’t learn the lessons of the past, you are doomed to repeat them” should prevent the mistakes that were made then from happening again.

Calling a bubble while a) looking at an incredibly short time frame and b) not examining what might be the cause of price increases is fairly irresponsible. And comparing what we’re seeing to 2005 seems like one hell of a stretch, if for no other reason than the 2005 bubble was fueled by the prevalence of garbage loans and lending standards. Ask any buyer today how much fun it is to deal with their lender’s underwriting department and they’ll tell you we’re nowhere near the No Income, No Job, No Problem buyer that actually made it through during that time.

It appears that demand far outweighs supply. The increased demand is not the real story. Demand overall is only up slightly. The real issue is the 50% reduction in inventory causing the demand to be concentrated on fewer properties. If the market were not being manipulated by the banks, the rising demand would be met with increased liquidation of distressed properties.

What are some of the factors that could interrupt the housing market recovery? Mortgage rates recently crept above 4% and the expectation for future increases are strong. This could hinder the affordability for many buyers from purchasing a home in a specific community. Using Davis, Ca housing for instance, the average sales price is $496,000. If rates continue the upward trend, this could push many families into surrounding towns such as Woodland or Dixon.

The diminished inventory is the main reason for the housing turn around this year. If inventory picked up, this could certainly have a negative impact on the upsurge in home prices. Nationwide, home prices are up over 12% this year. It’s unlikely prices will escalate at the same numbers next. A 2% to 3% increase in home prices would be a more normal improvement based on history. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.

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multiple-offersThe housing market has gotten quiet predictable. One word to describe our current status would be chaotic. At least that’s the viewpoint of almost every home buyer that has been fortunate enough to buy a home and those many prospects that have lost out to higher bids in the bidding wars that has caused anxiety for the buyer and euphoria for the home seller.

The big jump in home prices this year can be attributed to one big factor, a lack of inventory. The increase in prices are starting to bring more sellers to the forefront, but inventory remains lean. When adjusted for seasonal factors, inventory has risen for five months in a row, suggesting the supply bottom came in January. The new sellers are making moves they’ve put off for years as home prices tanked. And many are pricing homes at levels the market would suggest might be overpriced and getting their prices anyway.

The increased inventory hardly constitutes a flood, more like a trickle would be a better definition. There are still far too few for the balance of power to shift from seller, back to buyer. With home prices up by double digits from a year ago, more are expected as home prices continue to rise. Earlier this month, the number of homes listed for sale was down 12% year-over-year. That’s still better than January, when listings were down a robust 18% year-over-year.

Nationwide, the median time on the market for all homes that sold in May was only 41 days. That’s down from 72 days a year ago. Some sellers are getting prices that not only surprise themselves, but also their realtors, given the tight supplies for sale in most markets and the frequency of multiple offer situations that have had a big play in the uptick in home prices. Most properties in Davis are being sold with bidding wars that have taken prices 5% to 10% above the asking price. This is even with the average sales price that has crept to nearly $500,000 this year.

In California, data shows just a 2.6 month supply of single family homes for sale, leaving this state firmly in the sellers camp after years of rampant foreclosure and big price drops. The role reversal from a buyers market to a seller’s market happened so quickly that many homeowners have not realized the about-face has even taken place. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home or to view local area homes for sale in Davis, California and the surrounding communities.

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Staying afloat ILLUS.jpgFewer homeowners are now underwater, thanks to the surge in home prices. The number of underwater homes dropped below 10 million for the first time in 3 years. Another nugget that the improving housing market has rendered. The next likely domino to fall will be the limited number of homes that are for sale. Many homeowners are reluctant or unable to make their home available for sale, because they have little or no equity.

Rising home prices up over 12% nationwide have lifted 1.7 million home loan borrowers above water over the last year. If home prices continue to rise, expect more homes to hit the market in the near future. The declining ranks of underwater homeowners are a huge plus for the economy. Consumers with equity in their home are less likely to default on their loans, they’re also more avid spenders which improves other aspects of the economy. They are also more able sell their current home and purchase a replacement property.

The increase in equity allows homeowners to refinance and take advantage of lower interest rates to reduce their mortgage cost. As of December 2012, 45% of owners with mortgages still had loans with interest rates above 5%. The monthly average rate has been below 4% since late 2011. The states that suffered the biggest run ups in home price gains, then fell hard after the housing bubble burst, still lead in underwater borrowers.

Given the shortage of inventory and rising home prices, banks have little motivation to hold back on properties that have been repossessed. There are signals that the inventory crunch has bottomed. Nationwide, the number of for sale listings were down 12% in June from a year ago. But that’s less severe than the almost 18% shortfall recorded in January.

Short sales have also declined this year, with many owners holding their homes with the expectations their homes will gain in value and at least offer some hope that owners can expect to get back the lost equity that was lost over the last several years. Just as the economical downturn started with the housing collapse, the housing recovery will be the first step toward a full fledge improvement in the overall economy. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative bogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.

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Top_Reasons_to_Buy_a_Home_at_the_Start_of_the_YearHow can a home buyer with a loan compete against those all cash buyers? That’s a difficult question and a tough proposition, just ask those mortgage buyers that have repeatedly lost out to cash buyers. Are there actually any way possible that a loan can be as attractive to a seller? What can buyers do in markets where cash is king?

There are multiple advantages that a cash buyer has over a buyer obtaining a loan. The contingencies that would protect a buyer in the purchase contract, such as loan and appraisal are not a necessity with the buyer with sufficient funds to close escrow. The other advantage these buyers have is the ability to purchase and close on the home very quickly. How can a home buyer with a mortgage compete against those obstacles?

Home buyers have to go into the home buying process with a different mindset this year than anytime in the last several years. Understanding the disadvantages a loan versus all cash offer have is the first step in properly competing. Using the assumption that every all cash offer doesn’t win out every time is also an integral aspect to remember.

One of the plusses that a cash offer has is the simple fact they can close escrow within 15 days. That’s hard to compete against, but there are lenders that can accomplish that feat if a buyer has taken the next step past pre approval. Do your comparison shopping up front and decide on the lender that gives you the best deal financially and timing wise. If your offer is accepted and the buyer has gotten past the pre approval stage, closing escrow in 15 days or less is very possible.

The biggest advantage the cash buyer has is quiet simple, there is no loan. Therefore there is no loan contingency needed. Using the suggestion above of going past the state of pre approval should make removing the loan contingency in the purchase contract an easy task. Assuming a buyer has to pay above the sellers asking price, like many offers are today and the buyers realtor can sufficiently justify a value with comparable sales, then removing the contingency for apprasial a mundane point. Please visit www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blog and easy access to view local area homes for sale in Davis, California and the surrounding communities.

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draft_lens18346201module152539435photo_1313803400bankWith the housing market chugging along and prices up considerably, there’s not much that could derail the good news. A complete collapse of the economy would be the only catastrophe that could alter the run real estate is presently in. There are some concerns that might slow the market, such as a glut of inventory hitting the market at the same time, frustrated buyers taking a break from the continued loss of home to higher bids or maybe a spike in mortgage rates might deter the housing gains.

Rates jumped to 4.07% last week for a 30 year fixed rate loan. That’s up from 3.59% from early May. Economist Christopher Thornberg of Beacon Economics expects interest rates to settle between 4% and 5% next year. Higher rates have made obsolete the refinancings that were so prevalent when rates were at historical lows. For home buyers, the rise is nothing more than a blip. That’s because rates are still low and home prices, while higher, are still far from prior peaks.

Home buyers are making a conscious effort to get a mortgage now before rates head higher. This will not slow down the number of buyers on the market, but it could weigh on home price appreciation. That’s because higher interest rates make homes less affordable. Lower demand on homes would certainly be an issue of concern as we move into the Summer months, especially in markets where home prices are higher, such as in parts of California.

Even with the higher rates, owning a home is still far cheaper than renting, given home prices and rental costs. As of March, the cost of owning would have been 30% cheaper than renting with rates at 4.5% and 33% cheaper with rates at 5.5%. Though home prices went up significantly over a short period of time, the up tick in rates will alter how much home a buyer can purchase. For instance, two months ago a buyer could qualify for a $450,000 mortgage. The rate increase today might mean that same buyer can qualify for a $425,000 mortgage.

This could thwart the appreciation that was gained over the last six months, but will have little impact on consumers that are intent on buying a home. The only difference, these buyers will be buying homes priced more affordably than they would have done with the lower mortgage rate. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home or to view local area homes for sale in Davis, California and the surrounding communties.

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originalWith the price of homes increasing at an alarming rate, there are cheap home remedies that can keep some of that hard-earned money in your pocket. What does a box of crayons, Alka-Seltzer and toothpaste have in common? They offer quick, inexpensive fixes for those nagging home blemishes.

Treatment For Scratched Wood Floors: Crayons will do the trick for those minor scratches. Pick a color that matches the floor and color in the scratched area. Be sure to stay in the lines, then buff to a shine. A matching permanent marker can camouflage those deeper uglier scratches. Another method to consider. Grind the meat of a walnut or pecan into the scratch. The nut oil will provide a shine that blends with a polyurethane or water based surface finish. Presto, you just saved a bunch of money and eliminated those unsightly scratches from your hardwood floor.

Unclog A Drain With Alka-Seltzer: That’s right. For a balky drain, try dropping three Alka-Seltzer tablets down the sink, followed by a cup of white vinegar. After about 15 minutes, you can clear the drain with boiling water. Don’t call Roto Rooter, use Alka-Seltzer instead. Do not attempt this trick after using a commercial drain opener like Drano or Liquid Plumr.

Stained Tub: Combine equal amounts of cream of tartar and baking soda with enough lemon juice to make a paste. Rub the mixture into the       stain with your fingers or a soft cloth. Let sit for a half hour, then rinse well with water.

Clean Walls With Toothpaste: Apply the toothpaste to a sponge or cloth and wipe down your  walls.  You can apply the toothpaste directly to the wall, if you prefer.   Again, be sure to have a hidden test spot to make sure the toothpaste doesn’t  discolor the walls.  This is a particularly good way to clean problem areas  around light switches and door knobs.

Squeaky Door Hinges: Spray a little WD-40 onto the hinges, moving the door back and forth to work in the lubricant. Or try rubbing the hinges with petroleum jelly. If these tricks don’t work, lift the hinge pins about halfway and lubricate them with three-in-one oil, using a rag to catch drip

Squeaky Floors: For a temporary fix, sprinkle talcum powder over the noisy area and sweep it into the cracks. Be sure to remove any traces of powder if you’re ever going to refinish the floor. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home or easy access to view local area homes in Davis, California and the surrounding communities

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hand-house-image-stockEvery product’s value is based strictly on the supply and demand theory. If demand outweighs supply, the value improves. The reverse also applies, a higher supply than demand would command, will normally decrease the value of that product. This concept has never been more prevalent than explaining today’s real estate. The similarities between real estate and other less expensive merchandise are striking. Even if demand outweighs supply, the price of that home or product has to be inline with what a consumer will pay.

The main factor for rising home prices this year are the strong demand for the few homes on the market. Using Davis, California as an example, here are the numbers that tell the story.The average sales price has increased by about 7% this year. The total number of sold properties have increased by more than 10%. Here’s a breakdown for the first five months this year and how it compares to last years stats.

2013 total sales-198                    2012 total sales- 174                   
Avg.Sales price- $481,307         Avg.Sales price- $448,352
Price per sq ft- $275                    Price per sq ft- $251
Days on market 47                      Days on market 70
Like most markets throughout California that has seen home prices increase in many cases by double digits, the lack of inventory has been the main justification for the uptick in home prices and the change of the housing market that now favors the seller.  There are many more buyers than available homes for sale. Even with the escalation in mortgage rates that would normally decrease the number of buyers and slow the market, this has had little negative impact on the buying frenzy.
Why the lack of inventory is the burning question that many buyers are asking? With the rise in home prices this year, many sellers expect prices to surge higher. Many are holding off marketing their home now in hopes values are up in the future. You also still have those owners that can’t sell their home now because of the loss of equity that has happened over the last several years. Patience on the part of sellers could reap huge financial rewards heading forward. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.

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