Thursday, October 7, 2010

2011 forecast by the California Association of Realtors

California REALTORS® forecast slight rise in 2011 home sales

Sales of existing, single-family homes are expected to decline slightly in 2010 compared with 2009, but are forecast to rise slightly in 2011, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2011 California Housing Market Forecast.” Meanwhile, the median price of homes in California is expected to increase both in 2010 and 2011 compared with the year prior.

•Following near record-high levels of year-over-year sales increases, home sales are expected to decline 10 percent in 2010 compared with 2009, according to the C.A.R. forecast. C.A.R.’s economists predict home sales will increase 2 percent in 2011 compared with 2010.

•Home sales are expected to end the year at 492,000 units, compared with 546,500 in 2009. C.A.R. forecasts sales will come in at 502,000 units in 2011.

•The median sales price is forecast to increase 11.5 percent to $306,500 for 2010, and an additional 2 percent in 2011 to $312,500, C.A.R. announced.

•According to C.A.R. Chief Economist Leslie Appleton-Young, the Association expects a net jobs increase of approximately 1.4 million jobs in California for 2011 and an improvement in unemployment figures, which many believe are key to the economic recovery.

•Ms. Appleton-Young also noted that a lean supply of available homes for sale will drive up prices at the low end ($500,000 and less), but larger inventories and limited, less-attractive financing will cause continued softness at the high end of the market ($1 million and more).

Options to saving money on your mortgage...

If you are fortunate and are not in jeopardy on your mortgage at this time, you may consider refinancing to obtain a lower interest rate. Provide you have equity and your home appraises to a value acceptable to your new Lender you should be OK....and if you are even more fortunate and have some cash to paydown your loan, the savings could really increase. Unlike the borrowers who refinanced and took 'cash out' of their property, you would be doing a 'cash in' refinance and could save thousand of dollars over the term of your loan; however there is a second option you might consider and that is a "recast". You must check with your lender to see if the terms of your promissory note allow it and their current policies are to allow what is actually another way to modify your loan. If you can, you must request a recast and be able to paydown some principal balance on your loan(Each Lender will have different parameters so make the call). A fee will be required and the fee for a request is generally nominal by comparison; however, the good news is that you do not have to pay all the points, fees and closing costs associated with a refinance.

Before you do this, I strongly advise that you consult your tax preparer and/or financial consultant to discuss the tremendous savings of interest over the loan term -vs- write-offs -vs- investment possibilities with the cash you might use for 'cash in' or "recasting".

Good luck to you fortunate ones and as always...Keep the faith!

Friday, October 1, 2010

Want to save $100K when buying a home and borrow $ to fix it up?

To pare down their growing inventory of properties, Fannie Mae and Freddie Mac are scrambling to unload nearly 150,000 foreclosed homes. And that means 2004-esque deals – like requiring as little as 3% down, offering to pay a portion of the closing costs and arranging special financing and warranties for repairs and renovations.

It's another option for home owners who want to trade up -- and an easier way into the market for first-time home buyers, says Dean Baker, co-director of the Center for Economic and Policy Research who studies the housing market.

The best bargain might be the home’s price. A SmartMoney analysis revealed that buyers could save $100,000 by buying a Fannie or Freddie home instead of similar fair-market properties just a few blocks away.

And while many of Fannie and Freddie’s homes are at the lower end of the market and in less-desirable areas, a search of Fannie Mae and Freddie Mac listings revealed that buyers could find properties in good neighborhoods – and for $100,000 less than comparable houses nearby. For example, a five-bedroom, three-bath with a backyard, deck and two-car garage in tony Alexandria, Va., was listed for $445,000, $100,000 less than the average listing price in the area, according to Four blocks away, a similar non-foreclosed colonial is listed for $639,900.

Or how about a three-bedroom, two-bath in Bergen County's leafy River Edge, N.J for $359,900 -- $85,000 less than the average listing in the area. One avenue over, a non-foreclosed similar home is listed for $474,888.

The downside: Angry neighbors. These types of listings are devaluing nearby properties, says David Howell, realtor and executive vice president at McEnearney Associates, which sells homes in the metropolitan Washington D.C. area. That means in some areas where Freddie and Fannie homes are on the market, buyers could find a better deal on a nearby market-rate home that doesn't require repairs, he says.

Buying a Fannie or Freddie home can be more complex than pursuing an open-market real estate listing — or even a commercial bank foreclosed property. There’s a smaller selection of appealing properties — there were just six higher-end homes listed on a recent day in Alexandria, for example — and those tend to sell the fastest. And there's little room to negotiate price.

“Our goal is to recover as much as we can to offset our loss and not to be low balling properties just to move them,” says a Freddie Mac spokesman. “We absolutely have no motivation to be leading a downward spiral in home prices.”

The three best features of Fannie and Freddie foreclosures that make digging for these deals worthwhile:

Small down payment
For its foreclosed properties, Fannie Mae will accept down payments as low as 3% on 30-year mortgages at the same interest rates banks are currently offering. And Fannie Mae doesn’t require private mortgage insurance. Compared to a typical bank mortgage, which requires 10% down, plus PMI for buyers with less than 20%, that’s a huge savings – an estimated $51,000 up front and upwards of $2,500 per year PMI on a $300,000 mortgage.

It's a tradeoff, though. For buyers with 20% down, mortgage payments on a 30-year mortgage loan at 5% would be $1,288 a month. With just 3% down, the buyer would need to borrow $291,000 and make a $1,562 monthly payment.

Help with renovations
Fannie and Freddie have fixed big flaws like leaky roofs and damaged electrical work, and they often handle small projects like replacing appliances that are broken or missing, tearing up old carpet, or fixing other damage left by former owners or vandals.

Now, to entice buyers who want to update or upgrade, many of Fannie Mae's properties come with an optional mortgage that includes extra financing up to $30,000 for repairs and improvements. But with a little down payment and the extra amount tacked on, the buyer could end up owing more than the house is worth – especially if home prices continue to drop.

First dibs
Buyers who plan to live in their Freddie Mac-purchased home will get to see properties for at least the first 15 days they’re on the market -- before the listing opens to would-be landlords. Many bank-owned foreclosure properties are snatched up by cash-stocked investors who can wait out the downturn to sell later at a profit.

And Fannie and Freddie homes can be seen inside and out -- unlike some regular foreclosure listings. Consider bringing along a contractor when you view the home to help spot areas that need repairs and provide pricing. (Most contractors will do this for free.)

“It gives families who want to buy a home to live in the opportunity to look and bid without competition from cash-rich investors,” says a Freddie Mac spokesman. Story reproduced from

Fannie has announced (9/23/10) terrific incentives for Buyers who will personally occupy the property who close before year end. Talk to your Realtor