Dawn Rivera’s Fremont & East Bay Real Estate Blog

Hi All,  I am re-posting this article written by Steve Cook…..or is it Nick at nick does loans?  Either way it is well written and informative.  It sounds to me as if the buyers who are on the fence better jump off and jump in if they want to get in at the bottom…………

In two years Real Estate will rock!

Written by: Steven Cook

Housing starts will nearly double and home prices will begin to rise in 2013, with prices increasing significantly in 2014.

Those rosy predictions come from a new semi-annual survey of 38 of the nation’s leading real estate economists and analysts by the Urban Land Institute’s Center for Capital Markets and Real Estate. The economists foresee broad improvements for the nation’s economy, real estate capital markets, real estate fundamentals and the housing industry through 2014, including:

• The national average home price is expected to stop declining this year, and then rise by 2 percent in 2013 and by 3.5 percent in 2014.
• Vacancy rates are expected to drop in a range of between 1.2 and 3.7 percentage points for office, retail, and industrial properties and remain stable at low levels for apartments; while hotel occupancy rates will likely rise;
• Rents are expected to increase for all property types, with 2012 increases ranging from 0.8 percent for retail up to 5.0 percent for apartments;

These strong projections are based on a promising outlook for the overall economy. The survey results show the real gross domestic product (GDP) is expected to rise steadily from 2.5 percent this year to 3 percent in 2013 to 3.2 percent by 2014; the nation’s unemployment rate is expected to fall to 8.0 percent in 2012, 7.5 percent in 2013, and 6.9 percent by 2014; and the number of jobs created is expected to rise from and expected 2 million in 2012 to 2.5 million in 2013 to 2.75 million in 2014.

The improving economy, however, will likely lead to higher inflation and interest rates, which will raise the cost of borrowing for consumers and investors. For 2012, 2013 and 2014, inflation as measured by the Consumer Price Index (CPI) is expected to be 2.4 percent, 2.8 percent and 3.0 percent, respectively; and ten-year treasury rates will rise along with inflation, with a rate of 2.4 percent projected for 2012, 3.1 percent for 2013, and 3.8 percent for 2014.

The survey, conducted during late February and early March, is a consensus view and reflects the median forecast for 26 economic indicators, including property transaction volumes and issuance of commercial mortgage-backed securities; property investment returns, vacancy rates and rents for several property sectors; and housing starts and home prices. Comparisons are made on a year-by-year basis from 2009, when the nation was in the throes of recession, through 2014.

While the ULI Real Estate Consensus Forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas; and the complexities of tighter financial regulations in the U.S. and abroad, said ULI Chief Executive Officer Patrick L. Phillips. “While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years. These results hold much promise for the real estate industry.”

A slight cooling trend in the apartment sector – the investors’ darling for the past two years – is seen in the survey results, with other property types projected to gain momentum over the next two years. By property type, total returns for institutional quality assets in 2012 are expected to be strongest for apartments, at 12.1 percent; followed by industrial, at 11.5 percent; office, at 10.8 percent; and retail, at 10 percent. By 2014, however, returns are expected to be strongest for office, at 10 percent, and industrial, at 10 percent; followed by apartments at 8.8 percent and retail at 8.5 percent.

The forecast predicts a modest increase in vacancy rates, from 5 percent this year to 5.1 percent in 2013 to 5.3 percent in 2014; and a decrease in rental growth rates, with rents expected to grow by 5 percent this year, and then moderate to a growth rate of 4.0 percent for 2013 and 3.8 percent by 2014. This may be indicative of supply catching up with demand.

For the housing industry, the survey results suggest that 2012 could mark the beginning of a turnaround – albeit a slow one. Single-family housing starts, which have been near record lows over the past three years, are projected to reach 500,000 in 2012, 660,000 in 2013, and 800,000 in 2014. The overhang of foreclosed properties in markets hit hardest by the housing collapse will continue to affect the housing recovery in those markets. However, in general, improved job prospects and strengthening consumer confidence will likely bring buyers back to the housing market.

Related articles

• 2014 Real Estate Forecast, but What About Now? (lanacordier.wordpress.com)
• Forecast Upbeat on Housing Recovery (susiecammett.wordpress.com)

Mortgage rates have been hitting historic lows for five weeks in a row. But
that doesn’t mean you should refinance your mortgage just yet.

The average rate for 30-year-fixed-rate mortgages fell to 3.94% for the week
ended Oct. 6, according to mortgage-finance giant Freddie Mac—the lowest on
record. Rates on 15-year loans, meanwhile, have fallen to a record low of 3.28%.

While mortgage rates vary by region even among the nation’s biggest lenders,
they are down throughout the country for borrowers with excellent credit.
Citigroup, the third-largest U.S. bank by assets, is pitching a 4.193% rate on
30-year-fixed loans and a 3.806% rate for 15-year-fixed mortgages. EverBank
Financial of Jacksonville, Fla., is offering Cincinnati-area residents a 3.89%
rate on 30-year fixed-rate loans.

Steve Walsh, who heads mortgage lender Scout Mortgage in Scottsdale, Ariz.,
says he has seen a surge in interest among borrowers looking to take advantage
of low rates. “There’s a feeling that rates are basically at the lowest they can
get,” he says. But are they?

No one can predict the future, of course, but policy makers seem intent on
pushing rates down even further.

The Federal Reserve, for example, is trying to move rates lower by buying
more mortgage-backed securities. And Obama administration officials are talking
to lenders about ways to reinvigorate the Home Affordable Refinance Program, a
government initiative to help borrowers refinance even if they have little or no
equity left in their homes.

The goal for both: to get rates low enough so that more people will find it
beneficial to refinance. If people start doing it en masse, it could help the
economy.

“In the short term, rates could fall,” says Brad Hunter, chief economist for
Houston-based Metrostudy, a housing-market research firm. “In the longer term,
rates will rise as the economy starts to strengthen.”

If that were to play out, then refinancing now, with rates still around 4%,
could be a mistake. That’s because the chances are good that if you own a home,
and have significant equity in that home and good credit, you already have
refinanced in the past few years. Because refinancing involves costs—typically
2% of the mortgage value—it often doesn’t pay to refinance every time rates tick
down, tempting though it is.

“Don’t become a refinance junkie,” says Greg McBride, a senior financial
analyst at Bankrate.com, a consumer-information site. “You pay for it later in
the form of closing costs.”

So how far do rates need to fall before it makes sense for you to refinance?
Economists at the University of Chicago have tried to answer the question.

The ideal refinance rate must factor in closing costs, marginal tax rates,
the number of years left on the mortgage and other factors, the economists say.
Homeowners often make decisions based on faulty assumptions about rates, says
David Laibson, an economics professor at Harvard University and one of the
Chicago study’s authors. “Mortgage rates follow what we call a random walk, and don’t bounce back from
lows like most people assume,” he says.

In other words, what goes down could keep going down—even if it goes up for a
little while first. If you catch the first big dip, you can miss later ones that
offer even better opportunities.

The economists produced an online calculator, at zwicke.nber.org/refinance/, that distills their theory into a
tool that calculates how far interest rates need to fall for homeowners to
derive value from refinancing—the “optimal” refinance rate.

For example, their formula suggests that a homeowner with a $400,000 mortgage
with 25 years left on a 30-year-fixed rate mortgage at 4.75% shouldn’t refinance
until rates fall to below 3.51%, assuming 2% closing costs.

The risk of waiting for a lower rate, of course, is that it will never come.
If you are unwilling to take the gamble, your best bet is to negotiate hard on
fees.

The conventional wisdom is that it doesn’t make sense to refinance unless you
can shave at least a point off your interest rate. That’s because you don’t want
your “break-even” point—when your savings exceed your refinancing costs—to be
longer than two years or so.

But if you can persuade your lender to waive the fees, or most of them, you
might need only a half-point of savings to make a deal worthwhile, says
Bankrate.com’s Mr. McBride.

Last week, Michael Allison refinanced his $417,000 mortgage on a
three-bedroom California Ranch-style house in Santa Barbara, Calif. The
41-year-old fitness-center owner says he will save $200 a month by switching
from a 30-year fixed-rate mortgage at 4.87% to one at 4.25%.

“It’s an absolutely great deal and didn’t cost me anything,” Mr. Allison
says. His lender, Provident Savings Bank in Pleasanton, Calif., covered the
closing costs after his real-estate agent made some calls to the firm.

With a little negotiation, homeowners can persuade lenders to cover their
fees. “It’s not a free lunch,” Mr. McBride says, because borrowers get slightly
higher rates in exchange—but it is a good way to minimize your upfront
costs.

Another option that’s growing in popularity: refinancing a home at a shorter
term—say, 20 or 15 years. If you can find a rate that keeps your monthly payment
about the same as you were paying on your old 30-year loan, the decision is a
no-brainer, says Mr. Walsh of Scout Mortgage.

Lloyd Qualls, a 57-year-old accountant in Mesa, Ariz., decided to do just
that. Last month he ditched his 30-year fixed-rate loan at 4.875% for a 15-year
fixed-rate loan at 3.375%. While that boosted his payments by $89 a month, it
will shorten his payment period by 13 years and save him $104,233 on interest
over the life of the loan.

I have just received a new tool from my MLS provider Bay East and it allows me to invite friends, clients and future clients to listingbook which allows you to search for homes with a platform that is updated every 30 to 60 mins. Realtors pay a yearly fee to be able to access the MLS (covers Alameda and Contra Costa counties) and now I can invite you for free. So what that means for you is you can search for homes like a pro, and not have to worry that the home is already pending or sold. Feel free to contact me if you are interested and I will send you an invitation.

1. INFLATE YOUR TIRES.   Under inflated tires can lower gas mileage by 0.4% for every pound of drop in pressure of all four tires.  So keep ‘em pumped!!  Difficulty: l

2. GET RID OF THE LEAD FOOT.  According to the U.S. Department of Energy (DOE), quick acceleration and heavy braking reduce fuel economy by as much as 33% on the highway and 5%around town.  Give the lead foot a rest to improve your fuel efficiency and your passengers ride.  Difficulty: l

3. STOP IDLING.  Although most of us grew up needing to let the car “warm up” any car built after 1990 doesn’t need the warm-up, so go ahead and get a move on.   Difficulty: l

4.GIVE YOUR CAR A BREAK.   You may n0t be able to retire your car completely, but try to opt for public transportation, carpooling, walking or biking when you can, and you’ll save both money and carbon emissions.  For each gallon of gas you save, you keep 20 pounds of carbon dioxide out of the environment and nearly $5.00 in your wallet!  Difficulty: l

5. BE REASONABLE WITH THE THERMOSTAT.  You don’t have to be uncomfortable in your home to save energy or reduce emissions, but try to keep it as warm as you can stand it in the summer, and turn it down to 68 or below in the winter.  Difficulty: l

6, CAULKING AND STORM PANELS.  Double-paned wondows are are good fix but, a least expensive way to improve insulation, is to seal and leaks or gaps around doors and windows with caulking and weather stripping.  You can then add a storm panel to your single-pane window to increase energy efficiency for less money than double paned windows.  Difficulty: ll

7.SWAP YOUR A/C FOR A CEILING FAN.  Ceiling fans are remarkably effective in cooling and use far less energy (or chemicals!) than air conditioning.  If you still need a A/C, consider running it on low and using ceiling fans to circulate the cool air.   Difficulty ll

8. PLANT TREES.  On top of soaking up carbon dioxide, trees that surround your home can provide shading in the summertime, keeping your house cool and requiring less energy-intensive air conditioning.  Difficulty: ll

9.  GET YOUR DUCTS IN A ROW.  In addition to increasing your electricity bills and and your carbon foot print, faulty duct work can cause serious, life-threatening carbon monoxide problems in the home.  Check your ducts for air leaks.  First, look for sections that should be joined but have separated, and then look for obvious holes.  If you use tape,  to seal your ducts, use mastic, butyl tape, foil tape,or other heat-approved tapes (look for tape with the Underwriters Laboratories logo.)  Be sure a well-sealed vapor barrier exists on the outside of the insulation on cooling ducts to prevent moisture buildup.  Difficulty: lll

10. GO FOR DOUBLE-PANED WINDOWS.  According to the DOE, the typical family spends $1,300 a year on home energy bills.  If your windows are letting air in or out, some of that money is being wasted, as is the energy its paying for.  Double-paned windows are up to 40% more energy-efficient than standard windows, and could shave 10% to 25% off youe heating or cooling bill, on top of saving five tons of carbon dioxide emissions per household per year.  Difficulty: lll

DIFFICULTY SCALE:                                                  

l= No Pain, but Lots of Gain.

ll= Commitment and Consciousness Required Daily.

lll= You Will Soon Reap the Financial Rewards of your Herculean Efforts.

TO BE CONTINUED NEXT WEEK!

In the past I have allowed the seller (the banks agent) to choose the escrow.  Although it’s the buyer’s right to choose in Alameda County.  Why you ask?  Well because the bank has said they woulod pay all the escrow and title fees.  I have found thought that even if you put it in the car contract they don’t always pay.  Also whne your client is buying a home in alameda county and the escroe and title companies (plurl) are in bevery hlls 90210 it makes for a much more complicated and expensive closing, with extra fees for a traveling notary.  So, lesson learned, from now on my clients will pick their own escrow not the bank!

With all the foreclosures and short sales going on, and all us Realtors trying so hard to help our clients, it amazes me how the banks try so hard to be as uncooperative as possible.  My latest experience in this involved a listing that I had been trying to sell for so long it turned out to be a record in our office!  My client had just lost her job and could no longer pay the mortgage payments.  I rushed to get a buyer so she would not foreclose.  We get into escrow all the inspections and FHA requirements have been passed, the buyers has signed the loan docs.   The seller has signed off the house……..We cannot get chase to send the payoff demand to escrow so we can close.   I requested the demand again and again by phone after the title and escrow company had sent in a written demand and got no response.  Every time I called I was on the phone with them for at least 40 mins. and 30 of those mins. I was on hold!  I asked to speak to a supervisor and was told there were none I could talk to.  Over and over I got various customer service reps. who told me they were very sorry it has taken so long and they would fax it to escrow in 24 to 48 hours…to no avail.  Mean while they were calling my client three times a day demanding to be paid, while the whole time I was calling three times a day trying to pay them.    I finally had to find the main number for chase in New York by looking online.   I called and was told by the executive resolution dept. that I would need to talk to the attorney that was assigned to the loan. ( you would think that after I had called 15 to 20 times that someone would have told me I needed to talk to the attorney????? )  Well, I called “customer service” back up asked to be given the name and number of the attorney assigned to the loan and low and behold I was given a name and number.  I called said name and number and was e-mailed the payoff  demand right then.   I don’t know, but I would think the banks would be more cooperative when someone is trying to pay them???

A spurt in home sales in 2009, aided by low interest rates and the first-time home-buyer tax credit, has led some economists to forecast a turnaround in the housing market this year.

Among those who see improvement in the 2010 market is Lawrence Yun, chief economist for the NATIONAL ASSOCIATION OF REALTORS® (NAR). Yun hopes that the extension of the first-time home-buyer tax credit will provide a new pool of buyers to absorb the additional foreclosures that will hit the market this year.

He expects existing-home sales to rise 13.6 percent in 2010; home prices should go up 3 to 5 percent, with wide geographic differences. The average rate on 30-year fixed mortgages will range from 5.3 percent in the first quarter to 5.8 percent by year end. This forecast assumes there will be no major economic surprises. The weak job market remains a concern.

The Mortgage Bankers Association (MBA) has a slightly different take on the 2010 housing market. MBA predicts existing-home sales will increase approximately 11.2 percent. Interest rates should be about 5.6 percent by the end of 2010. The unemployment rate is expected to peak at 10.2 percent and gradually decline in 2011. National average home prices should stop sliding during the first part of the year and stabilize, depending on area and price range. 

In my office we have seen a marked improvement in the number of first time buyers calling for help buying a home.  I have been doing floor time (answering calls) and in the last five days I have acquired 5 new clients, one a day.

The FHA has come up with some new rules when it comes to their loans. 

Beginning April 2010, the up front mortgage insurance will increase from 1.75% to 2.25%

There will be no more spot appraisals.  So it will be harder to get an approval on a condo. 

This is a big one.  Effective for all case numbers issued on or after February 1 of this year, all previous FHA condo approvals will be eliminated and condominium projects must be recertified by HUD.

You can pretty much forget about buying a condo until the project has been blessed by HUD or one of HUD’s approved lenders.

Going forward there will be two approval methods for FHA Case numbers ordered after February 1, 2010; 

Hud Review and Approval Process (H-RAP)

DE Lender-Approval and Review Process (DEL-RAP)

On another note>>> 
For all purchase contracts dated after February 1st, 2010, FHA has waived the flipping rule.
Private Sellers & Investors can now sell their properties to FHA buyers without having to wait 90 days.

I have a listing in San Jose. The seller hired a handyman to remodel the home for her. He is a non-licensed contractor, who after 4 months of working on the home, talked the seller into letting him stay at the house (for free) while he worked on it. She agreed. BIG MISTAKE! We received a accepted offer on the property and he decided he did not want to leave. After giving him verbal and written 60, 30, and 3 day notices we were forced to do a unlawful detainer. I was able to help her with the unlawful detainer saving her the expense of an attorney, she had spent all her cash on the remodel. If the property you are listing has a tenant I recommend that you start the removal process as soon as the contract is signed. I was lucky and the buyer wanted the house enough to wait out the eviction, but we had to remove him before she would agree to close.