Does lower interest rate make house more affordable?

September 8, 2014

After the interest rate dropped, the mortgage applications went up 0.2 % last week from the previous week. The details are in the following link:
http://www.cnbc.com/id/101965360

I believe this will spur demand of housing; however, it would not help get more houses to the market for sale.  In Silicon Valley, the supply of homes for sale is historically low.  This helps increase the price of homes for sale.  Compounded with the cash buyers influx into the Valley, any home buyers have not had an easy time in the process of purchasing homes.  Some have been watching and waiting on the sideline, while the brave and young buyers jumped in and bought their first homes. The necessity of owning a home for the young first-time buyers are proving to be correct for this market.

This is just our observations, not solution to our tight real estate market... We welcome your opinions and input.

Thanks for reading.

From being in a rich neighborhood to burglary prevetion

August 2014

So,
Silicon Valley, we are in. San Jose is #2 and San Francisco #4 in the top 10
list of priciest cities for 2013 according to the TechScio website ranking.

http://www.techscio.com/the-richest-cities-in-the-us/

However, do people feel richer?  Or in the shadow of the rich new neighbors,
some felt poorer.  A burglary in our
neighborhood prompted me to rethink about the rich-poor mindset.  I would like to share an article from Los
Altos Town Crier on the prevention of burglary:

http://www.losaltosonline.com/news/sections/news/200-police-fire/48218-burglary-bump-in-lah-alarms-residents-and-sheriff-s-office

Hope you find the reading helpful.  If you
are interested in receiving my quarterly post cards, please send me an email to
HelloDean@gmail.com. So you will get some real estate update not just
virtually, but also physically.  After
all, we are handling REAL properties daily.

Thank you
for reading.

May 2014

On my Spring 2014 mailing, I talke about many water saving devices/practices to help ease the pain of draught: Low-flush toilets, Low-flow showerheads, Faucet aerators, Gray water system and Xeriscape landscapes.  They can increase the value of your property because of the lower maintenance cost.

National Geographic has an article on water conservation tips which gives readers more details:

http://environment.nationalgeographic.com/environment/freshwater/water-conservation-tips/

Hope you enjoy the reading and learning.  If you are interested in receiving my quarterly post cards, please send me an email to HelloDean@gmail.com. So you will get some real estate update not just virtually, but also physically.  After all, we are handling REAL properties daily.

Thank you for reading.

Water Conservation for new remodelling

 New rules that may affect you:

Effective January 1, 2014, homeowners obtaining permits to remodel a property built prior to 1994 are required to retrofit with toilets that use no more than 1.6 gallons per flush, shower heads with flow rates of no more than 2.5 gallons per minute, and other interior fixtures that use less than 2.2 gallons of water per minute. This applies to all single-family property permits, as well as multifamily and commercial property permits where 10 percent or more of the square footage is included in the remodel.

By January 1, 2017, all residential properties in California that were built prior to 1994 will need to be in compliance with water fixtures as outlined above, which will bring them up to the same standards as homes built since 1994.
Although retrofitting of all pre-1994 homes will not be mandated until 2017, making this change could save water and money for homeowners.

Creative ways to help young adults purchase their first home

A recent article from Los Angeles Times "Finding ways to help young adults make their first home purchases" reveals some creative trends for the younger generation to buy their first homes.  Many stories are echoing some of the buyers' experience.

http://www.latimes.com/business/realestate/la-fi-harney-20140216,0,7652846.story#ixzz2thIIJl3U 

With Stricter mortgage underwriting standards, higher unemployment, and heavy student debt, it's making it hard for the age 20 - 30 potential buyers to buy a home.  But they may be able to get help from family, friends or relatives with more creative techniques for their financing:

•  27 percent of first-time buyers in 2013 received gift money from relatives to help defray the down payment and closing costs.

• With professional help, some family or relatives provided either second mortgages or first mortgages, and when properly structured, these loans provide higher returns (than bank deposits) to family or relatives.

Please check into the article as it also provides some interesting statistics.  Please seek licensed professionals' help when trying these. 
 

On House Flipping

Many investors have been buying up short sales and REO properties after the 2008 financial meltdown.  Some investors are holding on the real estate for long term investment.  However, we’ve also seen more and more houses that had been bought, fixed up or rebuilt and sold shortly for relatively high profits.  This is called house flipping (purchasing a revenue-generating asset and quickly reselling it for profit, according to Wikipedia).

Typically houses that require some work would attract less buyers.  But for those into house flipping, the worse the condition of the property, the better buy it is.  Many of them have made so much profit that even some of the movie stars are into house flipping in a glamorous style.  Just check out the photos and the following article from Los Angeles Times:

http://www.latimes.com/la-fi-0824-celebrity-house-flipping-pictures,0,5290510.photogallery

http://articles.latimes.com/2013/aug/24/business/la-fi-celebrity-house-flipping-20130824

Sometimes I wish I could have talked my clients into the understanding that you can only change the conditions of the house, but not the location.  If time and money allow, people can always remodel or even rebuild a house.  See, some famous movie stars are doing that.

Margin loans and Reverse Mortgages

Margin loans and Reverse mortgages are two topics I have found interesting and would like to share some information with you.

Margin loans

Margin loans are loans backed by buyer’s investments, typically not more than 50% of the portfolio’s value.  In this hot real estate market with high competition from cash buyers, many buyers have found margin loans a great tool.  The advantages using margin loans are no closing costs, no prepayment penalty, no appraisal, tax benefits and etc.  There is a downside: a maintenance margin.  Please go to the following link to read the details.

http://online.wsj.com/article/SB10001424127887323936404578581991623331764.html

Reverse mortgages

What I found remarkable about reverse mortgages is the statistics:” nearly 1 in 10 federally backed reverse mortgages is in default” according to this article,

latimes.com/business/realestate/la-fi-harney-20130721,0,111605.story

The horror of reverse mortgage is well illustrated in the case of Havemeyer of New York against OneWest (whose subsidiary Financial Freedom Acquisition owns the reverse mortgage note).  A mortgage with 9.95% interest, plus a 50% share of increased value by lender, plus a 2% “maturity fee”, plus a $33,000 mandatory purchase of an annuity by the homeowner is unconscionably an insult to homeownership.

A consolidated class-action suit in the late 1990s by a series of California lawsuits had settled $8 millions from the defendants – Transamerica Corp. Transamerica HomeFirst Inc., Metropolitan Life Insurance Co. and Financial Freedom Senior Funding Corp.  However, even today’s friendlier versions of reverse mortgages are made too complicated for the elderly borrowers and their heirs to understand the possible consequences.  Opinions from legal, financial and tax experts are strongly advised before anyone would take a reverse mortgage.