Reno Sparks Real Estate Today

Mortgage Rates Rise To Highest Level Since Last April

Freddie Mac said Thursday the 30-year fixed-rate mortgage average surged to 5.05% for the week ending Feb. 10, its highest since April. In the previous period, the average was 4.81%, and the year-ago average was 4.97%. "Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week. For all of 2010, nonfarm productivity rose 3.6%, the most since 2002, while January's unemployment rate unexpectedly fell from 9.4% to 9%. Moreover, the service industry expanded in January at the fastest pace since August 2005. As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010," said Frank Nothaft, Freddie Mac chief economist, in a statement. 

Home Ownership - The Lost Decade

With all that government help, we are back to home ownership levels not seen since 1998. Ownership levels are expected to fall even further in the coming years.

The mortgage crisis has officially wiped out all the buyers from the 2000-2007 real estate boom. According to the Census Bureau, in the fourth quarter of 2010, 66.5% of Americans owned homes – down from 67.2% a year earlier and the lowest rate since the end of 1998. During the boom, the ownership rate hit a record 69.2% in 2004. Some housing experts expect the rate to fall below 65% as millions more Americans face foreclosure. 

Total U.S. building activity (including both residential and commercial) hit its lowest point in a decade last year. Construction spending fell 10.3% in 2010, marking the fifth annual decline and the lowest level since 2000.

So my questions.

Are government sponsored programs like Fannie Mae and Freddie Mac worth the risk and expense to tax payers?

Do FHA, HUD, and VA loan programs really improve home ownership rates?

You can probably guess my answers!

 

New Reno Sparks Foreclosure List Posted

New list of foreclosure deals in the Reno Sparks area now posted. Over 300 homes and condos. Values from $11,800 to $950,800. Need any more info on any of these homes, please let me know.

http://www.4renohomes.com/Web/AR295910/WebForm/index/10651

Buying A Home? Things To Consider for Insurance

If so, it’s a very exciting time — and you’re not alone. With home prices competitive and interest rates low, many people are considering the real estate market. Maybe you’re a first-time home buyer, or looking to purchase a second home. Perhaps you’re an empty nester looking for a cozy smaller property.

As you look at potential properties and start to calculate the overall price of ownership, it’s important to factor in the potential insurance costs. “When people look at homes, they tend to focus on factors such as property taxes, neighborhoods, school districts, and available recreational and cultural opportunities,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the Insurance Information Institute (I.I.I.). Insurance is an often overlooked item.

What to ask
When looking at prospective new homes, the I.I.I. suggests asking the following questions:

• How far is the home from the fire department? Properties located near professional, permanently staffed fire departments generally cost less to insure.
• What is the condition of the plumbing and electrical systems? Age and lack of appropriate maintenance can affect the safety of plumbing and electrical systems so older homes may cost more to insure.
• Is the home vulnerable to wind damage, earthquake, flooding? Properties vulnerable to wind, flood or earthquake damage will generally cost more to insure and may require separate policies to provide specific coverage.
• Is the house well-built and well-maintained? Consider hiring a licensed home inspector to determine the general condition of the property. Routine maintenance will be your responsibility as a homeowner.
• Check loss/claims history report. Ask the current owner for a copy of an insurance loss history report, such as a Comprehensive Loss Underwriting Exchange (C.L.U.E.) report from ChoicePoint or an A-PLUS report from ISO, a leading source of information about property/casualty insurance. This will provide you with a record of insurance claims for the last five years and can give you some insight with regard to past problems in the home and whether previous damage, if any, was properly repaired.

Where to get information
The I.I.I. has created a Home Buyers Insurance Checklist. Find out what to do before you buy a house and the factors to consider when looking at homes and placing a bid. Along with a knowledgeable home inspector, I can be helpful in answering some of your questions and providing information so that you can decide how to insure your new home. Don’t wait until the last minute to think about insurance.

 

Remember When? Interest rates rise for the first time in 5 weeks.

You ever look in the past and say “remember when?” Remember when you could buy a gallon of gas for $1?  Remember when you could buy a movie ticket for $4?  Remember when a silver dollar was actually a silver dollar? Remember when you could buy a new car for $7000 or $8000?  I remember when I first got into real estate 15 plus years ago, interest rates were around 9%. Single digit interest rates were big news and a “big deal.”

Well I am telling you now; we are in the middle of one of those “remember when” times in the real estate market. Mortgage interest rates ticked up for the first time in five weeks this week. While no one knows exactly what the government and the bonds markets are going to do, rest assured interest rates are bottoming out. Rates have been held artificially low for a long time and at some point in the very near future they will correct.  I don’t believe rates will skyrocket over night, but they will head north a little at a time. 

A few years from now we will be looking back at 2010 saying "remember when you could get a 30yr. mortgage for 4%?" If you are playing the waiting game trying time the market to get the lowest rate, I wouldn't wait much longer. 

Shadow Inventory Up - Short Sales Increasing

As the approximate 2.5 million homes in foreclosure complete the process, national delinquencies will fall, and REO inventory and short sales are expected to trend upward, according to a report released today by John Burns Real Estate Consulting.  There are currently 562,000 bank-owned homes and 2.5 million mortgages more than 90 days delinquent in the market.  Single-family starts as well as single-family and multi-family permits were down in August, leaving total completions last month 33% lower than July, at 587,000 units.

Foreclosures grew by 4% month-over-month.  Shadow inventory is inevitably growing and affecting the market already hit hard by high levels of distressed mortgages, such as Stockton, Calif. and Orlando, Fla., which have an excess supply of inventory already. According to John Burns' data, the two cities have a 27 shadow months supply of homes, 22,344 and 81,309 homes, respectively.  CoreLogic reported that national home prices in July remained steady, but existing home sales decreased 2.6% in August compared to July, according to the National Association of Realtors. New home sales dropped 12% over the same period.

Shadow inventory in the Reno Sparks area has been an increasing concern over the last year plus. No one knows for sure how many shadow inventory homes are lurking out there but it's safe to say we are looking at least in the hundreds minimally. It wouldn't surprise me if the numbers are in the many thousands neighborhood.  The question is when are banks and mortgage companies going to start releasing these homes to be sold on the open market? Will they all be released at once or a few at a time?  

 

Buy a Reno or Sparks Condo For Less Than A Car?

Hard to believe but you can buy condos in the Reno Sparks area for less than many cars or SUV’s. In addition, you can get good financing and tax benefits you don’t get with cars. Many of these condos are in great neighborhoods and in great move in condition.

Did a quick search and here is an example.

East Sparks – 2bedroom, 1.5 bath, 998 square feet with a carport.

Sold for $219,500 in 2005.

List price- $49,000.

Here are some rough payment numbers.

Down payment 5% - about $2500

Interest rate 4.75% fixed for 30years.

Payment $242.57 !

Taxes about $850 per year

Condo association payment $150 per month, includes exterior insurance, grounds maintenance, sewer, and garbage.

Total payment including principle, interest, taxes, and association dues about $466.  

Units in this complex are renting for around $650 - $750. This means you can buy and have payments $200-$300 less than you would have to pay for rent.

From an investment perspective, you would make about $200-$300 per month in positive cash flow. Down payment and interest rates will be slightly higher but you get the point.

If you are looking to buy a car, buy the condo instead. Use the cash flow to pay for the car. The car will be paid off in 4-5-6 years, but the condo will continue to pay you well beyond.  

The above numbers are rough and for example purposes. If you would like more specific info on this unit, mortgage rates, or down payment amounts let me know. 

How Low Can They Go? - Mortgage Rates Set Record Low

A wise investor once told me, sell when everyone is buying and buy when everyone is selling. Excellent advice, especially in todays market. 

Rates at under 5%, and for an extended period of time, is something I thought I would never see. I remember when rates dipped below 9%, and people where excited. Then under 6%, now under 5%. If you factor in inflation at about 3-4% annually (which I believe is conservative for the next 3-5 years) money is almost free.   

The sad part of this story is that many people that could use the lower interest rates to refinance and lower their payments can't take advantage. Banks should offer mortgage customers a refinance option regardless of equity. It would be a proactive approach to save people money and increase their motivation to stay in their home. Not to mention it would offer some relief to people that are trying to do the right thing. 

Just some thoughts for whoever is listening. 

WASHINGTON (AP) -- Mortgage rates fell this week to the lowest level on record, giving consumers added incentive to lock in low payments for home purchases and refinanced loans.

The average rate for 30-year fixed loans sank to 4.69 percent, from 4.75 percent last week, mortgage company Freddie Mac said Thursday.

That's the lowest point since Freddie Mac began tracking rates in 1971. The previous record of 4.71 percent was set in December. Rates for 15-year and five-year mortgages also hit lows.

Mortgage rates have fallen over the past two months as nervous investors have shifted money into the safety of Treasury bonds. The demand for Treasurys has caused Treasury yields to fall. And mortgage rates tend to track the yields on long-term Treasurys.

Yet the falling rates have yet to spark a home-buying boom -- or energize the economy. New-home sales collapsed in May after homebuying tax credits expired. The economy also remains under pressure from high unemployment. And many people don't qualify under tightened lending rules.

"As long as prospective homebuyers are still concerned about their jobs and financial well-being, many will be reluctant to take the plunge, even though affordability has never been better," said Greg McBride, senior financial analyst with Bankrate.com.

Low rates throughout the economy also hurt one group of Americans: savers. Puny rates are especially hard on people living on fixed incomes who are earning next to nothing on their savings.

Lending activity remains sluggish. Mortgage application volume dipped 6 percent last week from a week earlier, according to the Mortgage Bankers Association. Refinancing activity fell 7 percent. And mortgage applications to buy homes slipped 1.2 percent.

More.....

New Resource For Distressed Reno/Sparks Homeowners.

If you or someone you know is having trouble making their mortgage payments, or owes more on their mortgage than their home is worth, check out Hope4Homeowners.

Hope4Homeowners is a new program/website launched by Assist-2-Sell in Reno. The website (www.Hope4Homeowners.com/Reno) is great resource for information about how to avoid foreclosure and learning about the various programs that are available to you.   

 

Get information about:

• Short Sales
• Loan Modification
• Deed-in-lieu of foreclosure
• Home Affordable Modification Program (HAMP)
• Home Affordable Foreclosure Alternatives (HAFA)
• Home Affordability and Stability Program (HASP)

And much more.

You can download a report outlining many of your options and the qualifications for the various programs.

Letting your home go into foreclosure is the worst thing you can do and should be a last resort. There are so many better alternatives available today.

 

Reno Sparks Real Estate Market Report April 10

For all you numbers, charts, and graphs people out there the Reno Sparks Association of Realtors released a market report today.

You can download the report here. Download AprilMarketReport2010

Most of the info. was not surprising. There are a couple of figures that stand out to me.

#1 Page 12- 1417 Units available against 492 units sold. This is only a 2.8 months supply of homes.  This number is way down from the 14-18 month supply a few years back. With all the news we see in the newspapers and on TV about all the foreclosures, has to make you wonder where all the inventory is?  There is evidence that there is “shadow inventory” out there. (shadow inventory is homes owned by banks that have not been put on the market.) The question is when is this inventory going to hit the market?

#2 Page 11 - While the percentage of distress listings has gone down, the number is still high at nearly 60%. This means almost 6 out of 10 homes you see on the market are distressed.

The stats indicate the market is stabilizing, for now. With that said,  we are monitoring several factors very closely. The expiring tax credit, economic recovery(or lack there of), shadow inventory, and rising interest rates.

Stay Tuned. 

Download AprilMarketReport2010