What Features Do Buyers Value in a Home?
Retirement Without a Mortgage
Planning for retirement is obviously important and many times, an activity plagued by procrastination. Some people plan to have their home paid for by that magical date so they won’t have payments after they retire. It makes sense to eliminate a large recurring expense before they quit working.
One strategy would be to be make regular principal contributions in addition to the payments so that it will eliminate the debt by the target retirement date.
Let’s say that a homeowner refinanced their $200,000 mortgage at 4% last year with the first payment due on May 1, 2012. Under normal amortization, the home would be paid for at the end of the term; 30 years in this example.
By making additional principal contributions with each payment, it would accelerate the payoff on the home. An extra $257.13 a month would pay off the mortgage in 20 years. $524.55 extra with each payment would pay off the loan in 15 years; and $796.23 would pay off the loan in 12 years.
Having a home paid for at retirement has the obvious benefit of no house payment. It is also a substantial asset that could be borrowed against or sold if unanticipated events should occur.
Another strategy might involve purchasing a smaller home now to use as a rental that you intend to live when you retire; see Retirement Home Now.
To make some projections to pay off your own mortgage, use this Equity Accelerator.
Get Regular Check-Ups
Following his heart surgery in August, after an issue was discovered during his annual physical, President George W. Bush encouraged everyone to get regular check-ups.
Another important checkup that should be done on a regular basis and can be just as beneficial for your finances is an annual homeowner advisory. Why would you treat your investment in your home with less care than you treat your car or even your HVAC system?
Consider investigating the following:
- Know the value of your home by obtaining a list of comparable sales in your immediate area as well as what is currently on the market for sale.
- Have you compared your assessed value for tax purposes to the fair market value in order to possibly reduce your property taxes?
- Even if you’ve refinanced in the last two years, can you save money and recapture the cost of refinancing in the time you plan to remain in your home?
- Have you considered reducing your mortgage debt with low-earning cash reserves that will not be needed in the near future?
- Have you considered investing in rental homes in good neighborhoods to increase your yields and avoid the volatility of the stock market?
- Do you need recommendations of repairmen and other service providers from a trusted source who deals with them more frequently than you do?
My goal is to create a lifelong relationship to help you be better homeowners. I want to be your “go to” person whenever you have a real estate question. I want to help you not only when you buy and sell but all of the years in between.
I want to provide good, consumer-based information about homeownership on a regular basis. If it benefits you by helping you be a better homeowner, hopefully, you’ll consider me your real estate professional for life.
Anytime you or your friends need help, please call. Knowing where to get the answer is just as important as knowing the answer. If you’d like information on any of the items I suggested, please let me know.
Housing Statistics Report for San Diego County and North San Diego County September 2013
Here is a snapshot of the August housing statistics with links to both the full report for San Diego County and North San Diego County. In North San Diego County, the price of a single-family detached (SFD) home continues to increase, but we are seeing slightly more inventory and longer market times than in July. In San Diego County as a whole, the median-price of an SFD home has been constant during the past three months, but increased 24 .36 percent compared to August 2012.
• The median price for all North County home sales – attached and detached – increased to $495,000 in August 2013 compared to $494,000 in July 2013.
• Detached homes in North County increased 1.95 percent in August 2013 to $575,000 compared to $564,000 in July 2013.
• Year-over median SFD price in North San Diego County jumped 26.10 percent, compared to $456,000 in August 2012 – making 13 months of year-over median price increases (the last six months exceeding 20 percent). August 2013 reported the highest median SFD price since late 2007.
• The countywide median SFD price remained at $435,000 in August 2013 compared to July 2013.
• Year-over non-North County median price jumped 21.17 percent compared to $359,000 in August 2012, the 17th straight month of year-over median price increases.
• The number of North San Diego SFD listings (active and contingent) rose 11.49 percent in August 2013 compared to July 2013.
• The number of sold North San Diego County SFD units decreased 6.94 percent in August 2013 compared to July 2013. Year-over sold SFD units fell 7.71 percent compared to August 2012.
• Median days-on-market for single-family detached homes sold in North County increased to 21 days in August 2013 compared to 17 days in July 2013.
• The HomeDex affordability percentage for all homes in North San Diego County was 33 percent in August 2013.
AUGUST 2013 FULL COUNTY HomeDex Report
AUGUST 2013 NORTH COUNTY HomeDex Report
Information taken from HomeDex™ Copyright © 2012 by the North San Diego County Association of Realtors (NSDCAR). Used by permission.
It Can’t Hurt to Wait, Can It?
It’s been said that more money has been lost due to indecision than was ever lost because of a bad decision. Regardless of whether you agree with the statement, delaying the decision to buy in today’s market is going to cost the buyer more.
Home prices have gone up considerably in almost every market in the country in the past year and while inventories are beginning to grow, prices are expected to continue to rise. Mortgage rates jumped 1% from the beginning of May to now. They could easily reach 5% by the end of the year and continue to rise in 2014.
Many of the financial experts in the country believe that the economy will not be strong until rates are in the 7% area.
The two components that move the cost of housing are price and mortgage rates. Escalation of either one will have an affect but when both are going up simultaneously, it is dramatic. It can literally eliminate buyers who could have purchased earlier.
The following example shows what would happen to the payments on a $200,000 home if the price were to go up 3% at the same time that the mortgage rates went up 1%. Not only would the payments go up by $150.81 per month, the price of the home would be $6,000 more. Even though the down payment may not change much, the new owner would have to borrow more money. By not acting, it is costing them more in price and payment. The loss of the appreciation would have been equity had they purchased prior to the rise in price. With the median price of a detached home in San Diego County coming in at $429,750 as of last month, a 3% price increase would cost the buyer even more.
Check out the Cost of Waiting to Buy to see what the effect will be using your own projections.
Housing Statistics Report for San Diego County and North San Diego County July 2013
Prices continue to increase, and inventory is still tight in North County and San Diego County as a whole. Here is a snapshot of the June housing reports with links to both the full statistics for San Diego County and North San Diego County.
- The median price for all North County home sales – attached and detached – increased to $495,000 in June 2013 compared to $485,000 in May 2013.
- Detached homes in North County rose 1.71 percent in June 2013 to $565,000 compared to $555,500 in May 2013. June 2013 was the highest reported SFD median prices in North County since January 2008.
- Year-over median SFD price in North San Diego County jumped 20.21 percent, compared to $470,000 reported in June 2012.
- The countywide median SFD price increased 2.32 percent to $429,750 in June 2013 compared to $420,000 in May 2013.
- Year-over non-North County median price jumped 23.49 percent compared to $348,000 in June 2012, a 15-month trend of year-over median price increases.
- The number of North San Diego SFD listings (active and contingent) rose 5.97 percent in June 2013 compared to May 2013.
- The number of sold North San Diego County SFD units decreased 5.76 percent in June 2013 compared to May 2013. Year-over sold SFD units decreased 0.88 percent compared to June 2012.
- Median days-on-market for single-family detached homes sold in North County increased to 19 days in June 2013 compared to 18 days in May 2013.
- The HomeDex affordability percentage for all homes in North San Diego County remained at 34 percent in June 2013.
JULY 2013 FULL County HomeDex Report
JULY 2013 NORTH COUNTY HomeDex Report
Information taken from HomeDex™ Copyright © 2012 by the North San Diego County Association of Realtors (NSDCAR). Used by permission.
When Rates Go Up
Rising interest rates are great if you are renewing a certificate of deposit but not so much when you’re borrowing money. With interest rates on the rise as well as home prices, housing affordability is a concern for would-be homeowners.
A rough rule of thumb is that a person’s or family’s housing should not exceed 28% of their monthly gross income. While rental rates and home prices have been consistently increasing, mortgage rates have been soaring in the past month. In one week, according to the Freddie Mac Primary Mortgage Market Survey, they jumped by .5%.
This means that people have to pay a larger percentage of their income for housing unless their incomes have been increasing at an equal pace. A $200,000 mortgage would be over $100 more per month if closed in July compared to closing at the interest rates available in January of 2013.
If rates increase by .5% by the time you close on the same size mortgage, payments would increase by almost $60 per month. In order to keep the payments the same, a borrower would have to put an additional $11,000 down to lower the mortgage amount.
Check out how your payment would be affected if interest rates continue to rise.
Although The National Association of REALTORS® suggests that housing is more affordable now than one year ago, according to the California Association of Realtors® that is not the case in California. Their May 2013 statistics show the largest year-over-year price gain in at least the last 33 years. Also, with all of the variables in play including inflation that were not addressed in this piece, it is unclear how long conditions will remain “affordable.”
Housing Statistics Report for San Diego County and North San Diego County June 2013
Prices are moving up, and inventory is still tight in North County and San Diego County as a whole. Here is the North County snapshot of the May housing report with a link to both the full statistics for San Diego County and North County.
• The median price for all North County home sales – attached and detached – increased to $485,000 in May 2013 compared to $470,000 in April 2013.
• Detached homes in North County rose 3.83 percent in May 2013 to $555,500 compared to $535,000 in April 2013.
• Year-over median SFD (single family detached) price in North San Diego County jumped 23.72 percent, compared to $449,000 reported in May 2012.
• Spring 2013 has reported the highest median prices in North County since mid-2008.
• The countywide median SFD price increased five percent to $420,000 in May 2013 compared to $400,000 in April 2013.
• Year-over non-North County median price jumped 21.74 percent compared to $345,000 in May 2012, a 14-month trend of year-over median price increases.
• The number of North San Diego SFD listings (active and contingent) rose 5.35 percent in May 2013 compared to April 2013.
• The number of sold North San Diego County SFD units increased 11.49 percent in May 2013 compared to April 2013. Year-over sold SFD units increased 12.54 percent compared to May 2012.
• Median days-on-market for single-family detached homes sold in North County decreased to 18 days in May 2013 compared to 19 days in April 2013.
• The HomeDex affordability percentage for all homes in North San Diego County decreased to 34 percent in May 2013, compared to 36 percent in April 2013.
JUNE 2013 FULL County HomeDex Report
JUNE 2013 NORTH COUNTY HomeDex Report
Information taken from HomeDex™ Copyright © 2012 by the North San Diego County Association of Realtors (NSDCAR). Used by permission.
Renters Want to Buy
Fannie Mae, in a recently released study, states that consumer attitudes continue to be favorable about homeownership, particularly with the younger generations, ages 18 to 34. Slightly over half of them think that owning makes more sense than renting when comparing the financial and lifestyle benefits.
90% of aspiring owners expect to purchase a home someday and slightly over half think they’ll do it within five years. The primary challenges are having sufficient savings and the difficulty of getting a mortgage today. Younger renters see renting as a temporary stepping stone toward homeownership.
Homeowners are far more likely than renters to be “very positive” about their housing experience. Some of the benefits identified are:
• Having control over what you do with your living space
• Having a sense of privacy and security
• Having a good place for your family or to raise your children
• Having the best investment plan
• Living in a nicer home
• Building up wealth
• Saving for retirement
• Living in a place where you and your family feel safe
• Feeling engaged in your community
To satisfy a buyer’s doubts about qualifying for a mortgage, make an appointment with a trusted mortgage professional. If you’d like a recommendation at no cost or obligation, please contact me at SanDiegoRealtor@cox.net. Check out this Rent vs. Own to see the real cost of owning a home.
For more information about the Fannie Mae survey in presentation form, Click Here.
Last-Minute Amendment Holds SB 30 Hostage to Passage of SB 391
This article came to me a few days ago from the CALIFORNIA ASSOCIATION OF REALTORS.
LOS ANGELES (May 23) – This morning the Senate Appropriations Committee approved Senate Bill 30 (R. Calderon), which would extend existing provisions of state law protecting homeowners from having to pay income tax on a “short sale.” SB 30 is sponsored by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
However, in a surprise amendment, SB 30 was linked by the committee to another bill that REALTORS®, as well the county recorders, assessors and title industry, oppose. That measure, Senate Bill 391 (DeSaulnier), would establish a $75 per document recording tax to fund an affordable housing trust fund. C.A.R. is opposing SB 391 because it unfairly adds to the cost of recording real estate documents. The amendment holds SB 30 hostage to the passage of SB 391.
“Families that are forced to make the difficult decision to sell their home as a short sale are already in financial trouble. And, that financial trouble may be due to a serious illness and/or loss of employment. They simply can’t afford to pay an additional tax on money they’ve never actually received,” stated C.A.R. President Don Faught. “I’m outraged — as should the voters of California — that the Senate leadership would approve linking the fate of SB 30 to that of SB 391, effectively holding California property owners hostage.”
Short sales have become an increasingly important alternative to foreclosure for homeowners “underwater” on their mortgage. Without special protection, federal and state law would view the debt forgiven by a lender in a short sale as income and, as a result, that “income” would be taxed. In recent years, state and federal law has been amended to keep this “phantom” income from being taxed, but California protections have not been extended. Consequently, C.A.R. is sponsoring SB 30.
While SB 391 does not apply to sale transactions, the measure applies anytime a home/property owner records a document (e.g., refinancing, transferring into or out of a trust, liens, quit claim deeds, etc.). C.A.R. is an aggressive advocate for affordable housing, but believes it is bad policy to fund affordable housing at the expense of home/property owners who need to record real estate documents. The amendment to SB 30 attempts to extort support for the new tax on homeowners in SB 391.