There’s no guarantee that prices have hit bottom yet – but that doesn’t mean that you can’t get a great deal now.
By Amanda Gengler, Money Magazine
Last Updated: May 12, 2008: 1:06 PM EDT
(Money Magazine) — There’s no telling how long the housing crisis will drag on. Here’s what you need to know before you start shopping in a rocky market.
Rule 1: You can’t time the bottom
Face it: The house you buy today will more than likely be worth less next year. That could get you thinking about trying to time the bottom. Resist. It’s harder to do than you think, and this is the best buyers have had it in two decades, with inventories up and mortgage rates low.
Pace yourself, find the perfect place and drive a hard bargain: Ignore the seller’s asking price and bid 10% below what comparable homes are selling for. If the seller balks, move on. Remember that if you’re trading up, your home could sit. So sell before you buy.
Rule 2: One reason to buy now – mortgage rates
Homes are plentiful and will remain so, but financing will be getting more expensive. True, the Federal Reserve has slashed interest rates, but fixed mortgages don’t directly follow the Fed. They reflect the bond market’s expectations about inflation, which remains a concern. The 30-year, now at 6.1%, will likely reach mid-6% by December and 7% in 2009, says Celia Chen of Moody’s Economy.com.
That means there could be a penalty for waiting to buy even if prices fall more. Today a $250,000 loan would set you back $1,500 a month. At 7%, a $1,500 payment gets you only a $225,000 mortgage. As for variable-rate loans, the spread between conforming ARMs and fixed loans is too narrow to do you much good.
Rule 3: Another reason to buy – rates on big mortgages
Mortgages in amounts greater than $417,000 – the limit for buying by federally sponsored mortgage agencies – usually run a fifth of a percentage point above conventional products. But investors are shunning jumbos, which now average 7.2% and are unlikely to drop much this year, according to HSH Associates.
Certain jumbo borrowers could get relief, however. A new law allows Freddie Mac and Fannie Mae to buy loans as large as $729,750 in 71 high-priced areas. So far “jumbo conforming” loans average 6.6%. The program has gotten off to a slow start; you’ll need to shop around. And unless Congress acts, this bargain will disappear at year-end.
Rule 4: Don’t buy cheap; buy good schools
By now you’ve heard from somebody who knows somebody who got a great deal on a foreclosed property. But when you buy a house, you’re also buying into a neighborhood. And foreclosures tend to be bunched in areas where residents and speculators alike took out exotic mortgages to get into homes they subsequently found they couldn’t afford. That’s not a recipe for stability. Prices and quality of life could both decline further.
Similarly, avoid developments that popped up in the past few years. They too likely have a lot of owners with risky loans and little equity, says Mike Larson of Weiss Research. Instead, go for areas with highly rated schools. They generally fare better during downturns, and that pattern is holding today, according to a recent study by real estate site Trulia.com.
Rule 5: Make sure your agent has your interest at heart
The real estate game has a built-in conflict of interest, since the listing agent and your agent both get paid by the seller. And these days more sellers are offering extra cash to buyer’s agents.
So make sure you’re not being steered to a house that’s better for your agent than for you. Agree up front on his commission (typically 3%) and that any extra payments will go to you, says Jon Boyd, past president of a buyer’s agent trade group.First Published: May 12, 2008: 5:41 AM EDT
April 2008 Statistics for Redwood City
60 – Sales
$817,500 – April 2008
$887,500 – April 2007
-7.89% – % Change
Source: DataQuick from San Mateo County Recorder’s Office
The Memorial Holiday has shortened the week for real estate activity. Prices seem to be holding their own and in some market places there are still multiple offers and over asking sale prices. However, this is the exception and not the rule.
Fortunately for Redwood City in San Mateo County price are going sideways to a slight upward movement (1%). I see this as a trend through the rest of the year.
Oil prices have definitely had an impact on people. This past weekend I went to Hollywood for the release of my youngest son’s new album. Traveling down 5 and driving around the streets of Hollywood there was not the traffic there was a year ago. Even in the Bay Area I see less and less cars on the road when I am out there.
All this has a direct impact on homes selling and at what price. (This too will pass.) We still have the smartest men and woman around here and where else in the world can you find paradise like the Bay Area? You can’t.
Prices will go up again! Now is your opportunity to buy. Utilize this market to your advantage.
Hi,
My husband is a Realtor on the San Francisco Peninsula and publishes a newsletter with helpful tips for home owners. He just published his most recent newsletter (see below) that explains May is National Electrical Safety Month – and offers an electrical safety tip checklist for families.
As I went over the list I realized it offers tons of learning opportunities for homeschoolers. You could read this list around the dinner table tonight and talk about what each item means. After dinner go through the house and look for all of the items mentioned. Show your kids:
-where the fuse box and circuit breakers are located, -show them how to inspect your power and extension cords for wear or damage, -show them what a surge protector for your computer looks like, -show them a variety of light bulbs, where the wattage is printed on the bulb, and let the kids help check all of the lamp and light fixtures in the house to make sure you’re using bulbs with the correct wattage, -show them how to safely change/replace a light bulb -show them how to safely dispose of used/damaged light bulbs -while you’re at it, explain the difference between incandescent and fluorescent bulbs — if you don’t know there’s a basic explanation here:
http://www.homefires.com/click?electricbooklet
-to incorporate math have them count the switch plates and electrical outlets throughout the house – or count all of the light bulbs -show them any outdoor electrical outlets you have -show them where your electrical meter is located and how to read it -show them the electrical bill – and show them how you pay it
You’ll find lots of lessons and interactive for kids about electrical safety
here:
http://www.nfpa.org/riskwatch/teach_electricalsafety.html
The UK also has a terrific educational website on electricity here:
http://www.switchedonkids.org.uk/
Of course, any discussion of electricity leads to Thomas Edison – and PBS has a terrific site your family will enjoy here:
http://www.pbs.org/wgbh/amex/edison/
You’ll find a neat Electricity booklet online that explains many basic concepts to kids here:
http://www.homefires.com/click?electricity
Here’s a printable activity guide that explains how to read the meter and the difference between incandescent and fluorescent light bulbs:
http://www.homefires.com/click?electricbooklet
And for TONS of info on electricity for kids from the Energy Information Administration with fun facts, games, history, famous inventors, classroom activities and more visit:
http://www.eia.doe.gov/kids/index.html
Below, you’ll find my husband’s newsletter which was the impetus for this.
Use the list he provides to not only protect your home, but teach your kids about electrical safety and electricity. Have fun!
Diane
Editor, http://www.Homefires.com
________________________________
From: Cliff Keith and Team [mailto:Cliff@SFBayHomes.com]
Sent: Thursday, May 15, 2008 10:02 AM
To: Diane Keith
Subject: Home Electronic Safety Tips
Diane,
We tend to forget how dangerous electricity can be – without the proper safety precautions it can cause fires, injuries, and even death.
With May as National Electrical Safety Month, now is an excellent time to review basic safety practices – like the following – that can help you protect your home and family from electrical-related disasters.
1. Check for and professionally replace outlets and switches
that have damaged or missing parts or that are hot to the touch.
2. Test circuit breaker operation. If using fuses, confirm the
amp rating is correct for the circuit.
3. Watch out for counterfeit electrical products which might be
unsafe. Look for a certification mark like Underwriters Laboratories (UL).
Also stay informed with email alerts on dangerous product recalls from the U.S. Consumer Product Safety Commission (www.cpsc.gov <http://www.cpsc.gov/> ).
4. Reduce fire and shock hazards by replacing worn or damaged
electrical cords. And avoid running cords beneath carpet or near moisture.
5. Be careful not to overload outlets or power strips. Doing
so could create a fire risk.
6. Have a professional install ground fault circuit
interrupters in areas near water sources. If already installed, test GFCIs monthly and after electrical storms.
7. Limit the use of extension cords and ensure they can handle
the total wattage of appliances powered. When outdoors, only use cords rated for outdoor use.
8. Inspect computer equipment for damage to wiring or plugs and
use surge protectors.
9. To prevent overheating and a possible fire, ensure that
bulbs in lamps and light fixtures do not exceed the recommended wattage.
10. Have a professional electrical safety inspection performed
at least every 10 years and conduct your own visual inspection annually.
Keep your family safe. And remember, unless you are knowledgeable about electricity, consult a professional for all electrical needs. Don’t hesitate to contact me if you need assistance finding a qualified, professional electrician. I’m always available to help.
Your friend,
Cliff Keith
By Referral Only
Coldwell Banker
650-346-7366
http://www.CliffNotesOnRealEstate.com
JUMBO RATES FALLING- GREAT NEWS!
Just a quick bulletin to inform you of some fabulous news.
The interest rates on the newly coined “Conforming Jumbo Loans” (from $417,001 to as high as $729,750) have plummeted, and are now a mere ¼ % higher than standard conforming loan rates. (By contrast last week they were nearly a full percentage point higher.) This adds great buying power for your clients in this price range!
Moreover, Freddie Mac has announced that they will be buying more Conforming Jumbo Loans, adding further liquidity to this market.
And in further good news, rates for standard jumbo loans (those above $729,750 in San Francisco- lower in lower median home price areas) have dropped also.
At the risk of being overly optimistic, it appears that the tide is beginning to shift. We’re starting to see buyers come out and buy in the hardest hit areas. This is causing lenders to believe that we may finally be at or near the bottom of the pricing cycle. Keep your fingers crossed! Next thing you know, they might even start easing up a bit on underwriting!