5 Great Reasons to Buy a Home Right Now

  The nature of market bottoms is that it’s hard to tell one’s occurred until prices and sales volume start to rise again. That’s why the best time to buy is when market conditions suggest a bottom.


That means there’s still some risk for homebuyers, since no one has a crystal ball that predicts the future. To take advantage of low mortgage interest rates and home prices still well below previous records, you may have to take a risk, such as riding out another short-term dip in property values.

But the rewards may be well worth it. Here are five reasons to buy a home right now.

1. More jobs are available

Total nonfarm payrolls rose by 217,000 in June, and the unemployment rate is 6.3 percent, according to the U.S. Bureau of Labor Statistics. Employment increased in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing.

2. Houses are a great hedge against inflation

The Labor Department also says the May Computer Price Index is up 2.13 percent year-over-year. The index for all items less food and energy rose 0.3 percent in May, its largest increase since August 2011.

The CPI excludes volatile food and energy, so you can bet that the accelerating cost of things, otherwise known as inflation, also includes housing. You may be paying more for goods and services, but if you’re a homeowner, you’re better off financially. A major asset such as a home, purchased at a fixed cost, becomes more valuable when prices inflate.

3. Housing price increases are slowing

The median existing-home price was $213,400, over 5 percent above May 2013. Considering that the national median existing-home price was $158,800 in January 2011. That’s when the PMI Insurance Company said home prices relative to income are below market fundamentals in more than half of U.S. states. Prices overcorrected during the recession, and then they soared by the double-digits in 2013.

Now housing is correcting once again from an overcorrection. Now’s the time to take advantage of better homebuying conditions.

4. Mortgage interest rates are still low

During the recession, mortgage interest rates for a benchmark 30-year, fixed-rate loan, averaged 4.32 percent. Now they’re close to that and there’s no recession. That means mortgage rates have nowhere to go but up.

5. Pent-up demand ready to release

Since the recession, household formation fell dramatically to one percent of the national population. But considering that the leading age of the largest generation ever – 81 million Echo Boomers — is now over 30, the numbers should be closer to the 2.3% annual growth of the 1970′s, when 78 million Baby Boomers reached adulthood.

The National Association of Homebuilders (NAHB) said about 2.1 million households delayed formation due to the recession which allegedly ended in 2011. Now there’s pent-up demand for housing that should continue to drive home prices higher.

The takeaway

A housing recovery doesn’t occur in a straight line. There are surges and dips. Buyers could wait for better conditions, but the present alignment of falling mortgage interest rates, slower home prices, and larger selection is highly unlikely to reoccur.

This may not be the bottom, but it’s close enough.

Written by Blanche Evans

Market Commentary for the Week of August 11th

This week brings us the release of only four pieces of monthly economic data in addition to two Treasury auctions that have the potential to affect mortgage rates. Despite the fairly low number of reports, we still will likely see a fair amount of movement in the markets and mortgage pricing due to the importance of those economic reports and the likelihood of the geopolitical and financial issues being in the spotlight again. The economic data is set for the middle and late days of the week while the Treasury auctions will take place mid-week.

There is nothing of relevance scheduled to be posted or take place Monday or Tuesday. In the absence of anything on the schedule, look for the stock markets and overseas issues to affect bond trading and mortgage pricing early this week. As long as no major news or events transpire, stock strength will probably lead to bond weakness and higher mortgage rates. If the major stock indexes fall from current levels, bond prices should rise, pushing mortgage rates lower.

August’s Retail Sales data will start the week’s calendar at 8:30 AM Wednesday. This report comes from the Commerce Department and will give us a very important measurement of consumer spending. Consumer level spending figures are extremely relevant to the markets because they make up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.3% increase in sales. Analysts are also calling for a 0.3% rise in sales if more volatile auto transactions are excluded. Larger than expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate stronger economic growth.

There are two Treasury auctions this week that also have the potential to influence mortgage rates. The first is Wednesday’s 10-year Treasury Note auction, which will be followed by a 30-year Bond auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. If the sales are met with a decent demand from investors, indicating that interest in longer-term securities such as mortgage-related bonds is good, the earlier losses are usually recovered after the results are announced. Results of sales will be posted at 1:00 PM ET of each auction day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading those days. However, weak levels of interest could lead to broader selling in the bond market that could push mortgage rates higher.

The three remaining reports are all set for Friday morning. The first will be August’s Producer Price Index (PPI) from the Labor Department at 8:30 AM ET, giving us an important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices. Analysts are predicting a 0.2% increase in the overall index and a rise of 0.2% in the core data. Stronger than expected readings may raise inflation concerns in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bond’s future fixed interest payments. As inflation becomes more of a concern in the markets, bonds become less appealing to investors, leading to falling prices, rising yields and higher mortgage rates.

July’s Industrial Production report is scheduled to be posted at 9:15 AM ET Friday. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.3% increase from June’s level. A decline would be considered favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness and broader economic growth would be more difficult if manufacturing activity is slipping.

The last release of the week will be posted by the University of Michigan late Friday morning. Their Index of Consumer Sentiment will give us an indication of consumer confidence, which projects consumer willingness to spend. If a consumer’s confidence in their own financial situation is rising, they are more apt to make large purchases in the near future. But, if they are growing more concerned about their job security or finances, they probably will delay making that large purchase. This influences future consumer spending data and therefore, impacts the financial markets. It is expected to show a reading of 81.7 that would mean confidence was nearly unchanged from July’s level of 81.8. That would be considered slightly favorable news for bonds and mortgage rates. Good news for mortgage shoppers would be a sizable decline in the index.

Overall, Friday is the best candidate to be labeled most important day with most of the week’s economic data scheduled, but we could see noticeable movement in rates Wednesday since it has the single most important release and the 10-year Note auction. The Treasury auctions raise the possibility of afternoon volatility in the middle days, although I would not be surprised to see afternoon changes to mortgage pricing other days also if the crises overseas remain volatile. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week if still floating an interest rate and closing in the near future.

Using Coupons to Save On Your Vacation

Summer vacation is almost over, and you’re ready to make the most of what’s left. So you’ve decided to take the family to Disneyworld or the Grand Canyon, but you’re worried about spending so much money on the food and activities. Worry no more!

Here’s some tips on how to shave off a lot of the extra expenses in order to have a great time. You can even use these tips for your staycation and see places you didn’t know were in your neighborhood.

You can also use these tips for honeymoons or planning for your next vacation.

Theme Park Ideas

Look into buying your tickets in advance, or on the internet. Many parks offer discounts over purchasing at the gates.

Some theme parks have what they call a Cooler Pass where you can bring in your own food. This saves a lot of money as well as frustration since you won’t be standing in long lines for their food which is often not very good. Even if you can’t, consider keeping a cooler in the car and have a family break at lunch time, get your hand stamped, and go eat outside of the park. Most places provide picnic tables, or at least have some trees for shade. This gives you a chance to see how everyone’s doing, reapply sunscreen, and get a few hugs in.

Sign Up for Daily Deals Where You Want to Go

Social coupons like Living Social or Groupon can have really good deals on attractions, events and restaurants. You may also be able to get deals through the local newspaper, so check it out online before you go. Also, if you sign up ahead of time, you can learn about new places and research where they are in comparison to where you’re staying. No matter how great the price, if it’s a long drive, it may not be worth the deal.

Also look into packages from places like Jetsetter. You might find some great destinations for a very affordable price.

Before You Go and Once You’re There

If you’re staying in a hotel, they will probably have racks of coupons for local restaurants and activities. The business gives a small percentage back to the hotel usually, so take these recommendations with a grain of salt. Do your research with local review sites.

When you book your hotel, see if they have packages that include breakfast.

Find the local chamber of commerce. They often have maps with their businesses as well as discount coupons. Like the hotel coupons, you’ll want to do a bit of research to see if it’s what’s best for you. You could also call the local chamber ahead of time and have them send you a packet of information. Some towns have special tourism departments that also can send coupons.

From USA Today:

Museum admissions can add up quickly, even if you’re only seeing a handful of exhibits during your weekend getaway. Ease the pain with an admission-ticket bundle like CityPass, which conveniently packages discounted admissions to your destination’s top attractions. CityPass Seattle, for example, includes admission to six big-city draws, including the Space Needle and the Seattle Aquarium, for $69 (if you paid a la carte, you’d be forking over $128). Plus, you can buy your pass in advance, saving precious time by skipping busy ticketing lines.

Also look into using apps like Yelp and FourSquare. When you check in, they often have deals or coupons. You can research Yelp online to see who is offering a deal before you go as well. From MSN Money:

12. Use discount food apps. If you do dine out, use a restaurant-locating app to find special deals and the best prices. Some of my favorite apps include:

• Yelp Check-Ins
• LocalEats
• KidsEatFree

Split your meal in half, ask the waiter to box it up and use the hotel’s mini fridge for storage. That way, you get two meals for the price of one.
16. Go sightseeing for free. Popular tourist attractions can be pricey, but there are plenty of places you can tour for free. For example, admission to popular plantation homes in Louisiana can cost up to $18 per adult, but the National Park Service hosts free walking tours of the French Quarter in New Orleans.

Planning ahead what you do may save you much money. It will be very useful for figuring out your budget which saves you money overall. Finally, always read the fine print before you buy or use any coupon.

If a tourist walked up to you and asked where was the best place to eat, where would you send them?

Mortgage News Roundup - Waiting to Buy Will Cost You

Hello and welcome to Thursday, again. A fun factoid is that the average age of a home in the United States is 40.

Waiting to Buy Will Cost You

If you’ve been thinking about delaying buying a home until next year, you’ll want to pay attention to this: The house you can afford today may be out of reach a year from now due to rising interest rates and home price appreciation.

More often than not, buyers do not understand the profound effect of rising interest rates on affordability,” said Erin Lantz, vice president of mortgages at Zillow. “Many buyers associate a 1 percentage point interest rate change with a 1 percent change on a piece of clothing or the price of a car, when in fact they are very different.”

As a rule of thumb, Lantz said, a 1 percentage point increase in mortgage rates reduces affordability by 10 percent.

3 Keys to Selling a Home in 2014

If you plan to sell your home in 2014, be aware that buyers have changed since the economic downturn. They’re savvier than ever, and they’re not desperate. Many of today’s buyers are Millennials (also known as Generation Y) who’ve come of age with access to endless information via the Internet. It’s in their DNA to search, and they love photographs and sharing.

So to help your real estate agent sell your home for the best price:

1. Take your photo shoot seriously. People are looking online. Ensure there’s no clutter and that the house is sparkling.Too often, listings go online with photos of a dark room, lights off or blinds closed. And make sure photos are taken. Nothing is worse then a listing without them.
2. Have your home inspected before you list. You don’t want any surprises. If there are any issues, you can choose to repair or not, and price your home accordingly.
3. Throw buyers a bone and be in the good graces of the buyer before, during and after escrow. An example is giving them a shorter close if they like. These little offerings will go a long way toward a speedy and hassle-free escrow.

The bottom line is put yourself in the buyer’s shoes. Actually you may know better since you may be looking to buy another home. So treat them the way you would want to be treated.

What Is the Role of the Real Estate Agent?

According to the National Association of Realtors 2013 Profile of Home Buyers and Sellers, 88 percent of buyers purchase their homes through real estate agents or brokers. That reliance on real estate professionals has steadily increased from 69 percent in 2001.

There was a time where people thought they could handle everything themselves because they could do the research online, and there were programs to generate forms. Unfortunately, they made a lot of costly mistakes, and more people are realizing the role of the real estate agents.

Whether you’re buying or selling, your agent is your guide. Their role is to educate you. Buying and selling a home is a very detailed and complicated process. There are many legal areas that need to be addressed. A good real estate agent will talk to you about the steps, your responsibilities, and then guide you through it.

If you’re selling, the agent will be able to educate you on property values in your area, and what features people are looking for. They help you by putting together a marketing strategy.

If you’re a buyer, the agent will educate you on neighborhoods, and items that could be red flags like power lines or bad schools.

When you work with a buyer’s agent, their fiduciary responsibility is to you. That means you have an expert who is looking out for your best financial interests, an expert who’s contractually bound to do everything in their power to protect you.

For both buyers and sellers, the agent will handle the details of the negotiation process, including the preparation of all necessary offer and counteroffer forms. Once your inspection is done, the agent can also help you negotiate for repairs. An agent can remain detached during potentially emotional discussions.

The real estate agent is experienced and will be able to identify potential pitfalls before you stumble into them. And finally, the buyer’s agent will handle the minutia involved with the offers, mortgage application and the final closing documents. Paperwork that goes along with a real estate transaction can be exhaustive. If you forget to initial a clause or check a box, all those documents will need to be resubmitted. A good real estate agent understands the associated deadlines and details and can help you navigate these complex documents so you don’t have to.

There’s A Lot To Consider When Choosing A Home Inspector

 

Many times, in the course of reviewing transaction files, I will read that an agent has recommended to the buyer that he or she should have the home inspected by a licensed home inspector. While one has to appreciate the earnestness of such advice, it is nonetheless at least a trifle amusing. This is because there is no licensing of home inspectors here in California. California is one of 21 states that do not regulate home inspection services via some sort of licensing mechanism.

Of all people, real estate agents know that the mere possession of a license is no particular guarantee of service quality. Nonetheless, when there is no licensing of what, to many, would seem a fairly technical business, questions do arise as to how one goes about selecting a practitioner. One approach is to look for some sort of professional validation such as certification.

Indeed, a number of professional liability (Errors and Omissions) insurance companies provide incentives to their real estate customers to use certified home inspectors (or, to do the equivalent, obtain a “certified home inspection”). But then the question arises, “Certified by whom?” In some cases the insurance company may name which certifying organizations are acceptable; but, in others, the choice is left to the agent or broker. The insurance company just wants to know the inspector is certified.

Just as possession of a license to do something is not guarantee of quality, neither is the fact that someone has been certified. There are dozens of organizations that provide certification in the home inspection field, just as there are dozens of organizations that provide certifications in various aspects of the real estate business. (One can only imagine how many real estate agents became “certified short sale specialists” during the past few years.)

Some certifying agencies are undoubtedly quite rigorous and good; others, not so much. (As far as home inspectors go, I am neither qualified nor brave enough to single out here which are the really good ones.)

So what is a real estate agent to do when it comes to choosing or referring a home inspector? (I include choosing because that is often what the client wants and requests.) Obviously, in a state where licensing is required, then a license is a must. Secondly, despite what has been said, an inspector should be sought out who has membership and training through one of the professional societies. (It really doesn’t take a whole lot of effort to get an idea of which organizations seem substantial and which appear to be on the fly-by-night side.)

One of the most important things that an agent can do — that most consumers are just not in a position to do — is to ask around amongst one’s peers. And I don’t mean that from the perspective that you want to avoid inspectors who have the reputation of being “deal killers.” Sometimes that reputation just means that they are thorough, which, as a fiduciary, is just what you want. (Although, on the other hand, it is perfectly legitimate not to want someone who is a bad communicator or who leans toward negativity.)

There are many specific questions to be asked: “What are their reports like?” “Do they welcome buyers being present at the inspection?” “What is their level of experience?” “Do they carry professional liability (Errors and Omissions) insurance?”

A home inspection is one of the most important parts of a real estate transaction. Not only should agents recommend that buyers obtain one, they should make every effort to see to it that the inspector is really good at what he or she does. After all, you’d rather have the inspector tell you about a defect or problem, than to hear about it, after closing, from the buyer’s lawyer.

Market Commentary for the Week of August 4th

This week is very light in terms of the number of economic reports that are scheduled for release that may influence mortgage rates. There are three monthly or quarterly reports set to be posted, but none are considered to be highly important to the markets. We saw rates make a nice move lower Friday after a rough middle part of the week, leaving rates nearly unchanged from last Monday’s opening levels. This week should be much calmer for the mortgage market with fewer intra-day revisions than last week unless something very much unexpected happens.

June’s Factory Orders data is the first data of the week at 10:00 AM ET Tuesday. This report helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to the Durable Goods Orders report that tracks orders for big-ticket items only, which was posted late last month. Since a significant portion of the data was released then, this report likely will not have much of an impact on the markets. Analysts are expecting to see an increase in new orders of approximately 0.5%. A smaller than expected increase would be considered good news for bonds and mortgage pricing, but I don’t believe this report will have a significant impact on Tuesday’s mortgage rates either way.

The Institute for Supply Management (ISM) will post their Services Index for July late Tuesday morning also. This index is somewhat similar to last Friday’s ISM Manufacturing Index but tracks sentiment at the services level rather than manufacturing. It has the potential to impact bond trading and mortgage rates if it shows a sizable variance from forecasts, particularly when little other data is being posted. However, it usually has little influence on mortgage pricing and cannot be considered a key report. Current forecasts are calling for a reading of 56.5, up from June’s reading of 56.0.

Employee Productivity and Costs data for the second quarter will conclude this week’s monthly and quarterly report schedule early Friday morning. It will give us an indication of employee output per hour. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don’t see this being a big mover of mortgage rates either, but it may influence rates slightly during morning trading. Analysts have predicted a 1.4% increase in productivity during the second quarter and a 2.0% decline in labor costs. A larger increase in the productivity reading and a smaller than expected rise in costs could help improve bonds, contributing to slightly lower mortgage rates Friday.

Overall, any day of the week could end up being the most active with such little on the calendar. Tuesday has two reports so we can label it as the best candidate, although a sizable move in stocks could cause a larger move in rates than these reports are likely to do. I am not expecting to see nearly as much volatility in rates this week as we saw last week, but there still is a decent chance of seeing rates move multiple days. Therefore, please maintain contact with your mortgage professional if still floating an interest rate.