Ryan Blanco San Diego real estate agent

San Diego Housing Market Update-June 2017 Sales

San Diego Housing market update for home salesBelow is my monthly analysis of the San Diego housing market. It will show many different metrics to help us get an accurate “feel” for what is happening in our local real estate market!

There has been a general slowdown in sales across the country, and this cannot be blamed on negative economic news. Unemployment remains low and wage growth, though nothing to overly celebrate, has held steady or increased for several years in a row. There is strong demand for home buying, emphasized by higher prices and multiple offers on homes for sale in many submarkets. As has been the case for month after month – and now year after year – low inventory is the primary culprit for any sales malaise rather than lack of offers.

Activity Snapshot:

One-year change in closed sales

One-year change in median sales price

One-year change in homes for sale

-7.2%

+11.0%

-26.2%

Closed Sales decreased 3.4 percent for Detached homes and 14.0 percent for Attached homes. Pending Sales increased 8.7 percent for Detached homes and 7.1 percent for Attached homes. Inventory decreased 25.9 percent for Detached homes and 27.0 percent for Attached homes.The Median Sales Price was up 10.1 percent to $619,900 for Detached homes and 10.1 percent to $415,000 for Attached homes. Days on Market decreased 12.5 percent for Detached homes and 23.1 percent for Attached homes. Supply decreased 27.6 percent for Detached homes and 26.3 percent for Attached homes.

With job creation increasing and mortgage rates remaining low, the pull toward homeownership is expected to continue. Yet housing starts have been drifting lower, and some are beginning to worry that a more serious housing shortage could be in the cards if new construction and building permit applications continue to come in lower in year-over-year comparisons while demand remains high. Homebuilder confidence suggests otherwise, so predictions of a gloomy future should be curbed for the time being.

According to Bankrate.com, interest rates have continued to stay near the 4% level, despite the Federal Reserve Bank finally raising the fed funds rate to .75%. They are currently at 4.12% for a 30-year fixed loan (they were at 4.00% at this time last month). This is well below the historical average of 6% or so, which is great for home buyers. To calculate your potential mortgage payment or see what you can afford, go HERE.

The San Diego Association of Realtors analyzes housing market data for San Diego county every month. Below is their monthly report for home prices. The figures represents ALL property types.

San Diego Housing Market Stats for June 2017

CLICK TO ENLARGE

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

Don’t Fall Into These Real Estate Traps!

Real Estate is one of the safest investments you can make, isn’t it??  So why does a quick observation of the housing market tell us otherwise? Foreclosures,subprime loans, housing bubbles, defaults, homeowner assistance programs-all these things have become common terminology in the last few years. This leads those easily intimidated to believe that it’s nearly impossible to ever build wealth (or at least not lose it) in real estate. Like most things in life that come with a reward, successful real estate transactions require due diligence and discipline. They also require you to stay away of some easily real estate traps.

don't fall in love with a homeGet Emotionally Involved With a Property
You say you “fell in love” with that great new two-story custom home by a park. Good for you. Make sure you let the sellers know that, so that they can raise their price accordingly. Never give monopoly power to the person you’re doing business with!

You fall in love with people, maybe your pet. Which is to say, things that don’t come with economic potential. Real estate is for investing in, not for having an attachment to.

Buy the Pick of the Litter
The neighborhood is just ok, but the house in question is the best around! It’s twice as big as any other on the block, with decorative water fountains and many other custom upgrades. It stands to reason that such a house will make a better investment over the lessor homes around it, right?

Well, it won’t. You might not like this, but a house’s surroundings have as big an impact on its value as the house itself. In fact, the house mentioned about will only help the values of the other “lessor” homes in the area.

Remember, shopping around for a favorable interest rate is at least as important as shopping around for a well priced home. Getting a mortgage loan with even a few basic points in your favor can put you in a much larger house than you might otherwise have budgeted for. (Or, it could keep you in a smaller house at a much lower payment.)

Put Down as Little as Possible, Preferably Nothing
Don’t delay your gratification? That’s for suckers! You want it and you want it now. Saving up 20% of the price of a house for down payment could take years. Without that 20% 20% down payment for a new housedown payment, you will likely end up paying private mortgage insurance until you have 20% equity in the place.

Don’t leave money on the table. At the same time, never spend money you don’t need to. When you put little or nothing down, you’re already overextending yourself. Paying monthly mortgage insurance is the equivalent of undergoing a credit check that costs you hundreds if not thousands of dollars every year.

The Bottom Line
When you buy a house, you are not simply buying four walls and a roof. You are purchasing decades worth of mortgage interest and possibly, mortgage insurance. It’s helpful to think of the entire purchase as one item, and understand that a $300,000 house can end up costing you over $550,000 among principal, interest and insurance, not to mention property taxes.

Understand that a desirable property has financial potential. Many people who switch houses, whether they’re trading up or trading down, never think (or care to) keep the original house and rent it out. They want the cash to buy the new home. But what if you could rent it out for more than the mortgage payment? You could then use that difference to help pay for part of the new house.

Yes, a house is a home. But you’re missing out if you see it only as that. Real estate is a financial instrument that, under the right conditions, can help you solidify long-term wealth.

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

FHA vs. Conventional Mortgages

Today in California, fewer than one-third of homes are sold to first time home buyers. That’s the smallest percentage in decades. But now HUD has dropped the FHA or conventional home loanPMI rate (private mortgage insurance) on FHA loans, the mortgages taken out by most first time buyers. So when comparing FHA vs. Conventional mortgages, which is better?

FHA loans are popular because they only require a down payment of 3.5% with a credit score of 580. The down payment doesn’t even have to be your own money – you can use a gift from friends or family. And sometimes home sellers, builders, or even lenders to pick up the tab for closing costs and other fees.

Sounds great, right? A conventional loan still clearly has it’s advantages while FHA loans have some obstacles in front of it:

1. The maximum sale price to obtain a FHA loan in San Diego County is currently $612,950. Two mortgage insurance premiums are required on all FHA loans:  1. The upfront premium is 1.75 percent of the loan amount. This equals $1,750 for every $100,000 of loan amount. 2. The annual premium (but normally paid monthly with your mortgage payment) is as follows:

  • 30-year loan, down payment (or equity) of less than 5 percent: 0.85 percent
  • 30-year loan, down payment (or equity) of 5 percent or more: 0.80 percent
  • 15-year loan, down payment (or equity) of less than 10 percent: 0.70 percent
  • 15-year loan, down payment (or equity) of 10 percent or more: 0.45 percent

2. Banks are very picky. Buyers can help themselves by having up-to-date tax returns, W-2’s, 1099’s and the last three months of bank statements. But it’s not just the paperwork, it’s also your FICO score. While FHA loans technically require a credit score of 580, most lenders won’t consider buyers with credit scores under 640. (Conventional loans normally require FICO scores of 700 and higher).

Part of the reason for this? Since FHA loans only require 3.5% down. This limits home buyer risk, since they don’t have much “skin in the game.” If the housing market goes into another steep decline, these homeowners are more likely to walk away, leaving banks high and dry.FHA vs. conventional loans

3. FHA loans are still more expensive than most conventional loans. The FHA took a big hit during the housing collapse and required a $1.7 billion bailout in 2013. Those losses led to an increase in the fees charged for FHA loans.

But for borrowers with a higher FICO score, it’s  more economical for them to get a conventional loan and pay the PMI, or private mortgage insurance. This is because in addition to FHA’s monthly fees, there’s an upfront charge of 1.75% of the loan amount. So if you took out a $200,000 FHA loan, the loan amount you’d pay back would be $103,000. This is in addition to the monthly PMI payment on the loan of (currently at the new lowered rate of .85%/year).

4. On conventional loans: once a homebuyer has accumulated enough equity to equal 20% of the home’s value, they can request that the mortgage insurance be cancelled. On FHA loans, PMI remains in place for the life of the loan. Thus the only way to get drop it is to refinance into a conventional loan, or sell the home.

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

Understanding Home Appraisals

understanding home appraisalsHome appraisals can be confusing. The homeowner may feel that their home is worth a certain dollar amount, only to be disappointed that it appraises at another value. Although the disappointment is understandable, know that appraisals are not a just “opinion,” but rather based on guidelines set by lenders and the law.

A commonly known guideline is one that bases your home value on that of similar home sales in the area. Similar qualities such as the size of the home and size of the lot are considered. Your home will also be bracketed according to the value of certain amenities. For example, while there is no set amount associated with a pool, the value will be based on what the local marketplace can support. In other words, if a homeowner installs a pool that costs $30,000, but the local market supports the value of a pool at only $15,000, then that item is bracketed at [$15,000] on the appraisal.

Another area of confusion for appraisals and upgrades has to do with how they are weighed in new homes versus older homes. In newer homes, the full value of the upgrade will be reflected on the appraisal since it required investing extra money in building the home. On the other hand, the total amount invested in upgrading or remodeling an older home is often not expressed in the final appraisal. The reason for this valuation difference is that older homes already had value in their original condition.

Just remember that the local market must also support the value of the upgrades!

Guidelines state that appraisers must place a value on homes that have already sold. However, this is not a hard rule. The appraiser is permitted to increase the value when they deem that property values are rising that area. For this assumption to be valid, however, the appraiser must provide evidence such as comparable pending sales and active listings.

Although there is no formal standard, many lenders allow for a 5% margin of error. However, if the appraiser is off by 8%, it’s likely that the home value will be reduced by 8%. Although its tempting to encourage the appraiser to push the valuation to the higher end of the market, it’s best that the value is not pushed further than the market can support. If the lender suspects that the appraisal is drastically off, it will be subject to more scrutiny, and the value pushed further down.

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

Home Warranties–What You Need To Know

Home Warranty Plans for Buyers and Sellers

You get a warranty when you buy phones, computers, appliances, and more, but what about for your home? Yes, you can get a home warranty! These benefit both buyers and sellers and can be a valuable tool.

A home warranty is different than homeowners insurance. It covers many items not covered under your standard homeowner policy – filling a critical gap home protection. For example, if the dishwasher leaks and water damages the floor, the homeowner’s insurance policy may cover fixing the floor, but not the repair or replacement of the dishwasher. A home warranty will cover the dishwasher. So in many ways, they compliment each other.

Home warranty plans protect home buyers and sellersFor home buyers, a one-year home warranty is normally requested in the purchase contract, and even often paid for by the seller. The cost for a home warranty averages around $400/year. It is good for the first year after you purchase a home – and you have the option to extend it after that. With a home warranty, most major appliances, plumbing, and electrical systems are covered. For a little more money, additional items such as air conditioning and swimming pools can be covered. Buyers simply pay for the service call cost (which averages around $75), but not pay for actual repair or replacement cost for covered items. The contract covers repair and replacement of covered items, regardless of age, make, or model. This limits the risk home buyers have, and brings piece-of-mind.

Home warranties can also be very valuable for sellers. For example, if the new buyers move in the home and go to turn on the air conditioner and it does not work, someone may be blamed for it. Perhaps the buyers think the sellers knew of this problem and will blame them. Maybe they think the buyer’s Realtor, the seller’s Realtor, or the property inspector knew about it, or all the above! With the home warranty policy, the sellers are much more likely to maintain a good standing with the buyers. If any issues do come up, they will get repaired for the nominal cost of the service call. Quite simply, home warranty plans go a long way to prevent lawsuits and help everyone sleep better at night!

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com

San Diego Housing Market Update-May 2017 Sales

San Diego Housing market update for home salesBelow is my monthly analysis of the San Diego housing market. It will show many different metrics to help us get an accurate “feel” for what is happening in our local real estate market!

Home prices across the U.S. are reaching all-time highs, prompting worry over another boom-and-bust scenario like we experienced roughly ten years ago. Yet, as we glance across the state of residential real estate, what is clear compared to the last extended run of price increases is that lending standards are now much stronger than they were before. Incomes must be verified, a reasonable amount of money must be paid toward the home prior to purchase and a more stringent loan approval process is in place to prevent a repeat performance of the Great Recession.

 
Activity Snapshot:

One-year change in closed sales

One-year change in median sales price

One-year change in homes for sale

-4.3%

+8.0%

-25.2%

Closed Sales decreased 6.1 percent for Detached homes and 0.8 percent for Attached homes. Pending Sales increased 12.5 percent for Detached homes and 3.1 percent for Attached homes. Inventory decreased 24.7 percent for Detached homes and 26.8 percent for Attached homes.

The Median Sales Price was up 8.0 percent to $612,500 for Detached homes and 5.1 percent to $394,000 for Attached homes. Days on Market decreased 15.6 percent for Detached homes and 34.5 percent for Attached homes. Supply decreased 25.9 percent for Detached homes and 27.8 percent for Attached homes.

In addition to a stronger base upon which to conduct real estate transactions, the overall economy is in better shape than it was a decade ago. More jobs are available, unemployment is relatively low and workers have more faith in their wages and the potential for wage increases. Although we continue to battle an inventory shortage in much of the country, optimism remains high for a successful summer for buying and selling homes.

According to Bankrate.com, interest rates have continued to stay near the 4% level, despite the Federal Reserve Bank finally raising the fed funds rate to .75%. They are currently at 4.00% for a 30-year fixed loan (they were at 4.09% at this time last month). This is well below the historical average of 6% or so, which is great for home buyers. To calculate your potential mortgage payment or see what you can afford, go HERE.

The San Diego Association of Realtors analyzes housing market data for San Diego county every month. Below is their monthly report for home prices. The figures represents ALL property types.

San Diego Monthly housing report for May 2017-001

CLICK TO ENLARGE

 

Ryan Blanco-Realtor-San Diego Real Estate BlogAbout Me: I am a full time agent and I dedicate 100% of myself and my time to my valued clients in addition to the San Diego communities that I serve. It is imperative that I continuously evolve with local and national trends in addition to always looking ahead of the industry. It is a must to always provide the best service to my clients, their families and friends.

619.384.2248
Ryan@RyanYourRealtor.com

 

 

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