Orange County Real Estate

 

Dec. 5, 2017

Why is There So Much Paperwork Needed to Obtain a Mortgage?

Why is There So Much Paperwork Needed to Obtain a Mortgage?

 

Why is there so much paperwork required by the Lenders for a residential mortgage loan application when purchasing a home today? I feel like they need to know absolutely "everything" about me and even then they need 3 separate sources to independently validate every single fact I provided them on the application.

As a buyer, my friends and family are telling me the process was 100 times easier when they bought their home 20 years ago.

Well, there are two very good reasons why the mortgage loan process is much more difficult now than in past decades.

1) After the U.S economy crashed in 2008, the government put in place new guidelines demanding that the banks prove beyond any doubt that you are indeed able to pay the Mortgage you are applying for.

In the years preceding the housing crises, more than a few people "qualified" for a mortgage that in reality, they could never pay back. This ultimately led to millions of Homeowners losing their home. The government aspires to make sure this never happens again.

2) The simple fact is, Banks do not want to be in the Real Estate business.

Over the last several years (since the crash), Banks have been forced to take on the huge task of liquidating millions of homes that ended up being foreclosed on and also negotiating millions more through the short-sale process. Just like the government, banks do not want more foreclosures. For that simple reason, they need to double (or even triple) check every detail on the application.

However, there is some good news to be found in this situation.

The housing crises that forced the banks to be extremely diligent about their paperwork requirements also allowed you to get a very low-interest-rate in the 4% range!

Those friends and family you know that purchased homes 10 or 20 years ago did, in fact, experience a simpler mortgage application process. But, they also paid a higher interest rate - the average rates for a 30 year fixed mortgage in the 1990's was 8.12% and in the 2000's was 6.29%.

Today, if you went to your bank and said you were willing to pay 7% instead of around 4%, they would likely bend over backward to make even today's more complex process as easy as possible for you.

At the end of the day...

Instead of focusing on the more complex paperwork process, let's be grateful we are able to purchase a home at historically low interest rates.

 

Original Post - OCsearch.com

 

Nov. 29, 2017

Two Charts That Demonstrate The Facts About Home Affordability

The Facts About Home Affordability in 2017

 

There is a great deal of discussion regarding housing affordability for both move-up buyers and first-time buyers, and much of the discussion is delivered with a negative slant. However, the facts are that housing affordability is better today than at almost any time in history.

The naysayers are actually correct in the fact that current housing affordability is not as great as it has been in recent years. But, it is important to keep in mind that home prices truly collapsed during the housing crises that began in 2008. and during that crash distressed properties (foreclosures and short sales), kept housing prices depressed for years.

When we compare current housing affordability to the decades that preceded the crash, a whole different story is revealed.

Here is a recent graph put out by the National Association of Realtors (NAR). The higher the point in the graph, the more affordable houses are.

 

The Facts About Home Affordability in 2017

 

It is plain to see that housing affordability is better today than in the fifteen years prior to the boom and bust.

CoreLogic recently published a report showing Homebuyers "typical Mortgage Payments" nationally.

The Facts About Home Affordability in 2017

The Chart above reveals that while a "typical" housing payment was lower in 2012 (remember the distressed properties that were still a factor back then), it is currently less expensive than it was back in 2000 and is still predicted to continue to be lower next year than it was back in 2000.

In the end, Mark Fleming, Chief Economist at First American puts it this way;

“While borrowing power for the potential home buyer has fallen relative to the low point of 2012, it remains high today and will remain high next year, relative to the long run average. If you don’t want to rent anymore and are considering becoming a homeowner, even if mortgage rates rise next year, your borrowing power will remain strong by historic standards. 

Original Post: OCsearch.com

 

Nov. 27, 2017

What is the Cost of NOT Owning Your Home

Advantages of Owning Your Home

Most of us know that actually owning your home offers great financial benefits, yet many of us continue to rent! Let's take a moment and review the undeniable financial benefits of owning a home versus simply renting.

 Zillow.com recently posted the following statement:

“In reality, buying or renting a home is an intensely personal decision, with emotional and even financial considerations that go beyond whether to invest in this one (admittedly large) asset. Looking strictly at housing market numbers, there is a concrete point at which buying a home makes more financial sense than renting it.”

 

What evidence exists that owning your home is financially better than renting your home?

1) We recently featured the Top 5 Financial Benifets of owning your home:

  • Home-ownership provides much needed tax savings.
  • Home-ownership is a form of forced savings.
  • Buying a home is less expensive than renting.
  • Home-ownership allows you to "lock in" your monthly housing cost.
  • No other investment lets you live inside of it.

2. Numerous studies have shown a homeowner’s net worth is on average 44x greater than that of a renter.

3. Recently, we reported that if a family purchased an average-priced home at the beginning of 2017, they could accumilate more than $48,000 in family wealth over the next 5 years.

4. Some will argue that renting does away with the cost of taxes and home repairs, but anyone considering renting must realize that all of the expenses the landlord incurs are already factored into the (your) rent payments– along with a nice profit margin!!

Bottom Line

Home-ownership has always been, and will always be, the better choice from a financial standpoint - than renting.

Nov. 21, 2017

Making Your Home Available to Potential Buyers is Imperative to Getting Your Home SOLD!

Making Your Home Available to Potential Buyers is Imperative to Getting Your Home SOLD!

 

So, you've made the decision to sell your home  You've interviewed and hired a Professional Realtor to represent you and guide you through the entire process, and your Realtor has asked you what type of access you would like to make available to Potential Buyers and Showing Agents.

There are 4 basic elements to a high-quality listing. At the very top of this list is the home's availability to be shown (access). Followed by the homes condition, financing, and Listing Price.  When deciding the type and times you wish to make available for showing the home it is important to keep in mind, the easier it is for Agents to show your home to potential buyers the faster the home will likely sell.

Here are five levels of access that you can give to buyers, along with a brief description:

 

  1. Supra Lockbox on the Door – this allows potential buyers the ability to view the home as soon as they are aware the home is For Sale, or at their convenience.  A licensed Realtor must be present and log into the box each time the home is shown.
  2. Providing your Realtor with a Key to the Home – although the buyer’s agent may need to stop by an office to pick up the key (no Lockbox at the property), there is very little delay in being able to show the home.
  3. Open Access with pre-approval Phone Call – agent will call the seller for permission to show the home prior to going to the home.
  4. By Appointment Only (example: 24-Hour Notice) – Many buyers who are having to relocate for a new career or job promotion begin working in that area prior to committing to purchasing their new home. They often make use of free time during business hours (such as lunch breaks) to view potential homes for sale. Because of this, they might not be able to schedule very far in advance or may be unable to wait 24 hours to see your home for sale.  This could lead to missed opportunities for you as a seller.
  5.  Very Limited Access (example: the home is only made available Mondays or Wednesdays at 1pm or for only a two specific hours per day) – This is the most challenging way to show your home to potential buyers.

In a very competitive housing market (especially in the $1Million and up price ranges), the availability of your home for showings can make or break your ability to get the selling price you are seeking, or even selling your house at all.

Nov. 20, 2017

Attention Potential Home Sellers: Your House Must Be Sold Two Times!

Your Home has to sell two times

 

Today, in Orange County's housing market, where the inventory of available homes for sale is very low and buyer demand is very high - home values are increasing at a fast pace. Many local experts are forecasting that home values will increase by at least another 5% over the next twelve months. One of the biggest challenges in this kind of market is the Bank Appraisal.

 

If Housing prices are rising rapidly it increases the difficulty appraisers have trying to find an adequate number of comparable sales (houses similar to the subject property that have recently closed Escrow) to justify the subject properties selling price when performing the appraisal for the Lending Bank.

 

Every month Quicken Loans Home Price Perception Index (HPPI) measures the gap between what a current homeowner trying to simply refinance their current home feels their property value is and an appraisers opinion of the homes current market value.

Bill Banfield, Executive VP of Capital Markets at Quicken Loans encourages anyone seeking to buy or sell in today’s real estate market to keep in mind the impact of this challenge:

“Based on the HPPI, it appears homeowners in the markets where prices are rising faster than the national average – like Denver, Seattle and San Francisco – are continuing to underestimate just how quickly home values are rising, so the average appraisal is higher than homeowner estimate.

On the inverse of that, homeowners in areas where the values aren’t rising as fast may think they are rising faster than they are, leading to the appraisal lagging the estimate.”

 

The chart below shows the changes in home price estimates over the last twelve months.

Selling?, did you know your house has to sell Two Times?

Interested in tracking your homes current value and viewing all recent sales in your neighborhood? - Get Your FREE eProperty Report

The Bottom Line

Every home on the market must be sold two times; once to a prospective buyer and then again to the lending bank (via the bank’s appraisal). With increasing prices, selling the value of the home to the appraiser may prove more challenging than selling the home's value to the Buyer. If you are intending to enter the housing market this year, let’s get together to discuss this and any other challenges that may arise.

Nov. 19, 2017

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Nov. 18, 2017

Live in Orange County, CA? Do you know...

November 2017 Orange County Housing Report

 

With the historically low supply of active homes for sale in Orange County, this is the most active November housing market in recent years. With the current average expected market time at just 61 days, the Orange County, CA housing market is still firing on all cylinders.

 

  • Orange County's active listing inventory went down by 337 homes for sale in the past two weeks, amounting to the most significant decrease so far this year, and now totals a mere 4,878. The current trend is down and will continue that way for the remainder of this year. This time last year, there were 5,955 homes available for sale on the market, 1,077 more than there is today.

 

  • The fact is there are 36% fewer Orange County homes for sale below $500,000 today compared to this time last year and demand is down by 16%. Fewer homes and condominiums are available below the $500,000 price point. This popular price range is slowly vanishing.

 

  • Current demand, the number of pending sales compared to the previous month, increased by 16 homes in the past two weeks, up 1%, now totaling 2,409. The average pending price is $879,146

 

  • Current demand, the number of pending sales compared to the previous month, increased by 16 homes in the past two weeks, up 1%, and now sits at 2,409. The average pending price is $879,146

 

  • For Orange County CA homes priced below the $750000 price point, the market is EXTREMELY HOT with an expected market time of a mere 40 days. This price range represents some 40% of the current active "For Sale" inventory and 61% of total demand.

 

 

 

  • For luxury Orange County homes for sale priced between $1,250,000 and $1,500,000, the current expected market time declined from 111 days to 100. For homes priced between $1,500,000 and $2,000,000, the current expected market time declined from 173 to 154 days. For luxury homes priced between $2,000,000 and $4000,000, the current expected market time declined from 218 days to 164 days. For high-end luxury homes priced above $4 million, the current expected market time went up from 326 to 424 days - there just isn't great demand in this very high-end price range at this time.

 

  • The current expected active "For Sale" market time for all homes in Orange County went down in the past two weeks from 65 days to 61 days, a mild seller’s market (60 - 90 days). Moving forward, we can expect the market time to remain relatively flat, rising slightly by year’s end.

 

  • Looking back, there were 2,543 closed residential resales in October, down by 1% from October 2016’s 2,575 closed sales. October marked a 7% drop from September 2017, this is normal for the Autumn Market. The sales to list price ratio was 98.2% for all of Orange County, CA. Foreclosures accounted for a mere 0.7% of all closed sales, and short sales accounted for just 1.2%. That means that 98.1% of all sales were good "old fashioned" sellers with equity.

This information is all current as of November 5, 2017; we will update you again soon.

Always to be the Most Informed person when it comes to Your Home? Get your free eProperty Report  - Click Here

Have a great week!

The Wendy Rawley Team | Orange County Realtors

 

 

Nov. 17, 2017

Top 4 Home Renovations for Maximum ROI [INFOGRAPHIC]

Top 5 Home Improvements for best ROI

Some Highlights:

  • Whether you are selling your home, just purchased your first home, or are a homeowner planning to stay put for a while, there is value in knowing which home improvement projects will net you the most “Return On Investment” (ROI).
  • While big projects like adding a bathroom or a complete remodel of a kitchen are popular ways to increase a home’s value, something as simple as updating landscaping and curb appeal can have a quick impact on a home’s value.
Nov. 16, 2017

Your Friends Are Crazy Wrong If They're Telling You Not to Buy

Your Friends Are Crazy Wrong If They're Telling You Not to Buy

 

The current narrative is that home prices have risen so much so that it is no longer a smart idea to purchase a home. Your family and friends might suggest that buying a home right now (whether a first-time home or a move-up home) makes absolutely no sense from an affordability standpoint. They are wrong!

Homes are more affordable right now than at almost any time in our country’s history except for the foreclosure years (2009-2015) when homes sold at major discounts. As an example, below is a graph from the latest Black Knight Mortgage Monitor showing the percentage of median income needed to buy a medium-priced home in the country today in comparison to prior to the housing bubble and bust.

Your Friends Are Crazy Wrong If They're Telling You Not to Buy

 

As we can see, the percentage necessary is less now than in those time periods.

The Mortgage Monitor also explains that home affordability is better today than it was in the late 1990s in 47 of 50 states.

 

Your Friends Are Crazy Wrong If They're Telling You Not to Buy

Bottom Line

Your friends and family have your best interests at heart. However, when it comes to buying your first home or selling your current house to buy the home of your dreams, let’s get together to discuss what your best move is, now.

Nov. 15, 2017

Feeling ‘Stuck in Place’? You Aren’t Alone… And There’s Hope!

Want to move...but...feeling stuck in place>

 

Whether you are a renter who is searching for your dream home or a homeowner who feels like your only option is to renovate, you have at least one thing in common: feeling stuck in place.

According to data from the National Association of Realtors’ Profile of Home Buyers & Sellers, the average amount of time that a family stays in their home remained at 10 years in 2017. This mark ties the highest marks set in 2014 and 2016. Back in 1985, when data was first collected on this subject, homeowners stayed in their homes for an average of only 5 years.

There are many reasons why homeowners have decided to stay and not to sell. A recent Wall Street Journal article had this to say,

“Americans aren’t moving in part because inventory levels have fallen near multidecade lows and home prices have risen to records. Many homeowners are choosing to stay and renovate, in turn making it more difficult for renters to enter the market.” 

Sam Khater, Deputy Chief Economist for CoreLogic, equated the lack of inventory to “not having enough oil in your car and your gears slowly [coming] to a grind.”

Historically, a normal market (in which prices increase at the rate of inflation) requires a 6-7 month supply of inventory. There hasn’t been that much supply since August of 2012! Over the course of the last 12 months, inventory has hovered between a 3.5 to 4.4-month supply, meaning that prices have increased and buyers are still out in force!

Challenges in the new-home construction market have “helped create a bottleneck in the market in which owners of starter homes aren’t trading up to newly built homes, which tend to be pricier, in turn creating a squeeze for millennial renters looking to get into the market.”

“Economists said baby boomers also aren’t in a hurry to trade in the dream homes they moved into in middle age for condominiums or senior living communities because many are staying healthy longer or want to remain near their children.”

So, what can you do if you feel stuck & want to move on?

Don’t give up! If you are looking to move-up to an existing luxury home, there are deals to be had in the higher-priced markets. Demand is strong in the starter and trade-up home markets which means that your house will sell quickly. Let’s work together to build in contingencies that allow you more time to find your dream home; the right buyer will wait.