Posts Tagged: ‘economy’

Real Estate Values in 2014

December 20, 2013 Posted by Andre Hemmersbach

Being in the Real Estate industry gives me access to various   tools, reports and statistics that most individuals cannot find. That being said you can find a chart or statistic to make a case for or against almost anything. The big question on many of my client’s mind is where Real Estate prices go from here. Our friends at John Burns Real Estate Consulting do a marvelous job of sifting through the numbers on a state by state and county by county level to come up with relevant, timely and meaningful predictions about matters in real estate.

I found the recent information prepared by JBREC to be extremely interesting as it charts the historical ratio between the median housing payments to income.   A shorter way of describing this chart is an affordability ratio. As home payments get more expensive via higher rates, median home prices or a drop in income it is reasonable to expect a reversal in demand. The historical mean of the average housing payment to income ratio is close to 32.5%. The current ratio through October 2013 is 28.4% based on a 4.1% 30 year fixed rate.

MedianHousingPayment_to_IncomeRatios

If this chart holds true we would need another 13% increase in the national sales price or mortgage rates to go to 6% before we hit the historical mean of 32.5% in affordability.

Please call me to discuss your plans in purchasing a home or Real Estate investment in 2014. Unless you are paying cash, getting all your ducks in a row early will save you time, money and headaches!

Share

South Bay Sales Prices Take A Rest

November 8, 2013 Posted by Andre Hemmersbach

Per the Multiple Listing Service (MLS) data for the greater South Bay area, real estate prices seem to have taken a bit of a rest in the last few months as the median listing price and median sales price have dropped (See Chart Below). While certain high demand zip codes could still be experiencing sales price increases, multiple sources that measure housing values have been reporting that the rate of sale price increases have started to slow nationally. FHFA HPI

The frenzied atmosphere of this summer’s home buying season created conditions in which buyers had to make tough decisions on paying over value, waiving inspections, waiving appraisal contingencies and other contractual milestones that protect them from potentially harmful financial situations. For those who are still looking to purchase a home and were frustrated by the absolute chaos of multiple offer and “bidding war” situations during the summer months, may take hope in the recent slow down in activity.

Supply and demand is a basic driver of price in any free market and the lack of homes for sale has continued to be an issue (See Chart). Just a short 16 months ago a home owner wanting to sell his property had a tough time getting a fair price for his property because of the glut of foreclosures and short sales that were his competition. That is no longer a problem as distressed sales in the South Bay and the nation as a whole,  have dramatically decreased. According to most experts the supply of homes for sale will  probably not increase any time soon (Foreclosure Rates).

Demand from home buyers while still strong, seems to have slowed a fraction. To blame could be seasonal issues along with higher interest rates and sales prices. The latest Homeowners Affordability Index (HAI) report from the California Association of Realtors (CAR) showed that affordability in California has slipped every quarter since it’s high in the first quarter of 2012. Mortgage applications for purchases as reported by the Mortgage Bankers Association, a very reliable forward looking indicator for home sales has also fallen almost every week since the September 22, 2013 release.

Current conditions for buying a home appear as favorable now as they were in the 2nd quarter of 2012. Rates are still a extremely low historical levels and while we are still in a seller’s market buyers are not running over each other at the site of a new house on the market. At least until Spring buying season 2014, buyers should be able to make rational decisions based on real issues and not the “if I don’t get this one, I’ll miss the market” mentality.

Please let me know if i can be a resource you you or your acquaintances on any matters of real estate.

List Price vs Sales Price 11 1 2013

Share

The Federal Reserve’s Monumental Task

August 9, 2013 Posted by Andre Hemmersbach

Through financial news reports and various investment magazines I have been made aware of a coming moment in time somewhere in the future when the Federal Reserve will have to make an important decision to do something about their Quantitative Easing Program. Well many believe we are on the eve of this great day in the upcoming September 18th Fed meeting. Just the mere mention of slowing the program down by Federal Reserve Chairman Ben Bernanke has sent the fixed income market into turmoil since May 22nd. The program’s name itself “Quantitative Easing”, sounds safe enough and does not conjure up any visions of impending doom but the manner in which the Fed “unwinds” the program could have major ramifications. Because the Fed indirectly controls interest rates for credit cards, cars, business and home loans it also has a big influence on the well being of our and the world economies. The link below will take you to a speech given by President Richard W. Fisher of the Federal Reserve Bank of Dallas and voting member of the Federal Reserve of the United States, that in my opinion is the best and most simple explanation of what the Fed has done and now must do. It clearly explains and depicts with charts the monumental task that faces the Federal Reserve over the next few months and years.

http://www.dallasfed.org/news/speeches/fisher/2013/fs130805.cfm

If I can be resource to you, your family or friends on any matters of Real Estate, I would be honored to help. I can be reached in my office at 310 540-1330.

Have a great week!

Share

South Bay Home Prices Higher and Inventories Still Low

July 26, 2013 Posted by Andre Hemmersbach

Sales prices in the Greater South Bay area have continued to move higher as inventories are still very low. These trends however, are rearward looking events and represent contracts that were written before the mortgage rate increases from 45 days ago. Of real interest are what the numbers will look like in August and September after homebuyers have had some time to digest and concider the higher mortgage rates and the higher monthly housing payments that corresponds with those higher rates.

Robert Dixon of RE/MAX Estate Properties in Palos Verdes thinks that the higher mortgage rates are not going to affect property prices in any substantive way. The number of borrowers who are deciding they have missed the oppurtunity to buy their first home are equal to the number of fence sitters that finally have decided “we better move now, before rates move even higher.” Robert does feel that the higher mortgage rates in conjuction with the traditional end of the summer buying season approaching will bring back a more normalized negotiation environment between buyers and sellers. “The last several months have seen a frenzy of buyers who are climbing over each other to have their offers accepted.”

Greater South Bay Listings vs Sales Prices

Greater South Bay LIstings vs Sales Prices

By Andre Hemmersbach

Share

Ferderal Reserve Paves Way For Lower Rates

January 26, 2012 Posted by Andre Hemmersbach

Wednesday’s Federal Reserve statement made mortgage rates drop right back to the record lows from several weeks ago. Since we hit that low, traders have been looking for some sort of clear direction on where the market would move next. The lack of rate positive news had made rates steadily creep higher over the last 3 weeks. Yesterday the Fed released a statement confirming they would continue to buy bonds and keep rates low until 2014. This statement coupled with low inflation reports are starting to make Quantatative Easing #3  ( QE3 ) rumors perculate through the bond market.

The market reacted positively with mortgage rates moving all the way back down to previous records. Strange as it may seem some investors were caught off guard with the big drop in rates, as the Fed’s actions are actually inflationary. Gold prices closed up over $35 dollars an ounce yesterday confirming that some investors believe inflation will be an issue. The reason the move to lower rates  is surprising is that  inflation is the mortal enemy of low rates and usually short-term moves by the fed like the one mentioned above would be trumped by longer term inflation fears.  

What does this mean to you? Don’t fight it!  Wall Street typically trades on rumors and sells on news. So the rumor of the Fed continuing to make money easily available is good for rates today but as soon as it is confirmed look for rates to spike.

Take advantage of today’s historically great affordability and low rates. If you have been thinking of buying a home, your new mortgage payment could be lower than the going rents in your market. If you already own a home with a good mortgage or have paid on your current mortgage for a long time, please let me help you look into a shorter term mortgage. It could save you thousands of dollars over the life of you loan.

Please let me be of assistance in helping you answer questions about financing your home.

Share