South Orange County Blog from Bob Phillips

California Home Sales “Jump” Higher in March

An article by Colin Robins, from DSNews.com, April 17th, 2014:

quizzical-lookThe California Association of Realtors (CAR) reported 367,000 closed escrow sales of existing single-family detached homes, seasonally adjusted at an annualized rate. March marked the fifth straight month with sales below the 400,000 level, and the eighth month of declining sales on a year-over-year basis.

According to the group, “The statewide sales figure represents what would be the total number of homes sold during 2014 if  sales maintained the March pace throughout the year.”

Sales increased from February by 1.4 percent, but were down 12.3 percent from March 2013.

“While the demand for housing was up from February, the market is taking a hit from lower housing affordability compared to a year ago, which led to a decline in home sales from last year,” said CAR president, Kevin Brown. “Moreover, concerns over tighter lending standards and increased borrowing costs are also contributing factors to the sluggish market as they both negatively impact the bottom line of home buyers who obtain financing through mortgages.”

Home prices jumped upward as well, reversing a February decline to land on a 7.7 percent increase for March. March’s price  was 14.9 percent higher than prices from March 2013. Prices have increased on a year-over-year basis for two full years, with 21 straight months of double-digit annual gains.

Housing inventory tightened in March, with the available supply of existing, single-family homes for sale slipping to four months.

“While housing inventory has loosened since last year, it’s still below what’s considered typical in a normal market,” said CAR VP and Chief Economist, Leslie Appleton-Young. “Many of the listings continue to be priced above what the market will bear and are not moving. As such, even with improved home prices over the past year, new listings are lagging because would-be sellers who have limited options on where to move are hesitant to put their properties on the market.” ( End of Colin’s article.)

From Bob Phillips:  I plugged in a photo of a guy with a quizzical look on his face because – to me – the headline word “jump”  used by the author didn’t seem to match the article.  To me, there were a few ups & downs, but I sure didn’t detect a “jump” either in the number of sales, or in prices. “Nudge”, maybe, even “move”, but not a “jump”.

To me, the current market in South Orange County seems fairly mixed, with no discernible movement, or pattern.  I’m seeing more of a balance, between buyers and sellers, with no distinct advantage, for either.  I would call it either normal, or possibly neutral, but definitely not jumping, for anyone.

How You Can Get The Highest Selling Price For Your Home

How You Can Get the Full Selling Price You Want for Your HomeWhen it comes to selling your home and getting the best selling price you can, there are certain tactics and methods you can employ to ensure that this wish becomes a reality.

Avoiding the commonly made mistakes that end up lowering the value of your home and discouraging people from viewing it is ultimately the key in getting top dollar, as well carrying out the showings and sale of your home in a professional manner.

Listen to the professionals, and make sure you employ these real estate sale methods to get your desired number on your home sale.

Listing Tactic: Adding A Buffer

Always dependent on the type of market you find yourself in, a common and successful tactic in getting the price you really want for your home is adding a buffer on the list price.

This means that if you want $500,000 for your home, you should list your home somewhere around $510,000 to $520,000 to allow for some negotiating room. Even if you’d prefer not to negotiate, the majority of buyers will always assume that you have room to come down on the price, and will put in their offers accordingly.

Overpricing: Avoid At All Costs

With that being said, you don’t want to overprice your home too much so as to discourage potential buyers from looking at it, or to put your home outside of a financial bracket. Make sure you speak to your trusted real estate advisor on exactly what the right list price should be to obtain your desired value.

Increase Desire: Have Your Home LOOK like It’s Been Staged

In order to get the price you want for your home, you need to make a good impression on prospective buyers. A professional staging service cleans out most of the distractions from the home, making it look more open and attractive – but you can achieve the same effect. Ask your agent for suggestions to make your property look more attractive to buyers, which can dramatically increase the amount of interest you receive on your home, perhaps even creating multiple offers – which is the best situation a home seller can be in!

Appeal To Online Shoppers With Professional Photos

With so much of today’s modern real estate shopping happening online, you want to ensure that your home has a strong online presence with professional photos and a digital floor plan available to prospective buyers. Also make sure that all information online is full and complete, and presents your home in the best light possible.

Always Say Yes To Open Houses And Showings

Especially in a hot market, you want to ensure that you leave your home empty for your real estate agent on weekends so that they can hold it open to the public. This is especially important early on in your list date so that the buyers on the market who are ready to make a move can see your house right away.

You should also apply the same importance to showings, and ensure that each showing request is promptly responded to with an easy “yes.”

Lastly, Hire a Full Time Agent With a Lot of Local Experience

In South Orange County, I, Bob Phillips, have over 37 years of successful experience in marketing listings which have been entrusted to me – usually for top dollar!  I offer superior service, for a more than competitive fee. ( A discounted system similar to Redfin’s, but with a local touch.)

If you put these tactics into your home selling plan, you will find that it will be much easier to obtain more interest from buyers. And with more interest, it will be much more likely that you will be able to obtain the price you want for your home.

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First mortgage default rate falls to 1.13%

An article from Brena Swanson, of HousingWire.com, April 15th, 2014:

options-300x86All five national indices showed a drop-off for the second month straight in March, according to the latest report  from the S&P Dow Jones Indices and Experian for the S&P/Experian consumer credit default indices.

Falling to the lowest rate since July, the national composite dropped to 1.20% in March, a decrease from 1.30% in February and a drastic decline from 1.50% in March. This is the lowest post-recession rate.

In addition, the first mortgage default rate was 1.13% in March, its lowest level since September 2006.

Second mortgages came in at 0.60% in March, down from 0.69% in February.

“Along with signs that the economy is improving, consumer credit default rates continue to gradually decline,” said   David Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices.

“Economic reports confirm these improving trends. Gains were made in consumer confidence and the labor market as a result of fewer applicants filing for unemployment benefits. Consumer default rates have stabilized at levels similar to those seen before the financial crisis,” the report explained.  ( End of Brena’s article.)

From Bob Phillips:  Bank owned properties ( REOs.) represent only 1% of the market in South Orange County. In addition, short sales represent about 3% of our local inventory. Two years ago, distressed houses – the combination of REOs and short sales – accounted for over 25% of our transactions!  At the significantly lower prices of that time, 25% to 30% lower,  they were being scooped up by investors, who were paying cash.

In today’s market, due to higher prices, investor activity has practically dried up, but interestingly, there are still a substantial number of cash transactions, just now in the medium to higher price ranges, instead of the entry level, and not so much of distressed properties.  I attribute this to two factors that I can see.  First, people moving down from really big houses – downsizing. Secondly, from foreign buyers.

Neither of those demographics make for a high percentage of buyers, though, and that’s one reason that the present housing market, here in South Orange County is just plodding along, without much upward price pressure.  I wouldn’t be surprised for 2014 to be an extremely flat year, price wise, which is good for buyers who are still waiting in the wings.

 

What’s Ahead For Mortgage Rates This Week – April 14, 2014

2014-03-03-_WhatsAheadThisWeekWhile little housing-related news was released, last week’s economic news showed signs of a brighter economic picture.

Labor statistics were stronger, with job openings up and new jobless claims filed lower than expected.

Mortgage rates fell, and the University of Michigan’s Consumer Sentiment Index was higher than expected.

More Jobs Available, Fewer New Jobless Claims

The Bureau of Labor Statistics (BLS) reported that February job openings rose to 4.20 million, which exceeded January’s reading of 3.9 million jobs. New jobless claims were lower than expected with 300,000 new jobless claims filed against expectations of 316,000 new jobless claims and the prior week’s reading of 332,000 new jobless claims filed.

The Federal Open Market Committee (FOMC) of the Federal Reserve released minutes of its meeting held March 18 and 19. The minutes noted that payroll jobs expanded, but the unemployment rate remained elevated, and inflation was below the committee’s goal of 2.00 percent. Indicators of longer-run inflation expectations were seen as stable.

Severe winter weather was viewed as a cause for slowing economic activity. FOMC noted that it would be difficult to determine the effects of winter weather on the economy as opposed to slower economic growth caused by unemployment or other negative factors.

Housing Starts and Building Permits were lower, but FOMC noted the impact of winter weather on these reports. FOMC asserted its intention to continue reducing its monthly asset purchases by $10 billion per month as economic conditions permit.

The FOMC emphasized its commitment to continuous review of financial and economic news as it makes month-to-month decisions concerning asset purchases.

Mortgage Rates Fall, Consumer Sentiment Rises

Freddie Mac reported lower average mortgage rates last week. The rate for a 30-year fixed rate mortgage fell from 4.41 to 4.34 percent. The rate for a 15-year fixed rate mortgage dropped from 3.47 to 3.38 percent, and the rate for a 5/1 adjustable rate mortgage fell by three basis points from 3.12 percent to 3.09 percent.

Discount points were unchanged at 0.70, 0.60 and 0.50 percent respectively. Lower mortgage rates may encourage more buyers into the market as the spring and summer buying season gets under way.

The University of Michigan’s Consumer Sentiment Index for April rose to 82.60 percent against the March reading of 80.00 percent and the projected reading of 80.80 percent. If expectations prove correct, this week’s economic reports are expected to bring more good news.

Whats Coming Up This Week

This week’s scheduled economic news includes Retail Sales for March, which are expected to show a gain, the Consumer Price Index which is expected to hold steady, and the Home Builder Index, which is expected to rise.

Projections for Housing Starts are also higher. Fed Chair Janet Yellen is set to give a speech in New York on Wednesday, and the Fed Beige Book report will also be released. This week’s economic reports will wrap up Friday with Leading Economic Indicators.

 

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5 Worst and Best Ways to Use a Tax Refund

Posted in Budgeting, Household Finances, Personal Finance, Tax Tips, Taxes by southorangecounty on April 12, 2014

By Nancy Zambell, an InvestorPlace Contributor, April 6, 2012

My parents were working people, with five children (deductions!), which meant they received a nice little check each year after filing their taxes. They didn’t have the benefit of a good tax adviser and didn’t understand that it was their money that Uncle Sam was returning to them, year-after-year. In fact, they were giving the U.S. government  a tax-free loan!

tax-refund

Imagine what that $1,000 or so they received, annually, could have turned into had they been putting it away, instead of being so generous to Uncle Sam.

But that was then, and my folks weren’t any different than most people on our block. But in today’s world, with so much good (and often no-cost) advice, there’s almost no excuse for letting Uncle Sam have free use of your money. All it  takes is a little calculation to determine how much less you should be paying in throughout the year so that you just about break even by Dec. 31.

For many people, it’s this simple: Let’s say you’re getting about $1,000 back every year from your tax refund. Divide that by 12, and you get $83.33 — the amount you should reduce your paid-in taxes by each month. Just call your payroll department, and they’ll give you the right form to do that. Wouldn’t it be better to have that $83.33 in your pocket, instead of lending it to the government each month?

That’s a great strategy for 2012. But if you’re expecting a refund from your 2011 taxes, let’s look at the worst and best ways to spend that windfall:

 The 5 Worst Things to Do With Your Tax Refund

  1. Put it in your checking account, and spend it on a lot of little things. If you do that, you won’t have any idea where your money went.
  2. Go to Las Vegas or buy a lot of lottery tickets, to “leverage” your refund into bigger winnings. Bad idea. Need I say more?
  3. Use it for a down payment for something you should pay cash for (like a vacation, furniture, or swimming pool), and then taking on a financial obligation that you don’t need (exceptions: houses or cars).
  4. Lend it to a relative or friend. Consider those loans as gifts, because, chances are you won’t get your money back.
  5. Spend it all on a luxury vacation (unless you normally take luxury vacations and don’t have any other financial obligations).

Instead of wasting your refund, consider putting it to good use in the following ways:

The 5 Best Things to do with your Tax Refund

  1. Fund a six-month emergency stash. The challenging economy of the last few years took its toll on many folks, but those with an rainy-day fund fared much better than those who were already living paycheck-to-paycheck.
  2. Fund an IRA. If you don’t already have one, this would be a great start. If you’re under age 50, most folks can contribute up to $5,000 this year; over age 50, the “catch-up” contribution rises to $6,000. No matter your age, if you’re still working, saving for retirement is the one of the very best things you can do with any “windfall.”
  3. Start your own business. According to the Kauffman Foundation, more than 543,000 new businesses were created in 2011. If you’ve always wanted to have your own company, the improving economic period we’re in right now is the prime time to begin. If you can’t afford to do it full-time, start out slow.
  4. Invest. If you’re a beginner, start with an exchange-traded fund or a mutual fund. If you currently invest, put more money to work in your existing holdings or supplement your portfolio with some new additions.
  5. Start a 529 (college-investment plan) for your children or young relatives. I did this with my nieces and nephew when they were born, and so far, two out of the three have used the money to help fund their college years.

These are hardly the only great ideas for getting the most from your tax refund, but they’re my favorites. Bottom line — don’t waste the money. And for 2014, change your deductions so that you can turn that extra money in your paycheck into a greater stockpile each and every year — a seed that can grow into a worry-free retirement.

Water Saving Tips For Spring

Green Living: Water Saving Tips for SpringWater is the planet’s most precious resource. Access to clean water is a privilege that, unfortunately, many people still     take for granted.

By utilizing new water efficiency technologies and age-old conservation methods, we can help preserve the water supply  for future generations. Cutting down on consumption whenever possible is something that everyone can do to live a little greener.

Making Sure Your Home Holds Water

The first stop on your journey to save water is to ensure your home is free of water leaks. Make your way through your home, and properly shut off the water at all fixtures and faucets. Air-cooling systems and other devices that use water should also be shut off.

Read your water meter, wait two hours (without using any water), and check it again. If your water meter gives you two different readings, you are losing water somewhere, and the problem needs farther investigating.

Air It Out And Get In the Flow

Installing aerators on faucets and shower heads reduce their usage by half. These contraptions are inexpensive and easy to install. By injecting air into the water flow, you keep the same water pressure, but use less water.

If you are in the market for a new toilet, complete your water saving bathroom makeover with a low flow, water efficient model. These toilets can save about 9,000 gallons of water a year.

If a new toilet is not in your near future, a simple homemade contraption can cut down on water being flushed away. Fill a water bottle with some pebbles so it sinks, and fill the rest with water. Place the bottle in the cistern of your toilet. By displacing some of the water in the tank, you can save around 500 gallons of water a year.

Obtain A Lush Lawn With Less Water

Over-watering your grass is wasteful and counterproductive. Watering your lawn two times a week is better for grass than daily sprinklings. Giving your lawn a good soaking with an inch of water every few days will keep it lush and save water. You should also avoid over-mowing.

Grass is happiest at two to three inches tall. Over-mowed grass tends to have weak roots, and requires more water to keep it growing strong. Let Mother Nature take care of the watering on occasion, especially during the spring.

Mulch Landscape To Lock In Moisture

Mulch around the trees and shrubs in your yard. Mulch holds in moisture, and will keep the water in the ground longer. There are also water bags on the market that do a great job of keeping young trees hydrated.

Make sure your sprinklers are putting water where it is needed, and not unnecessarily watering the sidewalk. When the sidewalks and patios need a sweeping, make sure you reach for the broom and leave the hose on standby.

By making a few informed decisions to cut down on water consumption, you can feel good knowing you are doing your part to conserve. When water flows freely, it is easy to forget how precious it is.

Remind yourself that water is a resource that needs to be saved, and should not be wasted. Access to clean water is something no one wants to see lost.

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Second home buyers are older, have more money and like warmer climates

MatureCoupleHappy

An article by Ben Lane, of HousingWire.com.  April 7th, 2014

Fannie Mae reports that second home buyers “tend to be older, have higher incomes, and put larger down     payments on their second homes than primary residence buyers.”

We hope you were holding on to something when you read those truly and deeply shocking revelations. There is       little comfort in the fact that certain homebuyers are not getting any younger, or no less predictable.

The information comes from Fannie Mae’s latest Housing Insights, which focuses on the second home buyer. “A   typical second home buyer is 47 years old, comes from a two-earner household, and finances the purchase of the   home 61% of the time,” the report states.

In another revelation, the report states that the secondary home market grew significantly during the housing    boom but that growth ceased following the housing bust.

Readers of HousingWire will already know that vacation home sales were up nearly 30% in 2013. Too bad you     can’t count on second-time homebuyers to do anything but predictably buy a second home.

The report holds other information like the fact that second home buyers still tend to buy in warmer climates.

Yes, we knew that, and the states they pick also never seem to change.

“Since January 1998, 34% of all second home mortgages originated on properties located in Florida, California and Arizona,” Fannie’s report states.

And even though those states experienced home price volatility, with home prices decreases of 40% or higher in each state from 2006-2012, it hasn’t dampened buyers’ interest in those states.

C’mon, there is a condo in Alaska with your name on it. Any takers?

With second home buyers typically being wealthier, they are more prone to buy in cash. “The recovery in financial markets has allowed many second home buyers, who are typically older and more likely to own financial assets, to sell some of their assets to buy second homes or use dividend payments from these assets to cover second home mortgage expenses,” Fannie report states.

The report also predicts that an aging population could lead to an increase in second home sales in the future. “As the population continues to age, we expect people to continue to use their savings to buy second homes, thereby contributing to a segment of the mortgage market that will continue to grow in the years to come,” the report says.

Now as long as your jaw is still attached to your head, get busy getting older so you can buy that second home you’ve always wanted.

California and Florida are waiting! And don’t worry, they won’t change.”  ( End of Ben’s article.)

From Bob Phillips:  Can you believe how fortunate WE are, to already live in an area, that many folks are thinking of retiring to?  Personally, I can’t imagine moving from here to Florida.  But then, I’m not big on humidity, hurricanes, or big bugs, flying or crawling all around me.  Of course Floridians probably have similar objections to our higher prices, traffic jams, or earthquakes, LOL.

Thinking of selling the big old empty nest?  Or just buying a second home, and keeping your present home in the family?  I have helped numerous couples with similar needs, and am well prepared to assist you too.  Just give me a call - 949-887-5305, or shoot me an email - BobPhillipsRE@gmail.com - and let’s talk about your real estate goals.

4 Of The Best Questions To Ask Before Refinancing Your Mortgage

The Best Questions To Ask Before Refinancing Your Mortgage1) Do I Have Enough Equity To Get A Mortgage?

To get a conventional loan, you will usually need to have at least 20 percent equity. This means that your house will have to be worth at least $250,000 to get a $200,000 loan. If you have less equity, you could end up having to pay for private mortgage insurance, which can easily add $100 or more to your monthly payment.

2) How’s My Credit?

Most lenders will look at your credit score as a part of determining whether or not to make you a loan. With conventional lenders, your rate will depend on your score and the higher it is, the lower your payment will be. Other lenders, like the FHA and VA programs have an all or nothing rule.

If you qualify, your rate won’t be based on your credit, but if your score is too low, you won’t be able to get any loan. Generally, 620 credit scores are the lowest that will qualify you for any loan.

3) What Do I Want To Accomplish?

Mortgages typically offer a choice as to their term. While the 30-year loan is the most popular, shorter term mortgages save you money since you pay less interest over their lives. They also get you out of debt sooner, at least as regards your house.

The drawback is that they carry higher payments since you pay off more principal every month. This can make them less affordable for some borrowers.

4) How’s My Current Loan?

If you have an adjustable rate mortgage, you may want to switch to a fixed rate mortgage simply for the additional security it offers you. On the other hand, if you are planning to move relatively soon, your current mortgage could be a better deal whether it’s fixed- or adjustable-rate.

When trying to decide what to do, compare the cost of refinancing with what it would cost you in additional interest to hold on to your existing loan. While the breakdown is different for every borrower, generally, you’ll need to keep your current house and loan for anywhere from three to six years to break even on the costs of refinancing.

Deciding what to do with your mortgage can be complicated. Working with a qualified loan broker that can consider every angle with you can help you to make a better decision. If you don’t already have a favorite loan person, give me a call or shoot me an email – I have a couple who I can enthusiastically recommend.

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Four Places To Look For Tax Deductions In Your Home

Four Places To Look For Tax Deductions In Your Home Paying your income taxes each year leave your wallet a bit thin? There may be money hiding in your home that lessens your tax burden. Here are four places to look:

1. Home-Office Deduction

If you work from home, you could qualify for a home-office deduction. Taking the deduction can be a bit complicated; so many people who qualify don’t claim the exemption. An estimated 26 million Americans have home offices, but only 3.4 million claim them on their tax return.

Perhaps that’s why the Internal Revenue Service attempted to simplify the process in 2013.

The write-off takes into account depreciation, utilities, insurance, the amount of square footage dedicated for office space, whether you host clients at your house and other factors.

Because the parameters involved in filing a home-office exemption are rather complicated, it’s best to keep all business-related receipts, records of client meetings and other pertinent information to make things easier when you prepare your return.

2. Casualty Loss

Damage to your home from an act of God or a theft or burglary may qualify you for an income tax exemption. To qualify for the write-off, the causality loss must meet the “sudden event test.” That means it must be sudden, unpredictable, have involved some natural force and occur in a single instance.

To claim thefts and burglaries, you must be able to prove that a wrong doing has actually occurred. It can’t just be a case of a lost item that you suspect was stolen. Proof can come in the form of witness statements, police reports or newspaper accounts.

3. Energy Efficiency Upgrades And Repairs

Upgrading your home with energy efficient improvements can qualify you for a tax deduction. New roofs, insulation, windows, doors and a number of additional items qualify for the deduction. The deductions lets homeowners claim 10 percent of the total bill for energy efficient materials. The maximum credit is $500.

4. Real Estate Taxes And Newly Purchased Homes

New home owners should look at their settlement statement a bit closer. If the previous owner prepaid property taxes that cover any of the time you owned the home, you can include the prepaid taxes in your property tax deduction.

Don’t pay more than you have to when you file your taxes each April. Consider these commonly overlooked deductions that can lessen the amount you have to pay.

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What’s Ahead For Mortgage Rates This Week – April 7, 2014

Whats-Ahead-Mortgage-Rates-6Last week’s economic news included readings on February construction spending and multiple reports on employment data.

Private sector employment was higher in March, but The Bureau of Labor Statistics reported that Non-Farm Payrolls for   March fell short of expectations. According to Freddie Mac, mortgage rates ticked upward.

Employment And Unemployment News

ADP’s payrolls report for March was higher than February’s reading, with 191,000 new private sector jobs added. In February, 178,000 jobs were added. February’s reading originally showed 138,000 new jobs added.

While analysts were confident that private-sector employment was showing signs of stability, the U.S. Bureau of Labor  Statistics swamped excess confidence in labor markets Friday with its March reading for Non-Farm Payrolls.

192,000 jobs were added in March against predictions of 200,000 jobs added and February’s reading of 197,000 jobs added.

The news was not all bad as job gains for January and February were revised upward. January’s job gains were revised from 129,000 to 144,000 and February’s reading was revised from 175,000 to 197,000 jobs added. The revised readings represent a total of 37,000 more jobs added.

As data impacted by severe winter weather “shakes out,” it would not be surprising to see a revision to March’s new jobless claims reading as well.

Unemployment Rate Holds Steady, Workforce Numbers Higher

While readings on employment have been up and down in recent months, the national unemployment rate has held relatively steady, with last week’s reading at 6.70 percent. 503,000 workers joined the workforce this increased the labor participation rate for March from 63 percent to 63.20 percent.

Mortgage rates were incrementally higher last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage increased by one basis point to 4.41 percent; discount points moved from 0.60 percent to 0.70 percent.

The average rate for a 15-year fixed rate mortgage rose by five basis points to 3.47 percent with discount points unchanged at 0.60 percent. 5/1 adjustable rate mortgages had an average rate of 3.12 percent, which was two basis points higher than the previous week. Discount points for 5/1 adjustable rate mortgages were unchanged at 0.50 percent.

This Week’s Economic News Highlights

Job openings for February, FOMC minutes and the University of Michigan consumer sentiment index for March are set for release this week. As usual, Freddie Mac will post results of its latest Primary Mortgage Market Survey and weekly unemployment claims will also be reported.

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