South Orange County Blog from Bob Phillips

Mortgage Rates and Purchasing Power

Mortgage ratesHow Does Purchasing Power Work? You’ve heard the term before — but really, what does ‘purchasing power’ mean? In its most basic form, purchasing power means what you can buy for a given amount of money. For example, a cup of coffee that cost $1 in 2010 now costs almost $4 (thanks, Starbucks!). You buy less gas with $25 today than you did a few years ago, and a car that costs $35,000 once could be bought for less than $10,000. So the purchasing power of a dollar has dropped over time. Inflation makes items cost more and lessens purchasing power.

Buy Low …
So when costs are low, it’s better to buy, before they rise, right? That may not exactly work with a cup of coffee, but it definitely works with things like cars, airplane tickets, and of course houses. When it comes to buying a home, your purchasing power is directly related to several factors, including the availability of desirable homes, average home prices, and the current mortgage rate.

Today’s interest rates are still astonishingly low. The average rate for 30-year fixed-rate loans over the last 40 years has been around 8.9 percent. But over the last several months, mortgage rates have been in the 3-4% range. This is significantly lower than the historic average — but higher than it was a year ago. Experts are predicting mortgage rates to steadily go up, possibly to as high as 5% by the end of the year.

Little Numbers, Big Difference Five percent might not seem like a lot, but when you do the math, you’ll see that even a quarter of a percent rise in mortgage rates will significantly lessen your purchasing power and make a big difference to how much you end up paying for your home. Just check the following chart, which assumes you put 20% down (although loans are available with only a 3% down requirement — call me to learn more!).

Your Monthly Payment Rate Loan Amount Purchase Power
$1,500 3.75% $323,893 $404,867
$1,500 4.25% $304,915 $381,144
$1,500 5.00% $287,551 $279,422

Don’t be like the family who delayed and delayed buying, and ended up shopping in the $270,000 price range rather than the $380,000 range and had to settle for two bedrooms rather than three. With rates this low, the smart buyer makes a move. The market can’t sustain these numbers for long, and won’t need to as it improves. If you’re considering a home purchase, contact me today to see the strength of your purchasing power — before it drops!

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The Connected Home

Posted in Around The Home, Around The House, Home How To, Home improvement, Home Security, Real Estate Tips by southorangecounty on July 10, 2015

smart-homeTechnology is infiltrating every aspect of our lives. Twenty years ago, who could have predicted we’d have the Internet in our pockets? Or a refrigerator that tracks our purchases? There are so many choices when it comes to connecting your home and finding fun ways to let technology make your life easier. But which new tech tools are really worth the cost?

Smart ovens.
GE has come out with a range of connected appliances. Smart ovens can be turned on to preheat while you’re still driving home from the grocery store, and you can also change the temperature or get a notification that dinner is done right from your phone, too.

Smart fridges.
According to thewirecutter.com, they’re just not worth it — yet. GE’s Wi-Fi enabled fridges, due out in fall 2015, will let you know when the water filter needs changing or if the door has been left open. One day your fridge will be able to order more milk when you’re running low and check you’ve got all the ingredients for pasta primavera. Currently, though, fancy refrigerators mostly play music and post notes for the next person nearby to buy that milk. Plus, thewirecutter says, the software in general can’t be upgraded. Wait until these things have developed further.

Smart dishwashers.
Huh? Do you really need an alert when your dishwasher is done? Personally I set mine to run either overnight or in the morning before I leave for work. I find it’s usually done by the next time I’m in the kitchen

eKeys.
Kwikset, a pretty well-known maker of locks, has developed an ekey system. You can share a key with anyone, so no more fake rocks in the yard or placing a spare above the front door (or sending your five-year-old through the doggy door, ahem). Keys can be assigned to multiple people and can be revoked right from your phone. Know when your door is opened when you’re not home. You can even create a “scheduled” ekey that only allows access on certain days at certain times. Pricey, but super-convenient for key losers, especially if your car is also keyless.

Connected thermostat.
The Nest is still the top pick for most people when it comes to home technology. The Nest Learning Thermostat is not only attractive, it’s smart—it can learn your preferences, and your daily schedule, and adjust the temperature in your home accordingly. So it saves you money as well as helping to keep you comfortable. Its interface with your phone is considered the best of all the smart thermostats out there, as well.

Smart lightbulbs.
Control color to suit your mood, turn lights on when you’re out late or away on vacation, or schedule lighting changes from your phone or tablet. Cree, GE, and Belkin make smart LED bulbs that get pretty good reviews.

The Hub.
Of course, you can’t really hook up your smart home without a hub. Hubs help you get all of your smart devices controlled under one app, making life easier, which is really the ultimate goal of a smart home, right? PCMag recommends the SmartThings Hub and devices from IControl, and Logitech. There’s also the Wink Connected Home Hub, Apple’s Homekit, and the Insteon Hub to turn your Wi-Fi enabled home features into remotely controlled smart accessories that you access on the go. If you’re working on a budget, the Quirky Pivot Power Genius is a smart power strip that you can use to control plug-in items you already have in your home.

Our lives are getting easier — or are they getting more complicated? Either way, these smart, connected home appliances and features can help you take care of your home with the touch of a few buttons, and soon these tools will be taking care of us!

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Preparing Your Home for Hot Weather

As warm weather rolls across most of the country, it’s time to start thinking about how to protect and care for your home when the mercury soars. What can you do to ensure the summer sun doesn’t cause damage to your home?

Beat_The_Heat_With_A_Programmable_ThermostatHeat stays out, cool stays in.
That’s the general idea, right? Check the weather stripping around doors and windows to make sure you don’t have a leak where your air conditioning can escape. This is a good time to assess the state of your insulation as well. Many power companies also offer home energy-efficiency assessments — often at no cost — to help you pinpoint places where the heat is creeping in, and often they’ll supply solutions too.

Perform an A/C checkup.
Don’t wait until you really need the air conditioning to make sure it’s working properly! If something goes wrong at the  height of summer, it could be weeks before repairs can be made. Replace your HVAC unit’s filters, and consider having    your air ducts and vents cleaned out and the seals checked.

Turn it around.
Your ceiling fan, that is: Many types have a way to reverse the direction they spin. In summer, the blades should rotate counterclockwise in order to maximize the fan’s beneficial effect on your home’s temperature.

Scout the perimeter.
Most people spend more time outdoors when temperatures rise. Check the boundaries of your property for damage to fences, security lights, and gate locks. Clear away any long grass that may have grown up next to fences as they can harbor fleas and ticks. Reset timers on sprinklers and outdoor lights in consideration of the longer hours of daylight.

Paint: It’s not just for looks.
Although we generally think of a new coat of paint as a cosmetic indulgence, it actually helps to protect the home from the effects of strong heat and sun. While you’re at it, check the deck to see if it needs a fresh coat of sealant as well. Washing the windows will ensure you can enjoy the summer sunshine. And speaking of windows, check screens and shutters for damage too.

Prepare to party.
If you love to entertain outdoors, or you want to live off barbecue for the next few months, your summer fun equipment will need a good once-over. Hose down patio furniture and check cushions to see if they would benefit from a good wash and a chance to dry in the fresh air or if they’ll need to be replaced. Clean off the bbq and fill the propane tank [or stock up on briquettes].

Scale the heights.
Before it gets too hot, an inspection of the roof and attic is a great idea. Check outside for missing shingles or other signs of damage. Trim back tree branches that could be used by local critters as stepping stones to get onto and then under your roof. Check out the gutters while you’re up there too. Then head inside to examine the attic for leaks, holes, and signs of animal trespass.

We may think of summer as a time for vacations, but we never really get a vacation from taking care of our homes. I hope these tips help you have an enjoyable summer!

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Orange County Median Housing Price Hits $600,000 Mark

sold-homeThe median price of a home in Orange County rose to $600,000 in April, up by 4.2 percent from $576,000 in April 2014, a real estate information service announced today.

According to CoreLogic, the number of homes sold rose by 12.4 percent, from 3,111 in April 2014 to 3,497 last month.

“Sales activity picked up last month, making it one of the stronger Aprils since the housing bust, though sales  remained below average,” said Andrew LePage, a data analyst for CoreLogic. “Many buyers still face credit and affordability hurdles, and the inventory of homes for sale remains relatively tight in many markets. New home construction is still well below historically normal levels, too.”

In A total of 21,708 new and resale houses and condos changed hands in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month, according to CoreLogic. That was up 9.9 percent from 19,706 in March and up 8.5 percent from 20,008 in April 2014.

The median price for a Southern California home was $429,000 in April, up 0.9 percent from $425,000 in March and up 6.2 percent from $404,000 in April 2014.

If you have been looking to buy a house in Orange County, you know that the process has been a bit frustrating. Nice homes are selling quickly, frequently with multiple offers. ( Multiple buyers offering on the same property.) My past few sales have all involved such a challenge.

Fortunately – for MY clients – I’m very experienced in such situations, and in every case ours was the successful offer. And, NO, it’s not always about having the highest offer.

Need some good news? This present flurry will pass – probably in only a month or two. If you can exercise a little patience, waiting until late July, or early August, most of the highly competitive buyer activity will likely start to cool down, making for a better environment for a home buyer. The last part of almost every year is a much better time to buy, with fewer competitive buyers, and more houses coming onto the market – a perfect storm for a home buyer.

If you NEED to buy sooner than later, just make sure you’re working with an experienced agent, who can guide you through all the potholes of a real estate purchase. With over 38 years of local service, I happen to be just such an agent, and would be honored to go to work with you, to help find your next home.

Give me a call at (949) 887-5305, or shoot me an email to BobPhillipsRE@gmail.com, and let’s go shopping!

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Signs of a Neighborhood on the Rise

prices-upA neighborhood on the rise offers things you definitely want: a great space at a good price, and the promise of improvement (and rising home equity). But how do you know when a neighborhood is getting ready to take off? There a few signs to look for that can steer you to the next hot zip code. (Remember, Brooklyn was once considered highly undesirable!)

It’s near another hot spot.
Location, location, location! If you can’t afford the prices in the currently desirable metro area, then look at the neighborhoods adjoining. It’s likely the amenities you’ll find there will be creeping into the adjoining neighborhoods, and yours could be next.

You can get there from here.
Excellent public transportation and freeway access generally mean young people moving in, which in turn leads to…

…Independent business and trendy shops popping up.
A young demographic in a neighborhood generally attracts bars and restaurants that are chasing millennial dollars. Look for store and restaurant trends that you’ll find in the already hot neighborhoods — farm-to-fork, wine bars, even vape bars. And of course an uptick in the number of hardware and home improvement stores is always a good sign.

Upscale chain stores are also encroaching.
These businesses spend a lot of money tracking demographics and conducting market research before they begin to move into an area. Let them do some of the groundwork for you. Stores catering to a higher income clientele, such as Trader Joes, Whole Foods, and of course Starbucks are the ones to watch.

Homes are selling faster and faster in the area
If you notice a lot of houses undergoing renovations or new home construction, and more For Sale signs, it’s time to ask your real estate agent the average time a home in that area spends on the market. As the number of days on the market declines, the housing market in the area will be heating up. If you can get in at the beginning of this trend, you’ll probably get a great price on your new property.

Looking for a neighborhood on the rise is always taking a chance. There’s no guarantee you’ll be getting in on the next most desirable place to live in your area. But by looking at the signs listed above — and having a great real estate agent who knows the area and can offer guidance — you could be getting a great place for a much lower price. With over 38 years of continuous service in South Orange County, I not only know the area, but have the experience to guide you well.

Give me a call, ( 949-887-5305 ) or shoot me an email, ( BobPhillipsRE@gmail.com ) and let’s go house shopping!

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Four Excellent Reasons to Buy a Home So You Can Get out of the “Renting Rut”

Three Excellent Reasons to Buy a Home So You Can Get out of the Renting a home is a good option for some, but buying a home just might be the best thing for you.

There are some big advantages to buying a house that will help you get out of your renting rut and focus more on your future.

#1.)  Build Equity

Did you know that when you rent a home, you help someone else build equity? Any changes that you make with your landlord’s approval puts money back in his or her pocket. Keeping the yard clean and taking care of routine maintenance builds equity in that property. When you buy a home of your own, you have the chance to build equity of your own, which can add significantly to your net worth.

#2.)  Save On Your Taxes

When you rent a house, you cannot deduct the money you spend on your taxes. Though some states will let you make a small deduction based on the total amount you spend in rent each month, you cannot make any deductions on your federal taxes. When you buy a home, you can save with a few different types of deductions.

The federal government lets you make a deduction if your home is worth more than what you currently owe on your taxes. If you purchased your first home, you can make a deduction in regards to your property taxes. You can also deduct money that you spend on some renovations and energy saving appliances.

#3.)  Put Your Personal Touch On Things

As long as you continue renting, you live in a home that belongs to someone else. Your landlord has final say over what you do and do not do. This often means that you cannot make repairs or significant changes without seeking approval first.

Renting a home lets you put your personal touch on things. You can paint the walls any colors you want, rip out the carpet to add hardwood flooring or even make significant changes outside to turn your new home into your dream home.

#4.)  Interest Rates Are STILL Incredibly LOW!

One factor that has contributed to home affordability has been the incredibly low interest rates that have been available for the last couple of years.

Now that you know more about the benefits of buying a home and how that purchase can get you out of the rental rut you’re in currently, isn’t it a good time to give me a call? I would be thrilled to assist you in becoming a homeowner. Let’s go home shopping!

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What’s Ahead For Mortgage Rates This Week – February 2, 2015

Whats Ahead For Mortgage Rates This Week Feburary 2 2015Last week’s economic reports included Case-Shiller 10 and 20-City Home Price Index reports for November along with new and pending home sales for December. Freddie Mac reported on average mortgage rates and new jobless claims dipped unexpectedly. The details:

Case-Shiller: Home Price Growth Slower in November

Case-Shiller’s 20-City Home Price Index for November indicated that home prices continue to slow across the nation. Seasonally-adjusted annual home price growth slowed to 4.30 percent from October’s reading of 4.50 percent. Slowing momentum in year-over-year home price growth placed downward pressure on month-to-month readings. Several cities, including Atlanta, Georgia, Boston Massachusetts and Cleveland Ohio reported lower home prices in November as compared to October. Chicago, Illinois surprised analysts with a -1.10 percent drop in home price growth for November. Although mortgage rates have fallen in recent weeks, analysts cited tough mortgage approval standards, lower demand for homes and growing inventories of available homes as factors contributing to sluggish housing markets.

New and Pending Home Sales: Mixed Readings

New home sales jumped to a seasonally-adjusted annual reading of 481,000 sales in December against expectations of 455,000 sales and November’s revised reading of 431,000 new homes sold. The original reading for November was 438,000 new homes sold. New home sales were 8.80 percent higher in December year-over-year. The median price of new homes was $298,100 in December, which was an increase of 8.20 percent year-over-year.

Pending home sales reflected sluggish market conditions in December with pending sales lower by -3.70 percent as compared to November’s reading of +0.60 percent. This lull will likely impact completed sales as pending sales generally forecast completed sales within the next 60 days. The National Association of Realtors® said that home prices rose in some areas as supplies dwindled. Fewer homeowners list homes for sale during the fall and winter months than during spring and summer. Analysts also said that home sales trends rely on the willingness of homeowners to list their homes and move up. Although the economy continues to grow, homeowners can impact supplies of available homes if they wait to move up to larger homes.

Mortgage Rates Rise, New Jobless Claims Fall

Freddie Mac reported that average mortgage rates rose last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 3.66 percent; the average rate for 15-year mortgages rose by five basis points to 2.98 percent, and the average rate for a 5/1 adjustable rate mortgage was 2.86 percent. Discount points fell to 0.60 percent for 30-year mortgages and 0.50 percent for 15-year mortgages. Discount points were unchanged at0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 265,000; this was lower than the expected reading of 296,000 new jobless claims and the prior week’s reading of 308,000 new jobless claims. Analysts said that the short work week likely contributed to the drop in weekly jobless claims, which was the largest drop in new jobless claims since November 2012. As labor markets improve, more consumers can afford to buy homes. January’s Consumer Confidence Index rose more than expected in January with a reading of 102.9 against expectations of 96.90 and December’s reading of 93.10.

What’s Ahead

This week’s scheduled reports include Construction Spending, Personal Income, Core Inflation, and several employment reports including ADP Payrolls, Non-Farm Payrolls and the national unemployment rate. Freddie Mac’s mortgage rates report and new unemployment claims will be released on Thursday as usual.

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Three iPhone and Android Apps That Make Managing Your Mortgage Payments Quick and Easy

Three iPhone and Android Apps That Make Managing Your Mortgage Payments Quick and EasyYour mortgage payment may be among the largest payments you make every month. While certainly an important part of your budget, this payment is also critical to helping you build equity in your home because it attributes to mortgage principal reduction. Managing your mortgage payments can be challenging, but there are some incredible apps available for use with Android or iPhone smartphones that can simplify your mortgage management tasks.

Mortgage Mentor

This app is available for both iPhones and Android devices, and is designed to be compatible with all types of mortgages. It can calculate PMI for adjustable rate and variable rate mortgages, and it can help you to determine the true cost of a mortgage. Through the use of this intelligent app, you can track your account information in real-time, or you can manipulate the numbers to help you to make more thoughtful and intelligent decisions about your finances.

Loan Calculator Pro

This app is only currently available on iOS devices, but those with this operating system may want to download it today. It has some of the same capabilities as Mortgage Mentor, but it goes a step above and beyond by providing you with mortgage payment notification reminders. It also has a unique feature that allows you to set a final payoff date for your mortgage, and it will calculate how much money you need to pay per month toward your mortgage to accomplish this goal.

Bill Payment Log

The Bill Payment Log app is a unique program that can entirely replace the outdated manual entry checkbook balancing task. It is suitable for use with iOS, Android and even Windows. You can use it to monitor and track payments for all credit accounts, including mortgages. While it does not have the analytical tools associated with some of the other mortgage apps, those who are looking for an all-in-one app that facilitates bill payment tasks for all accounts, this may be a great option to consider.

Making your mortgage payments on time is important, but you also may need to know if you need to pay extra each month and what the effects of that will be. You may also be concerned about “what if” scenarios for your adjustable rate mortgage. There are numerous apps available on the market today that can help you to facilitate your efforts, and these are among the leading choices available.

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Three Tips for Reducing Your Closing Costs if You’re Looking Forward To Buying a Home in the Spring

Three Tips for Reducing Your Closing Costs if You're Buying a Home in the Spring Spring is approaching fast and it is usually the busiest time of the year for home buying. After a long and cold winter, many people are ready to enjoy the nicer weather and begin to shop for a new home. Spring is also the perfect time for home buying for families with children because it allows them to move during the summer without interrupting school.

Home buying has costs associated with it other than the mortgage itself. Known as closing costs, these fees are a part of the home buying process and they are due at the time that the mortgage is finalized. Buyers, however, can negotiate these costs and reduce the expense with a little bit of effort and with the help of a good mortgage professional.

If you are thinking of buying a new home in the spring here are three helpful tips to reducing your closing costs.

Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage adviser to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Third Party Fees

Some of the closing cost fees will be associated with third party vendors that must perform required services. Home appraisals, title searches, and costs for obtaining credit reports are some of the items included in this area. While these may be a little harder to negotiate because the lender uses specific companies to perform these services, it does not hurt to ask if you can use your own appraiser or title search company.

Zero Closing Cost Mortgages

Buyers may also wish to inquire about a no closing cost mortgage. This type of mortgage eliminates all closing costs. The lender covers all of the closing cost fees in exchange for a slightly higher interest rate on the loan. In most cases the increase is less than one-quarter of a percent. This type of loan can be very helpful to buyers. Buyers can then use the money that they saved on closing costs to help with the move.

With a little preparation, you can find the best mortgage product for the up-coming spring season. Be sure to contact your experienced mortgage professional, as they will be able to help you find the right mortgage for your specific needs with the lowest out-of-pocket expenses.

Compare All of Your Mortgage OptionsIf you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage advisor to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

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From RealtyTrac: Buying is more affordable than renting almost everywhere

A new blog from Trey Garrison of HousingWire.com, dated December 26th, 2014.

From RealtyTrac: Buying is more affordable than renting almost everywhere

rent-versus-buy“Buying is still more affordable than renting in the majority of U.S. housing markets, while the opposite is true in markets with the biggest increase in the millennial share of the population over the last six years, according to RealtyTrac.

RealtyTrac analyzed 2015 fair market rental data recently released by the U.S. Department for Housing and Urban Development for three-bedroom properties in 543 counties nationwide with a population of at least 100,000. In the 473 counties with sufficient rental and home price data, the fair market rent for a three-bedroom property in 2015 will require an average of 27% of median household income, while buying a median-priced home requires an average of 25% of median household income based on the median sales price in November.

Buying a median-priced home was more affordable than renting a three-bedroom property in 68% of the counties analyzed, representing 57% of the total population in those counties.

But in the 25 counties with the biggest increase in millennials between 2007 and 2013, fair market rents for a three-bedroom property in 2015 will require 30% of the median household income on average while buying a median-priced home requires 36% of median household income on average. For the analysis millennials were defined as anyone born between 1977 and 1992.

“First-time buyers and potential boomerang homebuyers are stuck between a rock and a hard place in today’s housing market: many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder-to-afford home prices; while the more affordable markets have fewer well-paying jobs and tend to be off the beaten path,” said Daren Blomquist, vice president at RealtyTrac. “Those emerging markets with the combination of good jobs, good affordability and a growing population of new renters and potential first-time homebuyers represent the best opportunities for buy-and-hold real estate investors to buy low and benefit from rising rents in the years to come.”

The top markets with the biggest increase in the percentage of millennials over the past seven years were counties in Washington, D.C., San Francisco and Denver, all of which saw an increase of more than 50% in the share of the population that is millennials.

Other markets in the top 25 for biggest increase in millennials included counties in New York, Nashville, Portland, St. Louis, Seattle, Charlotte, Minneapolis, Indianapolis, Atlanta, Orlando, Austin, Des Moines and Midland, Texas.” ( End of Trey’s blog.)

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