The 411 on Conforming Loan Limits

Data proposed by the National Association of REALTORS® indicates that for several metro areas, including Denver, San Diego, Los Angeles, New York and Washington, DC, prices for homes 2008’s expanded conforming range have not dropped to the levels proposed for October 1, 2011. The Federal Housing Finance Agency estimates that buyers above the limits can expect an increase in mortgage rates of 0.5% to 0.75%, which may make larger mortgages unaffordable (Fears, 2011). Data indicates that the portion of the market still dependent upon the current conforming limits, such as San Diego, will be negatively impacted by lowering conforming loan limits.

Today, the bond market was in negative territory due to stock strength as signs of recovery from what CNN money calls “the worst four-week loss since March 2009.” If improvement to the stock market coupled with a decline in bonds continues, it will equate to a rise in mortgage rates. With the Fed conference this week, stock investors will be watching carefully for any announcement of any additional stimulus from the Fed.

2nd Quarter Gross Domestic Product (GDP), Coming out on Friday- Providing data on the total of all goods and services produced in the U.S. This report is considered to be the best measurement of economic activity and will be the second of the three for this quarter. Last month, readings showed the economy growing at an annual rate of 1.3%. It is expected that Friday’s report will indicate that the GDP actually increased only 1.1%. If there is a revision much larger than anticipated, mortgage rates may decline this week (especially true if the inflation does not get revised higher by the report).

University of Michigan’s Index of Consumer Sentiment - Tracks consumer willingness to spend and an upward revision of 55.4 from August’s reading of 54.9 is expected. A lower reading indicates consumers were less confident about their personal financial situations than previously thought which would be good news for the bond market and mortgage rates but a negative indicator of economic recovery.

There may be quite a bit of activity in mortgage rates this week. If economic reports are stronger than expected and if the treasury auctions show a reduction in demand, we can expect rates to move higher this week. The way trading looked late last week, it appears mortgage rates may have hit bottom for now.

It’s a great time to mention the impending conforming loan limit changes and how they will impact us. Of the 16 US metro areas, San Diego, Las Vegas and Phoenix will experience the highest percentage of decrease in limit. It appears a substantial amount of housing in San Diego is still dependent upon government backed credit and will feel the “crunch” from the lower limits. As Treasury bond yields are low and stocks uncertain, it is also a great time to stress to that rates are still at historic lows and the cost of money incredibly economical.

Mark October 1, 2011 on your calendar. Why? That’s the day the Conforming Loan Limits, the maximum loan that can be sold to FannieMae, FreddieMac, and GinnieMae (FHA loans) are going to change. The government raised the limits during our housing crisis so lenders had the liquidity to provide loans to home buyers and jump-start the housing market. Which was needed, but that will end on September 30, 2011!

Here’s how the Conforming Loan limits will change. Any loan for a single-family home that is above $697,500 in San Diego looks like it will be reduced to $546,250. (In other area of CA the conforming limits will change from $729,750 to $625,500) Loans that are above that limit are considered “Jumbo Loans” which are generally more expensive then conforming loans. What does that means to a home buyer? The new conforming loans will become more costly. Also larger down payments may also be required which will make it more difficult for first-time home buyers to get into the housing market.

If that’s not bad enough, interest rates might start to rise. If mortgage rates rise then less people will be able to qualify for home loans. If that happens there will be less buyers shopping for homes and prices will fall even more! Remember if prices drop but interest rates rise you qualify for less. As a home buyer you don’t gain by waiting!

Remember no one knows when the real estate market has hit its bottom. Don’t be the home buyer who wishes they had bought, because once the real estate market starts rebounding, it may happen very quickly.

What Does The World Think Of Real Estate Agents?

A recent Gallup Poll shows interesting results about what the public thinks of Real Estate Agents.

2003 - 53% Positive Feeling - 18% Negative Feeling - Total 35%+

2007 - 34% Positive Feeling - 35% Negative Feeling - Total 1%-

2008 - 16% Positive Feeling - 56% Negative Feeling - Total 40%-

2010 - 26% Positive Feeling - 48% Negative Feeling - Total 22%-

We are coming back!

Which industries were below Real Estate Agents in the ratings? Oil and gas, federal government, banking and healthcare; even the legal field was two spots above us.

Tops in the poll: Computers, restaurants, and farming.

To see the complete poll, click here

7 Reasons Why Home Sales Will Rise Before The End of The Year 2011

Summer has been a little slow for most realtors country wide but we are still buoyed by the solid sales during the Spring season, and the remainder of the year, will continue to head up steadily. I was reading an article on real life economy and it states that existing homes have been selling at an annualized pace of 5.1 million according to Lawrence Yun the chief economist of the National Association of Realtors. The remainder of the year should be better for the following reasons:

1. More jobs
2. Rising stock market wealth
3. Rising apartment rents
4. Continuing high affordability conditions
5. Home values at historically justifiable levels
6. Investors looking to hedge against inflation
7. Foreigners buying U.S. homes on the cheap

Other potential contributing factors, when they happen, are huge bank profits translating into more desire to lend and some reduction to market friction as lenders' short sale approval processes improve and appraisals become less of an issue.

Which means that if existing-home sales either hold at the 5.1 million pace or improve on that, then the annual sales tally will easily exceed the 4.9 million home sales we saw last year.

I'm sure we will still have obstacles to overcome... High gas prices are a daily reminder that something is not right with the economy; that will hold back consumer confidence, along with what is happening with Washington policymakers in regards to FHA and VA mortgage programs.

At least through the rest of 2011, improving market developments should outweigh the negative impact imposed by those policymakers.

To learn how NAR plans to ensure the continued accuracy of its existing-home sales calculation in the years ahead go to http://tinyurl.com/5tz9ofw

Turning Your Everyday Encounters Into Real Business Leads

Have you ever stood in line at your local coffee shop or grocery store and thought about striking up a conversation with the person in front of you, but then decided against it? Approaching strangers is weird, and feels uncomfortable, you may have thought, and they probably don't need a real estate agent anyway.

BUT....they might be considering buying or selling a house - - and even if they're not, you could still benefit from meeting them. By starting a conversation with people next to you on the train, at the bank, and in public places, you can unearth a world of new clients. This method of drumming up new clients is called, "random networking", or the art of turning your everyday encounters into real business leads.

Here is a bit of advice for making connections:

LEARN TO LOVE MEETING NEW PEOPLE. Believe in your soul that the world is a friendly place. People today are starved for connection with others...not just online, but in the physical world. So don't think your words won't be welcomed. Anyone who is in a public place is fair game, and remember that every conversation has value - whether it is with someone who might be a future client of someone who can teach you something new about life.

BREAK THE ICE NATURALLY. Think of some easy quips about what's happening in the moment. For example: "Thank goodness for caffeine", while waiting in line for coffee,or "I like Sour dough bread too, good choice," when standing in line at the deli ordering your lunch or "How do you like your iPad?" People love to share their opinions about electronic toys. Follow up with questions that uncover potential opportunity: "Do you live nearby?" or "What kind of work are you in?"

GET OFF THE BEATEN PATH. We tend to repeat patterns on a daily basis and sit in the same spot, use the same locker at the gym, stand in the same area at the bar. And so does everyone else, which means you're bound to see the same people over and over. You will be a more successful random networker when you go where you've never gone before.

HELP YOUR CONTACTS. If you've met a promising lead, follow up right away to keep the connection alive and cultivate the relationship. Send an e-mail or put a note in the mail with some relevant information related to whatever you talked about. These follow-ups are designed to position you as a valuable resource.

Now it's time to make your everyday encounters into real business leads...too often we assume that people don't want to be interrupted, but they wouldn't put themselves in public if they didn't want to be met. Strangers are potential clients waiting for a hello.

What are you waiting for? Go say HELLO to someone new!

Home Ownership Is Possible Today!

The recent Case-Shiller housing price index showed that prices fell in the first quarter to the lowest levels since the real estate crash began. The "psyche" that the media is portraying has stated that there are more people who desire to rent versus owning now because of the real estate market not being conducive to buying a home today.

According to an article from The London Group, this is just a bunch of baloney. If there are more people who desire to rent vs. own, it's because they should be renters based on who they are and on demographics and lifestyle. Gen Y people, born between 1979 and 1999 are dictating the housing patterns.

Think about it, the 82 million of that GEN Y are just now entering their early 30s, staring, or now settling, into their careers. Many must be mobile to accommodate new job opportunities. They spend the beginning of their adult lives saving money so they can actually place a down payment on a new home. If anything, they are considered temporary renters and are creating a boom in new rental construction and a current run up in rental rates across the nation.

So, what does this all mean?

It means that the outlook for price stability and price increases are much better and that most of the sales over the past five years have been considered distressed sales and reflect price deflation. Ultimately, the collective mindset of the market dictates the flow of the market. The housing market is doing exactly what we all expected which is that the market bottomed out and has been bouncing back over the past couple of years.

While home ownership rates have dropped, and rents have been rising, this is not considered the time to walk away from home ownership as the media would have you believe but rather this is really the perfect time to be a homeowner!

The 411 on Short Sales

Shorts Sales are quickly becoming the norm rather than the exception. Keep reading to find out the 411 on who is doing them and what homeowners can expect on both sides of the transaction.

1. When should a homeowner consider selling home as a short sale?
If your home is worth less than what you currently owe and you would prefer to sell, but don't want the adverse consequences of a foreclosure, a short sale is a viable alternative.

2. How is the high end market different for Short Sales, if at all?
The short sale process is not unique to lower priced homes, however, lately there have been an increasing number of high end homeowners electing to go ahead with a short sale as an alternative to struggling with their payments. In the past banks have been somewhat reluctant to approve high end homeowners for a short sale. Now, lenders are more willing to work with these homeowners that have other assets and aren't always mandating that those assets be depleted in order for their home to be sold at a loss to the bank.

3. What should homeowners expect as the Seller in the process?
They should expect lenders to request volumes of information about their financial situation, from personal financial statements, to monthly income and expense summaries. While daunting and lengthly, up to 3-6 months, the end result could be acheiving your long term goals without being weighed down by an upside down mortgage.

4. What are the effects for Buyers who want to purchase a short sale property?
The process for short sale buyers is similar to a tradtional sale, except that the lender has to approve the terms and conditions of the offer and subsequent sale. Be aware that this approval process is time consuming.

5. For Buyers what are some red flags and/or golden opportunities to look for?
You need to keep in mind the old adage, if it's too good to be true, it probably is. Look out for homes that are under priced, where you may be involved in a bidding war just to end up waiting months to learn that the home was priced way below what the bank will take as an acceptable loss. Be realistic in what you are going after. Homes with considerable upgrades or are difficult to appraise can be considered a great deal, since the brokers price opinion may not relect the value that is seen in the home.

Keep in mind that sellers need to know that a short sale may damage their credit, though probably not as much as a foreclosure. Also, lenders generally will only agree to a short sale if the seller is many payments behind and has received a default notice. Buyers may get a great property at a discount, but they also will need to go through some extra paperwork too. Not to mention, they also need to be prepared to roll up their sleeves if that new property needs fixing up.

Summary: In a short sale, a seller facing potential foreclosure strikes a deal with their lender to accept less than they owe on the property, in exchange for avoiding foreclosure.

Del Mar - Where the Turf Meets Surf

"... And awa-a-a-y they go"... thundering hooves, equine nostrils aspirating loudly, while the constant din of salivating excitement for a hopeful long shot ricochets through the grandstands. Seaside racing in Southern California celebrates the 72nd season of sporting ponies, bets and the Del Mar scene begins July 20.

Since 1937, when Crosby greeted the first attendees at the gate, Del Mar's racetrack has lured many a celebrity, dignitaries, horsemen and families to its seaside locale to try their 'hand' at handicapping thoroughbreds.

Del Mar plays host to six designated Breeder's Cup Challenge races in its summer stakes schedule, earning the winners a berth in the designated BC races including entry fees and travel allowances for the horse and its connections.

While enjoying the races in Del Mar make sure to also take in its village charm and lure. Del Mar takes advantage of a much lauded locale along the coast, and a climate enjoyed throughout the seasons. Beyond the many accolades and reviews, Del Mar Racetrack, the attraction, whatever it may offer...Del Mar is simply irresistible.