Santa Clarita Home Prices Take a Sizable Upswing In January
Last year, there were some experts and analysts wondering just how long the real estate market could continue to rise. There were definitely rumors of changes in light of interest rates being raised by the Federal Reserve at the end of last year.
January is usually a very slow month for real estate. Many buyers and sellers are recovering from the holidays, and it's usually not at the forefront of the "to do" list. Typically, we see a slight drop in home values between December and January. For example, last year January saw a $15,000 drop in home prices from December of 2014. At the beginning of 2013, home prices dropped nearly $40,000 in one month. You get the picture, right?
However, this January saw single family home prices actually JUMP by $12,000 over December's closing price of $518,000. That's right. TWELVE THOUSAND IN ONE MONTH!
How is this happening in what's normally a slow month for real estate?
For one, mortgage rates are still dropping. That's right! We've seen them go down almost half a percentage point in recent months, and currently (As of the date of this post), rates for a 30 year fixed rate mortgage are at the nearly historic low of 3.64 percent. Qualified buyers can get a 15 year fixed rate home loan for just UNDER 3 percent.
If that's not motivation to get "off the fence" and find your dream home, then what else is there?
A big deal was made out of the Federal Reserve raising rates last month, so why are they still at historic lows?
It was one of the biggest “hold your breath” moments in the financial community. They said it was coming all year long. What would happen when it did? Would it change the mortgage and real estate industry as we know it? Are the good times over?
Yes, we’re talking about the Federal Reserve finally following through on a promise they’ve been making for quite some time: The raising of interest rates. Now, when we discuss raising rates from a Federal Reserve standpoint, we’re talking about the rate lenders pay the Federal Bank to borrow money at what would be in laymen’s terms, a “wholesale” rate. For the first time in nearly a decade, the Fed bumped their rates a quarter percent.
Making smart decisions when it comes to choosing a mortgage loan can save you a huge amount of money for years to come.
We talk a lot about interest rates. In most cases, the rates we’re discussing are base rates without any points or fees added by mortgage lenders. Many lenders may not want you to know this, but those points and fees may be negotiated to your best advantage.
A recent survey showed that, while 4 out of 5 Americans consider themselves bargain hunters, less than 30 percent of consumers actually look for, or ask for, better terms for their home loan.
Why is it so important to shop lenders?
There are several reasons. The main one of course would be….money! Aside from lender fees that you would pay as a lump sum at close of escrow, even negotiating your interest rate a few fractions of a percent can save you thousands of dollars over the lifetime of your loan. What’s equally important is the level of service you can expect from your mortgage lender. Finding out how easy it is to have problems resolved through their customer service branch, or even if a lender regularly sells your loan to another bank are good things to know up front. Continue reading Shopping Home Loans Can Save You Money→
prices leveling off in the Santa Clarita Valley for the month of September.
Home values dropped slightly from $523,000 in August to $515,000, which is not untypical for this time of year. Condo prices held steady, with no decrease month over month between August and September.
This however may create better opportunities for home buyers looking to get into property ownership before the end of the year.
The Federal Reserve has held off on raising rates for now, but how long will it last?
Buyers have been very fortunate for the past several years to enjoy what has become historically low interest rates. In 2008, the Federal Reserve dropped their base rate (The rate at which lending institutions can borrow money) to practically zero percent. Of course, consumers pay a bit more on their rates, but even still, home buyers have been able to take advantage of rates as low as 3 and a half percent. Currently, rates stand just below 4 percent.
Why are interest rates so low, and why might they rise again?
You might say that interest rates can reflect economic conditions nationally, and even internationally. In most cases, rates rise or fall based on economic forecasts that include the potential for inflation as our economy improves. That being said, in 2008 the Federal Reserve dropped rates in an effort to stabilize the real estate and credit markets, which were struggling due to issues that affected our economy and put the US on shaky financial footing.
Why would rates rise? As our economy improves, there is more money for goods and services, which in turn may cause prices to rise, or “inflate,” due to demand. There’s a delicate balance between inflation that could get out of hand (Known as “runaway inflation”) and putting systems in place that can maintain our economy without becoming volatile or unpredictable.
Raising interest rates has the ability to control the purchasing power of consumers to the degree that it could make them think twice about how they spend their money. This in turn could help to keep the price of goods and services steady, thus avoiding potential runaway inflation.
The Federal Reserve recently held off on raising rates due to our economy not showing any warning signs of unpredictable inflation. That being said, they may revisit this before the end of the year, with news that rates could rise as early as December.
Don’t wait! Qualify for a loan today!
If you’re on the fence about buying a home, now is the time to find out if you qualify for a mortgage and begin to take advantage of all the benefits of home ownership. Contact Team Avalos today for a no obligation consultation.
As summer sizzled its way through August, the SCV saw only a slight uptick in overall median housing prices, holding at $468,600, rising $4,000 from July. This median level includes all homes, including single family and condominium sales.
Typically we do see an upswing in August from July as it represents the peak of the summer buying season. August also showed less listings and escrow closings than July, with 446 homes being listed for sale, and 415 homes closing.
Of course, even with home prices on the rise, buyers are still finding their purchasing power boosted by interest rates that are still below 4 percent, despite worries that they may rise. That fear was put on hold last week when, after a two day conference held by the heads of the Federal Reserve, it was decided that rates would remain at their current position for a while longer. There are hints that they may rise as early as December, however. Continue reading Home Prices Hold Steady Through August→
Do you have a down payment? Want a no-money-down loan? Are you self-employed? Follow these tips to making sure you’re ready to buy a home.
There are plenty of reasons why owning a home is one of the most sound investments you can have. Even still, there are some out there who think
buying a home is a lot like buying a car. You know, walk on the “lot”, pick out what you want, haggle the price a little, and drive home…right?
Actually, the two couldn’t be more different. But before you get into the PURCHASING part of home buying, it’s best to make sure you’re ready to afford a home. What does it take? What do lenders look for? Can you buy a home when you’re self employed?
First up, your finances.
It’s one thing to have a good credit score, and it’s another to know that the money you make is enough to afford a monthly mortgage payment. Assuming your credit is in good shape, lenders also look at your DTI, or Debt-to-Income ratio. Very simply, this is an easy bit of math where you divide your monthly recurring debt (Car payments, credit cards, alimony if applicable, student loans, personal loans, rent/mortgage payment) by your combined gross monthly household income. The result should come in the form of a decimal point. Of course, from there, basic math says that you move that decimal point over two spaces to the left, and the answer turns into a percentage. So let’s say you have a monthly combined gross income of $7,000. Your recurring debt expenses are $2,500. Divide 2500 by 7000 and the answer is (rounded up) .36, or 36 percent DTI. Some lenders will allow mortgages when a borrower’s DTI is as high as 42%, but most like to see it between around 28-35% to offer the best rate.
From there, your lender will determine your best monthly mortgage payment that is affordable within your DTI, and along with your qualifying interest rate, will then determine your total loan amount.
Okay, what if I don’t have 20% down to purchase a home?
Of course, we know especially with today’s housing prices, not everyone has saved up the usual high five figure amount that would equal a 20% down payment. Even still, your lender will look at your DTI to determine your loan figure based on the amount of cash (if any) you can put toward your home purchase. Keep in mind that while there are low money and no money down loans out there, you still have to be able to afford the monthly mortgage. The more you have to put toward the purchase price, the more home you can afford, and/or the lower monthly payment you’ll have.
I’m self-employed. Can I qualify for a home loan?
There was a time, before the recession, that it was fairly easy to get a home loan, even if you were self-employed. The “stated income” loan often used by those who were self-employed required little in the way of proof that what you actually made equaled what you put on your loan application. Guess what? Believe it or not, both buyers and lenders “occasionally” abused the system, which resulted in many buying homes they actually could not afford.
Since the recession, new rules and guidelines have been in place and are enforced for self-employed home buyers. First of all, you’ll need to show your lender at least two years’ worth of tax returns from your business that provide an accurate portrayal of your annual earnings. Also, your lender will use only your adjusted gross income as a qualifier, and not your overall gross income.
Team Avalos Real Estate is here to help you with all of your real estate needs!
Santa Clarita single family homes holding at just over $500K, while condos take a leap forward in July.
Recent statistics released by the Southland Regional Association of Realtors showed home prices holding, with single family homes in the Santa Clarita Valley at an 8 year high, and condo prices jumping $15,000 from June.
The median price of a single family home in the SCV clocked in at $509,500 for the month of July. Condominiums in the valley are currently at a median price of $330,000.
442 homes closed escrow in July, which is a 16% increase over July of 2014. A total of 546 residential properties were listed last month, with 470 homes opening escrow.
“Boomerang” home buyers are re-entering the marketplace, and some are able to take advantage of first time home buyer programs.
The last decade brought us a few tough years, especially for some home buyers. Real estate professionals like us were able to help many avoid foreclosure during the darkest days of what’s become known now as “The Great Recession.” In some cases, foreclosure was avoided through a short sale or other means such as deed-in-lieu. Of course, in avoiding foreclosure, the now former homeowner was once again in the position of renting the place in which they lived.
Fortunately, in most cases, distressed times are short-lived, and many were (and are) able to get back on their financial feet. Lenders made changes to their restrictions, some allowed former short sellers to qualify for a mortgage in as little as two years under certain circumstances.
You love your home, but it’s become just a bit outdated, and maybe your family has grown beyond what you feel is comfortable as far as living space
goes. So what do you do? Your choices include renovating your current home, or you can buy another one that more suits your current and future needs.
So which one is right for you?
Renovate Your Current Home
One of the greatest assets to home ownership is the fact that your home increases in value over time. This difference in increase in Fair Market Value, compared to your current loan balance, is called equity. Now, you can refinance your home and cash out your equity to do whatever you want with it. One of the smartest things you can do is to update or renovate your home, based on your needs. Remodels, upgrades, new flooring, a pool, or even additional rooms are all things you might consider to maintain and improve the value of your property and truly make it a comfortable place for your family to live and grow.
Of course, with remodeling and renovation comes decisions that must be made. Are you a DIY-er who loves to do things on your own? How much time do you have to commit to a major renovation project, even if you have the skills to do so? If hiring a contractor, you’ll need to perform your due diligence to insure they will work within your budget…and timeline. You must also consider state and local regulations, and pull the proper permits. Continue reading Should You Renovate, Or Just Buy a New Home?→
Serving Home Buyers and Home Sellers in the Santa Clarita Valley