Margaret Szerlip 617-921-6860 firstname.lastname@example.org
Newton, MA. real estate, Realtor, Newton, MA
Thinking of a Vacation or Retirement Home? Buy It Now
by The KCM Crew on September 19, 2012 · 0 commentsWhen the economy was exploding in the early 2000s, many of us began to dream about purchasing that vacation home on the lake or securing a home in a more appropriate location for our retirement years. However, with the booming economy came skyrocketing house prices. Many of the homes we fell in love with quickly became out of reach financially. Perhaps we should take a second look at these same homes today.
With prices dropping by over 30% in some markets and with interest rates at historic lows, this may be the perfect time to do what we and our families have always dreamt of doing – buying that second home. Let’s look at the numbers.
Back in 2006 we may have seen the ‘perfect’ home but the $500,000 price tag was just out of reach. Today, we could probably get that home for $400,000 (if not less). We also would be financing it at the current mortgage rate instead of the rates available six years ago. The table below shows the difference in impact on our family’s finances:
Not every family is in the financial position to take advantage of the tremendous opportunities the current real estate market offers. But, if yours is, this may be the time for dreams to come true.
Newton, MA. real estate, newtonmasshomesfor sale.com
Mortgage Rates are on an undisputed tear, moving more today than any day in the past 3 weeks of progressive movement into new all-time lows. The week began much like the previous week ended, with concerns over the European financial system pulling all manner of ‘safe-haven’ bond yields lower, among them MBS (the Mortgage-Backed-Securities that most directly influence mortgage rates).
Once again, there was nothing on the domestic economic calendar and corporate earnings had little effect next to news that a third region in Spain will now request assistance from Spain’s central government. Combined with a glut of generally gloomy news overnight, 10yr Treasury yields hit new record lows before domestic trading commenced. The balance of the day has simply seen rates move in narrow, sideways patterns near these extreme levels.
Even though Friday had been fairly brisk in terms of the pace of improvement for mortgage rates, today was brisker in most cases. Best-Execution rates for 30yr Fixed, Conventional loans are a foregone conclusion at 3.5% and there’s an even stronger case for 3.375% at some lenders. That said, 3.5% continues to be a more efficient combination of rate and fee at most lenders.
(Read More:What is A Best-Execution Mortgage Rate?)
Long Term Guidance: We’d continue to advocate against trying to “get ahead” of current market movements due to the high degree of uncertainty. In the past, we would have interpreted that advice as a suggestion to lock, but in the recently “low and sideways” environment, it’s probably better-read as a suggestion to go with the flow of gradually lower rates until we see the pattern definitively break. It’s a reasonably safe assumption that European concerns will generally continue to apply downward pressure on rates although there are no guarantees that the right piece of news or economic event couldn’t mark “the turning point” at which rates bottom out. On any given day, rates have been at or near all-time lows and in the grand scheme of things, unable to move lower as quickly as Treasuries for example. So although there is potential gain from floating, it’s still a historically excellent time to lock if you’d prefer to take the risk off the table.
Loan Originator Perspectives
Ira Selwin, Vice President Of Secondary Marketing, US Mortgage Corporation
I have officially changed my thoughts from “Lock” to “Float”. I feel that right now is the time to float, but always have your Loan Officer ready to lock your loan at a moments notice in case things turn the wrong way.
Victor Burek at Benchmark Mortgage
If you have been following my advice(i said Friday don’t lock anything), it is the same today as it has been. Float until you are within 15 days of closing, then lock. Yes, rates might edge a little lower during that 15 days, but at some point you must lock. Don’t make the mistake of trying to time the bottom as the only way to know rates are at rock bottom is once they have passed, but then it is too late.
Julian Hebron, Loan Agent, Branch Manager, RPM Mortgage
Sticking to the plan I laid out last with all clients. It’s the safest way to manage a declining but unpredictable rate environment. Here it is: Locking purchases as they ratify to capture current lows for clients whose purchase contracts dictate a specific timeline. Decisions to lock refis are specific to each client. If they’ve recently closed a purchase or previous refi (thus rate is only slightly higher than current market), it’s either a float or a no-cost refi depending on breakeven math for closing fees spent previously. If they haven’t refinanced in awhile (thus rate is much higher than current market), it’s a lock—whether those locks are cost or no-cost also depends on math best suited to client profile and expected time horizon in the loan and/or home.
Today’s BEST-EXECUTION Rates
- 30YR FIXED – 3.5%, Some Approaching 3.375%
- FHA/VA – 3.25-3.5% (varies more between lenders than conventional 30yr Fixed)
- 15 YEAR FIXED – 2.75 – 2.875%
- 5 YEAR ARMS – 2.625-3. 25% depending on the lender
Ongoing Lock/Float Considerations
- Rates and costs continue to operate near all time best levels
- Current levels have experienced increasing resistance in improving much from here
- Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
- But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn’t always mean they’re done improving.
- (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).
Newton, MA. Top Realtor, Newtonmasshomesforsale.com, Buyer and Seller Agent, Newton, MA
A new development is catching home buyers off guard as the spring sales season gets under way: Bidding wars are back.
From California to Florida, many buyers are increasingly competing for the same house. Unlike the bidding wars that typified the go-go years and largely reflected surging sales, today’s are a result of supply shortages.
Vote and Discuss
“It’s a little surprising because we thought bidding wars were done with,” said Andy Aley, who is looking to buy his first home in Seattle’s Beacon Hill neighborhood. The 31-year-old attorney was outbid this year when he offered up to $23,000 above the $357,000 listing price and agreed to waive inspections and other closing conditions.
Competitive bidding in the current environment isn’t producing huge price increases or leaving sellers with hefty profits, as occurred during the housing boom. Still, the bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump.
An index that measures the number of contracts signed to purchase previously owned homes rose in March to its highest level in nearly two years, up 12.8% from a year ago and 4.1% from February, the National Association of Realtors reported on Thursday.
“We very much believe we’ve hit bottom,” said Ivy Zelman, chief executive of a research firm, who was among the first to warn of a downturn seven years ago. Earlier this week, she raised her home-price forecast for the year, calling for a 1% annual gain, up from a 1% decline.
The Wall Street Journal’s quarterly survey found that the inventory of homes listed for sale declined sharply in all 28 markets tracked. Real-estate agents consider a market balanced when there is a six-month supply of homes for sale. At the height of the housing crisis, in 2008, there was an 11.1-months’ supply. In March, there was a 6.3-months’ supply.
Inventory levels in many markets were at the lowest level in years. At the current pace of sales, it would take just 1.5 months to sell all the homes listed in Sacramento, Calif., and 2.4 months to sell all the homes listed in Phoenix. San Francisco and Washington, D.C., each have 3.4 months of supply, while Miami has 4.1 months of supply.
Other markets have plenty of homes. Chicago, for example, has 9.4 months of supply, while New York’s Long Island has 16.1 months of supply. Even in those markets, the number of houses for sale is edging down.
Increased competition is frustrating buyers and their agents. “We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” said Glenn Kelman, chief executive of real-estate brokerage Redfin Corp. in Seattle with offices in 14 states.
Nearly 83% of offers that Redfin agents have made on behalf of clients in the San Francisco Bay area this year and 71% in Southern California have had competing bids. Redfin represented a buyer that made the winning bid on a Gaithersburg, Md., home earlier this month after agreeing to adopt the dog of the seller, who was relocating and looking to find a new home for “Buddy,” a white toy poodle.
Inventories are declining for a number of reasons. Some sellers, unwilling to accept prices that are still down from their peak by one-third, are taking their homes off the market in anticipation of higher prices down the road. Meanwhile, investors have been outmaneuvering consumers for the best properties, often making cash offers that are quickly accepted by sellers.
In addition, some economists say that inventory levels are being held artificially low because Fannie Mae, Freddie Mac and the nation’s biggest banks have been slow to list for sale hundreds of thousands of foreclosed homes they currently own. The lenders slowed down foreclosure sales and repossessions after record-keeping abuses surfaced 18 months ago.
Banks and other mortgage investors owned nearly 450,000 foreclosed properties at the end of March, and another two million mortgages were in some stage of foreclosure.
Inventories could rise, putting more pressure on prices, if the banks and other lenders step up their efforts to sell their properties. Real-estate agents say they aren’t concerned. “There’s an enormous appetite for foreclosures. Release the inventory. It will sell,” said Richard Smith, chief executive of Realogy Corp., which owns the Coldwell Banker and Century 21 real-estate brands.
The declining inventory of older homes is spurring sales of new homes. New home sales are up 16% so far this year, compared with a year ago, while inventories of new homes fell in March to their lowest level since record keeping began in 1963.
Meritage Homes Corp., a builder based in Scottsdale, Ariz., reported Thursday a 36% increase in orders for the quarter ending in March versus the previous-year period.
Even though bidding wars are pushing prices higher, many homes are still selling for prices far lower than a few years ago. Increased demand is “entirely affordability driven, which tells me there will be strong resistance to price increases” by buyers, says Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm.
Rents are rising at a time when mortgage rates have fallen to very low levels. The result is that the monthly mortgage payment on a median-priced home is lower than any time since the 1990s. Freddie Mac reported on Thursday that mortgage rates fell to 3.88% for the average 30-year fixed rate mortgage, near its lowest recorded level.
Rates are “so low that we can afford a house that was out of our price range before,” said Aarthi Srinivasan, who is looking with her husband for a home around Palo Alto, Calif., one of the country’s hottest real-estate markets.
Ms. Srinivasan says she fears that prices are being bid up too quickly. She says she had her “aha moment” earlier this year while touring a 50-year-old house that needed extensive remodeling. The home, listed at $1.1 million, received nearly 10 offers and eventually went under contract for more than $1.3 million to a buyer who hadn’t even viewed the property.
“There are only so many buyers who are going to be in such a hurry, so we’re hoping it’ll top off soon,” she says. On Monday, they offered to pay more than the $1.2 million list price for a four-bedroom, bank-owned foreclosure. They haven’t found out if they made the top bid.
On the other side of those transactions are sellers like Debbie and Bill Wetherell, who had 17 offers in four days for their four-bedroom home in Danville, Calif. “I was floored. It was so fast, it was surreal,” says Ms. Wetherell. The home sold on Wednesday for $796,000, more than $50,000 above the asking price.
Still, the sale is for nearly $180,000 less than what they paid for the house in 2005. Ms. Wetherell’s husband has commuted to Reno, Nev., for five years and they have decided to relocate.
Housing markets face other headwinds. More than 11 million homeowners owe more than their home is worth. It is a big reason that the “trade-up” market has been stalled. These homeowners can’t sell their current homes, let alone come up with the down payment for their next home.
Mortgage-lending standards remain tough. Real-estate agents say an unusually high share of deals are falling apart because homes won’t appraise at the price that buyers have agreed to pay sellers.
Still, borrowers with stable jobs are looking to make deals. Kelly Pajela-Fu and her husband offered to pay the asking price of $600,000 for a four-bedroom home in Marblehead, Mass., within a day of the property hitting the market.
“We just knew this house would go quickly,” says Ms. Pajela-Fu, a 31-year-old doctor who had lost out on an earlier offer. Their strategy to avoid a bidding war paid off: The sellers accepted their offer before having an open house.
Newton, MA. A Real Estate Snapshot
There are currently:
236 Single Family Homes Listed for Sale, average list price is $1.164M with a marketing time of 109 days
60 homes are currently under agreement, average list price is $953K and a marketing time of 98 days
40 homes have sold in the past month averaging $830K and a marketing time of 83 days.
What do these numbers mean? I feel that these numbers are a clear reflection of seller reality, or lack thereof. The average list price in a stable market is much closer to the average sale price. Currently we have a 300K spread between average list and average sold. It is my opinion that we are still in a declining market. While I do not think Newton real estate prices will drop precipitously we are probably looking at a 3-5% reduction. It is worth noting that the high-end market (2.5M+) appears to be strong in the western suburbs.
The following article from the WSJ explains the new federal loan limits in MA. Could we see negative implications regarding the real estate market? Yes – high-priced communities such as Newton will suffer when the federal government lowers the loan limits they will guarantee to $523,000.00 While most jumbo loans in Newton are not currentlyFHA backed it may have a psychological effect on secondary mortgage lenders….stay tuned
The federal government is readying its first retreat from the mortgage market, with the size of loans eligible for government backing set to decline in October.
As an emergency measure three years ago, Congress raised to as high as $729,750 the maximum loan amount that Fannie Mae, Freddie Mac and federal agencies could guarantee.
That made it easier—and cheaper—for borrowers in pricey housing markets to obtain mortgages, because the government guarantees that investors receive payments on those mortgages even if homeowners default.
Mapping declines in FHA-backed loans by metro areas
Now those limits are set to decline modestly in hundreds of counties across the U.S. as the government attempts to reduce its outsized footprint in the mortgage market and create room for private investors to compete. Government-related entities stand behind more than nine of 10 new mortgages, and taxpayers have sunk $138 billion into Fannie and Freddie, underscoring the eagerness to dial down the government’s share.
The new limits will vary widely by location, but will drop to $625,500 in top-tier markets such as New York, Los Angeles and Washington, D.C.
Even though the new limits won’t take effect until Oct. 1, some lenders are already warning borrowers that they will stop accepting applications for loans that exceed the new limits much sooner, to ensure the loans are funded before the cutoff date.
Industry groups are making the case on Capitol Hill that reducing current limits in some of the largest markets is “the exact wrong way to go,” said Jerry Howard, president of the National Association of Home Builders. But Obama administration officials say the limits should fall as scheduled, and Republican lawmakers have introduced measures to shrink the Federal Housing Administration’s reach more aggressively.
Had the lower limits been in place last year, Fannie and Freddie would have backed 50,000 fewer loans, according to the Federal Housing Finance Agency. The bulk of the affected loans —about 60%—are in California, with another 20% in Massachusetts, New York and New Jersey.
Parts of the country with less expensive homes also would be affected; their limits are scheduled to fall as low as $417,000 for Fannie and Freddie loans and as low as $271,050 for FHA loans.
Limits for Fannie and Freddie-eligible mortgages will fall in 250 counties, and FHA limits will drop in about 600 counties. While that is a fraction of the nation’s 3,000 counties, economists at the National Association of Home Builders say those densely populated areas account for 27% and 59% of the nation’s housing stock, respectively.
The possibility of lower loan limits is causing considerable anxiety in coastal California and other high-end housing markets that will serve as test cases for how the government’s withdrawal from housing will affect the market and local economies.
Homeowners whose mortgages are too big to qualify for a government-backed mortgage must seek a so-called jumbo loan, which often carry higher interest rates as well as larger down-payment requirements, sometimes more than 20%.
“Sellers are going to have to reduce their prices if borrowing costs rise,” said Scott Sheldon, a loan officer with First Cal Mortgage in Petaluma, Calif.
One of Mr. Sheldon’s clients, Ed Barr, has been pre-approved for a $662,000 loan backed by the FHA, the largest mortgage the agency can insure in Sonoma County, Calif. He is racing to close a sale before the limit drops to $520,950.
Mr. Barr, who owns a wine-making machinery company, said he has excellent credit but a recent divorce left him with little cash for such a purchase. “I don’t have any other alternative,” the 48-year-old said. Without the loan backed by the FHA, which allows for down payments as low as 3.5%, “the sale won’t happen.”
Scaling back loan limits underscores a broader challenge facing the government: It wants more private players to hold mortgage risk, but it doesn’t want to destabilize fragile housing markets.
Craig Van Sant is looking to pay $500,000 for a home with a $20,000 down payment in Rancho Cucamonga, Calif. Once the FHA limit drops to $335,000, he would need to more than double his down payment. The only upside, he said, is that “home values slide even more, allowing us to buy more house, if we can pull together all the cash.”
Investors and some academics say the government needs to shrink its footprint if private markets are to re-emerge, and that big loans for pricey homes are a reasonable place to start. “Credit unions, small banks, and hedge funds are all eager to buy these loans,” said Brian Brady, a mortgage banker at World Wide Credit Corp. in San Diego.
For now, interest rates for jumbo loans are relatively low, which could cushion the impact of changing loan limits. Rates on 30-year fixed-rate jumbos averaged 5.07% last week, compared with 4.62% on government-backed loans, according to financial publisher HSH Associates. The jumbo rates are near the lowest mark since HSH began its count in 1986, and the spread is the lowest since mortgage markets seized up four years ago.
But rates are only part of the equation. Because jumbos aren’t being securitized, banks must keep them on their balance sheets and are generally requiring larger down payments and stringent income qualifications.”It’ll be a real test of private lenders and their ability to fill the void,” said Mark Zandi, chief economist of Moody’s Analytics.
Write to Nick Timiraos at email@example.com
More Borrowers Are Opting for Adjustable-Rate Mortgages
Published: March 17, 2011
IN the years since the financial crisis, adjustable-rate mortgages, or ARMs, with their low initial interest rates that changed over time, have been considered riskier than fixed-rate loans and shunned by most buyers. But these days more people are being persuaded to give the loans a try.
This time around, lenders are rolling out more conservative ARM products — without the gimmicky extra-low “teaser” rates that adjust every six months, or the “pick-a-pay” and “option” features that allow borrowers to pay less than the monthly interest, only to be hit with a huge bill down the road.
Those ARMs were hallmarks of the subprime mortgage boom that fueled the soaring rate of mortgage defaults and home foreclosures nationwide.
“An adjustable now is basically a prime product,” said Michael Moskowitz, the president of Equity Now, a lender in New York. “There’s definitely a comeback in their popularity.”
Bank of America, for example, had nearly twice as many ARM transactions last month as it did a year ago, according to Terry H. Francisco, a spokesman, and ARMs now account for 10 percent of all its home loans.
Mortgage brokers and lenders say the loans most in demand are the “5/1” and “7/1,” in which the initial interest rate is fixed for the first five or seven years — after which many homeowners typically think about selling or refinancing anyway — then adjusted annually at a capped rate toward a maximum level.
In contrast to fixed-rate loans, whose interest rates never change, ARMs start out at one rate and then adjust typically once a year at a capped rate, often two percentage points, based on changes in the interest-rate indexes to which they are tied. The adjusted rates can go up or down, and the total increase over the life of the loan is capped.
According to Stephen Habetz, the vice president of DRB Mortgage, the lending division of Darien Rowayton Bank in Darien, Conn., the maximum caps are around 6 percent above the initial rate.Bankrate.com said the initial rate for a 5/1 ARM in the New York area averaged 4.04 percent as of Wednesday, compared with 3.74 percent nationally. For 7/1 ARMs, the average was 4.74 percent, versus 4.10 percent.
Starting rates are usually one to one and a half percentage points below those of 30-year fixed-rate loans.
But one catch is that getting an ARM may now be harder.
Last summer Fannie Mae, the government buyer of home loans, said lenders must qualify borrowers on either the initial rate plus two percentage points, or on the full index rate to which the initial rate is tied, whichever is greater.
Back in 1994, ARMs were used for around 70 percent of all home purchases, according to a study by the Federal Reserve Bank of New York released in December. By early 2009, after the onset of the financial crisis, the share had fallen to 2.3 percent, the study showed, but as of April 2010, it had climbed to about 4 percent.
Freddie Mac, another government-buyer of loans, said in January that it expected the share of ARMs for home purchases to rise to 9 percent this year.
Among those borrowers choosing adjustable-rate mortgages are buyers of property costing more than the $729,750 limit at which Fannie Mae and Freddie Mac will buy back loans from lenders, said Mary Boudreau, the owner of Penfield Financial, a mortgage broker in Fairfield, Conn. (Without the government buyback, fewer lenders are willing to make these “jumbo” loans, which carry interest rates one or two points above those of conventional loans. The Fannie and Freddie limit is set to drop to $625,500 in October.)
With an ARM, the savings can be significant. Sean Bowler, a loan officer at DRB Mortgage, said someone borrowing $500,000 with a 5/1 ARM at 3.5 percent would save $42,507 in the first five years, before it adjusts, compared with a 30-year fixed-rate loan of 5.25 percent. A 7/1 ARM at 4.125 would save $38,330 over the first seven years.
A version of this article appeared in print on March 20, 2011, on page RE9 of the New York edition.
Great Post from KCM Crew I’d like to share….5 Reasons You Should Sell Your House TODAY!Selling your house in today’s market can be extremely difficult. It is for that reason that every seller should take advantage of each and every opportunity that appears. Each fall, such an opportunity presents itself. This fall, that opportunity may be just too good to pass up.
Below are five reasons you should consider when pricing your house to sell in the next 90 days. Meet with your real estate agent and mortgage professional today and see whether it is the right move for you and your family.
1. Entering this time of year, the buyers are more serious.
We all realize that buyers are not quick to pull the trigger on the purchase of a home today. There is no sense of urgency with the supply of eligible properties at all time highs. However, at this time of year, the ‘lookers’ are at the stores doing their holiday shopping. The home buyers left in the market are serious and are more apt to make a purchasing decision. Less showings – but to more motivated purchasers.
2. If you are moving up, you can save thousands.
The Chicago Tribune stated in an article last week that sellers who want to ‘trade up’ should act now:
It could be a bigger house, different neighborhood or a better school district, but it comes with a higher price tag. Do the math; this might be the right time.
A home that was once worth $300,000 may now be worth $240,000 in a market where prices have fallen 20 percent. Wow, you think, the seller is taking a bath. But that seller may also be a prospective buyer who wants a house that once was valued at $400,000. With an equivalent market drop and a realistic listing price, that house may now sell for $320,000. So, in effect, the person is losing $60,000 on the sale of one home but coming out ahead $20,000 on the purchase of another.
Keep in mind the spread may be even greater. There’s a smaller pool of potential buyers for more expensive homes, so sellers may be more willing to cut their price to get a deal done.
3. Interest rates just fell again – to 4.19%.
Four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of about 6.6 percent was $1,533. Today that $300,000 house would sell for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833 … housing has perhaps never been a better bargain.
4. You beat the rush of inventory that is coming next year.
Every year there is an increase of inventory which comes to market from January through April as homeowners put their houses up for sale in preparation for the spring market. As an example, here is the number of listings available for sale in each of those months in 2010.
- January – 3,277,000
- February – 3,531,000
- March – 3,626,000
- April – 4,029,000
You won’t have to worry about this increasing competition if you sell now.
5. You have less ‘discounted’ inventory with which to compete.
This year, sellers of non-distressed properties have been given an early holiday present. With banks declaring a suspension on the sale of many distressed properties (foreclosures), there has been a large supply of discounted properties removed from competition. No one knows how long this self imposed moratorium will last. However, while it does, every homeowner has a better chance of selling their property.
If you are looking to sell in the near future, there may not be a more opportune time than this fall. Serious buyers, great move-up deals and less competition from foreclosures creates the perfect selling situation. Don’t miss it!