Silicon Valley Real Estate Blog

Information and updates about the Silicon Valley Real Estate Market, lifestyles, schools  and interesting facts about the communities.  

June 21, 2018

Silver Creek Valley Homes For Sale | Homes are More Affordable in 44 out of 50 States

Silver Creek Valley Homes For Sale | Homes are More Affordable in 44 out of 50 States

 

There's is an abundance of open space, hiking trails, great schools and charm. Locals know that Silver Creek is a great place to raise a family.

While some people may say that the area is energized by new growth and rapid changes, Silver Creek value comes from its welcoming warm atmosphere, where neighbors participate enjoying various spectacular amenities enjoying a great convenient location.

All great neighborhoods have this in common. Pride in ownership is obvious when the residents, whether renters or owners, maintain their homes and care about their neighborhood. Neighbors participate to connect and create local groups that bring the residents together for the betterment of the area.

Connect with the past, present and future in Silver Creek Valley, one of the most charming neighborhood you'll find in the San Jose area.

Every home buyer has a wish when looking for a home, while not all of them are granted, the ‘feel good magic’ happens when they start seeing homes around neighborhoods of this beautiful valley.

Is the people what makes this place a little different from others, It's a great place to live.

Neighbors welcome you with open arms and share indiscriminately the beauty and charm that Silver Creek has to offer.

Today I would like to point out specifically about  Homes are More Affordable in 44 out of 50 States

 

With both home prices and mortgage rates increasing this year, many are concerned about a family's ability to purchase a major part of the American Dream – its own home. However, if we compare housing affordability today to the average affordability prior to the housing boom and bust, we are in much better shape than most believe.

In Black Knight's latest monthly Mortgage Monitor, they revealed that in the vast majority of the country, it is actually more affordable to purchase a home today than it was between 1995 to 2003 when looking at mortgage payments (determined by price and interest rate) as compared to incomes. Home prices are up compared to 1995-2003, but mortgage rates are still much lower now than at that time. Today, they stand at about 4.5%. Here are the average mortgage rates for each of the years mentioned:

 * 1995 – 7.93%

 * 1996 – 7.81%

 * 1997 – 7.6%

 * 1998 – 6.94%

 * 1999 – 7.44%

 * 2000 – 8.05%

 * 2001 – 6.97%

 * 2002 – 6.54%

 * 2003 – 5.83%

On the other hand, wages have risen over the last twenty years.

Black Knight's research revealed that, when comparing “the share of median income required to buy the median-priced home” today, to the average between 1995 to 2003, it is currently more affordable to purchase a home in 44 of 50 states.

Here is a state map of the percentage change in the price-to-payment ratio. Positive numbers indicate that it is less affordable to buy while negative numbers indicate that it is more affordable.

Bottom Line

Whether you are moving up to the home of your dreams or purchasing your first house, it is a great time to buy when looking at historic affordability data.

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.   

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com   

 

 

Posted in Silver Creek
June 14, 2018

Almaden Valley Homes For Sale | Are Lending Standards Too Loose…or Too Tight?

Almaden Valley Homes For Sale | Are Lending Standards Too Loose…or Too Tight?

 

We've streamlined and perfected the process of finding dream homes for our clients in Almaden Valley      

We know you want to spend less time looking at perhaps hundreds of homes for sale, looking all over. . .just to find that special place, allow our knowledge, experience and passion for Almaden Valley to guide you through the process of finding the right neighborhood that will fit your lifestyle. We strive in making it easier and have a direct path to help you find your dream home.    

We are also your Trusted Resource for Almaden Valley Real Estate, offering complete solutions for buyers, from financing assistance to creating innovative marketing strategies for home sellers.     

Check out the Almaden Valley Real Estate Market Report here!  

We are your neighborhood specialists and we are ready to help you..    

Today I would like to speak to you about  Are Lending Standards Too Loose…or Too Tight?

 

With home values appreciating at record rates, some are concerned that we may be heading for another housing bubble like the one we experienced a decade ago. One of the major culprits of that housing boom and bust was the loosening of standards for mortgage credit.

In a study done at the University of North Carolina immediately after the crisis, it was revealed that:

“Lenders began originating large numbers of high risk mortgages from around 2004 to 2007, and loans from those vintage years exhibited higher default rates than loans made either before or after.”

A study by John V Duca, John Muellbauer, and Anthony Murphy concluded that those risky mortgages caused the housing crisis:

“Our findings indicate that swings in credit standards played a major, if not the major, role in driving the recent boom and bust in US house prices.”

 

How do today's mortgage standards compare to those from 2004 to 2007?

The Mortgage Bankers’ Association tracts mortgage standards in their Mortgage Credit Availability Index (MCAI). A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. While the chart below shows the index going back to that period between 2004 and 2007 when loose standards caused the housing bubble, we can see that, though the index has risen slightly over the last several years, we are nowhere near the standards that precipitated the housing crisis.

Bottom Line

If anything, standards today are too tight and are preventing some qualified buyers from getting the mortgage credit they deserve.

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.  

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com  

 

 

Posted in Almaden Valley
June 7, 2018

Silver Creek Valley Homes For Sale | Did Tax Reform Kill the Luxury Market? NOT SO FAR!

Silver Creek Valley Homes For Sale | Did Tax Reform Kill the Luxury Market? NOT SO FAR!

 

There's is an abundance of open space, hiking trails, great schools and charm. Locals know that Silver Creek is a great place to raise a family.

While some people may say that the area is energized by new growth and rapid changes, Silver Creek value comes from its welcoming warm atmosphere, where neighbors participate enjoying various spectacular amenities enjoying a great convenient location.

All great neighborhoods have this in common. Pride in ownership is obvious when the residents, whether renters or owners, maintain their homes and care about their neighborhood. Neighbors participate to connect and create local groups that bring the residents together for the betterment of the area.

Connect with the past, present and future in Silver Creek Valley, one of the most charming neighborhood you'll find in the San Jose area.

Every home buyer has a wish when looking for a home, while not all of them are granted, the ‘feel good magic’ happens when they start seeing homes around neighborhoods of this beautiful valley.

Is the people what makes this place a little different from others, It's a great place to live.

Neighbors welcome you with open arms and share indiscriminately the beauty and charm that Silver Creek has to offer.

Today I would like to point out specifically about  Did Tax Reform Kill the Luxury Market? NOT SO FAR!

 

The new tax code limits the deduction of state and local property taxes, as well as income or sales taxes, to a total of $10,000. When the tax reform legislation was put into law at the beginning of the year, some experts felt that it could have a negative impact on the luxury housing market.

 

Capital Economics:

“The impact on expensive homes could be detrimental, with a limit on the MID raising taxes for those that itemize.”

 

Mark Zandi of Moody's Analytics:

“The impact on house prices is much greater for higher-priced homes, especially in parts of the country where incomes are higher and there are thus a disproportionate number of itemizers, and where homeowners have big mortgages and property tax bills.”

 

The National Association of Realtors (NAR) predicted price declines in “high cost, higher tax areas” because of the tax changes. They forecasted a depreciation of 6.2% in New Jersey and 4.8% in Washington D.C. and New York.

 

What has actually happened?

Here are a few metrics to consider before we write-off the luxury market:

1. According to NAR’s latest Existing Home Sales Report, here is the percent change in sales from last year:

  * Homes sales between $500,000 – $750,000 are up 11.9%

  * Homes sales between $750,000 – $1M are up 16.8%

  * Homes sales over $1,000,000 are up 26.7%

2. In a report from Trulia, it was revealed that searches for “premium” homes as a percentage of all searches increased from 38.4% in the fourth quarter of 2017 to 41.4% in the first quarter of 2018.

3. According to an article from Bloomberg:

“Median home values nationally rose 8 percent in March compared with a year earlier, while neighborhoods of San Francisco and San Jose, California, have increased more than 25 percent.

Prices in affluent areas in Delaware and New York, such as the Hamptons, also surged more than 20 percent.”

 

Bottom Line

Aaron Terrazas, Zillow's Senior Economist, probably summed up real estate's luxury market the best:

“We are seeing the opposite of what was expected. We have certainly not seen the doomsday predictions play out.”

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.   

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com   

 

 

Posted in Silver Creek
May 31, 2018

Almaden Valley Homes For Sale | Will Home Prices Fall as Mortgage Rates Rise?

Almaden Valley Homes For Sale | Will Home Prices Fall as Mortgage Rates Rise?

 

We've streamlined and perfected the process of finding dream homes for our clients in Almaden Valley      

We know you want to spend less time looking at perhaps hundreds of homes for sale, looking all over. . .just to find that special place, allow our knowledge, experience and passion for Almaden Valley to guide you through the process of finding the right neighborhood that will fit your lifestyle. We strive in making it easier and have a direct path to help you find your dream home.    

We are also your Trusted Resource for Almaden Valley Real Estate, offering complete solutions for buyers, from financing assistance to creating innovative marketing strategies for home sellers.     

Check out the Almaden Valley Real Estate Market Report here!  

We are your neighborhood specialists and we are ready to help you..    

Today I would like to speak to you about  Will Home Prices Fall as Mortgage Rates Rise?

 

Mortgage interest rates have increased by more than half of a point since the beginning of the year. They are projected to increase by an additional half of a point by year’s end. Because of this increase in rates, some are guessing that home prices will depreciate.

However, some prominent experts in the housing industry doubt that home values will be negatively impacted by the rise in rates.

 

Mark Fleming, First American's Chief Economist:

“Understanding the resiliency of the housing market in a rising mortgage rate environment puts the likely rise in mortgage rates into perspective – they are unlikely to materially impact the housing market…

The driving force behind the increase are healthy economic conditions…The healthy economy encourages more homeownership demand and spurs household income growth, which increases consumer house-buying power. Mortgage rates are on the rise because of a stronger economy and our housing market is well positioned to adapt.”

 

Terry Loebs, Founder of Pulsenomics:

“Constrained home supply, persistent demand, very low unemployment, and steady economic growth have given a jolt to the near-term outlook for U.S. home prices. These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetite of prospective home buyers.”

 

Laurie Goodman, Codirector of the Housing Finance Policy Center at the Urban Institute:

“Higher interest rates are generally positive for home prices, despite decreasing affordability…There were only three periods of prolonged higher rates in 1994, 2000, and the ‘taper tantrum’ in 2013. In each period, home price appreciation was robust.”

Industry reports are also calling for substantial home price appreciation this year. Here are three examples:

 * The Home Price Expectation Survey says that prices will appreciate by 5.8% this year.

 * The Freddie Mac Outlook Report is looking for home prices to appreciate by around 7% in 2018.

 * The CoreLogic HPI Forecast indicates that home prices will increase by 5.2% on a year-over-year basis.

 

Bottom Line

As Freddie Mac reported earlier this year in their Insights Report, “Nowhere to go but up? How increasing mortgage rates could affect housing,”

“As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.  

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com  

 

 

Posted in Almaden Valley
May 24, 2018

Silver Creek Valley Homes For Sale | Selling Your House on Your Own Could Cost You

Silver Creek Valley Homes For Sale | Selling Your House on Your Own Could Cost You

 

There's is an abundance of open space, hiking trails, great schools and charm. Locals know that Silver Creek is a great place to raise a family.

While some people may say that the area is energized by new growth and rapid changes, Silver Creek value comes from its welcoming warm atmosphere, where neighbors participate enjoying various spectacular amenities enjoying a great convenient location.

All great neighborhoods have this in common. Pride in ownership is obvious when the residents, whether renters or owners, maintain their homes and care about their neighborhood. Neighbors participate to connect and create local groups that bring the residents together for the betterment of the area.

Connect with the past, present and future in Silver Creek Valley, one of the most charming neighborhood you'll find in the San Jose area.

Every home buyer has a wish when looking for a home, while not all of them are granted, the ‘feel good magic’ happens when they start seeing homes around neighborhoods of this beautiful valley.

Is the people what makes this place a little different from others, It's a great place to live.

Neighbors welcome you with open arms and share indiscriminately the beauty and charm that Silver Creek has to offer.

Today I would like to point out specifically about  Selling Your House on Your Own Could Cost You

 

In this extremely hot real estate market, some homeowners might consider selling their homes on their own which is known as a For Sale by Owner (FSBO). They rationalize that they don’t need a real estate agent and believe that they can save the fee for the services a real estate agent offers.

However, a study by Collateral Analytics reveals that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

 

Why would FSBOs net less money than if they had used an agent?

The study makes several suggestions:

 *“There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales,        particularly buyers who rationalize lower-priced bids with the logic that the seller is “saving” a traditional commission.       Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.”      In other words, ‘bargain lookers’ might shop FSBOs more often.

 * “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.

 * “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker        websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation        to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer        pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

 

Conclusions from the study:

 1.- FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.

 2.- The data suggests the average price was near 6% lower for FSBO sales of similar properties.

 

Bottom Line

As Dave Ramsey, America's trusted voice on money, explains:

“Research has shown that, between mistakes, lack of negotiating skills, pricing errors and general exposure on the market, you'll cost yourself more than the real estate commission…You'll come out slightly better and with a lot less hassle if you use a top-shelf agent.”

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

 

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.   

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com   

 

 

Posted in Silver Creek
May 17, 2018

Silver Creek Valley Homes For Sale | Moving Up to Your Dream Home? Don’t Wait!

Silver Creek Valley Homes For Sale | Moving Up to Your Dream Home? Don't Wait!

 

Silver Creek is one of the most beautiful valleys in the San Jose area with beautiful scenery and rolling hills.    

There's is an abundance of open space, hiking trails, great schools and charm. Locals know that  Silver Creek is a great place to raise a family.   

While some people may say that the area is energized by new growth and rapid changes, Silver Creek somehow retains its old-fashioned charm and authenticity to provide a tranquil life for your family   

Connect with the past, present and future in Silver Creek Valley, one of the most charming neighborhood you’ll find in the San Jose area.   

Every home buyer has a wish when looking for a home, while not all of them are granted, the ‘feel good magic’ happens when they start seeing homes around neighborhoods of this beautiful valley.   

Is the people what makes this place a little different from others, It's a great place to live.   

Neighbors welcome you with open arms and share indiscriminately the beauty and charm that Silver Creek has to offer.   

Today I would like to point out specifically about  Moving Up to Your Dream Home? Don't Wait!

 

Mortgage interest rates have risen by more than half of a point since the beginning of the year, and many assume that if mortgage rates rise, home values will fall. History, however, has shown this not to be true.

 

Where are home values today compared to the beginning of the year?

 

While rates have been rising, so have home values. Here are the most recent monthly price increases reported in the Home Price Insights Report from CoreLogic:

 * January: Prices were up 0.5% over the month before.

 * February: Prices were up 1% over the month before.

 * March: Prices were up 1.4% over the month before.

Not only did prices continue to appreciate, the level of appreciation accelerated over the first quarter. CoreLogic believes that home prices will increase by 5.2% over the next twelve months.

 

How can prices rise while mortgage rates increase?

 

Freddie Mac explained in a recent Insight Report:

“In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

 

Bottom Line

If you are thinking about moving up to your dream home, waiting until later this year and hoping for prices to fall may not be a good strategy.

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

 

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.   

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com   

 

 

Posted in Silver Creek
May 10, 2018

Almaden Valley Homes For Sale | 5 Ways Tax Reform Has Impacted the 2018 Housing Market

Almaden Valley Homes For Sale | 5 Ways Tax Reform Has Impacted the 2018 Housing Market

 

We've streamlined and perfected the process of finding dream homes for our clients in Almaden Valley      

We know you want to spend less time looking at perhaps hundreds of homes for sale, looking all over. . .just to find that special place, allow our knowledge, experience and passion for Almaden Valley to guide you through the process of finding the right neighborhood that will fit your lifestyle. We strive in making it easier and have a direct path to help you find your dream home.    

We are also your Trusted Resource for Almaden Valley Real Estate, offering complete solutions for buyers, from financing assistance to creating innovative marketing strategies for home sellers.     

Check out the Almaden Valley Real Estate Market Report here!  

We are your neighborhood specialists and we are ready to help you..    

Today I would like to speak to you about  5 Ways Tax Reform Has Impacted the 2018 Housing Market

 

Starting late last year, some predicted that the 2018 tax changes would cripple the housing market. Headlines warned of the potential for double-digit price depreciation and suggested that buyer demand could drop like a rock. There was even sentiment that homeownership could lose its coveted status as a major component of the American Dream. 

Now that the first quarter numbers are in, we can begin to decipher the actual that impact tax reform has had on the real estate market.

 

1. Has tax reform killed off home buyer demand? The answer is “NO.”

According to the Showing Time Index which “tracks the average number of buyer showings on active residential properties on a monthly basis” and is a “highly reliable leading indicator of current and future demand trends,” buyer demand has increased each month over the last three months and is HIGHER than it was for the same months last year. Buyer demand is not down. It is up.

 

2. Have the tax changes affected America's belief in real estate as a long-term investment? The answer is “NO.”

Two weeks ago, Gallup released its annual survey which asks Americans which asset they believed to be the best long-term investment. The survey revealed:

“More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name stocks or mutual funds.” 

The survey also showed that the percentage of Americans who believe real estate is the best long-term investment was unchanged from a year ago.

 

3. Has the homeownership rate been negatively impacted by the tax changes? The answer is “NO.”

Not only did the homeownership rate not crash, it increased when compared to the first quarter of last year according to data released by the Census Bureau.

In her latest “Z Report,” Ivy Zelman explains that tax reform didn’t hurt the homeownership rate, but instead, enhanced it:

“We have been of the opinion that homeownership is most highly correlated with income and the net effect of tax reform would be a positive, rather than negative catalyst for the homeownership rate. While still in the early innings of tax changes, this has proven to be the case.”

 

4. Has the upper-end market been crushed by new State and Local Taxes (SALT) limitations? The answer is “NO.”

In the National Association of Realtors latest Existing Home Sales Report it was revealed that:

 

 * Sales between $500,000 and $750,000 were up 4.5% year-over-year

 * Sales between $750,000 and $1M were up 15.1% year-over-year

 * Sales over $1M were up 17.3% year-over-year

 

5. Will the reforms in the tax code cause home prices to tumble over the next twelve months? The answer is “NO.”

According to CoreLogic's latest Home Price Insights Report, home prices will appreciate in each of the 50 states over the next twelve months. Appreciation is projected to be anywhere from 1.9% to 10.3% with the national average being 4.7%.

 

Bottom Line

The doomsday scenarios that some predicted based on tax reform fears seem to have already blown over based on the early housing industry numbers being reported.

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

 

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.  

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com   

 

 

Posted in Almaden Valley
May 3, 2018

Silver Creek Valley Homes For Sale | Reasons Why Today’s Housing Market is NOT 2006 All Over Again

Silver Creek Valley Homes For Sale |  4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again

 

Silver Creek is one of the most beautiful valleys in the San Jose area with beautiful scenery and rolling hills.    

There's is an abundance of open space, hiking trails, great schools and charm. Locals know that  Silver Creek is a great place to raise a family.   

While some people may say that the area is energized by new growth and rapid changes, Silver Creek somehow retains its old-fashioned charm and authenticity to provide a tranquil life for your family   

Connect with the past, present and future in Silver Creek Valley, one of the most charming neighborhood you’ll find in the San Jose area.   

Every home buyer has a wish when looking for a home, while not all of them are granted, the ‘feel good magic’ happens when they start seeing homes around neighborhoods of this beautiful valley.   

Is the people what makes this place a little different from others, It's a great place to live.   

Neighbors welcome you with open arms and share indiscriminately the beauty and charm that Silver Creek has to offer.   

Today I would like to point out specifically about  4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again

 

With home prices rising again this year, some are concerned that we may be repeating the 2006 housing bubble that caused families so much pain when it collapsed. Today’s market is quite different than the bubble market of twelve years ago. There are four key metrics that explain why:

 

 1 .- Home Prices

 2 .- Mortgage Standards

 3 .- Mortgage Debt

 4 .- Housing Affordability

 

1. HOME PRICES

There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.

Frank Nothaft is the Chief Economist for CoreLogic (which compiles some of the best data on past, current, and future home prices). Nothaft recently explained:

“Even though CoreLogic’s national home price index got to the same level it was at the prior peak in April of 2006, once you account for inflation over the ensuing 11.5 years, values are still about 18% below where they were.” (emphasis added)

 

2. MORTGAGE STANDARDS

Some are concerned that banks are once again easing lending standards to a level similar to the one that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a Housing Credit Availability Index (HCAI). According to the Urban Institute:

“The HCAI measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

The graph below reveals that standards today are much tighter on a borrower’s credit situation and have all but eliminated the riskiest loan products.

 

3. MORTGAGE DEBT

Back in 2006, many homeowners mistakenly used their homes as ATMs by withdrawing their equity and spending it with no concern for the ramifications. They overloaded themselves with mortgage debt that they couldn’t (or wouldn’t) repay when prices crashed. That is not occurring today.

The best indicator of mortgage debt is the Federal Reserve Board’s household Debt Service Ratio for mortgages, which calculates mortgage debt as a percentage of disposable personal income.

At the height of the bubble market a decade ago, the ratio stood at 7.21%. That meant over 7% of disposable personal income was being spent on mortgage payments. Today, the ratio stands at 4.48% – the lowest level in 38 years!

 

4. HOUSING AFFORDABILITY

With both house prices and mortgage rates on the rise, there is concern that many buyers may no longer be able to afford a home. However, when we look at the Housing Affordability Index released by the National Association of Realtors, homes are more affordable now than at any other time since 1985 (except for when prices crashed after the bubble popped in 2008).

 

Bottom Line

After using four key housing metrics to compare today to 2006, we can see that the current market is not anything like the bubble market.

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

 

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.   

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com     

 

 

Posted in Silver Creek
April 26, 2018

Almaden Valley Homes For Sale | “Short of a war or stock market crash…”

Almaden Valley Homes For Sale |  “Short of a war or stock market crash…”

 

We’ve streamlined and perfected the process of finding dream homes for our clients in Almaden Valley      

We know you want to spend less time looking at perhaps hundreds of homes for sale, looking all over. . .just to find that special place, allow our knowledge, experience and passion for Almaden Valley to guide you through the process of finding the right neighborhood that will fit your lifestyle. We strive in making it easier and have a direct path to help you find your dream home.    

We are also your Trusted Resource for Almaden Valley Real Estate, offering complete solutions for buyers, from financing assistance to creating innovative marketing strategies for home sellers.     

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Today I would like to speak to you about “Short of a war or stock market crash…”

 

This month, Arch Mortgage Insurance released their spring Housing and Mortgage Market Review. The report explained that an increase in mortgage rates and/or home prices would impact monthly payments this way:

 * A 5% increase in home prices increases payments by roughly 5%

 * A 1% rise in interest rates increases payments by roughly 13% or 14%

That begs the question…

 

What if both rates and prices increase as predicted?

 

The report revealed:

“If interest rates and home prices rise by year-end in the ballpark of what most analysts are forecasting, monthly mortgage payments on a new home purchase could increase another 10–15%. That would make 2018 one of the worst full-year deteriorations in affordability for the past 25 years.”

The percent increase in mortgage payments would negatively impact affordability. But, how would affordability then compare to historic norms?

Per the report:

“For the U.S. overall, even if affordability were to deteriorate as forecasted, affordability would still be reasonable by historic norms. That is because the percentage of pre-tax income needed to buy a typical home in 2019 would still be similar to the historical average during 1987–2004. Thus, nationally at least, even with higher rates and home prices, affordability will just revert to historical norms.”

 

What about home prices?

 

A decrease in affordability will cause some concern about home values. Won’t an increase in mortgage payments negatively impact the housing market? The report addressed this question:

“Even recent interest rate increases and higher taxes on some upper-income earners didn’t slow the market, as many had feared…Short of a war or stock market crash, housing markets could continue to surprise on the upside over the next few years.”

To this point, Arch Mortgage Insurance also revealed their Risk Index which estimates the probability of home prices being lower in two years. The index is based on factors such as regional unemployment rates, affordability, net migration, housing starts and the percentage of delinquent mortgages.

Below is a map depicting their projections (the darker the blue, the lower the probability of a price decrease):

 

Bottom Line

If interest rates and prices continue to rise as projected, the monthly mortgage payment on a home purchased a year from now will be dramatically more expensive than it would be today.

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

 

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.  

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com   

 

 

Posted in Almaden Valley
April 19, 2018

Silver Creek Valley Homes For Sale | Is Family Mortgage Debt Out of Control?

Silver Creek Valley Homes For Sale | Is Family Mortgage Debt Out of Control?

 

Silver Creek is one of the most beautiful valleys in the San Jose area with beautiful scenery and rolling hills.    

There's is an abundance of open space, hiking trails, great schools and charm. Locals know that  Silver Creek is a great place to raise a family.   

While some people may say that the area is energized by new growth and rapid changes, Silver Creek somehow retains its old-fashioned charm and authenticity to provide a tranquil life for your family   

Connect with the past, present and future in Silver Creek Valley, one of the most charming neighborhood you’ll find in the San Jose area.   

Every home buyer has a wish when looking for a home, while not all of them are granted, the ‘feel good magic’ happens when they start seeing homes around neighborhoods of this beautiful valley.   

Is the people what makes this place a little different from others, It's a great place to live.   

Neighbors welcome you with open arms and share indiscriminately the beauty and charm that Silver Creek has to offer.   

Today I would like to point out specifically about  Is Family Mortgage Debt Out of Control?

 

Some homeowners have recently done a “cash out” refinance and have taken a portion of their increased equity from their house. Others have sold their homes and purchased more expensive homes with larger mortgages. At the same time, first-time buyers have become homeowners and now have mortgage payments for the first time.

These developments have caused concern that families might be reaching unsustainable levels of mortgage debt. Some are worried that we may be repeating a behavior that helped precipitate the housing crash ten years ago.

Today, we want to assure everyone that this is not the case. Here is a graph created from data released by the Federal Reserve Board which shows the Household Debt Service Ratio for mortgages as a percentage of disposable personal income. The ratio is the total quarterly required mortgage payments divided by total quarterly disposable personal income. In other words, the percentage of spendable income people are using to pay their mortgage.

 

Today's ratio of 4.44% is nowhere near the ratio of 7.21% during the peak of the housing bubble and is instead at the lowest rate since 1980 (4.38%).

Bill McBride of Calculated Risk recently commented on the ratio:

“The Debt Service Ratio for mortgages is near the low for the last 38 years. This ratio increased rapidly during the housing bubble and continued to increase until 2007. With falling interest rates, and less mortgage debt, the mortgage ratio has declined significantly.”

 

Bottom Line

Many families paid a heavy price because of questionable practices that led to last decade's housing crash. It seems the American people have learned a lesson and are not repeating that same behavior regarding their mortgage debt.

 

Source.. KCM Don Orason Blog

 

“All agents are NOT alike, We are Different … and We Want To Earn Your Business and Trust”

 

“The real estate market is constantly changing. I would like the opportunity to show you some of the new ways in which you are able to buy, sell and search for new homes”. 

We continually invest in the latest technology to give you the most up to date information on homes for sale and the most exposure for your property when selling.   

Give us a call at 408–741–9300 before buying or selling your next home. 

Don Orason, Owner — Silicon Valley Real Estate Team   

www.siliconvalleyrealestateteam.com     

 

 

Posted in Silver Creek