Joe Wilson's Silicon Valley Real Estate Blog

Of the 68 percent of renters who plan to someday purchase a home, nearly 80 percent said there are factors that could inspire them to purchase within the next 12 months.  Factors cited included: Able to save enough for a down payment, 47 percent; got a new job, 28 percent; interest rates stay low/get lower, 27 percent; decide it makes more financial sense to buy instead of rent, 24 percent; got a promotion/raise, 23 percent; and local real estate market stabilized, 9 percent.

According to the study, 72 percent of American adults still believe homeownership is part of their personal American dream.  Additionally, 23 percent of those surveyed said their attitude toward owning a home has grown more positive over the last six months.

• Interactive Options Finder to help homeowners identify options that might be right for their situation;
• Calculators to help borrowers understand how many of the options work, including refinance, repayment, forbearance, and modification;
• Videos featuring real homeowners discussing how they received help and housing counselors providing advice;
• A virtual assistant to walk homeowners through key areas of the site; and
• Next steps and helpful forms, including a financial checklist and contact log to help borrowers be prepared when contacting their mortgage company or housing counselor.

Fannie Mae plans to implement a comprehensive marketing outreach campaign to raise awareness about the site and also intends to use the site as a vehicle to roll out new options for borrowers that are currently being developed.

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Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score greater than or equal to 500. The property must be the homeowner's primary residence and the borrower's existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115 percent.

Additionally, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.

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San Jose Mercury News July 16, 2010

Seven days was all it took. Accepting an all-cash offer, Isobel Sheehan sold her Palo Alto townhouse recently for nearly $900,000, joining other Bay Area homeowners who've begun to come in from the recessionary cold.

"We saw places selling quickly around us,'' she said, "and we just thought the time was right.''

It's still a trickle — the number of Bay Area homes sold last month inched up from May, while still falling short of a year ago. But the median price of the previously owned, single-family homes that changed hands in Santa Clara County was $600,000, up 23.7 percent from June 2009 and 2.5 percent from May 2010, according to figures released Thursday by MDA DataQuick.

That was the highest since July 2008, when the county's median house price was $646,500. San Mateo County showed an 8.4 percent jump from June 2009, from $599,500 to $650,000.

But while Realtors report a return to stability in the market, there are crosswinds, as well. On one hand, the impact of the now-expired federal homebuyer tax credits continues to fade, adding a drag to homebuying activity. At the same time, the price jump was helped by fewer foreclosures re-selling and more action at the big-money end of the market.

While recent reports show an increase of foreclosures at the high end of the market, there are more non-foreclosure sales of expensive houses as well, said DataQuick President John Walsh. "Your house may have been worth $1.5 million at one point, then dropped to $1.2, but now it's at $1.25 (million) and it's been sitting there for a year. And that return to price stability is giving sellers the confidence to jump in.''

Like any business, the things you deal with every day become familiar to the point that you sometimes forget that not everyone knows what you know. I was reminded of this twice this past weekend when people asked me about the real estate market and the issue of financing came up.  I mentioned that I've done two deals this year representing Buyers who only put 3.5% down and was met with shock and amazement. 

The media has the general public convinced that you can only buy a home with a big (20% or more) down payment these days, That may be true for conventional loans but they fail to mention the increasingly popular FHA loan programs now available. FHA loans which were common in the rest of the country but not in high-prices California, are now available to home buyers for loans up to $729,750! But the best thing about FHA loans is that you can put down as little as 3.5% down on a home. Of course you have to have a reasonable credit score and be able to document sufficient income to qualify for the loan, but these loan programs have become increasingly popular, particularly among first-time buyers who usually have limited cash for a down payment. There are some additional costs associated with FHA loans though. Mortgage insurance (PMI) is charged to the homeowner each month at the rate of 0.5 percent per year. FHA also charges an upfront mortgage insurance premium of 1.5 percent, so your closing costs will be higher than with a conventional loan.

If you haven't heard about FHA loans and want more information, shoot me an email and I'll get you up to speed fast. With mortgage rates now at 50 year lows, there's little reason to keep putting off buying your first home. Now you know what I know!

Ok, so take a close look at the chart above which graphs the average rate for 30 year fixed rate mortages over the past 47 years. Right now rates for these mortage products are running in the high 4% range with zero points!

Secondly, with now plentiful FHA financing a buyer can easily purchase a home now with only 3.5% down plus closing costs. Of course you have to have decent credit and you'll have to document your income, but 3.5% down deals are being done routinely now throughout the valley.

Thirdly, look at the chart below which graphs median price for single family homes in Santa Clara County. For anyone still thinking that the real estate market hasn't bottomed, you can see that not only have we bottomed but we're about half way back to where we were when the market peaked back in 2007! So, while median prices bottomed over a year ago, prices are still significantly off their peaks.  And with the new low interest rates, Buyers may actually have lower monthly payments now than they would have had they purchased at the market bottom! So, Buyers...What are you waiting for?

Recently I successfully passed the California real estate broker's license exam and so now I'm officially a broker. A lot of people have asked me why I bothered to become a broker so here's the explanation:

1) Professionalism: My business philosophy has always been focused on professionalism which I've defined as Knowledge, Service and Integrity. The broker license signifies a much higher level of real estate knowledge and consequent ability to provide a higher level of customer service. Just to qualify to take the California state broker license exam requires taking eight 40 hour courses in areas such as real estate practice, legal aspects, finance, economics, appraisal, escrow, property management and brokerage office practice. Once these courses were completed, I took a comprehensive prep course that required dozens of hours reviewing all the myriad details needed to successfully pass the six-hour broker license exam and finally, I took and passed the exam. With the increased knowledge I've obtained during this process, I'm now able to bring an even higher level of professionalism to my clients' real estate transactions and better serve their needs.

2) Differentiation: I often say that the bar is set pretty low in the real estate profession. This isn't to disparage the many professionals in this business but rather it's a comment reflecting the relative ease with which one can obtain a real estate sales license. Professional organizations like the National Association of Realtors (NAR) enforce professional ethics among its Realtor members but not all agents choose to become members of NAR. I believe the vast majority of agents are competent and ethical but I also feel that mere competency isn't enough when handling one of the most important financial transaction that most buyers and sellers will experience in their lives. Many agents increase their knowledge in discrete specialties by obtaining professional designations like: ABR, ACRE, ACR, CRS, E-PRO, GRI, SRES and on and on. Some agents have so many of these "specialties" that I wonder how specialized they really are. I've always felt that these designations, while useful are more of a personal marketing gimmick. Nevertheless, differentiation IS important when you're competing for business with the thousands of agents practicing real estate in this valley, and unless you know me personally, you may not understand what professionalism means to me. The Broker designation, at least in my mind, is well understood by the general public as a mark of a true real estate professional and better conveys the standard that I've always tried to practice.      

SB 1178 was just approved by the California Senate, over lender opposition, with a vote of 30 to 4.

The California Association of Realtors (C.A.R.) is sponsoring SB 1178 to extend anti-deficiency protections to homeowners who have refinanced "purchase money" loans and are now facing foreclosure. Most homeowners didn't even know that when they refinanced they lost their legal protections, and now may be personally liable for the difference between the value of the foreclosed property and the amount owed to the lender.