Newport Beach, Newport Coast, Crystal Cove and Coastal Orange County, CA Real Estate with Michael Salas 949.370.7792

Today, more and more I am hearing these words, “If I can’t sell, I’ll lease”. Tough minded or unrealistic sellers are deciding to become landlords rather than price a home to sell. To be fair, even if a home is priced to sell, it still may sit. In Newport Beach real estate this is true, but in Crystal Cove real estate this is especially true.

Recently, a Los Angeles Times story discussed the realities of sellers becoming a landlords. This article made me curious about our local market - what is the percentage of homes for sale vs. homes for lease? More importantly, what does it mean?

I set about looking at the number of homes on the market and homes for lease in the four major local markets: Newport Beach, Corona Del Mar, Newport Coast and Crystal Cove.

What I found was interesting:

1) Corona Del Mar, 21% of the homes on the market are for lease

2) Newport Beach, 31%

3) Newport Coast, 35%

4) Crystal Cove, 51% 

When I first came up with these numbers I wasn’t sure what to make of them - I’m thinking, ok, so what? What does this mean? During a conversation with a client, we were discussing seller mentality - like so many people I speak with, posed the question, if they have it on the market, and they say, they are motivated to sell, why is it not priced to sell? I started thinking about my numbers - Ah ha! Here is a thought…in Corona Del Mar real estate, homes are selling, people want to live there and as you can see, it’s a tight rental market. 

Contrast CDM with Crystal Cove real estate and you get a different picture and draw some interesting conclusions: Crystal Cove in general has well-heeled owners. Many of these folks have two, three or more homes. So, it’s safe to say, while they would like to sell, most would say they don’t “Have” to sell. They sit tight on price, telling their real estate professionals to just tell people to make an offer. The sellers have now, in mass, it seems, to have taken the attitude of well, if I can’t sell it, I’ll lease it and wait for a better day. With a whopping 51% of the homes on the market in Crystal Cove for lease the numbers appear to support the, “Wait for a better day” approach.

With all the fuss about air pressure in your tires between McCain and Obama, one thing seems to have gotten lost in the back and forth jabs — it works! Correct tire air pressure does improve gas mileage. If you find yourself at the gas station and just can’t stand the idea of paying for air - don’t! Just go up to the window and tell the station attendant to turn on the air pump. Stations are required by state law to provide free air and water to customers who buy gas and diesel. That’s right - Free Air! The next time you are driving around the streets checking out Newport Beach real estate, take time to check out your tires. The money you save can be used to go out and buy yourself a tire pressure guage to keep in your car - or buy a bigger house!

A 5.4 magnitude earthquake shook Newport Beach at 11:42 AM today. The epicenter was located near Chino Hills.  Within thirty minutes of the quake, more than a dozen aftershocks were reported.  No reports of damage to Newport Beach Real Estate have been reported.

When everything settles down, owners of Newport Beach Real Estate should take a look at their homes for new foundation or stucco cracks.  There are some great new tools and products to fill cracks. It’s always a good idea to check around the house after an earthquake.

Do you have an automatic gas shut-off valve? I’ll write about that later. Stay tuned!

“Should I buy now or sell my home first?”

This is a question I am asked frequently, especially in today’s market. The answer…it depends on your risk tolerance. No, that’s not a cop out. Everyone is different.

It’s a very individual decision. But there are advantages to buying first. For one thing, you know you won’t be sitting in a hotel room after you sell your home-you’ll have a place to go! And if you make on offer on a house that’s contingent on selling your current house, that puts you in weaker bargaining position when you are looking for a deal. Yes, even in the Newport Beach real estate market there are deals to be had. You just have to look a little harder.

If you want to buy now and sell your current home later, you can always look at getting an equity line on your property to use as down payment for the new house. Then after you buy the new house, you immediately put your old house on market to sell in a timely fashion. And if you time it right-with both houses closing concurrently-you make just one move just once, saving time, money and stress.

On the other side of the coin, in the current buyer’s market, some people are selling now, renting and waiting to see what happens in a few months…or next year. The folks that are selling now and renting are convinced prices are headed south and they will have more purchasing power later.

Which way is for you?

In the hot market of years past, I used to hear this question frequently. Today, not so often, but it still comes up.

The number one reason for hiring a real estate agent is market exposure. If you’re selling your home yourself, you’re marketing to a limited audience. If you have a sign in front of your house, you’re limited to reaching the people who drive by. Even an ad in the local paper reaches a limited market. The way to ensure the highest and best price for your property is to expose it to every single person out there looking for a property—and that’s done through primarily the Internet, direct mailings, print advertising, the Coldwell Banker network and agent networking (marketing to agents). When you factor in what you save versus what you might be losing, you’re better off using a real estate agent. Consider this question: Have you made more money in your life, or saved more? It’s the same in real estate. The bottom line is not whether you save the commission, but what you net at the end of the transaction. I recently watched an owner sell his own house. He was determined to save the commission, and he did—but he sold his house for $85,000 under the most recently sold comparable homes! In the end, he lost much more than he saved. The National Association of Realtors found that agents can sell houses for 27 percent more than people selling themselves. And today in our California market, the disclosure laws have become so burdensome that a person selling his or her home without full knowledge of disclosure requirements could leave themselves exposed to legal action. You’re far better protected if you have a real estate agent who knows the ins and outs of the law and can expose your home to the broadest possible market. I could go on about this topic, but for now, this is enough. I will write more on this from time to time.

Welcome to the Newport Beach Real Estate Weekend Mortgage Rates Update.

My aim is to bring you the most current mortgage rates for your weekend house hunting and decision making. 

Tim Sibley from First Capital Mortgage, in Newport Beach, is providing this information.  

 

 Newport Beach Mortgage Rates Updates: Play Now | Play in Popup | Download

I hope this information is useful. Have a great weekend!

If you borrow money — doesn’t everyone? — You know your FICO score is important. The Fair Isaac folks, the ones that deliver FICO scores to lenders, insurance companies, employers, etc., recently announced they are changing the way they calculate the scores.

If you are thinking of looking into a mortgage loan, car loan, any type of credit, you will want to keep up and know the score — Check out this video from Money Talks News.

It usually takes, at least, a month or two for changes to appear in your credit score — planning now may make a difference.

While it may not be easy to change your scores, it is easy to get a free once-a-year look at your history, go to Annual Credit Report and get your copy.

Welcome to the Weekend Mortgage Rates Update.

My aim is to bring you the most current mortgage rates for your weekend house hunting and decision making. Tim Sibley from First Capital Mortgage, in Newport Beach is providing this information. Take a look at these rate tables  and listen to Tim’s podcast.  

 

 Weekend Mortgage Rates Update: Play Now | Play in Popup | Download

I hope this information is helpful. Have a great weekend!

The Stimulus Plan - Conforming Loan Limits. This is a hot topic!

I want to try (emphasis on “try”) to tell you about this, but stay tuned, because all of this Conforming Rate information is confusing and changing daily.  As most of us know, The Economic Stimulus Plan has been signed by President Bush and is now law. Breathe a deep sigh of relief here! Well, all that glitters is not gold. After a discussion today, with our Mortgage Guru, Tim Sibley of First Capital Mortgage, I came away informed and slightly confused. Not Tim’s fault.  Tim shared the following memo with me. Of course, I am going to share the memo with you. Read it for yourself and see what is being given out to mortgage broker’s today. Everyone is learning about the new guidlelines.  The missive was sent to him by one of his lenders. Of course, Tim has some thoughts and observations on the whole thing. But wait, I’m getting ahead of myself. Let me give you some more of the facts.

The GSE’s (Government Sponsored Entities ~ Fannie Mae and Freddie Mac) and HUD (Department of Housing and Urban Development) now need to determine how they will implement these changes and communicate the product and process guidelines to mortgage investors and lenders.  While mortage companies are working diligently to release new products as soon as possible, most of them must wait for formal communication of the guidelines before finalizing the approach to the new legislation. The new conforming rate for Newport Beach real estate (probably most of Orange County) will be $729,750. I don’t know about you, but that seems like a strange number to settle on.

One of Tim’s observations – Some of the programs just don’t make sense. For example, one product, a 5-Year ARM, has interest rates into the 8% range. Whoa! That’s getting up there. I thought this program was supposed to save us money. There are better programs around without having to pay such a steep rate. The names of these programs are interesting; Conventional Conforming, Agency Jumbo, Conforming Jumbo and, old faithful, the Jumbo. Each will have it’s own interest rate structure. I would say this is where you really need an expert to guide you through all this muck. 

The following is a memo from one of Tim’s lenders…it does make for interesting reading. The status is changing daily. Enjoy…

For Conventional Conforming Business

Here’s what we can tell you thus far for Conventional Conforming loans… again nothing is final until Fannie Mae/Freddie Mac and HUD make their formal announcements.

Fannie Mae and Freddie Mac need to consider many factors as they determine how to implement the new products. Once they have, they will send a formal announcement with the details.  The general target for release by the GSE’s is the beginning of April.  Because it is a temporary measure, this will not be as quick and easy as past increases to the maximum loan limits that were tied to home price appreciation.

Below are some high level details that Fannie and/or Freddie have provided to date:

• The new legislation sets maximum loan amounts based on calculations tied to the HUD Median House Price amounts:
  • The maximum loan limit will be increased to 125% of the HUD Median House Price based on Metropolitan Statistical Area (MSA) up to 175% of the current conforming limit, never to exceed $729,750 for a single-family property
  • The new loan limits will not be uniform across the country
  • HUD is required to publish revised median house prices to implement the legislation within the next 30 days
• Product parameters will be more restrictive than conforming products:
  • Full Documentation and Full Appraisals will be required
  • 660 minimum credit score
  • 90% LTV maximum for primary residence purchases and rate/term refi’s (lower LTV limits for investment properties,  second homes, and cashout refi’s)
  • 0×30 on all mortgage debt in past 12 months
  • 12 months minimum seasoning for cashout refinances since prior refinance
  • Full project review required on condos
  • The declining markets policy will be in effect (5% reduction of maximum LTV / CLTV for properties located within a declining market)
  • Product types will likely be limited to 5-yr ARMs (P&I and IO), 15- and 30-yr fixed P&I products
  • Full documentation means that variances such as VIP will not be eligible for loans within this product
• There will be special Pricing and Delivery requirements
  • Pricing will not be the same as current conforming product (we expect pricing to be somewhere between current jumbo and conforming pricing)
  • Because of the special requirements, PHH will release new products to identify these separately

Please note: the abovementioned product parameters are based on preliminary guidance only and are subject to change by Fannie Mae and/or Freddie Mac.

For FHA Business

We have not received any information as to whether or not HUD will impose any additional LTV, credit, or documentation requirements beyond standard guidelines for FHA products. As we become aware of these details, we will let you know.

Regarding HUD Sales Price Limits, the following describes how HUD derives their limits and how this new Law impacts these calculations.

For most areas, FHA limits are set at 95% of the median home price for the area.  However, there are Floor and Ceiling limits that are applied to low and high cost areas.

• Floor: The 1-unit “Floor” will now be $271,050 (currently $200,160)
  • The “Floor” is derived from calculating 65% of the conforming limit for 1-unit properties (previously calculated using 48%)
  • The “Floor” is used for areas in which 95% of the median home price is less than $271,050
• Ceiling: The 1-unit “Ceiling” will now be $729,750 (currently $200,160)
  • The “Ceiling” is derived from calculating 175% of the conforming limit for 1-unit properties (previously calculated using 87%)
  • The “Ceiling” is used for areas in which 95% of the median home price exceeds $729,750

As is the case for GSE eligible loans, exact limits per MSA cannot be determined until HUD releases the latest Median Sales Prices per MSA and confirms each MSA’s maximum loan limit.

As we find out more, we will send you updates…

In the interim, if any Real Estate Offices or Clients ask, you can let them know that we have been working on this for some time now, and we will react quickly once the GSE’s and HUD make their formal announcements.

~End of Memo~

You can see from the above memo, even the lenders have not figured out all of this stuff. 

Beyond the new Conforming Loan Limits, I know, from talking with Tim, loans are being made. There are great rates and programs available. I would suggest and strongly advise, in these uncertain financial times, seek out a true mortgage professional, like Tim Sibley, to assist you with obtaining a mortgage. Give Tim a call at: 949.718.1511. It will be a smart move and probably will save you a lot of money.