THREE PERCENT DOWN
There was good news for consumers announced on Dec. 9. The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have moved to lower down payments to as little as 3 percent for first-time home buyers and to allow refinancing borrowers to reduce their equity to cover the closing costs.
“Oh, no,” you think. “Didn’t lowering the standards for lending get us in the real estate debacle before?”
Actually, these entities are Government Sponsored Enterprises (GSEs) which simply means they are not part of the government but are backed by the government.
This does not lower the standards for borrowers. This is not for subprime loans. This is for people who are saving their money to get into a home for the first time. It means they can buy a home more quickly, with good credit and a capacity to repay the loan. This expands credit access to qualified buyers whose biggest hurdle is saving for a down payment.
LOOKING AHEAD TO 2015
TransUnion provides credit information to approximately 45,000 businesses and 500 million consumers worldwide. Recently it forecast that mortgage delinquency will hit its lowest level since the recession started in the third quarter of 2007. This augers well for the housing industry, and will probably fuel home sales.
At its peak, the national delinquency rate was 6.93 percent in 2010. It is expected to be around 2.5 percent in 2015.
Part of this decline can be traced back to the foreclosures funneling out of the system. But TransUnion also bases this projection on anticipated low mortgage rates and declining unemployment rates. In addition, lenders are now more conservative, with substantially fewer subprime mortgages being made.
WHERE HOMES ARE MOST AFFORDABLE…AND LEAST!
Trulia, a popular real estate website, has created a report which ranks cities based on their affordability for the middle class. To do so, they declared a city to be affordable if the total monthly housing payment (including mortgage, insurance and property tax) is less than 31 percent of the area’s median household income. The 10 most affordable cities are Dayton, OH, Rochester, NY, Akron, OH, Gary, IN, Toledo, OH, Birmingham, AL, Kansas City, KS and MO, Camden, NJ, Columbia, SC and Detroit, MI.
And we might as well check out the other side. Where is it least affordable? Whoa, doggies! Not many surprises here: San Francisco tops the list, followed by Los Angeles, San Diego, New York, NY, Orange County, San Jose, Ventura County, Honolulu, HI, Austin, TX and Miami, FL.
WHEN SHOULD I SELL MY HOME?
Redfin, a technology powered real estate search site and brokerage, has found in a recent study that houses listed from January through March have the best shot at selling within 90 days. This goes against the conventional wisdom that claims spring is the selling season. Who knew? If you are thinking of selling a property in 2015, you might want to contact your local Realtor soon.
BACK IN SAN BENITO COUNTY
Let’s look at last week’s real estate happenings in San Benito County. As of Dec.15, there were 108 homes available for purchase, down from last week again. The price spectrum remains stable. Last week, six properties were removed from the multiple listing service, three withdrawn and three canceled outright. Twelve homes closed escrow with a bell curve from $800,000 to $170,000. There were six new listings ranging from $769,000 to $314,000. To see if one of these homes is right for you, call your agent.
It’s a good life!
Nants Foley (CalBRE 0122234) is a Broker Associate at Flora Real Estate Group in Hollister. You may contact her at nantsfoley@gmail.com or 831.801.5110.