Navy Fellas Realty Group

Real Estate, Residential sales and purchase

What’s Ahead For Mortgage Rates This Week – August 12th, 2019

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What’s Ahead For Mortgage Rates This Week – August 12th, 2019Last week’s economic releases included readings on consumer credit, job openings and weekly reports on mortgage rates and first-time jobless claims.

Consumer Credit Use, Job Openings Slow in June

Consumer credit use slowed in June as credit card use lost ground. Non-revolving credit, which typically includes education and auto loans, grew at its slowest pace in three months. Mortgage loans are not included in the Federal Reserve’s report on consumer credit. Consumer credit use grew by $14.6 billion year-over-year in June as compared to May’s year-over-year reading of $16.0 billion.

Year-over-year credit use fell one percent in June to 4.30 as compared to May’s year-over-year reading of 5.30 percent. Credit card use fell by 0.10 percent in June, which suggested that consumers held off on large purchases. Fed Chair Jerome Powell said ,”households are in pretty good shape overall.” in reference to current economic conditions.

Job openings fell in June, but maintained a 15-month streak of seven million or more job openings. There were 7.35 million jobs open in June as compared to May’s reading of 7.38 million jobs open. Job openings rose in retail and real estate, but were lower in construction, leisure and hospitality categories.

Analysts said that shortages of skilled labor and fears over the effects of trade wars caused fewer hires. The trade war with China has not broken the longest period of economic growth in U.S. history, but escalation of trade disputes could further slow economic growth if trade wars aren’t resolved.

Mortgage Rates, Weekly Jobless Claims Fall

Mortgage rates dropped last week according to Freddie Mac. Rates for 30-year fixed rate mortgages averaged 3.60 percent and were 15 basis points lower. Rates for 15-year fixed rate mortgages averaged 3.05 percent and were 15 basis points lower.

The average rate for 5/1 adjustable rate mortgages dropped ten basis points to 3.36 percent. Discount points averaged 0.60 percent, 0.50 percent and 0.30 percent respectively.

Initial jobless claims fell last week to 209,000 new claims filed as compared to the prior week’s reading of 217,000  first-time claims filed. Analysts expected a reading of 215,000 new jobless claims filed for last week.

What‘s Ahead

This week’s scheduled economic news includes readings on housing market conditions, housing starts and building permits issued. Weekly readings on mortgage rates and initial jobless claims will also be released.

How To Find Hot Real Estate Markets

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How To Find Hot Real Estate MarketsA hot market in real estate is identified by a few things, which include higher prices, lower amounts of unsold inventory, and desirable neighborhoods. Neighborhoods can increase in value because of having an excellent location, high-paying jobs, quality schools, and a variety of attractive amenities.

Hot Markets Are After The Fact

Properties in a hot market may sell faster, for higher prices, and without needing to be in perfect condition or staged for sale. Real estate investors do not necessarily benefit from learning about a hot market unless they already own property in that market area.

It is nice to be an owner with a property for sale in a hot market. However, more success may come from identifying a market as potentially valuable before it becomes a hot market.

Hot Market Trends Before The Fact

Gentrification is a pattern that may start out slowly and then build until a market goes from cold to hot. With gentrification, renovation of rundown neighborhoods attracts new, wealthier residents. Many cities encourage the gentrification of deteriorating urban areas.

Streets with abandoned storefronts may convert into pedestrian-only shopping promenades. Old wharf warehouses may turn into a riverfront boardwalk. Artist types may move into a bad neighborhood because of the low rent and then turn it into an eclectic, hip area with art galleries, coffee shops, boutiques, and street murals.

One way to benefit from gentrification possibilities is to follow the long-term development plans of a community and be an early investor in those plans. Invest in property just on the outskirts of a planned gentrification zone.

Be careful to note any physical barricades, such as a wide street, which may stop gentrification from progressing further. A wide street may prevent gentrification from moving across it to the rundown area on the other side.

A similar pattern shows up when investing in real estate that is on the outskirts of a growing area or adjacent to a desirable neighborhood. Over time, if the growth continues, these outlying areas may become a nicely profitable investment for those who are patient.

Getting Out Of A Hot Market At The Right Time

It is important to know when to sell properties in a hot market and move on to find a different one. Continuing to re-invest in a hot market may ultimately disappoint when there is a market correction to the downside. Try to avoid this if possible.

Market indicators to watch include:

  • Year-over-year increases in listing prices compared to historical figures for the same area.
  • The percentage of listings showing a price reduction.
  • The average time a property is listed before being sold.
  • A comparison between the listing price and the sales price for sold properties.

Conclusion

Studying market growth and guessing the direction of growth helps identify a potentially strong market before it gets hot.

It is time to sell and move on, if the listing prices are not increasing each year or if price reductions are increasing. Other strong indicators that a market is cooling down are when the average listing time is increasing and the average difference between the listing price and sale price is widening.

If you’re in the market for a new home or interested in listing your current property, be sure to set up a consult with your trusted real estate professional.

How To Maximize The Resale Value Of Your Home

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There are a few things to consider, when selling a home, that will help you maximize your potential for a better sales price. Seasoned real estate professionals are one of your best resources for these tips.

The Buyer’s First Impression Is Emotional

The first goal is to improve the buyer’s first impression when they see photos or a video of the home, do a drive-by, or make an appointment to view the home. Work with a real estate agent on staging the home and pay particular attention to curb appeal.

Staging means that a home has no clutter. Remove any personal items (family photos, toys, pets, etc.). Make closets less than one-third full. Make sure the home is immaculately clean. Use nice decor and minimal furniture. 

Logical Backup For The Buyer’s Emotions

Once a buyer has a positive emotional reaction to the home, then to cement the deal at a good price, offer logical backup to support the emotional reaction. Create a handout that lists the amenities and positive attributes of living in the neighborhood, such as good schools. If possible, sell the neighborhood and the community along with the home.

Answer a buyer’s, often unspoken, question of “Why should I live in this area?”

Like-New Condition

Homes that are in perfect condition usually sell for a premium price and may attract multiple purchase offers. Make any repairs that are necessary to ensure all the systems in the home are in working order.

Another confidence builder for a buyer is when the seller reimburses the fees for the inspections needed, from the escrow closing. Let the buyer choose the inspection companies from a pre-approved list that is acceptable for the seller.

Kitchen and master bathroom upgrades usually have a positive impact on the sales price. New appliances can be included in the sale and covered by a home warranty.

Go Green

Homes that are energy efficient and have an alternative energy system, such as solar, are usually more desirable. This is especially true in parts of the country where the monthly utility bills are very high. Add information about the savings on the monthly utility bills, when compared to other homes that are not green, to the home’s selling brochure.

Summary

Top-selling real estate agents know that homes with these characteristics usually command the best prices, receive more offers, and spend less time for sale on the market. Another benefit is that agents get excited about listing high quality homes. They typically feature them prominently in their listings from the agency, on their website, and in all other marketing efforts.

What Are The Pros And Cons Of Covenants, Codes and Restrictions?

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What Are The Pros And Cons Of Covenants, Codes and RestrictionsThere is a joke about gated communities that says the walls are not just there to keep the people out but to keep the residents in. Living in a gated community that is subject to the rules of a homeowners’ association (HOA) can be a pleasant or a severely irritating experience, depending on the perspective a homeowner has about lifestyles.

The Good, Bad, And Ugly About CC&Rs

Gated and master-planned communities may have an HOA and also may have covenants, conditions, and restrictions (CC&Rs) that are part of the property rights (or lack thereof) that a home buyer accepts when they buy a property in those neighborhoods.

The developer records a registered copy of the CC&Rs with the county where the development is. Every homeowner is subject to the rules found in the official CC&Rs. A copy of the CC&Rs may look like an old-style telephone book with hundreds of pages.

Prospective home buyers should force themselves to take the time to read the entire CC&Rs extremely carefully. This may take many nights to read because reading the CC&Rs may put a person to sleep. However, failure to read them can cause serious problems in the future and extremely stressful levels of frustration.

What Can Be In The CC&Rs?

It is not surprising to see in the CC&Rs rules that prohibit a homeowner from filling the front yard with broken-down cars or having a pig farm on the property. In a nice, gated, community nobody wants to see a neighbor’s property in that condition. The benefit of having reasonable CC&Rs is that homes, which are eyesores, because the people do not maintain them properly, are prohibited.

So far, so good. However, what about when the CC&Rs state the maximum measurement of grass before cutting it is 1.25 inches. That is an odd number to use as a measurement standard but don’t be surprised to see stuff like this in the CC&Rs. In such a neighborhood, you can be cited for a grass height violation. It may seem funny to see the enforcers in the front yard measuring the grass with a ruler until a homeowner gets a fine for a violation. This is just a simple example of the many rules potentially found in the CC&Rs that are very easy to violate.

Want to put up lighted holiday decorations? Check the CC&Rs because it may not even be allowed to put a wreath on the front door.

Think it would be a nice idea to repaint the exterior of the house? Check the CC&Rs first because there are usually severe color restrictions. If the paint is one shade lighter or darker than an approved color, this may cause the need to redo the entire paint job.

Conclusion

Personal taste differs significantly between people. When buying a home subject to CC&Rs, be sure to read them carefully and be able to live with all the details. Otherwise, a homeowner may find it really frustrating to live in a neighborhood with so many controls over personal freedom and choice.

If you have any questions or concerns about a prospective HOA, be sure to discuss it with your trusted real estate professional before making an offer on a new home.

Fed Lowers Key Interest Rate For First Time Since Great Recession

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Fed Lowers Key Interest Rate For First Time Since Great RecessionThe Federal Open Market Committee of the Federal Reserve announced the first rate cut to its key interest rate range since the Great Recession ushered in a series of rate cuts described as “quantitative easing.” The Fed committee confirmed a quarter-point cut to 2.00 to 2.25 percent.

Fed Chair Jerome Powell described the rate cut as a “mid-cycle adjustment” intended as a one-time boost for the economy. Mr. Powell said he did not view the cut as the first in a series of quantitative easing moves, but analysts said single rate cuts are not common.

The FOMC post-meeting statement said the decision to cut rates was based on global and domestic economic developments prompted by recent trade wars and resulting uncertainties. The Fed also cited inflation concerns connected with its dual mandate of maintaining maximum employment and stable pricing, but did not indicate urgency in its decision to reduce its benchmark rate range.

No Commitment to Future Rate Cuts

The FOMC statement did not commit to future rate cuts, but said that committee members would “continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion with a strong labor market and inflation near its symmetric two percent objective.” Mr. Powell said, “If you look overall, financial stability vulnerabilities are moderate.” Eight of ten FOMC members voted in favor of the rate cut.

Projections for future cuts varied, as the Fed gave no guarantees of further rate cuts and economists predicted one more rate cut in 2019. Bond market analysts expected three rate cuts this year, which was factored into bond pricing.

The Fed also announced it was ending is efforts to shrink its balance sheet and that it was important for the Fed to buy Treasury bonds in the open market as mortgage assets move out of the Fed’s balance sheet. This move was expected to stabilize the market.

The FOMC statement concluded with the Committee’s consistent commitment to  assess real and expected economic developments and to review global and domestic developments along with readings on economic and financial trends as part of its decision-making process. The FOMC outlook is flexible and subject to change as events warrant.

What’s Ahead For Mortgage Rates This Week – August 5th, 2019

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What’s Ahead For Mortgage Rates This Week – August 5th, 2019Last week’s economic news included readings from Case-Shiller on home prices, pending home sales, construction spending and a post-meeting statement from the Federal Open Market Committee of the Federal Reserve.

Consumer sentiment was released along with Commerce Department reports on public and private sector job growth and the national unemployment rate. Weekly readings on mortgage rates and new jobless claims.

Home Price Growth Slows in May

The Case-Shiller National Home price Index showed slower home price growth in May; this was the 14th consecutive month of slower growth in national home prices and the lowest reading for home price growth since the Great Recession.

Home prices grew by 3.40 percent on a seasonally-adjusted annual basis as compared to a 3.50 percent reading in April. While easing home price growth is a plus for would-be home buyers, slower growth in home prices could be a sign of overall economic slowing.

Construction spending was lower in June and fell by 1.20 percent. Analysts expected spending to slow at 0.10 percent based on May’s reading of -0.80 percent. Les spending suggests fewer homes will be built and demand for homes could increase based on the combined effects of slower price gains, low mortgage rates and fewer available homes.

Pending home sales jumped 2.80 percent in June and 1.60 percent year-over-year according to the National Association of Realtors®. The year-over-year gain was the first in 17 months. Analysts said that slower growth in home prices coupled with lower mortgage rates would prompt more buyers to enter the housing market.

The Federal Reserve’s Open Market Committee lowered the Fed’s benchmark interest rate range on Wednesday. Committee members voted to lower the key fed rate range from 2.25-2.50 percent to 2.00-2.25 percent. Fed Chair Jerome Powell said that this rate reduction was not  first in a series of rate cuts, but one-off rate cuts by the Fed are not common.

Job Growth Mixed, Unemployment Rate Unchanged

Labor-sector readings for July showed mixed results for public and private-sector job growth, ADP reported 156,000 private sector jobs were added in July as compared to 112,000 jobs added in July.

The Commerce Department reported 164,000  private and public-sector jobs added in July as compared to June’s reading of 193,000 public-and private-sector jobs added. July’s lower reading was not unexpected as analysts projected 163,000 public and private-sector jobs added in July.

The national unemployment rate held steady at 3.70 percent; this was higher than in recent months, but  remained relatively low, which suggested few layoffs and strong job markets.

Freddie Mac reported little change to average mortgage rates. 30-year fixed rate mortgages averaged 3.75 percent and were one basis point higher than for the prior week. Rates for 15-year fixed rate mortgages were two basis points higher and averaged 3.20 percent. Rates for 5/1 adjustable rate mortgages averaged 3.46 percent and were one basis point lower.

Discount points averaged 0.60 percent for 30-year fixed rate mortgages, 0.50 percent for 15-year fixed rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.40 percent.

First-time jobless claims rose to 215,000 claims filed and surpassed expectations of 210,000 new claims filed, which was based on the prior week’s reading of 208,000 first-time claims filed.

Last week’s economic reports wrapped up with the University of Michigan’s Consumer Sentiment Index reading for July, which was two points higher than June’s index reading of 98.2. Consumers surveyed reported paying off debt and increasing savings as a hedge against slower economic growth.

What‘s Ahead

This week’s economic readings include weekly reports on mortgage rates and first-time jobless claims.

How To Buy A Bargain Home As A Short Sale

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How To Buy A Bargain Home As A Short SaleA short sale is when the mortgage lender(s) agrees to sell the property for a lower amount than the loan-balance remaining.

During the worst moments of the 2006 to 2008 real estate crisis, homes sold as short sales for a fraction of their value. Lenders had so many properties with loans in default that they could not manage the ones that they had in foreclosure.

Foreclosure is an expensive legal process that causes a lender to lose more money on a property. This is one of the motivators that encourages lenders to accept a short sale because sometimes through a short sale the foreclosure process is avoided.

Are Short Sales Still Available?

The number of short sales peaked in 2012. The inventory of homes available for a short sale transaction is much lower than the massive numbers caused by the 2006 to 2008 real estate crisis; however, they still do exist.

Short sales are still worth exploring as long as a qualified buyer has enough cash on hand or is pre-qualified with home-purchase financing that is acceptable for a short sale transaction.

A short sale may be a bargain; however, the buyer must be careful because there are some pitfalls to avoid in short-sales transactions.

The Challenging Dynamics Of A Short Sale

There are three (or more) parties in a short-sale transaction. They are the seller, the buyer, and the lender(s). All must agree to the closing sales price of the home and the terms and conditions of the sale in order for the transaction to succeed. The lender(s) forgives part or all of the mortgage loan that is secured by a lien on the property and agrees to take a loss on the sale.

A short sale only occurs when the home cannot sell for the amount of the mortgage loan(s) on the property. The home is considered to be “underwater,” which is a colloquial term for a home, with a loan(s) that is more than the home is worth.

Short sales do not close quickly because the paperwork is complicated. If there is more than one lender on the property, the process is even slower. Buyers in short sale transactions need to be patient. They must be approved for financing and also approved by the existing lien-holder(s) on the property that is for sale by making a successful short-sale application.

A buyer may need to make a “good faith” security deposit to initiate the short sale application process. The deposit, which is refundable, may sit in a trust account for quite some time before the deal is approved.

Even with proper planning, a short sale deal can still fall apart. Buyers must also take on the risk that the property may need significant repairs and buy the property “as-is.” Homeowners who cannot pay their mortgages usually are not very diligent at taking care of their properties.

Summary

Short sales are an important strategy to consider when searching for a bargain property. Buyers must have cash or significant financial strength and be willing to complete the complex process for the transaction.

To reduce risk, a buyer needs to get careful inspections of the home and have a very clear idea of the costs to bring it up to a nicely-repaired condition, in order to profit from this strategy.

Your trusted real estate agent will be a reliable and necessary ally in your short sale transaction. 

Case-Shiller: Home Prices Growth Slows in March

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Case-Shiller: Home Prices Growth Slows in MarchHome price growth slowed again in May according to Case-Shiller home price indices. Home price growth slowed for the 14th consecutive month to its lowest rate in 12 years. Case-Shiller’s National Home Price Index showed 3.40 percent growth year-over-year in May as compared to April’s year-over-year reading of 3.50 percent.

Las Vegas, Nevada held its first place position in the 20-City Home Price Index for highest year-over-year home price growth rate at 6.40 percent; Phoenix, Arizona held second place with a year-over-year home price growth reading of 5.70 percent. Tampa, Florida home prices grew by 5.10 percent year-over-year in May.

Home Price Growth Rates Fall In West Coast Cities

West coast cities that posted double-digit annual home price gains in recent years posted less than two percent growth in home prices in May. Seattle, Washington was the first city to post negative home price growth with a negative year-over-year reading of -1.20 percent in May. San Francisco, California home prices rose by 1.00 percent year-over-year and home prices in San Diego, California grew 1.30 percent year-over-year.

This trend suggests that home prices were topped out in terms of affordability as buyers looked elsewhere for larger selections of homes at affordable prices.

Analysts predicted a plateau in home price growth and did not expect steep declines in home prices. Steady growth in wages and jobs could help to ease affordability challenges for home buyers. Lower mortgage rates provided additional opportunity for first-time and moderate income home buyers, but home price growth needs to ease further to help would-be buyers conquer affordability concerns. Shortages of homes for sale are most pronounced for lower-priced homes, where demand is largest. Higher demand for homes during the peak selling season could boost prices in popular metro areas.

If you’re in the market for a new home or interested in listing your current property, please contact your trusted real estate professional.

Buying A Home In Foreclosure

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Buying A Home In ForeclosureForeclosure is a process that happens over many months. There are various opportunities to acquire real estate that is in a different stage of foreclosure, including before the foreclosure process completes. This short guide identifies the different stages and the opportunities that may exist to acquire a property at a discounted price.

Get The Money Lined Up First

To acquire a property at any part of the foreclosure process requires cash or pre-approved credit. Have the full amount of cash available to pay for the transaction or have a recent pre-approval letter from a reliable lender. The letter shows the amount of mortgage financing available and approved for buying a foreclosure.

Pre-Foreclosure

Before a lender forecloses on a home, to take legal possession of it, they must go through a legal process filed with the courts. All those legal filings are public records.

The borrower, who is in default on the loan, gets a legal “Notice of Foreclosure” that gives a date when the foreclosure will occur. There are subscription services that collect these dates from the court records and assemble a database of information about the properties coming up for foreclosure.

Up until the foreclosure date, it is possible for the homeowner to make a deal to sell the home, which pays off the lender and that stops the foreclosure.

Sometimes the existing loan can be acquired and the past-due payments brought up to date and that is all that is needed to satisfy the lender. In other cases, the outstanding loan must be paid off entirely or refinanced by the new owner.

To find an attractive deal in this stage of the foreclosure, a real estate investor looks for a property that has significant equity and the loan(s) on the property are far below the market value of the property.

If the home continues to foreclosure then the existing owner will lose all the equity they have in the property. This makes the owner very motivated to sell the property at any price, even at a steep discount, which helps them to not lose everything.

Foreclosure Auction Sales

Some lenders immediately put a property up for auction right after foreclosure. An investor with an interest in these foreclosed properties, bids with other bidders at the auction. The highest bid wins.

All that is needed is to get on the mailing list to be informed of upcoming auctions and have a cashier check in hand for the required deposit at the auction to be able to bid.

REO Properties

Other lenders take ownership of foreclosed properties and then sell them off through authorized broker/dealers who work for the lender. Some lending systems, like HUD, for example, maintain a public database online that shows all the foreclosed properties that are for sale and their minimum offer price.

Creating personal relationships with the bank/lending officers who manage REO properties is a terrific way to get leads. It helps to have the first chance to buy a foreclosed property, which is recently added to a lender’s REO system, that other investors may not yet know about.

Conclusion

Foreclosed properties may create significant opportunities; however, there are also serious risks when buying these properties because they are sold on an “as-is” basis. This type of investment is definitely a “buyer be aware” opportunity. It can be lucrative, yet investors need to be careful as well.

If you are interested in trying to find a foreclosed property, be sure to contact your trusted real estate professional for assistance.

Making Money Buying Homes And More From Estate Sales

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Making Money Buying Homes And More From Estate SalesAn estate sale is the sale of the property owned by a person after a person dies. This sale may include real property, such as a home, and personal property, such as the home’s contents.

There are two ways to buy property through an estate sale. One way is to buy it from the person who inherited the property. The other way is to buy it from the estate through the executor of the estate. The executor is the person with the legal authority to dispose of the estate’s assets according to the last will and testament of the person who died.

The executor of the estate may be working with the state authorities in a probate court if the estate is in probate. Probate is an action by law that occurs automatically if the person died without leaving a will. Probate legal proceedings may also happen if the beneficiaries of an estate dispute a will that exists.

Opportunities In Estate Sales

Usually, the property purchased from an estate sale is available at a discount from its market value. Sometimes, this discount may be significant. When a person buys a home sold this way, the purchase is usually on an “as-is” basis. That means the buyer takes all the risk when acquiring the property. The buyer may have to make significant repairs to the property if it needs them.

For this reason, the price of these estate homes is often much less than their market value. Moreover, when buying the contents of the home, it is possible to find treasures in the contents. Unfortunately, it is also possible to find only trash and junk that costs more to remove and throw out than it is worth.

Disadvantages Of Property Acquisition Through Estate Sales

The main disadvantage is buying something without really knowing what it is worth or having a complete evaluation of its condition.

Other disadvantages are that if the sale goes through probate, it may take a very long time to close, perhaps up to a year or more. There is a need to check all the familial circumstances, the legal title, and the will carefully. Otherwise, there may be legal complications and claims of ownership even after the property is acquired.

This is why having competent legal counsel to review a deal before making the purchase is critical. Nobody wants to buy a property that brings them into a lawsuit.

Finding Estate Sales

If a disputed will, or the lack thereof, puts a property through a legal probate process, then this is part of the public records. These records are available to anyone who wants to look at the information. Properties may be put up for public auction as part of the probate process.

For properties sold through the executor for the purpose of dividing up the proceeds among the heirs, they can be found by reading the obituaries and making contact with the executor after a person died.

Summary

Buying property through an estate sale may be very profitable. Many specialists make their careers in real estate investing based on these opportunities. To be successful in this effort requires patience and careful attention to details with competent legal support.

Whether you are interested in buying a home through an estate sale or a more traditional sale, be sure to contact your trusted real estate professional.