How Will the Trends of 2013 Affect You in the New Year?

Happy New Year! It's 2014: are you wondering where the real estate market is headed? Where will interest rates go? Will the average housing price change? Before we launch head first into a forecast of the future, let's take a look back at 2013, and see how those trends will affect us going forward.

As you may know, we had historically low inventory numbers in 2013, and this led to a big 24% rise in appreciation. Nevada County also had 1,500 sales which is comparable to our peak in 2006. So what does this have to do with 2014? There are buyers on the market now and we have low inventory. In fact, right now inventory is at 363 homes. Take advantage of a seller’s market and sell now. There may be more buyers in the spring, but the buyers looking right now have a lot less options. And less competition will give you a higher return.

If you or anyone you know is thinking about selling, give me call at 530.273.0073 or send me an email at kurt@kurtcongdon.com Let’s talk about what your home is worth and how we can get it on the market now!

Market Update November 2013

Welcome back to my video blog! Today I wanted to give you an update on what’s happening in our market.

If we look at the end of the third quarter of 2013, we saw property values had increased by 20 percent from 2012. Homeowners all benefited from the appreciating market. 

Right now there are 470 homes on the market. This time last year there were about 600-650 homes listed. That means there are 200 fewer homes in inventory. 

In the past 30 days, from Oct. 6 – Nov. 6, 93 new homes came on the market, 100 homes went into escrow and 106 closed escrow. With that information, we calculate we have about a 4.5 month absorption rate. That means if no new homes came on the market, the entire current inventory would be sold in 4.5 months. 

With such a low inventory, we can expect little selection in the spring. If you are thinking about buy, now is the time. Give me a call so I can help you get into your new home for a great price.

Thanks for watching!

Government Shutdown Risks Hurting The Housing Recovery

From: http://www.forbes.com/sites/morganbrennan/2013/10/01/heres-how-the-government-shutdown-will-affect-housing/

By:  Morgan Brennan, Forbes Staff

The government shutdown is here. Whether it’s not being able to get a new Social Security card or visit a national park, Americans will immediately feel the effects. But there’s one bright spot of the economy that stands to be affected as well: housing.

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers’ access to new home loans. After all, more than 90% of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.

Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.

Mortgages purchased and securitized by Fannie Mae and Freddie Mac will be unaffected because their operations are paid for by fees charged to lenders. And the Department of Veterans Affairs will continue to guarantee mortgages for Americans that have served in the military since these loans are funded by user fees as well.

But if the government shutdown of 1995-1996 is any indicator, the process will take longer than usual. “Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed,” the VA warned in its September 25th contingency plan.

Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15% of the entire single-family mortgage market. Several media outlets recently reported that the FHA would be unable to endorse any single-family loans and that no staff would be available underwrite and approve new loans.

That prospect would be somewhat worrisome – if it were actually true. The FHA’s Office of Single Family Housing will indeed remain open for business, albeit with a smaller staff. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans,” the report now states. In other words, other lenders’ loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.

The reason for that mix-up: the initial draft of the U.S. Department of Housing and Urban Development’s contingency plan mistakenly stated that single-family loan operations would cease. The report was amended over the weekend.

The FHA’s single-family loan operations are funded through multi-year appropriations, meaning their budget is not tied to the government’s standoff over funding for the new fiscal year that starts in October. On the other hand, what will be more affected is the agency’s Multifamily Housing Office, which is funded through yearly appropriations.

“Because we are able to endorse loans, we don’t expect the impact on the housing market to be significant, as long as the shutdown is brief,” continues the HUD report. “If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market.”

One government lender that will indeed suspend its home loan activity, however, is the Department of Agriculture. The USDA says that no new housing loans or guarantees will be issued through its Rural Development programs in a shutdown. The department also warns that such a scenario could cause “a setback in construction start-up,” and if the shutdown lasts for an extended period, “a substantial reduction in housing available in rural areas relative to population.”

“The government doesn’t generally approve loans, they basically just insure them,” says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. “For the most part you aren’t going to see much of a hit in the mortgage market unless it goes for a long period of time.”

If it does stretch on, he adds, the worry will be what mortgage rates do in a market shrouded in fiscal uncertainty and how that will affect the home buying, especially in light of recent rate spikes.

Home lending aside, many economists and real estate experts are keeping a close watch on how Americans will react to this shutdown. “Administratively everything should keep moving along, but it’s more about the confidence of consumers and whether they perceive that the government shutdown could lead to a recession,” says Lawrence Yun, chief economist at the National Association of Realtors.

Moody’s Analytics chief economist Mark Zandi recently told the Senate Budget Committee that a partial shutdown could shave as much as 1.4 percentage points off of fourth quarter economic growth if it drags on for several weeks.

Americans’ confidence in their ability to buy and sell homes hit a record high in May, according to a Fannie Mae survey. Since then, as mortgage rates jumped more than a percentage point, that confidence level has plateaued.  If prospective homebuyers fear that the country’s economic recovery will stall, or worse slip back into recession, they will pull back on purchases, worries Yun.

“Home sales is always the first housing variable that changes so one would see sales declining and that would naturally lead to more inventory on the market and eventually put pressure on prices,” he says. But that would be a worst-case scenario based on a long-term shutdown.

Jed Kolko, chief economist at Trulia TRLA +6.43%, notes that if the shutdown lasts longer than a few days, the first places to feel the impact will be local economies with large concentrations of federal government workers. Metro areas like Washington, D.C. and Bethesda, Md., where 19% and 13% respectively of total local wages go to federal employees, would be the feel the negative effects of unpaid furloughs and with them, tightened consumer spending and weakening local economic growth. Though not all will be equally affected, other metro areas like Virginia Beach, Va., Honolulu, Hawaii, and Dayton, Ohio are areas that Kolko is keeping an eye on: “Whether there is a big effect depends on how long the shutdown lasts, how long people think the shutdown lasts, and whether people get back-pay. All those things matter for the impact.”

Still others are worrying even more about the next fiscal standoff, in  mid-October, surrounding the debt ceiling debate and its accompanying threat of debt default by the U.S.  ”With the threat of an impending partial government shutdown and yet another battle over the nation’s debt ceiling, in particular, we are really messing with fire right now—even if it doesn’t seem to bother some legislators,” says Stan Humphries, chief economist at Zillow.

“But the effects of a government default associated with the impending debt-ceiling deadline would be more pronounced because of its greater impact on domestic and international markets. This will rattle consumers and investors alike, slow down the overall economic recovery and further slow the housing recovery, which is already undergoing a moderation in the pace of home value gains due to rising mortgage rates,” he warns.

3 Reasons Why Fall is the Perfect Time to Sell

Hello, everyone! Welcome back to my video blog!

A lot of people have asked me lately whether fall is a good time to sell or if they should wait until next year to put their home on the market. Many of you may be surprised to learn fall is actually one of the best times to list your home. In fact, from September to the end of November of last year more than 400 homes were sold in Nevada County.

So, the answer is yes, fall is a great time to list your home, especially this year. Why? There is a shortage of inventory but a large buyer’s pool. The demand outweighs the supply, especially because many sellers choose to wait until spring.

Secondly, buyers have a sense of urgency because they want to purchase before the rising interest rates impact their buying power.

The third reason this fall is a great time to sell is because there are less foreclosures and short sales. This means less competition when selling your home!

If you are ready to sell your home, give me a call!

Thanks for watching!

Is the increase in interest rates affecting the real estate market for sellers and buyers?

Interest rates are affecting the market. They have increased about 1% over the last 12 months; however, I really don’t think interest rates are the only factor contributing to our change in the market.  Specifically the change has been that sales are down 18% between mid 2012 and mid 2013.

What are the other contributing factors?

The two other primary factors that are contributing to the slowing in the market place are:
1.    Lack of inventory: We are simply not seeing as many homes on the market and that is because the foreclosures and short sales have almost entirely disappeared, where two years ago it was almost 50% of our sales. However, the additional $40,000 in price reflects only an additional $23 per month in today's interest rates.
2.    Appreciation: Entry-level homes have gone up by about 20% in the last six months. Our average sales prices have risen from $249,000 to $289,000.

So when you analyze those three factors affecting the market, the lack of inventory is the most impacting. We simply have fewer homes to sell than ever before. As a matter of fact we have less inventory to sell than we have in the past 15 years. So, sellers we need you now!

So if you know someone who wants to sell, give me a call. I’d be happy to give you a free market analysis; you might be surprised how much your home is worth in today’s market.

Thanks for watching!

Market Inventory in Nevada County

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I have been getting a lot of questions about the market lately.

Inventory is 40% less than it was a year ago; last May there were 602 homes on the market, this May there were 357.

Another thing we look at is the absorption rate. This determines how long it would take for all the homes on the market to sell if no other homes came on. Last May that rate was 5.6 months; this May it was 2.5 months. 

The appreciation has increased as well. Again using last May, the average sales price in Nevada County was $249,000 versus this May’s $293,000. That’s a 17% percent increase in the appreciation rate. 

Now is the best time to sell your home. The low interest rates and great appreciation rate will not last. If you are interested in buying or selling your home call me at 530.273.0073 or send me an email at kurt@kurtcongdon.com.