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The Reality of a 4.5% Interest Rate Letter

by Ashlie DuCros

I want to share a letter I came across recently. It doesn't hurt to know what if!

 

Dear Valued Client,
 
While the mortgage market continues to generate a lot of chatter in both the media and in Washington, interest rates are currently near or at all-time lows. If you or anyone you know are looking to take advantage of these low rates, let me explain why now is the time to act.

Lately there has been talk about the 4.5% 30-year fixed rate mortgage. Will it become a reality though? Right now, no one really knows. Homeowners who could benefit from a lower interest rate need to know that even if 4.5% becomes a reality from Washington's actions, it would only be available to home buyers, not homeowners seeking to better their rate. If you need to refinance, you will be left out.

You also may have heard about Hope for Homeowners, which is a program approved by legislators to help distressed homeowners. However, regardless of its best intentions, the program has not been embraced by investors, and it is not available to many it could help.

The bottom line is, the Fed announced recently that they are going to buy up to $600 billion in mortgage-backed securities. This has already driven rates to historical lows. In January, the SEC is meeting and information may be released that could have a significant bearing on rates, potentially for the worse.

Waiting to obtain the best rate is only possible for those with loan applications already in process. Interest rates are incredibly volatile and fluctuations that used to take months are now occurring in just days or even hours. If you don't have an application in process, you could lose out.

We are already seeing lender backlog due to low interest rates. In 2003, with rates at these same low levels, we saw some lenders taking up to 90 days to close a loan.
Home loan rates are currently in the mid- to low-5% range. Home values are currently at 2003-2004 levels, coming down significantly from their high point. If you–or friends and family members you know–are contemplating seeking financing, now is the time to act.

With a first time home buyer tax credit of up to $7,500 and low or no money down programs available for many people today, now is a great time to buy a home.

Sincerely,

Chad Foland
Coventry Capital Group

OC Housing Too CHeap

by Ashlie DuCros

Hello Everyone!

Check this article out.

If you have any questions, feel free to contact us.

O.C. homes seen as 13% too cheap

December 11th, 2008, 2:02 am · 50 Comments · posted by Jon Lansner/ocregister.com

Yes, your eyes aren’t foggy. Economists from Global Insight and National City say their real estate math machines saw Orange County housing “fairly valued” in third-quarter as values ran 13.2% below what — theorhetically — local homes should sell for.

Global Insight/National City economists track home valuation nationwide by mixing pricing data with interest rate, income and other demographics data. And for the third-consecutive quarter, this pair’s concluded that O.C. homes sell for less than the assumed true value — this time by the largest undervaluation margin since 2001’s fourth quarter, just after the 9/11 terror attacks. See chart. Click on it to see larger version.

A key reason for the undervaluation is obvious: O.C. home values are off 23% in a year, by Global Insight/National City math — and down 35% from the 2006 second-quarter peak.

Ok. Then explain why do Chapman U. professors see O.C. home prices off 7% more in ‘09? Well, undervalued doesn’t mean it’s going to get better soon. In the last downturn, Orange County homes were undervalued by this Global Insight/National City math  from 1993’s second quarter to 2002’s second quarter. Yes, nine years. We’re nine months into this valuation cycle. By the way, undervaluation peak — Does this measure peak? Or does it bottom? — the last time was at 29.4% in 1998’s first quarter.

Here’s what Global Insight/National City says about the national picture: “According to our latest analysis, the incidence of extreme overvaluation has become negligible. Only 3 markets met that criteria during the second quarter: St. George, Utah; Atlantic City, New Jersey; and Bend, Oregon. That compares to 4 extremely overvalued markets during the second quarter and 5 during the first. Overvaluation was most pervasive during the fourth quarter of 2005, at which time 52 metro areas were considered at risk for major price declines.”

 

 

Mortgage Rate at Historic Lows

by Ashlie DuCros

Hello Everyone!

Check out this article...rates are looking good for OC today.

If you want more info regarding this article, feel free to contact us.

 

O.C. mortgage rates return to historic low, 4.875%

December 10th, 2008, 4:27 pm · 24 Comments · posted by Mathew Padilla, Reporter

(Update: private mortgage insurance reference added.)

Rates on some home loans in Orange County fell today to the lowest since 2003, some mortgage brokers said. And rates in 2003 were the lowest in more than 30 years.

But at least one broker questioned whether the low rates will last.

down-arrow.jpgBorrowers with good credit and a down payment of 20% to 25% of a home’s value can get a 30-year fixed rate loan for 4.875% with a one-point fee, said Jeff Lazerson, president of Mortgage Grader in Laguna Niguel. That’s down from 5% on Wednesday and the first time the rate is below 5% since 2003, he said.

He said a homebuyer might be able to get the best rate with 5% to 10% down, but would have to pay for mortgage insurance.

It’s not clear why rates dropped today, Lazerson said. In any case, the yield on a 10-year Treasury, an indicator of mortgage rates, has been under 3% all month.

Not all banks are offering 4.875% on certain mortgages, Lazerson said. Some lenders are still around 5% or higher. But he said generally consumers can get the best rate offered by a bank for loans up to the 2009 conforming limit for Orange County of $625,500.

Previously lenders offered the best rates on loans up to the old conforming limit of $417,000 and charged a little more for loans up to the temporary 2008 loan limit of $729,750. Loans above $729,750, known as jumbos, had rates all over the map from 7% to 10%. Lazerson said as of last week many lenders stopped offering lower rates on loans up to $729,750 even though the limit expires Dec. 31.

Loan limits refer to the maximum size loan that can be sold to government-sponsored buyers Fannie Mae and Freddie Mac. Rates are lowest on loans they purchase.

Now rates vary widely on loans above $625,500, Lazerson said.

Lazerson said rates around 5% and lower have spurred many calls from folks seeking to refinance, but some 70% of callers don’t qualify. That’s because they owe the same or more than their home is worth, or they don’t earn enough money, or their credit score is too low, he said.

And Lazerson slammed the plan reportedly being considered by Treasury Secretary Henry Paulson to set purchase loan rates at 4.5% by buying mortgage-backed securities. Some folks are sitting on the fence, as they wait to see if the plan is enacted. If the plan does not happen, then borrowers could miss out on a chance to get a rate under 5%, he said.

Lazerson said Paulson doesn’t think things through. “He doesn’t realize the impact of the things he is doing,” Lazerson said.

Perhaps, but it is not clear who leaked the story on Paulson’s 4.5% plan. Maybe somebody in the industry found out and leaked it.

Jeff Altman of WestCal Mortgage Corp. in Orange also said some banks offered loans at 4.875% today. But he said that low rate may not last.

Altman said the yield on U.S. Treasury bonds rose a bit late today, possibly as investors began to worry about massive government borrowing to fund bailouts, a possible stimulus next year and the ongoing federal deficit.

All that could translate into higher consumer rates.

Consumers are confused and it’s hard for brokers to explain or predict anything these days, Altman said.

“It’s hard to answer anybody because we are in uncharted waters,” Altman said.

And in other news…

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OC Distressed Home Inventory Down

by Ashlie DuCros

Hello Everyone!

Good news....take a look at these numbers.

 

O.C. distressed-home listings take year’s biggest drop

December 15th, 2008, 8:55 am · 9 Comments · posted by Mathew Padilla, Reporter

Home market watcher Steve Thomas at Altera Real Estate in Aliso Viejo reports that the number of O.C. distressed properties (homes listed by agents as foreclosures or short sales) was 5,519 last week, -276 vs. two weeks earlier or a -4.8% change. That’s the biggest two-week drop of the year.

  • As a percent of all listed homes for sale, distressed properties were 44.6% of the market last week vs. 44.8% two weeks earlier.
  • Distressed properties make up 66% of pending sales.
  • Since Dec. 27, 2007, the number of distressed homes on the market has grown 1,768 while the non-distressed supply is 4,895 lower.

Here’s a look at various slices of the O.C. market as of last Thursday: total inventory listings; distressed property listings; and the share distressed listings have of total inventory supply on a percentage basis in each niche …

Slice All inventory Distressed Share
By price …      
• O.C. $0-$250k 2,142 1,438 67%
• O.C. $250-$500k 4,363 2,838 65%
• O.C. $500k-$750k 2,286 796 35%
• O.C. $750k-$1m 1,245 257 21%
• O.C. $1m-$1.5m 887 95 11%
• O.C. $1.5m-$2m 582 38 7%
• O.C. $2m-4m 647 19 3%
• O.C. $4m+ 356 2 1%
All O.C. 12,388 5,519 45%
• Attached 4,890 2,466 50%
• Detached 7,420 2,993 40%
County high share      
• Santa Ana 1,216 976 80%
• Anaheim 874 668 76%
• Garden Grove 466 337 72%
• Foothill Ranch 62 43 69%
• Lake Forest 212 145 68%
• Rancho Santa Marg. 192 128 67%
• Buena Park 206 137 67%
County low share …      
• Corona Del Mar 179 5 3%
• Laguna Woods 403 13 3%
• Seal Beach 318 11 3%
• Newport Coast 205 15 7%
• Laguna Beach 319 2

U.S. Property Recovery to Start by Spring

by Ashlie DuCros

Hello Everyone!

Check out this article...a perspective that is sure to keep our outlook on the Real Estate market optimistic.

 

By Ori Lewis

TEL AVIV (Reuters) - A revival in the U.S. real estate market, key to a recovery in the world economy, should begin by next spring, property mogul Sam Zell told an Israeli business conference on Sunday.

"I believe that in a country that continues to grow and where the population continues to grow, we will see the first signs of equilibrium in the housing market in the spring of 2009 and I will expect by spring 2010 the housing market in the U.S. will look a lot better," Zell said.

Zell is the owner of Tribune Co, publisher of the Chicago Tribune and the Los Angeles Times, which filed for Chapter 11 bankruptcy protection last week.

He declined to comment on his plans to sell the Chicago Cubs baseball team and its Wrigley Field stadium.

Zell said that with the U.S. population continuing to grow and with fewer than 600,000 building starts in 2008, over a million fewer than in each of the past 10 years, demand for houses would soon rise.

He added that after the U.S. housing market begins to stabilize over the next 12 months growth would return to other markets, as the balance of supply and demand evened out "and the staggering amount of fiscal stimulation that has been enacted around the world will have its impact."

Zell said he currently saw four global areas with a chance for investments because demand was continuing -- Brazil, China, the Middle East, and parts of eastern Europe.

"The have growth, they have political stability, they have natural resources ... and a relatively low cost of entry today," he said.

He added that the crisis was also in part due to hasty decisions being taken in the marketplace.

"We are living through our first Blackberry recession where, literally, information is instantly disseminated around the world and people, in effect, respond to it, perhaps, often without any particular caution or attention."

(Reporting by Ori Lewis; Editing by Greg Mahlich)

Will 2009 Real Estate Market Surprise You?

by Ashlie DuCros

I read this article today and thought I would share. I do agree with many things she says below. When thinking long term..real estate is a good investment. If it may be time for you or someone you know...I am happy to help assist in your search!

Get ready for real estate rebound

Next year may surprise naysayers

 

 
Will 2009 boom or will it be more doom and gloom?
Now you're probably thinking: "A real estate boom in 2009? You've got to be kidding!" While the market may not exactly boom in 2009, there are a number of factors that may signal a dramatic improvement over the next 12 months. Here's what's happening that could make 2009 better than anyone anticipates.
 
1. The 10-year real estate cycle
All markets are cyclical. While markets differ dramatically, a 10-year cycle is common in many places. The Southern California market provides an excellent illustration. In 1960, 1970, 1980 and 1990, the real estate market was at its lowest point plagued by excessive inventory, foreclosures and short sales. By 1994, the market had stabilized from the downturn in the early 1990s. As market values were beginning to climb, the Northridge Earthquake hit. Extensive damage throughout the area sent the market into a tailspin. It took another three years for the market to stabilize again. The beginning of the next upswing began in earnest in 1998. The market peaked in 2005 -- seven years into the cycle -- and then began the current downward trend.
Given a 10-year cycle, California should be pulling out of the bottom and be on its way to a more normal market. This appears to be happening, despite the financial meltdown. The California Association of Realtors reported a 63 percent increase in sales in September. Radar Logic reports increases of year-to-year sales (2007 to 2008) ranging from a low of 16.3 percent in San Jose to a high of 74.3 percent in Sacramento. DataQuick reports that September sales were up from a low of 29.4 percent in Ventura County to a high of 106.1 percent in Riverside County as compared to September 2007. Mike Kelly of Keller Williams Sonoma reports that his market has only two months of foreclosure inventory and about four months of short-sale inventory. Foreclosures and short-sale inventory are rapidly being depleted in other areas of the country as well. As this inventory disappears, prices will stabilize and will eventually begin to rise.
 
2. Pent-up demand
Across the country, sellers and buyers have been telling their agents that they are waiting for the presidential election to be over before they buy or sell any real estate. Now that the presidential election is in back of us, the bailout is in motion and the most recent stock market plummet seems to have passed, look for a substantial uptick in buyer and seller activity. People still marry, have children, retire and have to relocate for their jobs. Many of them postponed selling or buying waiting for market conditions to improve. Look for this pent-up demand to make its way into the market in 2009.
 
3. The credit crunch eases
Credit is still tight. As one loan officer put it, "We're back to qualifying buyers the way we did in the 1980s. If you don't have a credit score of 740, forget it!" The bailout in conjunction with the new guidelines for FHA, Freddie Mac and Fannie Mae will result in more money in the system. Many credit unions are flush with cash and some are even making zero-percent-down loans to highly qualified buyers. As credit eases, buying and selling becomes easier. This will be particularly true in the jumbo market where highly qualified buyers are still having problems obtaining financing.
 
4. Inventory and days on market decline
The amount of inventory and the "days on market" statistics are the best harbingers of market changes. Prices always lag behind these statistics. When there is a strong seller's market with upward pressure on prices, there may be only two or three months of inventory. Price stability normally occurs when there are six to eight months of inventory. Thus, when there has been a shortage of inventory, it can take 12 to 24 months before the market recognizes that there is an oversupply. The converse is true for a buyer's market with downward pressure on prices. Unless you're tracking inventory and days on market, you may not be aware of the shift until months after it started. Currently, inventory and days on market are dropping in many areas.
 
5. Demographics
In 2008, the size of Gen Y (born 1977 to 1994) surpassed the size of the Baby Boom generation. Gen Y wants to own real estate. Some researchers claim that there will be a boom in the Gen Y "Mommy Market." While members of Gen X (1965-1976) are delaying both marriage and children, the typical Gen Y mom currently has 2.7 kids. This population explosion is being lead by Latina and Asian women. Gen Y is just now beginning to hit their early 30s, the time when they are most likely to buy their first home. On the other side of the coin, baby boomers (born from 1946-1964) are most likely to buy a second or a retirement home between the ages of 50 and 60. While builders have cut back substantially on the numbers of new homes being built, an increase in future demand and a limited inventory will result in higher prices.
 
The question is not whether there will be another real estate boom -- there will be. The real issue is how long it will be before it starts. Watch your local market's inventory levels and days on market to see what your future will hold.

Displaying blog entries 1-6 of 6

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Ashlie DuCros & Associates
Coldwell Banker Previews Global Luxury
21580 Yorba Linda Blvd.
Yorba Linda CA 92887
714-743-9778
Fax: 714-849-5489