Time to Buy or Sell – Mortgage Rates at Record Low

It’s official. According to Freddie Mac, 30-year fixed mortgage rates have hit a low of 3.91%. What does this mean to you, you ask? Well for one thing, it means that you can refinance that old loan you took out on your house back in 1994 when rates spiked. It also means that those who have been on the fence about wanting to purchase a new home in 2011 have even more reasons to do so.

In my last blog post, I mentioned how the middle market was seeing some sluggishness as current home owners were wary of trading up for a larger home in the Bay Area market. Given where rates are today, those looking to ‘trade up’ should find the purchase a little less risky and perhaps in 2012 we will see some movement in the mid-range market which encompasses the majority of the Bay Area. Additionally, the first-time buyer market should see some good traction with new buyers able to take advantage of great rates and home values still below peak along with FHA loan maximums at $729,000.

According to an article today on CNNMoney.com “Mortgage Rates Hit another Record Low,” there could be even more reason to buy in 2012 as lenders may be loosening up on borrowing requirements a little bit during the year.

With more buyers in the market, those thinking about selling their homes should consider the beginning of 2012 to do so before a possible rate increase comes our way.

As always, if you have any questions about buying or selling your home, feel free to get in touch with me today.

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2011 San Francisco Bay Area Real Estate Market Review

2011 San Francisco Bay Area Real Estate Market Review

Check out the link  to this month’s Reality Check from Coldwell Banker which takes a look back on the housing market in the Bay Area in 2011.

Of particular interest is CAR’s forecast of new home sales in 2012 – which stands at a sluggish 1%. However, this forecast encompasses the entire state of California and given the dynamic Silicon Valley market, which is adding high quality jobs, one can only hope that the local market will outperform CAR’s prediction.

The market is also seeing strength in the luxury high-end home segment specifically in Silicon Valley, San Francisco and the Peninsula with many homes for sale receiving multiple offers. There was some noticeable distinction in the mid market, where there was very few homeowners ‘trading up’ perhaps due to economic uncertainty.

Some hopeful signs for 2012..

  1. There seem to be fewer distressed sales
  2. As buyers become more active in the market place and inventories compress, pricing has begun to firm up
  3. Some banks have implemented procedural efficiencies for processing short sales, allowing for faster approvals
  4. The news media has finally started to question if we have reached a bottom, which will hopefully boost consumer confidence

Here’s to hoping 2012 marks a true turnaround in real estate market in California and specifically and Bay Area!

Great Reasons to Own a Home

“A man complained that [on] his way home to dinner he had every day to pass through that long field of his neighbor’s.  I advised him to buy it, and it would never seem long again.”     -Ralph Waldo Emerson

Ownership of real estate can provide a place to truly call your own as well as a way to provide a good neighborhood for your kids to grow up in, and freedom from the whims of your landlord. Yet some of the biggest advantages of owning a home are less romantic and more practical – in fact, there are wonderful financial advantages to owning a home:

  • Tax Deductibility You can deduct the cost of your mortgage loan interest from your state and federal income taxes. Since interest generally will account for most of your payment during the first half of your mortgage, the savings can be significant. Some of your costs at the time of closing (including prepaid mortgage interest) can be taken as deductions on that year’s income tax return, and points paid up front at the time of closing represent additional mortgage interest and may be taken as a deduction. In addition, you can deduct all of the property taxes you pay as well.
  • Appreciation Potential Real estate is considered a good long-term investment because it usually appreciates in value especially given where values are in some markets today. The effects of borrowing potential can also increase as the value of the home appreciates.
  • Capital Gains Exclusion When it’s time to sell your home the amount of capital gains you have to pay is reduced. A homeowner can exclude up to $500,000 per couple if married and filing jointly, or $250,000 if single or filing separately for homes that have been the taxpayer’s principal residence for the previous two years.
  • Capital Gain Treatment Congress allows preferential tax treatment on gains from capital assets held for more than one year. This would be important for a homeowner who has gains in excess of the allowable exclusion.
  • Personal Enjoyment Pride of ownership is a valid reason for wanting to own a home as well. You can personalize your home while enjoying the financial benefits!

If you are considering purchasing your first home, I would love to speak with you further to help evaluate your current situation.