Affordable Housing for First-time Buyers

Now is the time for parents to help their children buy their first East Bay home. The meltdown on Wall Street coupled with foreclosures, dropping home values and tightened credit are creating a “perfect storm” of opportunity for parents with solid credit.

Who the heck knows what will happen next week, but right now with mortgage rates plummeting, great home deals at an all-time high, and banks desperate for cash and rock-solid loans – it’s time to strike!

The challenges for first-time buyers in the Bay Area are considerable. Many turn to their parents for help in buying their first home. There has not been a better time for parents to help their children buy their first home in the East Bay.

The media is doing a great job in scaring the hell out of people and that is helping to create this window of opportunity. The general public sees the Wall Street meltdown as one more reason to wait, but the havoc on Wall Street is what is causing mortgage rates to drop.

The foreclosure rate actually dropped in August. We could very well be seeing the greatest opportunity to steal a home deal for a long, long time.

Not everyone is in a panic. Investors are flocking back into real estate. Contact Paul (925) 963–4246 f you want to buy a home in the East Bay.

Mortgage Rate Mania

I make no bones about it – Dan Green of The Mortgage Reports produces one of the most informative blogs on all things mortgage. Dan’s also a great guy. Through his savvy blogging and business efforts, he has become something of a celebrity in news circles.

This past week, Dan Green, wrote two posts that help to explain some of the challenges that exist today in getting a home sold and an escrow closed.

How To Avoid Paying Jumbo Mortgage Rates On A Jumbo-Sized Mortgage – explains what jumbo loans are and the predicament high-end buyers are finding themselves in when purchasing million dollar homes. It seems their friendly “Big Bank” banker can’t always take care of the buyer’s needs.

There's Only An 18.60% Chance That A Morning Mortgage Rate Quote Will Be Honored By The Afternoon – talks about loan rate volatility and what buyers can do to lock in loan rates.

Escrow Hell

More and more, I hear reports from fellow Realtors about how difficult it is holding deals together. Getting a transaction through the escrow process is not only challenging, it’s full-time work and baby sitting.

One Danville, California real estate agent commented to me that the 8 deals she had in the escrow process are all in jeopardy. They’re in jeopardy, not because of a lack of skill or experience on her part. They’re in jeopardy because the real estate, mortgage and lending rules are changing daily. AND because buyer/seller dynamics are at a place that make many transactions take on the appearance of a Mel Brooks film.

 Sellers That Need to Sell, Need to Sell Now

It’s becoming an epidemic. It may be worse than the bird flu – sellers ignoring reality and chasing the market down.

It is absolutely mind-boggling to hear all of the stories surfacing at the local Realtor marketing meetings about sellers who were offered reasonable prices for their homes 2 to 3 months ago and refused to entertain them.

“We won’t sell for less than…” is a common seller battle cry these days. To a person, these same sellers (there are hundreds of them locally) are now wishing they had entertained those offers as interest in their properties has evaporated and the market has continued it’s slide.

Here’s an example we know of: House priced around $800K. Two offers in first two weeks around $740K. NO THANK YOU! House around the corner with same floor plan sold at $700K. $740K offer could probably have been negotiated back to $760K, but not now – with a comp around the corner at $700K.

Looking at the reality of the situation, $800K was wishful thinking by sellers looking at their situation, needs and wishes.

To sell a home, the reality of the market needs to be considered. Buyers aren’t looking to “make the seller’s day.” They want the seller to – make my day.

Here is the reality for sellers – The market is still slowly sliding down and ALL housing market forecasts call for flat to sluggish growth through 2010.

Sellers in Alamo, Danville, Dublin, Pleasanton, San Ramon and Walnut Creek California that need to sell in the next couple of years need to consider selling now. 

Our FREE Market Reports are updated weekly. These reports are the best source of local real estate information for buyers or sellers wanting to track local real estate trends with current information – not information that is 30 to 60 days old.

The average 30–year fixed rate in June of 2008 was 6.32. Five years ago in 2003 it was at a historic low for the past 35 years – 5.23. Back in October of 1981 30–year fixed rates for mortgages were at 18.45.

So, today we are about 1 point above an historic low that very few American homeowners have ever seen and about 12 points below the wonder years of Jimmy Carter and the Ayatollah Khomeini.

For those with enough long-term memory left, interest rates in the 6% range are considered very attractive indeed. 7.5% to 9.5% are historically the norm.

A half a percent increase in your interest rate in the East Bay real estate market can wipe out a significant price reduction on the sales price of the home.

Real estate professionals who have been in the business in the East Bay for 10 to 30 years seem to be in agreement that the current conditions are providing a window of opportunity for historic deals on East Bay estate.

As we have mentioned before, foreign investor groups are entering the local markets looking to purchase multiple homes in foreclosure or bank owned properties. One agent has an Asian client interested in purchasing up to one hundred homes.

We noted in an earlier post, that positive cash flow opportunities are available for investors and that rents are stable, if not rising. People that are losing their homes are not leaving the area – their jobs are here. They are renting the homes that people just like them are vacating under similar circumstances. It seems to be a case of musical homes in some communities.

Bottom line for buyers is – BUY NOW – lest you find your self down the road needing some cheese with that whine!

Get our FREE Market Reports on local real estate trends - they are updated weekly and have the details you need to track real estate locally. 

Whcih way is your mortgage interest rate heading?

Many people assume that when the Fed cuts interest rates it will lower mortgage interest rates, but this is a misunderstanding. Long term mortgage rates are not tied to short-term treasury notes.

The Federal Reserve cut interest rates by three-quarters of a percentage point Tuesday, but don't expect mortgage rates to go down too. In fact, home loans could be heading higher.

Long-term mortgage rates (30 year) are tied to inflation concerns and not the Fed rate.

But, your Adjustable Rate Mortgage interest rate may lower because there is more of a connection between ARM’s and the Fed rate.

Related articles

• Pain relief for mortgage flare-up
• Fed to crack down on shady lenders
• Home Foreclosures Hit Record High
• Record Number in U.S. Lost Homes in '07

Yesterday saw mortgage interest rates hit a 25 year low – for about 3 hours! As the day played out, there were a total of four major adjustments in rates according to Mike Tacconi of CMG Mortgage Services and past president of the California Association Mortgage Brokers  (CAMB).

This morning, rates had adjusted twice by 10am and we will probably end the day with at least one more. All of this in response to the Asian financial markets, the recent Fed interest rate cut, the recession worries, the job market report, and the possibility of of more legislative support for the mortgage industry.

What’s the significance of all of this for home buyers? It’s a roller coaster world out there. Home buyers in the Danville, San Ramon, Walnut Creek, Alamo, Dublin and Pleasanton areas will benefit from establishing a working relationship with a professional Realtor and Lender.

It’s a buyer’s market in the East Bay of California and all of this excitement and recession concern is helping to turn a so-so buyer’s market into a hot buyer’s market.

The key to this market for buyers and sellers is not the price of the home, but the monthly payment. Buying down the interest rate is something we are seeing more and more of. It’s often a better solution for the home buyer and the seller.

Talk it over with your lender and agent. The time to get into this buyer’s market is now – you will be reading more and more online and offline about the improvement in conditions for buyers.