Come visit Linette and me at our open house on Saturday, December 19th from 1 PM to 4 PM. This is a great home in Whitney Ranch at an affordable price with 4 bedrooms, 3 baths and a backyard view to open space. Check out the tour below that allows someone to walk through the home while sitting at their computer, tablet or smartphone.
This beautiful Whitney Ranch home can be yours! One of the most desirable floorplans, features a bedroom & full bathroom downstairs – great for guests, 3 bedrooms and a loft upstairs. Luxurious hardwood floors through most of the down stairs. Formal living and dining room areas, plus a family room. The kitchen includes upgraded cabinets with nickel knobs, a full backsplash with designer tile accents, and solid surface counter tops that never need to be sealed. The backyard was recently redesigned; and is great for water conservation. Just across the street is a lovely cul-de-sac; and a short walk to the local neighborhood park. Whitney Ranch is home to award-winning Sunset Ranch Elementary and Whitney High. Enjoy the benefits of the Ranch House with pool and clubhouse.
1st Open House Saturday, March 27, 2015 from noon to 4 PM. Stop by and see us.
Built in May 2013, get the best quality features of a new home, plus all the options, window treatments and landscaping that you would typically pay more for. It’s all included in this beautiful home. Located at the end of a quiet cul-de-sac, you can expect minimal traffic; great for families with kids.
The first showings are scheduled for an open house on Saturday, June 10, 2015 from noon to 5 PM. Click the link below for more infomation. Hope to see you there!
Over the last week or so, mortgage interest rates decline by approximately ½%. The net effect will allow a prospective buyer to qualify for a larger loan amount and keep the payment the same or lower the monthly payment.
For example, if a home was purchased for $325,000 at a 4.25% interest rate and a 20% down payment on a conventional loan; the loan amount would be $260,000 and the monthly principal and interest payments (PI) would be $1279. An interest rate of 3.75% would allow a home buyer to purchase a home for $345,000 ($20K more), for the same monthly PI payment.
Or if a home buyer purchased the same home at $325,000 and 3.75% interest, the monthly PI would be $1204 which is $75 less per month and a $900 savings per year.
For any potential home buyer who believes that prices will soften, it’s important to also consider the effects of changes in interest rates. As shown above, if rates go back up to 4.25%, but home prices dropped by say $10,000, a buyer is worse off than had he/she purchased at the higher price and lower interest rate. Under this example, prices would need to drop by $20,000 before there was a break even between the higher price and lower rate.
There is a “mass psyche” that I see with buyers and sellers in general. Last year buyers were buying anything they could get their hands on and were willing to pay above asking price and appraised value. At the same time, sellers were holding off listing with the belief that prices would continue to rise in the short run.
The current market has more inventory and some sellers may now regret not putting their homes on the market in Spring 2013. I see the “mass psyche” of many buyers is to sit and wait. They wait because there is a lot to choose from and so are waiting for the perfect home to come along. There has not been recent press about the possibility of interest rates increasing so some buyers do not feel a sense of urgency since they believe rates will stay low. Some potential home buyers believe prices are going to go down. Many buyers try to “time” the market and purchase when they believe prices are lowest. We are also entering, what is typically, a slow selling season with holidays coming up which may be a benefit to buyers over the next few weeks/months. However, what was typical in the past doesn’t seem to apply in today’s environment.
Unfortunately, there is no way to know where prices or interests rates are going or how quickly it will all change, but it’s important that prospective buyers have this information for consideration. This may be a pivotal point and opportunity in the market for home buyers. And most opportunities usually only become evident after they are gone.
After a booming 2013, the Placer County real estate market has been somewhat subdued so far this year. While actual sales are down each month this year compared to 2013, the larger impact has been the increase in available homes for sale.
In July 2013 there were 930 homes available for sale in Placer County compared to 1454 in July 2014. Closed home sales were at 583 in July 2013 vs. 528 in July 2014. Perhaps the good news is that pending sales were up with 488 home gone pending in July 2013 vs 586 homes pending in July 2014. The real estate activity in Rocklin, Roseville and Lincoln is also in line with Placer County.
The pendulum is always swinging and what I believe we are seeing is a somewhat typical transition to a normal market. 2013 was so strong that it is reasonable to see the pendulum swing in the other direction. In fact, it’s probably a good thing when you think of the alternative being a run-away market with prices escalating and pushing us into another bust cycle too early.
Of course, all this data is generalized. Lower priced homes have maintained momentum better than higher priced homes, as is to be expected. In addition, the change on January 1, 2014 in the maximum FHA loan limit (dropping from $580,000 in 2013 to $474,950 in 2014) took a hit on home prices mostly in the $500’s.
To further challenge the market, many home sellers expect to be able to sell their home for more than the neighbor’s home that sold earlier this year. While this may be appropriate in the $250K price range, we have seen little or no price appreciation this year in the $400,000+ market in 2014. So these homes hit the market overpriced and ultimately the prices must be reduced to market level. It doesn’t necessarily mean that home prices are declining, but it does infer that if you want to sell your home in today’s real estate market, you must price it using good comparable properties and not shoot for “pie in the sky dreams.”
The remainder of 2014 will give us a good idea of how the selling season will take off next year. I expect that we will see sales pick up over the next few months and will likely drop off over the holidays. By February 2015 I expect to see inventories start to drop again and that we will see marginal appreciation next year. The one wild card is whether or not interest rates stay low. A 1% increase in interest rate will put pressure on home values since this will push buyers into lower priced homes.
Hope this gives you an idea of where our local real estate market trends are heading.
As we approach the 2014 selling season, I’ve received questions about how this year will unfold compared to the banner year we had in 2013. In a normal market, the main selling season runs from about February through May or June. Last year we experienced a strong market that carried over from 2012. Prices increased substantially, inventory levels were extremely low, and it was common to see homes selling in the first week of being listed with multiple offers; many offers above the asking price.
As prices have risen, more homeowners are now sitting in equity positions. Many wanted to move but sat on the sidelines waiting for the opportunity to sell their home as prices rose. In June/July 2013 interest rates jumped up. That event, and the fact that we were exiting the selling season, slowed market absorption. In the 2nd half of 2013, many owners put their homes on the market after the run up in prices. In many cases, these homes were priced with the assumption that prices were continuing to increase every month as was experienced in the first half of the year. Where does that leave us?
Every area is different. Lower priced homes in Placer and Sacramento Counties continue to see high demand and low inventory. However, homes in higher priced areas are trending toward (or perhaps are already in) what is typical of normal market conditions. In higher priced areas, home appreciation has been very subdued over the last six months. These homes are not seeing multiple offers as they did one year ago, it’s taking much longer to sell those homes, and inventory levels are up.
Don’t get me wrong. I’m not saying the market is declining. But I am saying that indicators point to higher inventory levels in 2014, slower price appreciation, and sellers should expect that it will take longer to sell their home than it did in 2013; unless the home is in the lower priced areas or offers something highly desirable and considered a one-of-a-kind offering. Those owners who are considering selling their home will do well to find an excellent real estate agent who will guide them in pricing their home appropriately. Otherwise, “frustration” may be the word of the day.
Below I’ve included some charts for the 95765 zip code. This demonstrates where we are in the market now as we approach the selling season. If you would like to view charts on other surrounding areas, please visit our website:www.quarantarealestate.com. Click on the Market Trends Reports in the left column. If you have questions about these or other areas, feel free to contact us. And remember, Real Estate Market Trends are fluid and can change on a dime.
I’ve had several people ask me about the change in FHA loan limits and what impact it may have on home buyers and home sellers. Up until December 31, 2013, the maximum loan amount that a borrower could receive under FHA was $580,000 for Sacramento and Placer counties. Starting in January 2014 the maximum FHA loan amount is now $474,950 for FHA in the same areas. The only exception to the new loan limit is if a home was assigned an FHA case number prior to the end of 2013. FHA gave little notice of this change with a formal announcement occurring in early December 2013.
FHA doesn’t make loans but does insure lenders against defaults that have been funded using FHA. There are many reasons why a buyer may choose to use FHA as a method of financing a home.
• Only 3.5% down payment (with max loan of $474,950)
• Lower FICO score requirement than Conventional Loans
• Higher DTI (debt to income ratios) allowed vs Conventional
• After short sale, able to purchase sooner than Conventional
o FHA has a “back to work” program that allows qualifying buyers to purchase a home 12 months after a short sale.
How will this affect the market is unclear at this point in time. Homes priced under $500,000 should experience little negative impact. However, homes selling in the mid $500,000 range and up could be negatively impacted if FHA is heavily used in the area. Some home buyers who must use FHA may have to reduce the purchase price they have been considering. This could negatively impact demand for higher priced homes. If we see strong demand, the change in FHA loan limits may have little impact.
We’ll have to see how the selling season unfolds in the coming weeks to ultimately understand the impact of the change in FHA loan limits. In the bigger picture, the overall real estate market is moving toward equilibrium. Communities with higher priced homes are seeing slower appreciation and some increase in inventory leading to a balanced market. Lower priced homes will likely continue to be in a seller’s market in the short term. Most experts suggest that home prices will continue to increase in 2014, though not at the rate we’ve seen over the last few years. Instead, they are predicting an appreciation rate of around 6%. Interest rates by the end of the year are expected to be somewhere between 5% and 6%. If you would like to find out what the maximum FHA loan limit is for your area, click the link below. https://entp.hud.gov/idapp/html/hicostlook.cfm (all you need to do is put in the county and hit send).
Contact me if you would like more information. Hope that helps!