On Thursday, March 14th, The Blue Waters Group will be attending the region’s largest business expo, Folsom Connections. The event is free to the public and will have over 150 area businesses and restaurants showcasing their services. In addition to our normal participation as a vendor, we are also orchestrating a campaign called “The 131,000 Challenge” to raise money and awareness for our nation’s 131,000 homeless veterans. We are asking the community to come to the business expo and perform push-ups or sit-ups. In turn, we’ll have businesses and individuals pledge a donation for every repitition that is completed at the expo.
Inspired and created by our dear friend and retired Army Ranger Captain Phil Williams, The 131,000 Challenge is a small way to show gratitude to all our nation’s veterans, and remind our community there are 131,000 heros out there that need our help. As Phil boldly states, “The 131,000 Challenge is an effort to draw a line in the sand to say ‘no more homeless vets. None.”
All funds raised at this event will go to the Sacramento Veterans Resource Center. Check out this video to hear from SVRC’s site director DJ Phaneuf of the amazing programs they offer to Sacramento area homeless Veterans. They are an incredible organization that we are proud to support.
131,000 Challenge by The Blue Waters Group
We hope you rise to the 131,000 Challenge with your muscles or your money on Thursday March 14th. For full details about the campaign and how to pledge funds, please visit our web site www.TheBlueWatersGroup.com and click on the 131,000 Challenge link. We look forward to seeing you at Folsom Connections Biz Expo on the 14th!
My real estate market forecasts are the most widely read articles on MattsMemos.com. Their popularity is certainly not due to profound accuracy; in fact, I’m probably wrong more than I’m right. Nevertheless, it’s been fun for me to take my best-guess and, as it turns out, it’s been fun for my followers to read. You can read prior year’s forecasts here, here, and here. But, you’ll get more from reading the one below which also includes home refinancing, buying, and selling tips. If you like it, share it! If you disagree with my projections, make a comment…I’d love to hear your thoughts on our CRAZY real estate market.
Refinancing
Everyone (including me) predicted mortgage rates would rise slightly through 2012 as the economy slowly recovered and as the presidential election brought some clarity to the fiscal and political direction of our country. We were all wrong. 2012 saw lower rates than ever before, largely due to The Fed’s decision to buy mortgages. When the Fed’s announced they’d steadily purchase billions worth of mortgages until the unemployment rate hits 6.5% (its currently at 7.8%), mortgage rates fell dramatically. Presently, The Fed is buying $3.7 billion in mortgages every day, yet the industry only originates $2.5 billion daily, essentially meaning mortgages are “selling-out.” Simple economics dictate that regardless of if its a mortgage investment or a bunch of bananas, when a product sells out due to high demand, prices rise (just think of skyrocketing prices in New England right now as there isn’t enough supply to meet the demand of frantic buyers preparing for the blizzard!). When the prices of mortgages to investors rise, the rates to borrowers fall. As long as The Fed stays the course on buying every mortgage off the shelf, we will see these low rates remain throughout this year.Currently, 30-year fixed rates are around 3.75%. However, economic conditions around the globe are improving, and with brightening economic forecasts both at home (our real estate rebound will do wonders for America’s economic health) and abroad (many believe the worst of Europe’s fiscal woes are behind them), rates should increase from the record lows we saw last year.
More importantly, accessible programs (like the Home Affordable Refinance Program – HARP) and rising home values (much more on this below) are allowing more folks to refinance as we march through 2013. According to statisticians much smarter than me, 4 million more Americans are eligible to refinance today compared to last year simply because their home is worth more now. If you’ve tried to refinance in the past but hit hurdles due to your home’s value, be sure to check back again.
After 6 years of having the negotiating advantage, home buyers last year suddenly found themselves competing over a short-supply of homes for sale. I foresee this feeding-frenzy dynamic to continue well into 2013…possibly beyond.
The Red Line shows how Sacramento home prices have steadily and dramatically increased
Sacramento County home prices rose 20% in 2012, so many sellers are less inclined to put their homes up for sale if they believe their home will continue to be worth more in the near future. Furthermore, there’s much pent-up demand from home buyers, including ones who are now eligible to purchase after a short-sale or foreclosure. Real estate investors also make up a big portion of the home buyer pool as they see big profits in real estate from both a strong rental market and swiftly rising home prices. In conclusion, the imbalance between strong demand and weak supply should continue this year, leading to further steady price increases for sellers and challenging times for buyers.
Home sellers are finally back in the driver’s seat, and likely will remain there through 2013. Due to rising home values, many once upside-down homeowners are discovering they can now sell and break-even. “Traditional” sales by sellers with equity now comprise over 60% of home sales, compared to only 34% from just two years ago. Furthermore, bank-owned sales are down nearly 90% from 2010, thus showing signs banks are foreclosing on and, more importantly, re-selling significantly fewer homes.
These figures show the number of bank-owned REO homes that have hit the market in Sacramento county.
In my opinion, the fear of banks’ “shadow inventory” is grossly exaggerated as many banks are trending to renting out their foreclosed homes or selling homes in bulk to investors who also turn many of the homes to rental properties (this recent Bloomberg article discusses this trend in detail). Bottom line, 2013 will afford many home owners to sell after years of riding out the market, and to command higher prices than the last neighborhood home sale before them.
To wrap up, 2013 will see rising home prices, stingy levels of inventory, and slightly elevated interest rates. It should be a very healthy year for real estate, and likely be the catalyst for economic growth in many other sectors. The Blue Waters Group is honored to stand alongside you in your home buying, selling, and refinance transactions in the year ahead and beyond.
For the second year in a row, I have been featured in Sacramento Magazine as both a Five Star Mortgage Professional AND Five-Star Real Estate Agent (you can see the feature here, or pick up a current copy on newsstands). The Five Star program is the largest real estate award program in North America (you can read more about the program here), and very few people have won awards in multiple categories in multiple years like this.
It is an honor to be honored with these awards, and they serve as reminders for how fortunate we are to have our awesome family of clients. We sincerely thank you for your business, your referrals, your raving reviews, and for your efforts to help spread the news of our Five Star awards. We share these awards with you!
Get Tuned in to HARP – The Home Affordable Refinance Program (HARP) allows underwater home owners to refinance. This wildly popular and successful program is set to expire at the end of 2013. Despite current efforts from a few senators to extend and expand the program, our strong real estate market (combined the dysfunctional nature of politics) will make it likely 2013 will be the end of HARP. Find out ASAP if you qualify. Either give me a call or fill out the short questionnaire at my web site www.UnderwaterRefiCA.com
Find Out Your Home’s Value – For those that don’t qualify for HARP, a refinance loan will require you have at least some equity in your home. With home prices rising so dramatically last year, many homeowners will now find the opportunity to refinance. As a combined mortgage broker and real estate agent, I have the added knowledge and insight to estimate your home’s appraised value prior to pursuing a refinance (and paying $450 for an appraisal!!). Give me a call or select Home Value Request on our web site and I can research your home’s possible value.
A Penny Saved is a Penny Earned – As our population ages (Baby Boomers, I’m talking to you), more and more homeowners are looking to move their investments to safer alternatives than the stock market. If this sounds like you, consider refinancing and paying down your mortgage at the same time. Doing so will dramatically lower your mortgage payment, thus providing you with lower housing expenses in retirement. Furthermore, your lump sum investment towards paying down the mortgage essentially gives you a guaranteed rate of return equal to the interest rate on the mortgage. Try earning a guaranteed 4% rate of return on a CD or other form of safe investment. Remember, a penny saved is a penny earned!
Now is the Time to Move-Up – If you’ve been hanging on to that smaller house a little longer than planned, now is the time to sell and move-up to the bigger house. Entry-level homes are in tremendous demand from investors and 1st-timers, while mid-range homes are not moving quite as quickly. Homes under 1600 square feet went up 23% in Sacramento County last year, compared to 15% for larger homes 1600-2600 square feet. This allows you to command the highest price possible for your old home, and better chances of scoring a deal on your next house.
Make Demands – This isn’t about greed or bullying, but today’s market enables sellers to be very firm on what terms they accept. Don’t be bashful about waiving appraisal contingencies, demanding higher deposit amounts, and listing at aggressive prices.
Know the Code (tax code, that is) – The tax rules on short-sales are constantly changing. Due to the fiscal-cliff negotiations at the beginning of 2013, short-sales are still exempt from federal income tax. However, state legislation made so such extension. Before you look to short-sale your home, get in touch with a trusted CPA and real estate attorney to know your options and outcomes.
Know What You’re Looking For – You have to shop for a home with laser-focus, and act decisively when you see what you want. Don’t window shop for too long; homes are often selling within days to above-asking-price offers. Make a list of features and amenities you’re looking for, and when you see the right house get in there and make a strong offer.
Be Prepared to Pay Market Value (if not more!) – The days of simply looking for a good deal are over. Sellers have the luxury of being picky in today’s market (more on this later), so “low-ball” offers are easily ignored. In 2012, Sacramento area home prices rose an average of nearly 2% per month (WOW!), so even if you end up paying a few thousand dollars above-asking price its likely these rising values will aid you to recoup that in no-time.
Credit Wounds Heal Faster Than You Think – Most folks are eligible to re-purchase a home after just 3 years since a short-sale or foreclosure, or 4 years since a bankruptcy. All you need is a 3.5% down payment and a good credit history since your last mishap. If you’re considering getting back in the real estate game, obtain a copy of your credit report (we can help with this) to see how your credit past has been reported.
Be Patient & Have Faith – Most clients I work with don’t get the first house they write an offer on. Some don’t get the 10th house! But, in hindsight all of them ultimately bought the house they were meant for. Keep your head up, and have faith that things happen for a reason.
Since opening our doors in early April, The Blue Waters Group has met some major milestones! Thank you for all of your support, business and referrals that have quickly propelled us from a new start-up to thriving firm.
Our group is expanding, with the newest addition to our group, Donna Adams. We are elated to have her on board. Check out our latest video to meet her, as well as get info on my “expecting” news (what could I mean by that?), as well as details about an extra charity drive that we’re kicking off on Halloween (costumes included).
Most parents sent their kids back to school in recent weeks (in fact, today is National Back to School Day!), and with it came the common bittersweet feelings of watching your baby take one step closer to becoming all grown up. Oddly enough, those feelings didn’t come for Mary and me last week when we dropped Maddison off for her first day of 1st grade. Our daughter had already squeezed our hearts and made us wistful while out on the water earlier this month. Let me share…with video too, of course!
In early August, Maddison came to us and said she wanted to try water skiing. Mary and I kept our giddiness thinly veiled and then quickly darted off to Water Ski World to pick up a pair of training skis. A few days later, we were off to the houseboat to work on this new challenge together. When a kid learns to ski an adult sits in the water with them to help handle their skis, give instruction and keep them calm. That was going to be my role so you see, I was going to be an invaluable piece to Maddison’s skiing success…or so I thought.
The experience hardly required my “expertise.” She popped up on her second try and took off like a pro. This left me alone in the middle of the lake, watching her image shrink into the horizon. I could hear her excited shrieks and the cheers of her Mama, Cousins and Godparents in the boat. Suddenly it occurred to me that I was the farthest person from her skiing success.
As I was bobbing in the water alone with the caution flag and my thoughts, I realized that this was a classic parenting moment. Being a parent is rarely about participating in your child’s exciting life moments alongside them. When they are babies, they let you only by necessary proxy. As they get older and take steps away from us, we see that our job is to the lay the foundation and hand them the tools to build their own successes. We don’t get to rush out onto the football field with them at their first big football game or be a fly on the wall at their first real job. As badly as we want to do those things, we instead get to do the gritty un-glamorous job of preparing them to take those defining moments head on with passion and confidence.
Maddison may not have needed Mary or I to learn to ski that day, but it turns out we’ve been creating the right environment for her to want to try for a while now. Watching Maddison ski away from me suddenly became a very gratifying parenting moment. Daddy had done his job of getting his baby ready and it was just time to watch her grasp the glory all on her own.
The Blue Waters Group is hosting a special & unique event on Wednesday July 25th, 2012. Check out the video for full details, but in short we’re going to give you great insight on real estate investing in today’s market and afterwards we’re heading out for an afternoon on the water! Should be a fantastic time.
Come see The Blue Waters Group, check out our office, and be our guest at our Grand Opening Event on June 7th, 2012. Check out full details and RSVP at www.TheBlueWatersGroup.com.
Matt Sundermier's Memos on Real Estate & on Life 