Its no secret…home values are skyrocketing everywhere!  Sacramento Home Prices are up 31% in just the last year!  Besides leading to increased home sale opportunities for those looking to move-up, this trend has also led to more and more refinances.  In fact, most of my current refinance clients could not have refinanced just 6 months ago due to low or no equity.  But now, they’re experiencing the benefits that come with thier fast-rising home value.  If you’ve previously written off the possibility of refinancing, then its time to reconsider your options.  Even with only 5% equity, homeowners with credit scores over 740 have options to refi to 30-year fixed rates around 4% with no mortgage insurance.  And you don’t even need to be eligible for HARP to do it.

Speaking of HARP, the Home Affordable Refinance Program (HARP) has been extended through 2015.  HARP offers refinance opportunities for homeowners with no equity (see if you’re eligible).  It was set to expire at the end of this year but the government, in one of its rare recent occasions to agree on something, approved its continuance for two more years.

To make these opportunities even sweeter, mortgage rates remain super low.  I’ve been finding 30-year fixed rates around 3.5% and 15-year rates under 3% for clients with 20%+ equity.*

Bottom line…now’s the time to consider refinancing.  If you contact me this month to determine your refinance options, I will waive the initial credit report fee cost ($25 value).  As I’m writing this post, I have several specific clients that come to mind that should take advantage of these low rates and rising home values.  If I don’t hear from you, maybe you’ll hear from me in the coming days! 🙂  This is the perfect time to refi; I don’t want you to miss it.

*Rates shown are only meant as rough illustrations.  For full rate and APR details, please contact me. I assure you; rates like these are currently available for qualified borrowers

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.

Read these tips if you’re hoping to refinance this year

Home Buying

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.

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.

If you expect to be a buyer in 2013, here are a few tips:

Home Selling

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.

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.

Here are a few tips for Home Sellers in 2013

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.

As always, thank you for reading.

-Matt Sundermier, Mortgage Broker & Real Estate Agent
Owner/Broker of The Blue Waters Group
Two-Year Winner of Five-Star Awards as featured in Sacramento Magazine

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.