Let's start with an investment figure of $100,000. If you wanted to maximize your return, where would you put it?
Had you invested that money in Contra Costa Real Estate in 1997, the average return was 216%by 2007 for a dollar value of $1,082,000.
In a normal stock market that brought an average anual return of 10%, your ten year value would be $235,000. In a bull market with 15% average appreciation, your ten year value would be $351,000..
Right now Contra Costa homes are the lowest they have been since 2004 or 2005 depending on the particular city. Interest rates are hovering around 6%, the lowest for many, many years.
We don't have crystal balls that show us the future of any market. However, I believe Will Rogers said something to the effect of buying land because they aren't making more of it...
With Bay Area home demand remaining high, I think that is good counsel today...
Tuesday, March 4, 2008
Friday, February 29, 2008
ARE YOUR DUCKS IN LINE?
Regarding residential real estate in centra Contra Costa County, California:
Ever travel where you were spoiled by good weather and low prices? For me that is the frosting on the cake of a good vacation.
Our current real estate market reminds me of such a vacation. Our average price in May of 2004 was $557,000. Last month that average was $553,000. In other words, a buyer can buy today at 2004 prices.
In spite of interest rate increases over the past three weeks, our interest rates still hover around 6.25 for 30 year conforming loans.
Housing demand continues to build. Large funds ("Vulture Funds") are buying up blocks of inventory as we speak. They plan to rent and hold this inventory for five years. The bet here is that we are near a bottom and appreciation will follow.
I calculate the pending to active ratios for the past month on the 15th of each month. Our present inventory is fluctuating from 8 to 12 months. Buyer's are in the driver's seat, but I question for how much longer.
Get your duck's in line! This is a great market for first time buyer's and move ups. The secret to a great landing is a well planned and well executed approach. Know what your options are and get guidance from well qualified professionals.
Ever travel where you were spoiled by good weather and low prices? For me that is the frosting on the cake of a good vacation.
Our current real estate market reminds me of such a vacation. Our average price in May of 2004 was $557,000. Last month that average was $553,000. In other words, a buyer can buy today at 2004 prices.
In spite of interest rate increases over the past three weeks, our interest rates still hover around 6.25 for 30 year conforming loans.
Housing demand continues to build. Large funds ("Vulture Funds") are buying up blocks of inventory as we speak. They plan to rent and hold this inventory for five years. The bet here is that we are near a bottom and appreciation will follow.
I calculate the pending to active ratios for the past month on the 15th of each month. Our present inventory is fluctuating from 8 to 12 months. Buyer's are in the driver's seat, but I question for how much longer.
Get your duck's in line! This is a great market for first time buyer's and move ups. The secret to a great landing is a well planned and well executed approach. Know what your options are and get guidance from well qualified professionals.
Saturday, February 23, 2008
DO STAIRS GO UP OR DOWN?
It is a matter of perspective because it depends where you are on the staircase...
I am pleased that Alain Pinel Realtors, my company, knows this. While headlines trumpet a national "lending crisis" and "plunging real estate prices", the fact is that the mature neighborhoods in the San Francisco Bay Area mature remain strong.
Here our homes have appreciated more than 175% over the last ten years. On average, homes doubled in value every 6.6 years. Mortgage rates continue to remain near 25 year lows.
As you look at your investments, get the facts. Make your decisions based on Bay Area housing market realty...
I am pleased that Alain Pinel Realtors, my company, knows this. While headlines trumpet a national "lending crisis" and "plunging real estate prices", the fact is that the mature neighborhoods in the San Francisco Bay Area mature remain strong.
Here our homes have appreciated more than 175% over the last ten years. On average, homes doubled in value every 6.6 years. Mortgage rates continue to remain near 25 year lows.
As you look at your investments, get the facts. Make your decisions based on Bay Area housing market realty...
Wednesday, February 20, 2008
Why Halladay House?
Karen and I have sold residential real estate in Contra Costa County for over 30 years now. We are often asked our opinion regarding all facets of the real estate business.
Our blog, halladayhouse, is a forum where we can post information pertaining to housing issues as we understand them. Look to halladayhouse (or halladay house) for informative and factual opinion.
We welcome your comments and will respond as time and resources allow.
Karen and Wayne
Our blog, halladayhouse, is a forum where we can post information pertaining to housing issues as we understand them. Look to halladayhouse (or halladay house) for informative and factual opinion.
We welcome your comments and will respond as time and resources allow.
Karen and Wayne
Wednesday, February 13, 2008
Money Owed? Need to know: is it hard $ or soft $?
Soft money loans are great! What do I mean by soft money? This is a loan where should the
borrower default, the lender has no other place to go for satisfaction. There is no recourse to the borrowers assets for more money. The product loaned against is all that they can get.
A “hard money” loan is a loan with recourse beyond the product loaned against. If you owe me $100,000 secured by a Porsch and that Porsch is now only worth $80,000, I can go after your other assets to get the missing $20,000 I am owed.
There is a tendency for us to think loans of all types are soft money. Pay attention here! If the loan has a three day period during which you can change your mind, A “Three Day Right of Recission” means that it is a “HARD MONEY” debt.
Oh, oh. You mean when I refinanced my $800,000 home with a $560,000 first and a $160,000
second to invest in the stock market I entered into a hard money transaction? Yes, Charlie Brown, you now have a recourse loan. You see, when you buy a house it is a soft money loan and the house is the only recourse for the lender. When you REFINANCE a house, it is a hard money loan and you have a three day cool down period to reconsider.
In this instance Charlie Brown has a problem. The $800,000 figure was built upon spiraling prices and sub-prime lenders with overvalued appraisals. It true value was 5% below the $800,000 figure at $760,000. So the home he thought was $800,000 in the spring of 2005 was really worth $760,000. The current debt stands at the original $720,000 and Charlie is three months behind in his payments of $4,000 each month for interest on the debt.
Central Contra Costa prices held in 2005 and 2006 but depreciated 6.3% in 2007. This first quarter of 2008 finds Charlie’s home value not at the 2005 value of $760,000, but at $712,000. Before this is done and over, he may owe six or eight months of back payments or more. I’ll use $32,000 for back payments and $8,000 for back taxes and 6% for Realtor fees.
There you have it. Charlie cannot pay, let’s the house get a little shabby. At sale time the debts are $800,000 with a sale of $675,000
In this example, the bank forecloses with a judicial foreclosure. Look out Charlie Brown. That may be the debt collector coming for your other assets…
Will the lender come after him for more?
Place your bets.
Your comments are welcome!
I’ll be listening...
borrower default, the lender has no other place to go for satisfaction. There is no recourse to the borrowers assets for more money. The product loaned against is all that they can get.
A “hard money” loan is a loan with recourse beyond the product loaned against. If you owe me $100,000 secured by a Porsch and that Porsch is now only worth $80,000, I can go after your other assets to get the missing $20,000 I am owed.
There is a tendency for us to think loans of all types are soft money. Pay attention here! If the loan has a three day period during which you can change your mind, A “Three Day Right of Recission” means that it is a “HARD MONEY” debt.
Oh, oh. You mean when I refinanced my $800,000 home with a $560,000 first and a $160,000
second to invest in the stock market I entered into a hard money transaction? Yes, Charlie Brown, you now have a recourse loan. You see, when you buy a house it is a soft money loan and the house is the only recourse for the lender. When you REFINANCE a house, it is a hard money loan and you have a three day cool down period to reconsider.
In this instance Charlie Brown has a problem. The $800,000 figure was built upon spiraling prices and sub-prime lenders with overvalued appraisals. It true value was 5% below the $800,000 figure at $760,000. So the home he thought was $800,000 in the spring of 2005 was really worth $760,000. The current debt stands at the original $720,000 and Charlie is three months behind in his payments of $4,000 each month for interest on the debt.
Central Contra Costa prices held in 2005 and 2006 but depreciated 6.3% in 2007. This first quarter of 2008 finds Charlie’s home value not at the 2005 value of $760,000, but at $712,000. Before this is done and over, he may owe six or eight months of back payments or more. I’ll use $32,000 for back payments and $8,000 for back taxes and 6% for Realtor fees.
There you have it. Charlie cannot pay, let’s the house get a little shabby. At sale time the debts are $800,000 with a sale of $675,000
In this example, the bank forecloses with a judicial foreclosure. Look out Charlie Brown. That may be the debt collector coming for your other assets…
Will the lender come after him for more?
Place your bets.
Your comments are welcome!
I’ll be listening...
Tuesday, February 12, 2008
Two Economic Certainties
Either the economy will get better over time or it will get worse…
Either is better than stagnation.
During the summer of 2005 the Bay Area housing market entered a downturn. By October the ratio between the number of homes on the market and the number being sold began to grow. Since that time, home inventory levels in central Contra Costa county have moved from a “seller’s market” (three or less months of inventory) to a “buyer’s market” (seven or more months of inventory).
So what is the outlook? Janet Yellen is the head of the San Francisco Federal Reserve for our region. She feels that the U.S. economy will experience slow growth in the coming quarters.
Her negative concerns are: (1) consumer spending will continue to fall (2) home prices will decline further (3) loan delinquency will grow (4) volatile markets will dampen consumer spending.
There are four counters to the negative concerns: (1) the “Economic Stimulus Bill” signed February 11 will boost the US economy (2) relatively low inflation will be a boost (3) appropriate monetary policy will help (4) rising consumer confidence would help
Place your bets.
Your comments are welcome!
I’ll be listening...
Either is better than stagnation.
During the summer of 2005 the Bay Area housing market entered a downturn. By October the ratio between the number of homes on the market and the number being sold began to grow. Since that time, home inventory levels in central Contra Costa county have moved from a “seller’s market” (three or less months of inventory) to a “buyer’s market” (seven or more months of inventory).
So what is the outlook? Janet Yellen is the head of the San Francisco Federal Reserve for our region. She feels that the U.S. economy will experience slow growth in the coming quarters.
Her negative concerns are: (1) consumer spending will continue to fall (2) home prices will decline further (3) loan delinquency will grow (4) volatile markets will dampen consumer spending.
There are four counters to the negative concerns: (1) the “Economic Stimulus Bill” signed February 11 will boost the US economy (2) relatively low inflation will be a boost (3) appropriate monetary policy will help (4) rising consumer confidence would help
Place your bets.
Your comments are welcome!
I’ll be listening...
Friday, February 8, 2008
What about real estate values?
Real estate markets are really local markets. Unlike the stock market, they aren't as affected by national or global news and trends. While the mainstream media is reporting a "mortgage crisis" and "plunging real estate prices", the real estate market in central Contra Costa County, Northern California, remains active.
Contra Costa County homes have averaged an annual appreciation of 12% in the past decade. On average, a Contra Costa home doubled in value every 6.1 years. Over the decade we saw appreciation of 197%.
The Bay Area economy is strong. Many East Bay neighborhoods offer mature, stable communities with excellent schools, a wonderful climate, and access to San Francisco's world-class cultural community.
The market here began to shift away from sellers in the fall of 2005. Values held well in 2006, but in 2007 local home values declined 5% to 8%, depending on location. This is comparable to what we experienced during the period 1992 to 1995.
With current interest rates and a market that favors buyers, this is a great first time buyer or move-up market.
Contra Costa County homes have averaged an annual appreciation of 12% in the past decade. On average, a Contra Costa home doubled in value every 6.1 years. Over the decade we saw appreciation of 197%.
The Bay Area economy is strong. Many East Bay neighborhoods offer mature, stable communities with excellent schools, a wonderful climate, and access to San Francisco's world-class cultural community.
The market here began to shift away from sellers in the fall of 2005. Values held well in 2006, but in 2007 local home values declined 5% to 8%, depending on location. This is comparable to what we experienced during the period 1992 to 1995.
With current interest rates and a market that favors buyers, this is a great first time buyer or move-up market.
Subscribe to:
Posts (Atom)