How Mortgage Rates Move

Invest Now Before Rates Climb

What should you do? Be proactive. Act now before mortgage rates move up.

Keller Williams Real Estate Update: Feb. 2010

Click here …THIS MONTH IN REAL ESTATE : February 2010

Each month, This Month in Real Estate provides expert opinion and analysis on real estate trends across the nation. The aim of the consumer-oriented segments is to provide real information on real estate.

Real Estate, You, the Fed and Interest Rates

The Fed has certainly been affecting our economy with their bailouts. What effect will this have on real estate in Truckee and Tahoe Donner?  The Fed’s Mortgage Bond purchase program has artificially created demand in the bond market, and in turn kept mortgage rates near all times lows even as the stock market had some upturn. The Fed has now confirmed the MBS (mortgage backed security) purchase program will end on March 31^st.  This means mortgage rates will creep higher in the months ahead. Bond prices, which drive mortgage rates, will once again be dictated by normal economic factors. 

So, here are some things to keep in mind for the coming “real market” conditions:

1. Inflation leads to higher interest rates.
2. If you are a seller, it is time to cut your price and be decisive. If you’re serious about selling your property, adjust your price to where the market is moving, take your lumps and move on, or you’ll be waiting a long time.
3.  If you are a buyer, it is time to purchase or miss out on the current opportunities. Don’t make the mistake of waiting for everybody else to make a move before you feel comfortable enough to purchase. Many people have made a purchasing decision already, and we never know what the bottom of the market is until it has passed. Here’s one thing you can take to the bank—higher interest rates are the equivalent of a price increase. Don’t wait for prices to drop, the market is indicating we have reached the bottom. When rates go from 5% to 7%, it is the equivalent of a 20% increase in price to the borrower.

Look at the difference just 1 point makes in these loans:

Loan Amount               Type of Loan                Interest Rate                 Monthly Payment

 $250,000                                 30 Year Fixed              5%                               $1342.05

$250,000                                 30 Year Fixed              6%                               $1498.88

$250,000                                 30 Year Fixed              7%                               $1663.25

Keller Williams Real Estate Update: Aug 09

Keller Williams Real Estate Update – YouTube Broadcast

Truckee Real Estate – Buying, Selling & Market Conditions

Selling your real estate in Truckee is not about guessing- it is both a science and an art.  The science is in the numbers and the art is finding the balance between a special property and market conditions. We have all heard the terms “sellers market” and “buyers market”. These are fundamental measures of market conditions.

• “Sellers Market” conditions exist when there are between 1 and 4 months of inventory.
• “Balanced Market” conditions exist when there are between 5 and 6 months of inventory.
• “Buyers Market” conditions exist when there are 7 months and more of inventory.

So what is “Absorption Rate and Months of Inventory”? 

Absorption rate and months of inventory are mathematical calculations, based on current and past market trends that help us estimate how long it will take to absorb the current active inventory in a given area or market segment. The total number of available homes is divided by the total number of homes sold in the previous month. The resulting number represents the number of months it would take, at that same pace, to sell the entire inventory of homes.

For example, let’s say that there are 24 similar homes currently on the market in Tahoe Donner and last month 3 comparable homes sold. The absorption rate is 3 (3 sales/1 month = 3) and the months of inventory is 8 (24 current inventory/3 absorption rate = 8).

The chart above shows us absorptions rates and months of inventory for Tahoe Donner single family homes. The absorption rates were based on a monthly average of sales over the last 3 months (2nd QTR stats) for each price segment. Current inventory for each price segment was divided by the corresponding absorption rate and months of inventory were determined.

The market segment for homes up to $500K, with 6 months of inventory, is the most balanced while all other segments are strong  ”buyers markets”. There have been no sales prices over $1,250,000 in 2009 therefore it is not possible to calculate an absorption rate (nothing has been absorbed) nor months of inventory.

Understanding market conditions is powerful knowledge for both buyers and sellers. It can help in the following ways:

1. For Sellers – Realistic Selling Prices:
   As a rule of thumb…The longer your property is on the market the more likely it is that you will see price reductions. This means that it is of utmost importance that you price your property correctly for the current market conditions. If you need to sell your home, it must be better than its competition. In a given market segment, the most desirable home at the best price will sell first. Absorption rate is a concept and practice that is often over looked by many Realtors and lack of knowledge can lead to properties that don’t sell, expired listings, numerous price reductions and disappointed sellers.
   .
2. For Buyers – Realistic Purchase Offers:
   Knowing the market conditions in the specific areas you are looking to buy in will prepare you for negotiating.  As a buyer you may have greater success negotiating in an area or market segment where there is more inventory and the seller may be more motivated to sell!

If you have considered the idea of selling, please give us a call at 530-412-0583 or send an email to karen@huntoonrealestate.com .We will establish a value for your property and design a selling strategy and marketing plan. We thoroughly research market areas both before and during our listing periods as good knowledge of the market is critical in selling a home and allowing Sellers to get the most money out of their homes and to sell in the shortest period of time.

Now, more than ever, it is important to take the guess work out of selling and talk with a Realtor that understands the art and science of pricing a home in todays market conditions. Give us a call 530-412-0583.

Keller Williams Real Estate Update – July 09

Keller Williams Real Estate Update – YouTube Broadcast

Keller Williams Market Report: June 2009

This Month is Real Estate – June 2009 YouTube

What is My Truckee Home Worth?

Understanding the Truckee Real Estate Market….

The most common questions we hear from our clients that own second homes in the Truckee real estate area, including Tahoe Donner are, “How much is my home worth and  what is the market doing?”

While prices have declined over the last few years it is important to remember that prices escalated dramatically just before the drop. Research from Wellesley College tells us that, historically, homes typically appreciated about 5% per year. During the first six years of this decade, however, average home appreciation was almost 15% per year! This type of growth is unsustainable and the current drop in prices is a market response. The market is now trying to stabilize and in the long run this will make the Truckee real estate market stronger and healthier.

It is very important to price right for today’s market. If you price your home too high, it will sit on the market and receive little, if any, attention. Meanwhile, you are making mortgage payments, paying property taxes and in many cases, HOA fees as well. One good indicator of how you should price your home for a successful sale is to look at the absorption rate or month’s supply of inventory (total inventory divided by the number of homes sold per month) in your neighborhood.

For example, on average this year we have seen 13 houses per month close escrow in Tahoe Donner and we have 158 active listings currently on the market. That means that we have a little over a 12 month supply of houses to sell in Tahoe Donner.

To put this into perspective, industry guidelines suggest that a 1-2 month supply is equal to double digit appreciation of home values. A 5 to 6 month supply is considered the balance point and on the other end of the spectrum, a 12 month supply, which is where we are currently, signals as much as a double digit depreciation. The bottom line is that you have to price with knowledge of where our market is today.

If you are thinking about selling your home, you can get started by clicking on “What is my Home Worth?” We will carefully determine an appropriate value for your home and we’ll create a marketing plan to get your property sold. We look forward to working with you to facilitate the sale of your Truckee real estate. Click here to view a variety of articles written for Sellers courtesy of Robbie and Karen Huntoon.

Mortgage Rates…Hitting the Bottom?

Each week, and sometimes more, we get updates from our Truckee real estate lenders commenting on mortgage rates. The following is an excerpt from a mortgage update we got from O’Dette Mortgage Group last week:

“We have been talking the past month about the “bottom” for mortgage rates, have been quite vocal that the 4% mortgage was a myth, and that I believe it prudent to consider this the bottom for mortgage rates. Although today was a relatively good day and we would love to see bond prices/mortgage rates return to all time low, I would not hold my breath for an immediate return to where pricing closed last week. I will be impressed if we see rates return to last week’s level in the near future.

Is there a silver lining? Perhaps. Rates going up will be plastered across the news, yet terms on a conforming 30 yr fix are still the best they have been in over 50 years. Might this inspire those sitting on the fence to take action capitalizing on this once in a lifetime combination of prices and mortgage rates? We hope so, and it’s, in part, our responsibility to help our clients see such opportunity. Also, the rate increase should slow down the refinance boom, allowing banks to catch up, improving turn times.”

If you are a buyer and you have been sitting on the fence “waiting” to buy your perfect piece of Truckee real estate now may be a good time to make a move!

Keller Williams Market Report: May 2009

This Month in Real Estate – May 2009 YouTube