Coto de Caza, CA Real Estate News

By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
For the second consecutive month, the number of homes under contract to sell increased -- further evidence that housing markets may have already bottomed. As reported by an industry trade association, the Pending Home Sales Index rose by 3-plus percent last month. A "pending" home is one that's under contract but has yet to close.  This is one reason why the Pending Home Sales Index is an imperfect statistic. Just because a home is under contract doesn't mean it will actually sell.  A lot can go wrong between the date of agreement and the date of closing.  Deals fall apart all the time.  But, when the number of pending contracts rises, we can infer that buy-side demand for homes is strong. It's likely that the number of homes under contract is being influenced by a combination of low mo...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
With the start of May comes warmer temperates. But just because the mercury's rising doesn't mean your energy bills have to.  This quick Weather Channel video shows how a ceiling fan can cool a 78-degree room by up to 6 degrees and reduce the costs of running an HVAC unit.  The key is to have the fan's blades rotating in the right direction. When the heating system is on, blades should rotate clockwise When the air conditioning is on, blades should rotate counter-clockwise By changing a ceiling fan's blade rotation, a homeowner can push heat back into circulation to warm a room, or create a downward draft to make a room feel cooler. 
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The Case-Shiller Index is a popular reporting tool for the nation's home prices.  Each month, researchers measure home values in 20 large cities, compile their findings, and then publish them to the public. The Case-Shiller Index is not a perfect measurement by any means.  It gives more weight to expensive homes than inexpensive ones, for example, and its sample set includes just 37 states.  But that doesn't diminish its importance to the housing sector.  Because the Case-Shiller Index comes from the private sector, it's an excellent counter for the U.S. government's home value reporting tool -- the House Price Index. In this current market, the Case-Shiller Index tends to report housing in a more negative light than does the government.  This doesn't make either method more accurate, ...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today within its target range of 0.000-0.250 percent.  The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion. In its press release, the FOMC noted that the economy may still be contracting, but that it's not happening with the same speed as in prior months.  Household spending is stabilizing and financial markets are "easing". Nevertheless, threats to the recovery are everywhere with the following items on the Fed's short list: The growing ranks of unemployed workers The reduction of housing wealth nationally Reduced inventories and investment from business Furthermore, the FOMC fingered today's inflation levels as too low to support economic growth.  This justifies the ...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The Federal Reserve adjourns from its two-day meeting this afternoon.  It's one of 8 scheduled meetings each year for the Federal Open Market Committee. Like all FOMC get-togethers, the purpose of the meeting is to discuss financial and economic conditions in the U.S., and to make new policy to stimulate or retard economic growth, when necessary. The Federal Reserve's main tool for reaching this goal is the Fed Funds Rate. When the Fed lowers the Fed Funds Rate, growth is stimulated.  When the Fed raises it, growth is slowed.  The Fed has other tools at its disposal, of course, but the Fed Funds Rate is the most common and most well-known. Fed meetings are highly anticipated events to markets because the central bank's can change the course of the U.S. economy with just a statement.  A...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Monday, mortgage markets improved with news of new Swine Flu cases.  It's a classic example of Safe Haven buying and today's rate shoppers will see the benefits. Mortgage rates improved about 0.125 percent Monday. It's not an official term, but "Safe Haven buying" describes the trading patterns in which large numbers of investors move money away from risky investments and toward safer ones.  As a general rule in Safe Haven buying, stocks sell off and bonds make gains, including mortgage-backed bonds. Fears that a global Swine Flu outbreak would slow the global recovery is a major reason why mortgage rates improved Monday. Dumping risk is a common reaction on Wall Street when unexpected events occur.  Because the future is uncertain, traders prefer to play it safe.  Hence the jargon-like...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
There's a right way and a wrong way to transfer a home posthumously.  The right way requires having a documented plan.  The wrong way could stick your loved ones with a tax bill so large they may have to sell the home just to cover it. With just 4 minutes for the segment, The Today Show rushes through some very important estate planning considerations, but that doesn't make the points any less relevant. Among the estate planning tips: Even a simple will can big protection For multiple beneficiaries, consider a trust agreement Avoid taxes by "selling" your home to heirs while you're still living Estate plans are simple, are cheap, and affords protection from the state and the IRS. Every homeowner should have one. 
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Here's an excerpt from the latest Orange County Market Report from my friend Steven Thomas, of Altera Real Estate.  It addresses the so called "shadow inventory" of foreclosure properties.  "Isn't there going to be a wave of foreclosures coming on the market? ( The "Shadow Inventory")  I am often asked about a foreclosure moratorium or banks holding back on releasing foreclosures so that they do not saturate the market.  Distressed properties also include short sales, where a seller owes more to a lender, or lenders, than a home is worth. In the case of a short sale, even with a successful negotiation between a buyer and seller, the sale is still subject to the lender, or lenders', approval. Lenders cannot prevent homeowners from placing their homes on the market as short sales, where t...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The days of rock-bottom housing prices may be reaching an end. According to the National Association of REALTORS, the number of Existing Home Sales fell by a modest 140,000 units last month. It's the fifth straight month in which home sales straddled the 4.5 million mark. The national housing inventory is down 900,000 from its July 2008 peak. These are two encouraging signs. Meanwhile, in a separate report, the Commerce Department said the supply of newly-built homes for sale is at a 7-year low.  This, too, is a positive signal for housing. Home values are based on supply and demand.  If the number of homes for sales falls while the number of buyers stays constant, home prices will rise.  This is because the same number of buyers are competing for fewer properties.  It's basic economics...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
If falling home values is what prompted Fannie Mae and Freddie Mac to tighten mortgage guidelines in 2007 and 2008, America's mortgage applicants may get their long-awaiting loosening within the next 18 months. According to a government report, the values of homes financed with conforming mortgages rose for the third straight month in February. This is an important piece of data because as values rise on the homes against which conforming mortgages are made, Fannie Mae and Freddie Mac's respective loan portfolios get less risky. With less risk related to home values, there's an opening for the agencies to assume more risk on individual borrowers.  A guideline loosening would help home loan applicants that currently find themselves ineligible for conforming mortgage financing -- often th...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
National real estate data helps economists identify trends in the housing market. It shapes policy and influences markets. For active home buyers and home sellers, though, national real estate data is irrevelant.  This is because national data says nothing for the factors determining home prices in any given zip code. See, national real estate news is mash-up of data.  It's 128,203,000 homes from all 50 states.  Each of these states has its own economy and there are different factors that drive home values in each Most Americans understand this. But, if we dig deeper, we see that within those states, there are more than 19,000 incorporated cities -- plus thousands of unincorporated ones.  And like the 50 states, city-to-city home values vary by economy, too.  Furthermore, each city is c...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The Federal Reserve meets next week for a policy-setting meeting.  It's one of 8 scheduled Fed meetings this year in which the Federal Open Market Committee votes on whether to raise, lower, or leave unchanged the Fed Funds Rate. Based on data compiled by the Federal Reserve Bank of Cleveland, Wall Street's expectations of the Fed Funds Rate post-meeting are as follows: 97 percent probability that the Fed Funds Rate holds at 0.000 to 0.250% 3 percent probability that the Fed Funds Rate is raised to 0.750%. There is no expectation for a 0.500% Fed Funds Rate. The Fed Funds Rate influences the economy by changing borrowing costs for banks, businesses, and consumers.  When the Fed Funds Rate is lowered, "cheaper money" is meant to speed the economy forward.  When the Fed Funds Rate is rai...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Sure, you've got a fire extinguisher at home, but if you ever had a fire, would you know what to do with it? Like any tool, reading the directions can only get you so far.  If you've never "pulled the pin" and discharged a fire extinguisher before, fighting an actual fire can be a frightening intiation. For non-firefighters, there's an alternative. It's an aerosol spray from the First Alert company called the Tundra Fire Extinguishing Spray and it's billed as an intuitive fire safety product. According to a First Alert product fact sheet, aside from its ease-of-use, the Tundra product boasts several advantages over traditional fire extinguishers: Tundra sprays for 32 seconds -- double a traditional fire extinguisher Tundra spray covers 3 times more surface area than a traditional exting...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
With respect to housing data, news is rarely positive or negative on a universal level. There's always two perspectives to consider, after all. The home buyer's perspective The home seller's perspective Usually, when data is beneficial to one group, it's less beneficial to the other.  This is true for rising home prices, average days on market and so forth. Today, the group that gets the most benefit from data is the home seller group. Published Thursday, a government report showed that Housing Starts fell 11 percent nationwide in March and also fell short of analyst expectations.  A "Housing Start" is a new housing unit on which construction has started. The press is calling this a stumbling block for the economy, but that's not exactly true. Fewer Housing Starts last month means that ...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Since 2007, foreclosures have dominated real estate news.  You can't turn on the news or open a paper without some foreclosure-related story.  But for all of the discussion, foreclosures continue to be geographically concentrated.  Adding up the latest stats from RealtyTrac.com, more than half of the country's foreclosure actions from March occurred in just 3 states -- California, Florida and Nevada. Those 3 states represent just 19 percent of the nation's population. Despite the local concentration of foreclosures, however, they remain a national problem.  This is because mortgage lenders lend in all 50 states -- not just 3 of them -- so the impact of mortgage defaults in one region can quickly spread to others. In part because of foreclosures are higher, the following has happened: Mo...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
It's Tax Day today and who among us doesn't love a legitimate tax deduction? The IRS expects to process 138 million tax returns this year and accompanying those returns will be a melange of tax deduction requests.  Most will be run-of-the-mill including such staples as mortgage interest, vehicle mileage, and child care deductions. Others, however, will be less ordinary. On its website, TurboTax pays homage to some of the most off-the-wall, offbeat tax deductions through the years permitted by the IRS.  Among the "weirdest deductions allowed": A bodybuilder's body oil so his mustles would glisten in competition A private airplane for owners of investment properties Landscaping for a sole proprietor that meets clients at home A swimming pool for a man with emphysema Tax deductions are pri...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Shopping for low mortgage rates is a game of luck.  Some days, mortgage rates are favorable.  Other days, they're not.  And while you can sometimes make an educated guess about where rates might be headed, you're not always going to guess right. Even the experts get it wrong more often than they'd like. But some parts of the rate shopping process can be predicted and one of them is the future of mortgage guidelines.  In general, the more often homeowners default on their respective mortgages, the harder it is for future mortgage applicants to be approved. This is why "now" may be the best time to apply for a FHA mortgage.  Defaults are climbing, suggesting that FHA underwriting guidelines are about to tighten. Indeed, the FHA has implemented two major changes since last summer: The mini...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
In 2003, the Department of Homeland Security launched Ready.gov, a government website aimed at family, business and community disaster readiness. Now, when the Ready.gov website talks about disaster readiness, it's referring to more than just physical attacks on the county -- it's talking about natural disasters, too.  This includes hurricanes, tornados, earthquakes and floods and these weather-related events impact the different parts of country each year. The Ready.gov website is loaded with tips, notes and checklists, including the 3-minute "It Takes Just Three Steps To Get Ready For An Emergency" video featured above.  If you've never watched it, take the time to watch it today.  Then, test your home's disaster readiness, take this 10-question quiz.  There's no "passing grade", per...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
A lender friend sent me an article that I just had to share.  It was written by Damien Caves, for the New York Times.  Here's a link:   https://tinyurl.com/falling-prices And here's the print version: "While her friends ran up credit card debt and bought show homes beyond their means, Taina Goldman saved for a down payment. She moved back in with her parents, sharing a room with her young daughter, ate in and worked two jobs. "I don't live dangerously," said Ms. Goldman, 42, a nurse. "You can't live on ‘what if.' Now, she is reaping the rewards. She and her daughter recently moved into a three-bedroom, two-bathroom ranch-style house, with a pool, after putting 20 percent down and persuading the seller to cover most of her closing costs. She paid $187,000 for a house that sold in July 20...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
When conforming mortgages adjust, they're often tied to an interest rate index called LIBOR. LIBOR is an acronym for London Interbank Offered Rate. But what LIBOR stands for isn't as important as the role it plays. LIBOR is an interest rate at which banks borrow money from each other.  Therefore, when banks feel the banking system as a whole is unsafe, LIBOR rises to compensate.  It's why LIBOR spiked last October after Lehman Brothers failed.  Financial institutions wondered what other institutions would fail and that added risk to the system. Since October, however, and because of massive government interventions worldwide, LIBOR has been on a steady retreat.  Moreover, with close to $30 billion in conforming mortgages scheduled to adjust by Labor Day, the timing couldn't be better fo...
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