www.SunilSethi.com

Real Estate & Mortgage Loan Specialist

March 2005

Spring is almost here. Soon we’ll all be in our backyards planting flowers and barbequing. I look forward to it. I also love to get feedback on the newsletter so please let know what you find useful in this month’s edition.

Real Estate Bay Area Update

Since November 2004 home prices have increased 10-15%. Price increases have been driven by a short housing supply and a plethora of buyers anxious to take advantage of historically low housing. However now that we are getting closer to summer, the supply of homes for sale will be increasing and at the same time interest rates are rising (shutting out marginal buyers). I expect pricing to be stable going forward and becoming a more neutral buying experience towards the end of summer.

Home buying Affordability

Below you’ll find a table that tells you the approximate housing payment (PITI) based on a purchase price (left column) and interest rate (top row). These housing payments are based on 5/1 ARM interest only for the first loan at 80% of purchase price, and a second for 10% of purchase price. One way to interpret this info is if a buyer was stretching to buy a $710K home in January, today he could afford about 10-15K less.

	5.000%	5.125%	5.250%	5.375%	5.500%	5.625%	5.750%
$656,728.76	$ 4,011	$ 4,080	$ 4,148	$ 4,216	$ 4,285	$ 4,353	$ 4,422
$676,430.63	$ 4,093	$ 4,164	$ 4,234	$ 4,305	$ 4,375	$ 4,446	$ 4,516
$696,723.54	$ 4,178	$ 4,250	$ 4,323	$ 4,396	$ 4,468	$ 4,541	$ 4,613
$717,625.25	$ 4,265	$ 4,340	$ 4,414	$ 4,489	$ 4,564	$ 4,639	$ 4,713
$739,154.01	$ 4,355	$ 4,432	$ 4,509	$ 4,586	$ 4,663	$ 4,740	$ 4,817

Interest Rates

The Fed raised their short term lending rate to banks on March. 22 as planned, and correspondingly the banks raised their prime rates by a 0.25% to 5.75%. The next FOMC meeting will be on May 2. It is expected that the Board will increase the Fed Funds rate by another .25% at that time and correspondingly the prime rate will increase to 6.00%%.

Though all this was expected the market behaved like it was shocking news and both short term and long terms rose by a 1/8% to ¼% correspondingly. For purchase transactions the 5/1 ARM interest only is at 5.5% and the 30 Year fixed jumbo is at 6.25%.

Real Estate Investment Club – East Bay Wealth Builders

This year I plan to attend more East Bay Wealth Builder meetings. Let me know when you’ll be there as well. All meetings start at 6:00PM. These are both educational and networking events.

Calendar of Events

Date	Topic	Speakers
April 20 –San Ramon Marriott Hotel	Getting Financing for your Deals	Barney Zick
April 21 –Fremont Marriott	Commercial Real Estate Strategies - How to Invest successfully in Multi-Unit Properties	Greg Warr
April 23 – Courtyard Newark	Multi-Unit Investment Properties Workshop	Greg Warr
May 18 –San Ramon Marriott	How to Build Your Bridge to Financial Freedom How to Build Your Real Estate Investment Business	Gary Massari Loral Langemeier
May 19 –Fremont Marriott	Investing in the Caribbean	Darrell Anderson
May 21 – San Ramon Marriott	Wealth Builder’s Seminar	TBA

Property Taxes

Your second installment of properties was due Feb. 1, and becomes late on April 10, 2005.

Get a copy of your bill online by visiting the county assessor’s website. Click here

Income Taxes – How much of Home Interest Expense is Deductible

Fully deductible if you debt falls into one of following 3 buckets:

Mortgage you took out on or before 10/13/1987.
Mortgage you took out after 10/13/1987 to buy, build or improve your home but only if throughout 2004 these mortgages plus any grandfathered debt totaled $1 million or less.
Mortgage you took out after 10/13/1987 other than to buy, build or improve your home (called home equity debt) but only if throughout 2004 these mortgages totaled $100,000 or less and totaled no more than the fair market value of your home reduced by (1.) and (2.) above.

Home Maintenance Tip – Furnace Filter and GFCI Breaker

Change or clean furnace filters according to the manufacturer’s recommendations (usually no less than every six months). Many new systems require a monthly cleaning or replacement of the filter for maximum efficiency. A dirty filter reduces airflow and causes the system to use more energy.

A GFCI (ground fault circuit interrupter) is a special electrical breaker that is more sensitive to electrical changes than standard circuit breakers. Areas that are subject to moist or wet conditions such as kitchens, baths, garages, and outdoor areas must have their electrical outlets connected to a GFCI. Test GFCI’s monthly by pressing the black test button, and reset it by pressing the red button. Do not plug a freezer or refrigerator into a GFCI outlet. If there is a current surge or power failure, a tripped GFCI will not reset itself. Your freezer or refrigerator may be off and would not know it until the food spoils.

Buying or selling a home? A home inspection by NuCentury Home Inspections is an unbiased objective visual examination of the systems and structure of a home, from the roof to the foundation. 866-806-4949 www.NuCenturyHI.com

MEGAN'S LAW DATABASE NOW ONLINE

Website access to California's sex offender registry is now available to the public. In response to a legislative mandate, the California Department of Justice recently started providing online information about registered sex offenders at http://www.meganslaw.ca.gov.

Home Improvement – Install Central Air Conditioning Now

The best time to install central AC is before it gets hot. You’ll be able negotiate a better deal since the AC installers have less work in cold weather. Shopping advice: Trane is considered the brand of preference. Get a minimum of 11 SARs, however anymore should be cost justified. Get 3-5 quotes. Good luck.