November 2005


Sunil Sethi Real Estate & Mortgage Loan Team

 

www.SunilSethi.com

 

Explosion 2: The Argus 2005 BEST of the Tri-Cites  

 

 


Good relationships are what it’s about, and thanks to your efforts I was voted 2005 Best of the Tri-Cities – Mortgage Broker, and Show and Sell Realty was also voted the 2005 Best Realty Firm. All of us here thank you for your support. My team looks forward to continue working with you in the years ahead.

 

Best regards,

Sunil Sethi Real Estate Team

           

Real Estate – It’s slowing down

 

The real estate market is slowing down. The California Association of REALTORS® (C.A.R.) Housing Affordability Index for August stood at 14%.  What I’m seeing today is a lot more buyers are over stretching to purchase, qualifying with 100% financing, interest only loans and stated income documentation.

 

Is the market collapsing? – No. Part of the reason for the slowdown in sales is seasonality; however it’s not the sole reason. Affordability has been reduced because the people who are buying today have poorer credit, make less money, and are facing higher interest rates which is compounded with seller’s overpricing their properties.

 

As a seller, should I sell today or wait until the spring? I would set a price that will encourage multiple offers in hopes of getting a clean purchase agreement. I believe interest rates will continue to rise (see below), and you’ll most likely end up selling at no better a price in the spring than you could right now.

 

Take a look at this month’s MLS activity in Fremont. The number pending is greater than the number sold, so we can expect even more closings to complete in November than did in October. So transactions are happening, however, we are seeing fewer offers, more price reductions (which are reductions from seller’s lofty expectations), and longer days on the market. Instead of a listing going pending in 15 days, you are seeing listings sit for 30, 45, 60 and even 90 days.

 

Fremont Area

October 1-28, 2005 Snapshot

Price Range

Active

Pending

Sold

$000K - $400K

48

22

17

$400K - $500K

47

28

14

$500K - $600K

57

36

20

$600K - $700K

103

70

61

$700K - $800K

63

34

46

$800K - $900K

34

10

9

$900K - $1000K

17

7

5

$1000K - $1500K

25

12

9

$1500K +

22

7

2

Total

416

226

183

per MLS  11/28/05  4:40PM

 

 

 

Fast Facts

Calif. median home price - Sept. 05: $543,980 (Source: C.A.R.)

Calif. affordability index - Aug. 05: 14 percent (Source: C.A.R.)

Calif. highest median home price by C.A.R. region Sept. 05:
                               Santa Barbara So. Coast $1,475,000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region Sept. 05:
                               High Desert $312,410 (Source: C.A.R.)

Mortgage rates - week ending 10/20:
                               30-yr. fixed: 6.10%; Fees/points: 0.5%
                              15-yr. fixed: 5.65%; Fees/points: 0.6%
(Source: Freddie Mac)

 

Are you wondering what your home is worth based on the most recent sales?  Give me call for a free evaluation.

 

 

 

 

 

 

 

 

 

 

 

         

Interest Rate Watch – Long Term Rates Finally Moved

 

 

 

 

 

 

Interest rates have gone up the last couple of weeks, for a couple of simple reasons and based on the recent GDP growth, inflation figures and upcoming changing of the guard at the Fed we can expect 3-5 more rate increases.

 

At the Fed’s Nov. 1 meeting the Fed Funds rate was raised a 0.25%, which moved the prime rate to 7.00%. The next meeting/rate increase will be on Dec. 13 followed by another increase on January 31, 2006.

 

Action Point: If you still have home equity line 2nd, consider moving it to a fixed 2nd. You should be able to get a rate that is the same or better than the floating rate you currently have.

 

Property Taxes

 

You should have received the tax bill for the 2005-2006 fiscal tax year by now. The first payment is due Nov. 1 and late if not received by Dec. 10.

 

If you don’t receive it in the mail, get it online at http://www.sunilsethi.com/property_taxes.htm. For those of you, who purchased your home and haven’t received your supplemental bill, call the assessor’s office on when you can expect it or check for it online at http://www.sunilsethi.com/property_taxes.htm.

 

 

Money Market Interest at 4.5% - Superior Savings of New England

 

 

GreenPoint Mortgage’s affiliate Bank Superior Savings of New England, N.A. is offering a 4.5% rate with a minimum $25,000 balance. That’s the best rate I’ve seen so far.  www.superiorsavings.com or call 1-877-728-3758.

     

Reduction of Mortgage Interest Deductibility     

 

TAX REFORM PANEL PROPOSES REDUCTION OF MORTGAGE INTEREST DEDUCTIBILITY
The President's Advisory Panel on Tax Reform (http://www.taxreformpanel.gov) published its recommendations on how to reform the federal tax code. Its mission from President Bush's Executive Order calls for the panel to find a way to make the tax code "simpler, fairer, and more pro-growth to benefit all Americans," while staying revenue neutral. 

 
As with any revenue neutral legislation, the elimination of a revenue stream or the lowering of a tax rate must be offset by the elimination of deductions and/or increase in tax rates in another area. Members of the panel have suggested reforming portions of the tax code that would negatively impact homeownership and the housing market.

The current interest deduction for mortgage loans of up to $1.1 million for primary residences and vacation homes would be scaled back. The new ceiling would be a much lower regional average ranging between $227,000 and $412,000 for primary residences only. Reducing the mortgage interest deduction and radically changing areas of the tax code that promote homeownership would be detrimental not only to California's housing market, but to housing nationwide. 

 

As most buyers today are lucky to put down 10%, with loans often in excess of $600K. The proposed cap would further reduce the affordability index for Californians.

 

 

Real Estate Investment Club – East Bay Wealth Builders

 

 

Please let me know if you plan to attend so I can look for you. All meetings start at 6:00PM. These are both educational and networking events.   

 

Calendar of Events

Date

Topic

Speakers

Nov. 17, 2005

 

Fremont Marriott,

6 pm to 9 pm

EXCEPTIONAL REAL ESTATE OPPORTUNITIES
IN TEXAS PROPERTIES!!
(COMMERCIAL & RESIDENTIAL)

Don McClain

 

October 1, 2005 – California Energy Efficiency Law Changes

 

If you are planning on or doing a remodel make sure you’ve looked at the new Title 24 law changes concerning energy efficiency. For example, If you change your furnace, now you’ll have to test the efficiency of you ducts for leakage, through the use of an independent certified duct tester (which probably doesn’t exist yet).  Another example if you install new lighting in a kitchen, 50% must be energy efficient, and operated by a separate switch. Have a question about exemptions; Call the Energy Efficiency Hotline at 800-772-3300.

 

 

New Air-conditioning Law – 13 SEERS Minimum

 

 

Beginning January 23, 2006 – only 13 SEER (Seasonal Energy Efficiency Ratio) AC units will be manufactured. What this means is that if you have a less than 13 SEER unit, and it goes bad, you may be have to upgrade to a 13 SEER unit. The higher the SEERs the more efficient the unit, however the costs involved in upgrading involve more than just the unit. Consider your options now while you still have the ability to get spare parts for your existing unit.

 

Theatre and other Events Discounted

 

Check out this new service which sends you updates on events happening in the bay area that you can attend for discounted prices. http://www.goldstarevents.com?p=F18Dear Tina Clayton,4047N (sample newsletter).