My Crystal Ball Readings: Future California Real Estate
If you want a home you’ll pay more money for them. See what my research shows for home in Silicon Valley for the coming year. Sellers will be happy and home buyers will be happy because the prices of home is not going up as much and as fast as last year.
Last night I got my crystal ball out to see if I could see the future for SF Bay Homes. After some hard searching I came to realize 5 basic aspects of California real estate we can expect to see over 2016.
1. Sale Prices will continue up trend.
2. Interest Rates and A.P.R. will be on the rise.
3. Loan underwriters will need looser loan requirements
4. Distressed Homes are a thing of the past
5. Number of Home Sales will be up.
What does that all mean?
Sale prices at close of escrow will show to be above the listing price because of the number of home buyers in the market today and will continue to flood the market with over market values bids on homes for sale.
Loan underwriters relying on bank appraisals, whose valuations come mainly on comparative homes that sell in the neighborhood, will have to go with the flow and allow values unable to be explained on paper.
Their only saving grace is that in 2015 home prices had a 17.5% increase in appreciation.
With these figures in front of all loan underwriters it is no wonder they have guidelines which are favorable for home borrowers. The higher than normal demand for homes in SF Bay Homes have caused many home buyers to throw their hands up in the air and rush to the sidelines. That frustration leading to retreating out of the market causes pent-up demand to lessen.
However, with the spring real estate market on the horizon, we are seeing home buyers re-entering the market again, who will cause the number of home sales in the future to increase, and the choice to be scarce.
This will cause home prices to stay strong. And, yes expect more fees and costs and higher interest rates. They will still be okay as they will be under 5% for 2016 according to the San Francisco Chronicle.
Even if you put 20% down payments all your fees and costs will be higher in the future especially if you get an FHA loan. The major lending institutions will shirk it off by saying…it’s only $26 per month…okay that’s $312 per year more to pay, or $9,360 over the life of a 30-year loan, or by the total number of homes sold in 2015 in San Mateo County, (5,752) only $53,838,720…not bad for just only $26.00 uh? And, this is only one year and one county. This is sad but true.
Okay so I walked on the dark side last night.
Is it really that bad? If you look at the numbers for what it will cost you. It will take more money to buy a home in the future…YES! On the other hand if you want to make “The American Dream” through home-ownership…NO. Being a Realtor for 40+ years and practicing what I preach…buying real estate. I can tell you I am far better off today owning real estate than I would be without it. Real estate holdings not only gives a homeowner shelter, which next to food and clothing is a fundamental necessity.
Passive income helps make life just a bit easier. Anyone can have this same beneficial experience and life style if they choose. The real estate market is cyclical will continue to go up as well as going down. The real estate market is static not fixed.
So take advantage of the real estate market you have in front of you today. Don’t over extend yourself and you’ll be fine. Define for yourself a well thought out plan for your real estate acquisition and stick to it. Buying a home is a process…not an event like the Super Bowl.
What is a short sale?
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency
FHA Loan Facts for you to understand a FHA loan.
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