Best Laid Plans

So much for committing to do a post a week.  It's been a busy spring with real estate sales, then a vacation to Northern Europe, then a home remodel.   So what's next? 

Interest rates were down, then they were up and then they are down again.  Not down as far as they were but down from their recent high. 

Property sales were crazy while interest rates were at their all time low but first time buyers had little chance of getting into their first home because of all of the competition.  Property prices were increasing and multiple offers on homes were the norm.  In one case, a Sonoma County home, had 23 offers.  If that wasn't bad enough, if you were counting on taking advantage of the low interest rates you then had to compete with the "all cash" investor that knocked you out of deal. 

It can be very discouraging when you visit multiple properties, put offers in, and then get knocked out of the deal because someone has put in an over inflated offer or they've come in with all cash.

But - some first time buyers did get find a property and did get their first home closed and with good interest rates.  Persistence pays off.   



This home just came on the market
 in Santa Rosa, 1975 sq ft $349K

The craziness seems to have slowed down a little and interest rates are still low compared to where they were a number of years ago.  Is it a good time to buy?  I don't know, but I think it is.  On an overall scale - prices will continue to increase and there is a comfort in owning a home. 

I think properties in Santa Rosa, are comparatively, a good deal.  Santa Rosa is also a great town with all of the amenities.  It might be worth taking a look.
 

 

Is Now The Right Time To Buy a Home

If you are considering buying your first home, is now the right time? 

First time home buyers are challenged with questions and few solid answers.  Interest rates seem to be going up.  Home prices are going up.  If I wait, will prices and interest rates, drop back down?  Will there be another housing bubble burst and will I be stuck with a loan I can't pay?  How stable is my job? 

When you are struggling to make ends meet and yet you have been saving for a down payment on your first home, it's hard to take that saved money out of the bank and use it for a down payment on a home with a 30 year loan commitment. It seems like every day a couple will come to me wanting to buy a home but worried about what is coming around the corner. 

As a realtor you might expect me to push the value of "getting in now" before it's too late.  Buying a home is a big decision and I would like to think that my approach is to always do what is in the best interest of my clients. 

I live in the same home my wife and I purchased 29 years ago.  We paid $80,000 for our home and it would now sell for between $650,000 and $700,000.  On the face of it, it would seem that we did all right.  But the interest rate at the time we purchased was 13% and many months it was difficult to make those high payments.  We ended up refinancing 3 times and the last interest rate we had was 6.6%.  Over the course of the 29 years we have probably put an additional $250,000 into the property.  There is the advantage of the interest rate deduction but you have to be making enough money to pay property taxes, mortgage payments, insurance and upkeep to then take advantage of the deduction.  But the house is paid for now and I can sit on my deck and know that I no longer have house payment and the home is mine.  Even though I still have to pay property taxes, insurance and upkeep, I'm glad I own my home.  No one is going to up my rent. 

There is something about owning your own home that even with all of the challenges I think it makes it worth it, at least to me.  Also - even with home prices going up, and interest rates moving in an upward direction, interest rates are at an all time low.  If you think you might want to own your own home at some point - now is probably a good time to get very serious about moving forward.  The biggest risk in waiting is not only home prices increasing but possibility of the Federal Government changing the deductibility of home interest rates (see below).

C.A.R. opposes bill that would reduce availability of mortgages
Yesterday, the House Financial Services Committee approved H.R. 2767, the Protecting American Taxpayers and Homeowners Act of 2013 (PATH). C.A.R. and NAR strongly oppose this bill because it would severely reduce the flow of capital to the mortgage market. When capital is reduced, the cost of mortgages increases, and the burden of the increases is passed on to consumers who could be priced out of the market and unable to purchase a home.

Other consequences of H.R. 2767 include:

• The 30-year, fixed-rate mortgage could become less readily available.
• The elimination of the conforming mortgage due to the abolishment of a government guarantee.
• Limiting FHA financing to first-time home buyers or low- and moderate-income home buyers.
• Lowering loan limits in high-cost states, such as California, forcing California home buyers to pay higher mortgage rates. 

How To Save On a True Custom Built Home

 - Not All Custom Built Homes Are Custom Built

Custom homes are great.  They're not tract homes.  You know when you go into your neighbor's home you are not going to mistake it for your own.  They have unique features for families that want to experience a better lifestyle.  They are generally built with a little more land and in some cases are built specifically to take advantage of the individual characteristics of the topography.  They also run significantly more money than you might find from major mass builders. 

Custom built homes have catchy adjectives such as, Artisan, Craftsman,  Cape Cod, Carriage, Colonial, French, Mediterranean, etc.  You not only get a "craftsman" home but you generally get a home built in a style that indicates "money."

There are individual builders that specialize in custom homes.  Builders may build on spec and then hope to sell the home and make enough money to go on to their next custom spec home.  They will have the latest features and fixtures and enough unique characteristics to justify the higher price.  Most of the spec homes are built to ready- made plans.  Custom homes built on contract for a specific owner will more likely come from custom plans from the owner's personal architect.  

Here's the challenge of buying a custom built home.  If you buy a custom built spec home - are you really getting your money's worth?  After all, the spec builder,  isn't in the building business for fun.  The builder needs to not only make a margin on his labor but the materials as well.  The features you will get on a spec built custom home are the items that visually stand out.  High-end stainless steel kitchen appliances, granite counter tops, high-end cabinets and bathrooms with top flight fixtures along with some type of stone shower.  But it's difficult to tell if corners were cut on the structural part of the home.  You would almost have to x-ray the entire home to see what is not visible and even then you would not see it all. 

On the other hand - if you're building from your architect's custom design, I can assure you that as the building process moves on, you will be adding enhancements that can quickly drive up costs.  Your $700K home now has a finished price tag of over $1M.  But it will be your home, built the way you want.   You know the true quality of your home because you've been there with the builder every step of the way.  It's great.  You plan to live there the rest of your life - right?

I love owner built custom homes.  No expense is spared and the thoughts that go into these homes set them apart. 

Buyer's Opportunity

If you are looking for a custom built home and can find one that is owner built, I can almost guarantee you that no matter what you pay for the home you are going to get a good deal.  When the owner of a owner built custom home finds out they need to sell, they rarely get out of the home what they have painstakingly put into it.  Remember - the home was built with the intention of the owners living there the rest of their lives.

Here's an example of a home I looked at over the weekend.  John and Cherie built their dream home on a 2 acre parcel with a view of the ocean.  They had their 3 plus, car garage built first with a "granny" unit built over the garage so they would be on site as their new home was being built.

From the exterior of the home it looks like a nice home but nothing immediately stands out other than the location.  It sits on 2 acres with an ocean view about 10 to 15 minutes from Mendocino on the Northern California Coast.  It's not right on the ocean so you don't need to worry about erosion, it sits far enough back so on many foggy days you are left in the sun.

John and Cherie now find they need to move from the area for personal reasons and leave the home built "for the rest of their lives."   Are they ever going to get out of this home what they have into it?  No.

This home has radiant floor heating throughout the house - including the shower.  No more cold feet.  The master suite was designed so the king bed can be placed on any of 3 walls with recessed lighting located to provide just the amount of light for each side of the bed no matter what wall the bed is placed against.  The kitchen appliances are Dacor.  An inexpensive Dacor range can run well over $4,000.  The exterior siding is Trex and was custom manufactured for John and Cherie with the redwood color impregnated during the manufacturing process.  It's "green" and will last for a 100 years if not more.  No "every 2 year" exterior painting required, no need to worry about termites in the siding.  Was it more expensive than redwood siding?  You bet.  But - it will last longer than redwood and you have saved a couple of trees.  

I'm sorry to see John and Cherie leaving the area.  They are nice people and they are leaving their dream home that they have spent a lot of money on to get just the way they wanted. 

For a buyer, John and Cherie's love that went into this home, will be the new owner's gain and the new owner will save a lot of money on this truly "custom" built home.

Real Estate Agents -

Real estate is interesting.  There are a lot of agents out there and each of those agents may have their own areas of specialization. Some focus on listings, working with sellers, other agents may work primarily with buyers and most probably do both.

The competition between agents can be fierce, especially in working to get a new listing. But yet, when it comes to helping each other out, I have never seen an industry where individual agents are so willing to support fellow agents.  Real estate agents also seem to have a strong desire to give back to their communities.  I'm not talking about giving back where the agent might directly benefit at a later date.  I'm speaking of giving back with no obvious link of a future relationship at all. Agent community organizations give freely of their time to local non-profits, such as food banks, senior centers, homeless shelters and any number of community supportive groups.

Prior to becoming an agent, I thought of real estate as a group of self-serving manipulators and speculators working to drive up pricing on properties for their own self gain.  What I now see are individuals, that for the most part, are motivated to help people find a home of their dreams and especially get much satisfaction in helping first time buyers get into their first home.  Funny how things change once you are on the other side.