5 Things Consumers Should Expect From Housing Market In 2013

   In 2012, the national housing market finally turned a corner. We’ve now experienced 13 straight months of home value appreciation. Sales were up significantly over 2011 as buyers returned to the market, boosting demand.

   So what will 2013 have in store? Here are five things consumers can expect to see in the housing market next year:

    Up, Up and Away

  • The national housing market hit bottom in October 2011, and home values have since risen 5.3 percent from that trough. The most recent Zillow Home Value Forecast calls for 2.5 percent appreciation nationwide from November 2012 to November 2013.
  • According to a recent Zillow survey of more than 100 economists and analysts, respondents predicted home values (based on the S&P/Case-Shiller U.S. National Home Price Index) to rise 3.1 percent in 2013, on average.
  • Most markets covered by Zillow’s Real Estate Market Reports have already bottomed out, with only 10 of 255 covered metro areas not projected to hit a bottom within the next year.

   Bottom Line: Homeowners looking to sell in 2013 can largely rest assured they won’t be selling at the bottom, and many will find themselves in a sellers’ market. Potential buyers in 2013 may be more motivated to get a deal done while affordability is still extremely high and mortgage rates continue to be historically low.

   Real Estate Is Local Again

  • According to the Zillow Breakeven Horizon, buying beats renting when staying in the home for three years or more in roughly 60 percent of U.S. metros. The areas where it might make more sense to buy (if you’re planning on staying for three-plus years) are clustered in the Southwest and Southeast. If you won’t be staying put for at least a few years, consider renting in the Northeast, where buying often doesn’t make more financial sense until five years or more.
  • The goal of Zillow’s Buyer/Seller Index is to determine where buyers have the most leverage in a sale, and where sellers might have the upper hand. In general, we determined that metro areas in the West and Southwest – including the Bay Area, Las Vegas and Phoenix – are strong for sellers. Metros in the Midwest and Mid-Atlantic – places such as Chicago, Cleveland and Philadelphia – are best for buyers.

   Bottom Line: The housing market recovery has remained true to the old real estate axiom of “location, location, location.” How your local market is faring today – and if it makes more sense to buy or rent, to sell now or to hold off if possible – is largely determined by unique, local factors and fundamentals. Arming yourself with timely and comprehensive local market information is good advice at any time, but will be even more important in 2013 as buyers continue to seek bargains and sellers look to maximize returns.

   Coming Up for Air

  • In the third quarter of 2012, the percentage of homeowners with a mortgage in negative equity – or “underwater,” owing more on their mortgage than their home was worth – fell below 30 percent for the first time since Zillow began tracking that data using an improved methodology in early 2011.
  • Still, 28.2 percent of homeowners with a mortgage remain underwater. Because underwater owners have a far more difficult time selling their home, a large number of homes that otherwise might end up on the market aren’t getting listed. As a result, inventory in many areas is incredibly tight, leaving buyers to fight it out amongst themselves, which in turn can help drive up prices. This, among other factors, has led to tight inventory in many of the hardest-hit cities around the country.

   Bottom Line: As home values continue their upward march in 2013, more homeowners currently trapped underwater will begin to surface. This will be good for buyers exhausted by limited inventory and intense competition in markets such as Phoenix and Miami, but it will also have the effect of cooling price increases. As a result, in 2013, we predict home value appreciation in many areas will look more like a series of steps, characterized by cycles of price spikes and plateaus. Price spikes will free some homeowners from negative equity, allowing them to sell, thereby easing supply constraints and dampening prices until the cycle is repeated.

   Historically Affordable

  • Mortgage interest rates have been hovering at or near historic lows for the past year, and the Federal Reserve has taken concrete steps to ensure they stay low for at least the foreseeable future.
  • At the same time, home values – while recovering nicely – still have a long way to go to reach their pre-bubble levels. Overall, national home values in November were still down 19.4 percent from their peak in May 2007, according to Zillow.

   Bottom Line: Between 1985 and 2000, Americans spent, on average, about 20 percent of their household income on mortgage payments. That percentage increased to more than 24 percent by 2006, before falling to just 13 percent by the second quarter of 2012. If you can qualify for a home loan, the combination of low rates and low prices means your home-buying dollar will continue to take you farther in 2013 than in recent years, even for buyers on modest budgets.
Mortgage Interest Deducted?

  • Changes to the mortgage interest deduction (MID) may be a key element of any “grand bargain” reached by politicians in order to avert the year-end fiscal cliff. If adopted, any measure to limit or repeal the MID will result in some home price impacts over time and by market segment.
  • Home values at the high end of the market will likely be more negatively impacted by MID changes than home values overall, according to a recent Zillow survey of economists. For example, in the event that the maximum MID-eligible mortgage amount is reduced from $1 million to $500,000 and the deduction allowance for second homes is eliminated, the majority of respondents said they expect high-end home prices to fall while U.S. home prices overall experience little or no price impact.

   Bottom Line: Real estate lobbying groups have long fought against changes to tax rules allowing for the deduction of mortgage interest, arguing that any changes will impact or eliminate some of the historic financial advantages of owning a home. But unless you’re buying a proportionally more expensive home or are buying in a more expensive area, the impacts of MID changes will likely be muted. The decision to buy or sell a home is highly personal and dependent on a number of factors, only one of which is potential tax implications. In 2013, make your decision to buy or sell based on your own informed opinion and your unique situation.

   Click here to contact Roy for more information or questions concerning your real estate goals.

Homebuying spree hits all corners of O.C.

from Jonathan Lansner and Jeff Collins at OC Register

Our analysis of DataQuick trends shows a broad-based homebuying push — regionally speaking — lead Orange County to its best first-half sales in six years.

 That was a key highlight of our region-by-region study of how recent housing trends hit various corners of Orange County in the first half of 2012 …

Mid-County: These ZIPs — median selling price $456,375 — had 4,884 sales, +15.2% from a year ago. This was largest year-to-year gain among the four regions. In these 25 ZIPs, the median price change was -4.2% in a year. Mid-County accounted for 24% of recent home sales vs. 24% a year ago.

  • South Inland: These ZIPs — median selling price $440,000 — had 3,752 sales, +13.3% from a year ago. In these 19 ZIPs, median price change was +0.6% in a year. South Inland accounted for 23% of recent home sales vs. 23% a year ago.
  • Beach Towns: 3,630 homes sold in these ZIP codes in the most recent period, +12.9% from a year ago. Median selling price? $430,000 in these 17 ZIPs. Median price change was -2.6% in a year. Beach Towns accounted for 23% of recent home sales vs. 23% a year ago.
  • North Inland: 3,817 homes sold in these Orange County ZIP codes in this most recent period, +10.2% from a year ago. This was largest year-to-year drop among the four regions. Median selling price? $449,500 in these 22 ZIPs. This most recent median price change was -2.4% in a year. North Inland accounted for 30% of recent home sales vs. 30% a year ago.

Other analysis: Continue reading “Homebuying spree hits all corners of O.C.” »

6 Ways Your Home Can Help You Retire

Once upon a time (i.e., 2006) in a magical place called the Bay Area, the real estate market got so heated that it became commonplace to hear coffee shop patrons trading stories about their little old million-dollar houses. It became equally commonplace for this excess of home equity to create a false sense of financial security, causing many a homeowner to save less for the future than they might have otherwise. This practice was just as inadvisable as it was common, as evidenced by a retirement planner’s primely located billboard at the time, which read:

“My house is worth a million dollars” is NOT a retirement plan.

But many people treated it like it was, to their detriment.

Relying upon your home equity for retirement requires that you sell the place at some point, cashing out and moving to someplace cheaper (and potentially less desirable) to live, when you stop working.  That said, there are a number of other, less risky ways you can use your home 5, 10, even 20 years in advance of your planned retirement date to:

  • save cash now, so you can add it to your investments

  • increase your income now, also adding it to your retirement nest egg, and/or

  • reduce your expenses later, which might allow you to retire sooner (at a time when retiring at all is a true feat).

Here are six sets of strategies for using your home to help you retire – without having to  sell the place and retire in Timbuktu:

1.  Put your spare space to work.

Depending on where you live and whether you have room, you may be able to rent your home out, a little bit at a time. On sites like VRBO and Airbnb you can rent out as little as one room, your mother-in-law unit or your whole house for one night, one week or one month (or any combination of these). Also, savvy homeowners are increasingly renting out spare rooms or floors for the long-term.  I know a number of people who are now renting out their own homes while they travel on their own vacations, and still others who rent out their extra rooms while they’re at home, enjoying the side benefit of meeting new people.

If you do put your extra rooms to work, you can use the extra income to pay down your debt or to pile onto your retirement fund – just be careful of your local rent control laws, especially if you’re doing anything longer than a vacation rental.

2.  Hack your utilities.  

If you do the whole weather-stripping-and-dual-pane-windowing drill, you definitely stand to save some cash on your monthly utility bills. But in some areas, homeowners might also be able to save, big-time, with little or no cash out of pocket by opting out of their regular utility service and into something called solar power service. These companies sell solar power as a service, on a long-term contract, so home owners don’t have to pay for panels, then charge a lower power rate than the traditional utilities.

What you save over these years you can redirect to your retirement.  And to boot, some of these companies also allow you to fix your utility rate for a 20-year period so that in your retirement years, you will not be exposed to the unpredictability of energy rate increases.

3.  Pay your mortgage off early.

There are two levers you can pull to supercharge your retirement plan: (1) you can boost the income you’ll have to save and live on or (2) you can slash your future living expenses. The largest of these living expenses is, of course, your mortgage. For my grandmother’s generation, the norm was to pay off your 30-year mortgage right about the same time you were winding down a 30-year career. But today, it’s much more common for people to retire with 5, 10, 15 years or more still left on their mortgages.

One way to get to retirement sooner? Pay your mortgage off early. Enter three different time frames in which you’d like to pay your home loan off (i.e., in 7, 9 and 11 years from now) and enter that time period and the current balance you still owe on your mortgage (loan amount) into our mortgage terms calculator to figure out how much you’d have to pay every month to meet any of these targets.

If you can’t swing making a higher payment for one of your ideal payoff time frames, try this: simply round your monthly payment up to the nearest hundred or thousand dollars every month, if you can afford it. You’d be surprised at how even small, extra payments can snowball into an early mortgage payoff.

Here’s another option: pay 1/2 of your monthly every two weeks – because there are 52 weeks in the year, paying on that schedule results in making 26 half, and 13 full payments each year. The extra payment can pay off a 30 year loan as much as 4 or 5 years early! (Note: you can get the same result by simply paying an extra 1/12th of your mortgage payment every month.)  However you do it, make sure you tell your mortgage servicer to dedicate any overage you pay toward your principal balance.

4.  Tune up your mortgage.

If you’ve been in your home a few years, it can be easy to tune out of the whole mortgage scene – especially after five years of mostly bad news. But the news now might be better than you think, as home values are starting to steady and even edge up, and rates are still uber-low. If you have a 6 percent home loan you got 6 years ago, you stand to save thousands and thousands of dollars by refinancing into a 3.6 percent loan (the going rate this week). And that’s thousands and thousands you can put into your retirement fund. (Of course, the precise amount that you personally will save from refinancing depends on your current interest rate, your loan amount and the costs you incur refinancing.)

So, reconnect with your mortgage broker and pay attention to interest rates – especially if you’re paying more than 5 percent. And just generally click out of mortgage autopilot, watching your statements and asking questions about things you don’t understand. For example, you might still be paying a Private Mortgage Insurance premium that you can get removed upon request, assuming you’ve been in the loan long enough and your home has enough value beyond the loan amount (the precise standards vary from loan to loan, but check in with your mortgage broker and your lender to see if you can ditch your PMI payments anytime soon and put that money toward your retirement savings).

5.  Start a side business from home.

Put your home to work! Whether you use your space to dog-sit, baby-sit, bake or make preserves to sell at the farmer’s market, using your home to start a side business or to work a side job can pull the “extra income” lever of the retirement cushion-fluffing equation. It might also enable you to claim a home office deduction from your income taxes, depending on whether you’re able to dedicate the space completely to your business endeavor.

Read The $100 Startup to make sure you don’t spend more in startup expenses than you make. Also, consult with a tax expert to be sure that you dot your i’s and cross your t’s; depending on how you structure your business, you may end up increasing your tax burden, an unpleasant result a real pro can help you avoid.

6.  Trim your taxes. Follow these steps:

  • Type your address into the search box at Trulia.com.
  • Compare the Trulia Estimate against the tax assessment (you can find your assessed value on the same page under Property Taxes, or on your tax bill).
  • If your Trulia Estimate – or the prices you know nearby homes have recently sold for – is at or below the assessed value, you may want to apply to have your home’s value reassessed.

On your county tax assessor’s website, you’ll find the instructions and paperwork for submitting this request. (If you don’t, give them a ring!) They generally will ask you to tell them what you think your home is actually worth, and to provide some recent, comparable sales to back that dollar amount up (scroll all the way down on your home’s Trulia page, to the Sold Properties section for recently sold homes that might work).

The theme?  If you can save on taxes, utilities or mortgage interest, we’re talking about the potential to save tens, even hundreds of thousands of dollars over the years between now and retirement – much more than cutting back on coffee or the occasional meal out. Same goes with using your home to bring in some extra income or paying off your mortgage early – the potential retirement-boosting results are unparalleled.

Shedding a Little Light on Shadow Inventory

Last week, we posted a blog titled: The Impact of Distressed Properties on Neighboring Values. In the article, we said there would be more distressed properties coming to market in the next six months and that these properties would put added downward pressure on prices of other homes in the area. Some questioned our assumption that foreclosures were about to increase and others questioned our assertion that they would have a negative impact on values. We want to qualify both of our statements today.

Distressed properties are about to increase

We have been in the ‘eye of the storm’ regarding the shadow inventory of foreclosure properties for the last several months. Foreclosures have been delayed by court systems mandating that the banks have their paperwork in order. Just last week, Fannie Mae addressed this issue in a report:

“Our foreclosure rates remain high. However, foreclosure levels were lower than what they otherwise would have been in the first quarter of 2011 due to the delays caused by servicer foreclosure process deficiencies and the resulting foreclosure pause.”

In their First Quarter 2011 Financial Results Supplement, Freddie Mac, also addressed this issue last week:

“We expect the pace of our REO acquisitions to increase in the remainder of 2011, in part due to the resumption of foreclosure activity by servicers, as well as the transition of many seriously delinquent loans to REO.”

More foreclosures will be coming to the market throughout 2011.

Distressed properties impact prices of surrounding properties 

Clear Capital discussed this point in their May 2011 Market Report. In the report they used two graphs to emphasize the connection. In the first graph, they charted the national saturation rate of foreclosures (REOs) from 2008 until the present.


In the second graph they charted national home prices during the same time period.


We can see that as the saturation rate of foreclosures increase, prices decrease.

Bottom Line

More foreclosures will be coming to market and they will have an impact on values. How will your neighborhood be affected? Sit down with a local real estate expert to find out.

NEWSFLASH: There Is NO Inventory!!!

I was in a conversation with one of the most productive agents in our area recently and he told me that there were “no homes for him to sell”. I thought he had a brain cramp. Look at all the ‘For Sale’ signs, all the homes on MLS, all the short sales and foreclosures plus all the shadow inventory on its way. Had this respected agent lost his mind?

As he saw the puzzled expression on my face (which was his intent), he began to explain that every home that is priced correctly is being gobbled up by buyers right away. The only homes that remain on the market for more than 30 days are the ones where the price doesn’t COMPEL a buyer (even multiple buyers) to make an offer.

I pondered his assertion for a while and his premise began to make more and more sense because I am witnessing:

1. Increased attendance at Open Houses. Buyers are coming out to look because they know now is the time to buy(great interest rates with higher rates around the bend, huge inventory available, etc.)
2. Realistic sellers (in terms of asking price) are getting significantly more traffic. This results in an increase in interested buyers; more interested buyers push prices higher. By adjusting prices, many sellers are getting higher offers. By remaining overpriced (and hoping to negotiate down), other sellers are seeing no traffic and no offers.
Why are there record numbers of homes on the market when the properly priced homes are being gobbled up (some at even higher than the listing price)? Because there is a huge difference between a home ‘being on the market’ and a home that is seriously ‘for sale’. Sellers who are serious about selling are aggressive with pricing because that is how you gain the highest price. A little counter-intuitive maybe; but, it’s very true.

Pricing is the centerpiece of your real estate agents marketing plan (although not the only component). The marketing plan should be designed to drive as many qualified buyers to see your home because THAT is the single most important factor in getting the most money – the number of people bidding. My advice is to give yourself the best chance for highest bids by pricing the home at a compelling number.

Brea vs. Foothill 9/30/10


Brea vs. Diamond Bar 9/23/10

Hello freshmen football parents,

This week all videos are combined in one embedded YouTube box. I was running short on time and this was a quick fix. However, all football highlights from last week’s game are included in the video mix. If you didn’t find a particular play/highlight, please send me a comment below and I’ll try to include it.

Also, your comments and thoughts are welcomed. So we may get some conversations going amongst the parents, I encourage all to leave at least one comment below. Thanks for your support.

Roy Hernandez


Brea vs. Sonora 9/16/2010

Run Ritchie, Run! Brea up 7-0!


Fumble recovery by Ammon Hernandez


Big run around the corner by Ritchie Main!


Nice catch by Cameron Bishop!


Touchdown from Ritchie Main to Diego Chavarria. Brea up 13-0!


Strong Brea Defense!


QB sneak for BIG yards!


Good O-Line blocking results in a TOUCHDOWN! Brea up 19-0!


Brea fumble recovery by Zach Owens.


Nice tackle in the backfield by Cameron Graciarena!


Great blocking O-line! Michaelangelo Talag breaks free…


Colin Williams gashes the Sonora D!


Hernandez block springs Michaelangelo for a big run!


Fantastic run by Tyler Inman.


Tyler Inman takes it in for a TD! Brea up 27-0!


Ritchie and Diego hook up for their 2nd TD! Brea up 34-0!


Zach Owens tackles Sonora for a loss!


Colin Williams makes a spectacular interception!