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Homes for Sale in the Dana Estates Neighborhood of Concord

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Historic Low Rates… Bad for Homebuyers?

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I enjoy reading smart people and Jay Voorhees at JVM Lending is a smart guy. He writes this:

… Here is my point: efficient markets theory applies to housing too, which means that subsidies in any form will usually drive up the price of housing.

And very low rates fostered by the gov’t policy are a subsidy of sorts, and they will push up the price of housing – again.

In the short run, lower rates are definitely a gift for most borrowers, but over the long run, housing prices usually adjust to reflect the impact of lower rates.

We are seeing a huge surge in demand for housing now, driven by pent up demand from buyers who were on the sidelines b/c of COVID-19 and by demographics overall.

But another reason demand is so strong is low rates, and we are already seeing the results.

July Bidding Wars Jumped 5x From 2019, according to this article from National Mortgage News.

Why Low Rates Are BAD For Homebuyers

Bottom Line

Demand for housing is strong in the East Bay. Some clients are moving out of denser areas and moving to our area for outdoor space, a bigger house, and for better schooling options in a Covid-impacted world.

For Buyers

If you are thinking of buying a home, be prepared to write a strong offer and to face competition. Make sure you have your financing lined up and that you are working with an experienced real estate agent.

For Sellers

With high demand and low rates, buyers are competing for well priced homes. It is a great time to sell your Dana Estates home!

Peter Maclennan
Broker
DRE#: 01801793
925-385-8798

A Great Time to Buy or Refinance???!!! – Dana Estates Real Estate

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According to the article today on January 30, 2020 Mortgage Rates Basically at Best Levels Since 2016:

For top tier scenarios, the average lender is now offering rates not seen since 2016, with the slight exception of a few hours during the beginning of September 2019….  In other words, today is tied for the lowest levels in more than 3 years.

Matthew Graham

Time to Buy or Refinance

The graphic below indicates how purchasing power decreases as rates increase.

Graphic depicting the decreasing purchasing power as interest rates rise.

The inverse of the graphic is also true. As mortgage rates decrease, buyers can afford a higher priced home. Current owners can lower their payments.

This could be an opportunity to move up in home or to lock in a low rate mortgage. If you are interested in seeing how you could benefit, give me a call at 925-385-8798.

Millennials’ Scary Strategy to Afford Down Payments

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If you take a look at national home values over the last decade, you will not be shocked that few millennials are able to afford down payments in recent years. Yet, homes continue to sell, and first-time homebuyers are scrambling to make down payments by whatever means possible.

Millennials' scary strategy to afford down payments - savings graphic

As Bankrate mortgage analyst Deborah Kearns told MarketWatch.com, “[Millennials are] having to be very creative and diversify the ways that they’re coming up with their down-payment and closing cost money.”

One of these ways, according to a Bankrate housing survey, is dipping into retirement savings–a scary concept to financial advisers. Thirteen percent of millennials say they will use retirement savings to fund down payments, compared with just 8% of Gen Xers and 7% of baby boomers.

It is possible that millennials feel as though they have more time to recover the lost retirement savings after they buy a house, as they are still relatively far from retirement age. And although 13% is far from a majority, it worries financial analysts, who advise keeping retirement savings intact no matter what.

Among those millennials who do not yet own a home, the largest barriers to home ownership include: income too low (52%), cost of living too high (45%), and remaining student loan debt (23%). View the Bankrate survey infogram here.

It’s no surprise homebuyers are struggling to make down payments in high-cost residential areas of California. In Dana Estates alone, the median home price was $615,000 in 2018. See below for the Dana Estates market report for 2018Q1 through 2019Q1.

2018-2019 Dana Estates Housing Market Report

So what should you do if you still want to buy a home? Kearns advises that you leave your retirement savings untouched. Instead, carefully estimate what size mortgage you can afford and then start a savings account specifically for your down payment and closing costs.

And as always, consult a financial adviser before making large shifts in your budget. Even if you can afford it, protect your future by making informed decisions. Buying a house is a big decision, but that alone should not keep you from taking such an important step. Owning a home is possibly the most effective way you can build wealth and root your life in a community.

Having a knowledgeable and experienced real estate broker on your side helps protect your interests and ensure you make the best possible decisions. We are dedicated to keeping on top of the real estate market and keeping you informed of changes. You can rest easily knowing you made a well-informed decision based on experience and insight into the Concord California market.

To reach Peter Maclennan please call 925.385.8798 or email at peter@maclennaninvestments.com.

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Getting Pre-Approved Should Always Be Your First Step

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first steps real estateThe Concord real estate market is still very active, especially Dana Estates real estate. Reasonable sellers are receiving offers quickly and buyer confidence remains strong. There are multiple price points and types of houses available in Concord, CA.

Particularly around the Dana Estates neighborhood 94519 zip code, homes are in demand. The neighborhood provides convenient access to Highway 4 and to downtown Concord. It is also about equal distance from both the Concord BART station and the North Concord BART station.

Purchasing a home is one of the largest financial decisions that a family can make. Because of the size of the transaction, there are many complicated decisions that surround the purchase of a home.

Today we are going to talk about: Getting Pre-Approved Should Always Be Your First Step

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so.

Source… KCM Peter Maclennan Blog

Having a knowledgeable and experienced real estate broker on your side helps protect your interests and insure you make the best possible decisions. We are dedicated to keeping on top of the real estate market and keeping you informed of changes. You can rest easily knowing you made a well-informed decision based on experience and insight into the Concord California market.

To reach us please call 925.385.8798 or email us at peter@maclennaninvestments.com.

Search for the newest real estate listings in Concord, CA by map (click the map below):

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Closing Chaos – Top 5 Delays for Close of Escrow

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Top 5 Delays of Close of Escrow

The infographic below courtesy of the California Association of Realtors explains some of the most common reasons for a delayed settlement.

delays to close of escrow
Courtesy of California Association of Realtors

Looking ahead to the spring, expect a busy time with many homes coming for sale in a busy market. With this in mind, avoiding these hurdles can really help real estate buyers have a quick, smooth closing process.

Issues related to obtaining financing:

Many buyers get preapproved, which means getting a written loan commitment from a bank saying it will provide you with a mortgage for a certain amount of money. This is a smart move and helps make the financing process go smoothly but there are still problems that can arise and prevent the loan from closing. If the loan application was inaccurate, interest rates go up sharply, your job situation changes, or the borrower’s credit score changes it could result in the closing process being drawn out to fix any problems.

Appraisal issues:

Once a home goes into contract, the bank has to be assured that the value of the home is equal to the price paid. The appraisal does this by comparing the sale price to recent sales of comparable homes. If the appraiser deems that the price is too high, it can cause issues with financing the home purchase.

Home inspection/environmental issues:

Most purchase offers have a contingency written into them, so that if the inspection reveals serious problems, the buyer can back out of the purchase. Based on the home inspection a buyer may want to renegotiate the price or ask the seller to perform repairs prior to close of escrow. These negotiations and repairs can delay the closing process.

Titling/deed issues:

Title insurance is provided so that the buyer’s ownership is free of defect and that no other person can claim ownership. Sometimes in that process a discrepancy or error in prior transfers is discovered. Resolving these issues can take time to find the prior owner to clear the issue.

Contingencies stated in the contract

Other contingencies such as selling a home or paying off a debt can delay closing as well.

Bottom Line

Doing your best to avoid these issues can lead to a quick closing and aid in success whether you are purchasing or selling a home.

Buying a Home in Concord.

If you are looking to buy a home or sell a home around Concord, CA, I would be delighted to help you. Please feel free to call me at 925.385.8798 or use the contact form to get in touch.

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Bubble Alert! Is it Getting Too Easy to Get a Mortgage? | Concord CA Real Estate

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Bubble Alert! Is it Getting Too Easy to Get a Mortgage? | Concord CA Real EstateBubble Alert! Is it Getting Too Easy to Get a Mortgage?

The Concord CA real estate market is still very active. Reasonable sellers are receiving offers quickly and buyer confidence remains strong. There are multiple price points and types of houses available in Concord, CA.

Particularly around the Dana Estates neighborhood 94519 zip code, homes are in demand. The neighborhood provides convenient access to Highway 4 and to downtown Concord. It is also about equal distance from both the Concord BART station and the North Concord BART station.

Purchasing a home is one of the largest financial decisions that a family can make. Because of the size of the transaction, there are many complicated decisions that surround the purchase of a home.

Today we are going to talk about: Is it Getting Too Easy to Get a Mortgage?

There is little doubt that it is easier to get a home mortgage today than it was last year. The Mortgage Credit Availability Index (MCAI), published by the Mortgage Bankers Association, shows that mortgage credit has become more available in each of the last several years. In fact, in just the last year:

  • More buyers are putting less than 20% down to purchase a home
  • The average credit score on closed mortgages is lower
  • More low-down-payment programs have been introduced

This has some people worrying that we are returning to the lax lending standards which led to the boom and bust that real estate experienced ten years ago. Let’s alleviate some of that concern.

The graph below shows the MCAI going back to the boom years of 2004-2005. The higher the graph line, the easier it was to get a mortgage.

Bubble Alert! Is it Getting Too Easy to Get a Mortgage? | Simplifying The Market

 

As you can see, lending standards were much more lenient from 2004 to 2007. Though it has gradually become easier to get a mortgage since 2011, we are nowhere near the lenient standards during the boom.

The Urban Institute also publishes a Home Credit Availability Index (HCAI). According to the Institute, the HCAI:

“Measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates … it is easier to get a loan.”

Here is a graph showing their findings:

Bubble Alert! Is it Getting Too Easy to Get a Mortgage? | Simplifying The Market

Again, today’s lending standards are nowhere near the levels of the boom years. As a matter of fact, they are more stringent than they were even before the boom.

Bottom Line

It is getting easier to gain financing for a home purchase. However, we are not seeing the irresponsible lending that caused the housing crisis.

Source… Peter Maclennan KCM Blog

Having a knowledgeable and experienced real estate broker on your side helps protect your interests and insure you make the best possible decisions. We are dedicated to keeping on top of the real estate market and keeping you informed of changes. You can rest easily knowing you made a well-informed decision based on experience and insight into the Concord California market.

To reach us please call 925.385.8798 or email us at peter@maclennaninvestments.com.

Search for the newest real estate listings in Concord, CA by map (click the map below):

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Concord CA Real Estate Map Search

Dana Estates Real Estate | Renting or Buying…Either Way, You’re Paying Someone’s Mortgage

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Renting or Buying…Either Way, You're Paying Someone's Mortgage | Dana Estates Real Estate

Dana Estates Real Estate | Renting or Buying…Either Way, You’re Paying Someone’s Mortgage

The real estate market in Concord, California is still very active. Reasonable sellers are receiving offers quickly and buyer confidence remains strong. There are multiple price points and types of houses available in Concord, CA.

Particularly around the Dana Estates neighborhood 94519 zip code, homes are in demand. The neighborhood provides convenient access to Highway 4 and to downtown Concord. It is also about equal distance from both the Concord BART station and the North Concord BART station.

Purchasing a home is one of the largest financial decisions that a family can make. Because of the size of the transaction, there are many complicated decisions that surround the purchase of a home.

Today we are going to talk about: Renting or Buying…Either Way, You’re Paying Someone’s Mortgage.

There are some people who have not purchased homes yet because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich,”

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 3.94% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Source… KCM Peter Maclennan Blog

Having a knowledgeable and experienced real estate broker on your side helps protect your interests and insure you make the best possible decisions. We are dedicated to keeping on top of the real estate market and keeping you informed of changes. You can rest easily knowing you made a well-informed decision based on experience and insight into the Concord California market.

To reach us please call 925.385.8798 or email us at peter@maclennaninvestments.com.

Search for the newest real estate listings in Concord, CA by map (click the map below):

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Concord CA Real Estate Map Search

Problems with PACE Financing for Single-Family Homes

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Solar Panels on a Home - PACE Loans

What are PACE Loans?

Property Assessed Clean Energy (PACE) program is a means of financing energy-efficient upgrades by attaching the costs of the upgrades to a property’s tax bill.

Under PACE programs, municipalities and counties form special tax districts to help property owners finance energy retrofits by allowing a property owner to place an additional tax assessment on his or her property. Property owners who invest in energy efficiency (EE) measures and small renewable energy (RE) systems repay these assessments over 15 to 25 years via additional annual payments on their property tax bills.

Many homeowners are using these loans to finance solar panel installations, energy-efficient window upgrades, and other projects to improve their home’s energy efficiency.

Which Contra Costa Communities are Participating in the PACE Program?

According to CaliforniaFirst.org, a public/private financing program that allows you to receive upfront funding for EE improvements, the following cities in Contra Costa County are participating in the PACE program:

  • Antioch
  • Brentwood
  • Clayton
  • Concord
  • Danville
  • El Cerrito
  • Lafayette
  • Martinez
  • Oakley
  • Pittsburg
  • Pleasant Hill
  • Richmond
  • San Pablo
  • San Ramon
  • Walnut Creek

What’s Wrong with PACE Financing?

PACE itself isn’t a bad program. However, it may affect the ability of a homeowner to sell a home because of financing.

How? Well, according to the Federal Housing Finance Agency (FHFA), the two biggest purchasers of mortgages on the secondary market, Fannie Mae & Freddie Mac, prohibit the purchase of a mortgage that may be subordinated to a PACE loan. As well they won’t refinance a mortgage with this type of financing in place.

From the FHFA Website:

​In issuing this statement, FHFA wants to make clear to homeowners, lenders, other financial institutions, state officials, and the public that Fannie Mae and Freddie Mac’s policies prohibit the purchase of a mortgage where the property has a first-lien PACE loan attached to it.  This restriction has two potential implications for borrowers.  First, a homeowner with a first-lien PACE loan cannot refinance their existing mortgage with a Fannie Mae or Freddie Mac mortgage.  Second, anyone wanting to buy a home that already has a first-lien PACE loan cannot use a Fannie Mae or Freddie Mac loan for the purchase.  These restrictions may reduce the marketability of the house or require the homeowner to pay off the PACE loan before selling the house.

What does this mean?

Basically the FHFA is saying that because PACE loans go on the tax bill, they have a priority over a loan from Fannie or Freddie. Consequently, should Fannie or Freddie foreclose on a property, they would be responsible for repaying the debt incurred through the PACE program. This is an additional risk that a lender doesn’t want to take on. Consequently, they won’t finance properties with this type of lien on title.

Since most mortgage companies make loans with at least the option, if not the intention, of selling the mortgage to Fannie Mae or Freddie Mac this makes finding financing a home with an outstanding PACE loan very difficult. Lenders don’t want to limit the pool of interested buyers for their mortgages, especially to the two largest buyers of mortgages.

What are the solutions?

What is a homeowner to do if they want to sell their home and they have a PACE loan in place?

1) Don’t sell. Just hold the property until the PACE loan is repaid. This is fine if this is your dream home and you plan on living there through the life of your loan.

2) Find a cash buyer. Cash buyers don’t need a mortgage so it won’t impact them. They may have a slightly higher tax obligation, but the benefits of energy efficiency should offset that.

3) Pay off the PACE loan at the sale. This is the most likely scenario. The PACE loan will likely have to be repaid from the sales proceeds at the time of sale. This means that if you borrow $20,000 to install new windows or a new solar system, likely you will have to repay that $20,000 at the time of the sale of your home during escrow. This will decrease the proceeds you obtain to buy your next home.

4) If you plan to sell in the near future, avoid using a PACE loan to finance upgrades. Until this situation is resolved, it may be best to avoid financing energy-efficient upgrades with this type of loan program.

PACE may be a useful tool to finance energy-efficient upgrades to your home. However, it may hinder your ability to refinance or sell your home.

If you have other real estate related questions, please feel free to call Peter Maclennan with Perception Real Estate.

Additional Reading:

*Photo Credit: Solar Panels by wallheater used by Creative Commons License 2.0

Is 100% Financing Available?

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$0 Money Down Graphic

Not many lenders allow for 100% financing or no down payment. There are a few circumstances that do allow it.

  1. If you are or were a member of the military. (VA Loan)
  2. USDA Rural Loans

VA Loans

If you were a member of the military, you may qualify for 100% financing of your primary residence. The Veterans Administration (VA) provides a home loan guaranty benefit and other housing-related programs to help veterans buy, build, repair, retain, or adapt a home for their own occupancy. Because the VA guarantees a portion of the loan amount, lenders are able to offer more favorable terms to eligible veterans.

These VA loans are subject to strict criteria on loan limits, minimum property requirements (MPR), and a condo association must be VA approved. This is an attractive incentive for faithful service in the United States Military.

USDA Rural Development Loans

The USDA guarantees loans in certain rural areas. These loans do not require a down payment. These loans are only available in rural areas and are meant to support housing in these areas.

  • 100% financing, no down payment is required. The loan amount may not exceed 100% of the appraised value, plus the guarantee fee may be included.
  • Guarantee Fee applies: may be rolled into the loan amount.
  • Flexible credit guidelines. Non-traditional credit histories may be accepted.
  • Fixed 30 year interest rates apply. Lenders and applicants agree upon interest rate.
  • Qualifying ratios are 29% for housing costs and 41% for total debt. Lenders may request an exception to exceed these ratios when strong compensating factors are identified.
  • No maximum purchase price. Qualifying ratios and the applicant’s stable and dependable income will determine home affordability.
  • Eligible property types include existing homes, new construction, modular homes, Planned Unit Developments (PUD’s), eligible condominiums and new manufactured homes.
  • Eligible closing costs and lender fees may be included in the loan or paid by the applicant.
  • Gift/Grant Funds/Mortgage Credit Certificates (MCC’s)/Seller Concessions are allowed.
  • Eligible repairs and improvements may be included in the loan.
  • Applicants apply with an approved lender of their choice.
  • Not limited to first time home buyers.

Low Down Payment Options

Section 184 Loan

According to the HUD website:

The Section 184 Indian Home Loan Guarantee Program is a home mortgage specifically designed for American Indian and Alaska Native families, Alaska Villages, Tribes, or Tribally Designated Housing Entities. Section 184 loans can be used, both on and off native lands, for new construction, rehabilitation, purchase of an existing home, or refinance.

The Section 184 Loan allows for a low down payment of as little as 2.5%. It also has no monthly mortgage insurance, but instead charges an up front fee of 1.5% of the loan amount.

A list of currently approved lenders is available here.

FHA

The Federal Housing Authority (FHA) insures low down payment loans. This allows you to finance a home with as little as 3.5% down.  The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. This program is called the 203(b) program. It is available for properties with 1-4 units.

Conventional Loans

Some conventional lenders will lend with as little as 5% down. These programs have private mortgage insurance (PMI) that will insure the lender for losses above the traditional lending limit of 80%. PMI adds an additional cost to borrowers.

Down Payment Sources

The down payment  for most loans can come from a variety of sources.

  • It can come as a gift from a family member or friend. This must truly be a gift and not a loan in the form of a gift.
  • It can come from 401k and retirement plans. Check with the HR department at your employer to see if they allow you to make a loan to yourself from your 401k plan to apply towards a down payment. This can be a great option if saving for a down payment is tough.
  • Your down payment can also come from savings. This takes discipline and practice. Here is a good article from the Washington Post with some helpful tips.

Have a question about financing? Contact us below to get an answer.

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