We Still Aren't Recovered From Financial Crash, but Give It 2 More Years

by Jeff Brown, msn money
February 21, 2015

Two years and change — that's how long until home prices finish recovering all the losses from the financial crisis, according to a survey from Zillow.com.

The home sales and data firm says that by May 2017 the median home price should exceed its pre-recession peak of $196,400. If so, it will have taken roughly nine years to get back into the black after the home-price crash — a disturbing figure for homeowners who had long thought a house or condo to be not just a home but a key asset for retirement and other needs.

The survey of experts, conducted for Zillow by the research and consulting firm Pulsenomics, forecast a 4.4% price gain this year, well below the double-digit increases of a few years ago but still ahead of the long-term average of around 3% a year.

"During the past year, expectations for annual home value appreciation over the long run have remained flat, despite lower mortgage rates," says Pulsenomics founder Terry Loebs. "At 4.4%, overall expectations for nationwide home value growth in 2015 are one-third lower than the actual 6.6% appreciation rate recorded last year."

While homeowners prefer big price gains, the slowing pace is actually good news because it signals a soft landing, not another bubble likely to burst. Because a home is a big asset that is hard to sell, price volatility is hazardous to the owner's financial health.

Among the factors that muddy the situation: the high cost of renting. High rents give renters an incentive to buy, but they also make it hard to save up a down payment. Pulsenomics says it will take a couple of years for this situation to ease, arguing there's not much the federal government can do to make rents more affordable, though policies to lift wages and employment can help.

"Housing markets in general and rental dynamics in particular are uniquely local and demand local, market-driven policies," Zillow Chief Economist Stan Humphries says.

Tight supply of rental housing could be eased by making it easier for developers to build new units. That could involve speeding the approval process or changing zoning codes.

The pace of housing sales and home price gains is, in a sense, not a clear measure of supply and demand because many would-be buyers are shut out of the market by tight lending standards.

The credit availability index calculated by the Mortgage Bankers Association rose to 117.8 in January, compared with 100 in March 2012. But this is still far below the levels of 300 to nearly 900 in the Wild West days of 2004 to early 2007. While few experts recommend a return to the no-questions-asked policies that helped bring on the financial crisis, many feel today's standards are too tight, shutting out borrowers who are good risks.

Fortunately, there is some hope on this front.

"Several new initiatives aimed at making mortgage credit more available and affordable to consumers were recently announced and resulted in a net loosening of credit over the month," MBA Chief Economist Mike Fratantoni says.

Those include new Fannie Mae and Freddie Mac programs requiring down payments of only 3%, and a reduction in mortgage insurance premiums on FHA loans.

Those moves could bring more buyers into the market, ensuring that home prices continue to rise at a healthy pace.

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How to Choose the Right Tile Layout

Yanic Simard

Houzz contributor, Houzz.com

Whether you’re splurging on a rare natural stone or standing by classic porcelain, choosing a tile type is only part of the design decision. The way the tile is installed also matters. To help you figure out the best layout for your kitchen, bathroom and beyond, here are some of the most popular options.

Lisa Gabrielson Design

Brick

This is the classic layout for subway tile. In a brick pattern, each row of tiles is typically offset by half a tile width, which results in long, horizontal lines that can subtly widen a room. It’s a timeless layout that can work for any rectangular tile, making it a great option for virtually any space.

A brick layout can look especially stylish when paired with a contrasting grout color, such as gray grout with white tile, emphasizing the geometric pattern.

Where to use a brick pattern: Anywhere, but especially in spaces where one simple tile is used throughout.

EM DESIGN INTERIORS

Vertical Brick

Choosing a brick pattern but orienting it vertically takes the widening effect and rotates it, emphasizing the height of a space instead. It also adds a touch of contemporary appeal by being a little unexpected but still classic, for a fun twist that isn’t too trendy.

When to use a vertical brick pattern: To lift the ceiling height, such as in a compact bathroom.

Thomas Buckborough & Associates

Large Brick

An oversize brick pattern is not technically different from a standard brick, but the effect can be different, especially with rich stone tiles. Here the pattern helps minimize the visual impact of the grout, allowing the tiles to have a more seamless appearance.

When to use a large brick layout: When you want oversize tiles to appear as a continuous plane of stunning unbroken material.

Tip: Use color-matched grout to enhance the effect.

Architect Mason Kirby Inc.

Stacked

This is the simplest layout. In a stacked pattern, the tiles are aligned to form a basic repeating grid. This results in a modern look that works well with clean shapes and crisp angles, and plays against the organic forms of exotic woods.

Where to use a stacked layout: In a modern space with rectilinear forms, especially with a beveled-edge tile or bright grout, which emphasizes the Zen-like simplicity.

John Lum Architecture, Inc. AIA

Mosaics

While the word “mosaic” may bring to mind complex forms that create lively patterns and images, in design terms a mosaic is simply any small tile in a repeated shape (or set of shapes), typically attached in small sheets to matting for easy installation. A very common example is a 1-inch by 1-inch square, although endless shapes and patterns are available.

Pinney Designs

Mosaics are more common for accent areas (rather than full-height walls), because they require more grout. This means they can require more maintenance if exposed to heavy soil or moisture, which can be an issue in mildew-prone bathrooms.

However, they can create a rich and subtle multi-tonal effect that has the appeal of luxe stone without the luxe cost, making them a popular backsplash option.

Jonathan Raith Inc.

In the case of a shower stall floor, the additional grout can be a benefit, as it helps create a less slippery surface.

In general, mosaic makes a great counterpoint to larger tiles, because the dramatic shift in scale makes the mismatch clearly intentional. (Here a hexagonal mosaic beautifully contrasts oversize Corian planks.)

When to use a mosaic layout: To highlight an accent wall, on a shower floor or lining a niche.

Mahogany Builders

Herringbone

A herringbone pattern is achieved by laying tiles at right angles into zigzag formations or by a preformed mosaic. Either way, the look is sophisticated and has high-end appeal, even with a simple material. However, this pattern will inevitably require additional cutting of tiles at the borders, so it can create some extra material waste.

Dyer Grimes Architecture

The angular nature of this pattern creates a dynamic energy, which can be perfect for accent walls but a little overwhelming if used on too large a surface.

Where to use a herringbone layout: In a traditional or transitional kitchen (especially in classic white on white), or with a long, thin tile to form a powerful accent anywhere.

Carrara White Marble Subway Tile - $13.89 

Basket Weave

Basket-weave and similar patterns that turn subway tiles into square units are effective for adding a sense of drama similar to a herringbone layout, while avoiding the extra cutting of material. In fact, this sort of pattern can potentially avoid any cutting at all when filling a rectangular area, making it a good secret weapon for DIYers.

When to use a basket-weave layout: To add subtle energy to contemporary decor.

Buy

Amoroso Design

Other Considerations

Accent borders. Although a border strip of accent tile can be added purely for visual interest, it can serve another important function beautifully with just a little planning. When tiling a full wall, it’s common to find that the ceiling height is not an exact multiple of the desired tile size, meaning tiles at the top or bottom will have to be cut to fit. By including a slightly wider or narrower stripe, your tiles can add up to the exact height of the wall and avoid costly (and possibly unattractive) cuts.

Richardson Homes Ltd

For example, when using a 3-inch-high tile with a 7-foot, 2-inch ceiling, using a 2-inch border at any height will leave a remaining even 7 feet for the tiles to fill perfectly. Of course, grout size can affect the way the tiles stack up, so talk to your designer or installer to figure out the exact math in advance, and you can achieve a perfect result with no headaches.

See how to install tile flawlessly

Toronto Interior Design Group | Yanic Simard

Solid slabs. The opposite of a tile pattern, a single slab is a popular choice for contemporary backsplashes. Although typically more of an investment than patterned tile, a slab can be an excellent choice for compact kitchens where not much material is required. It achieves a very open look and can be created with one single material piece cut to form a matching backsplash and counter.

For a budget-friendlier option, you can also look for off-cut slab pieces to create a short backsplash in a luxe stone, and use a less expensive material for the counter that picks up on the veining tones to coordinate beautifully.

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Weekly Mortgage Rate Update

A positive outlook for the US economy caused investors to shift assets from bonds to stocks this week. The economic data was highlighted by Friday's strong labor market report. Mortgage rates ended the week higher.

THIS WEEK'S RATE TREND IS UP

Loan Amounts under $417K, Shown as Note Rate/APR

Conforming 30 year fixed: 3.875/3.943

FHA 30 Year Fixed: 3.500/4.572

Conforming 5/1 ARM: 3.000/3.056

Conforming 7/1 ARM: 3.250/3.172

Loan Amounts over $417K up to County Limits, Shown as Note Rate/APR

High Balance Conf. 30 Year Fixed: 4.000/4.047

FHA High Balance 30 Year Fixed: 3.750/5.264

High Balance 5/1 ARM: 3.500/3.116

Loan Amounts Exceeding County Limits, Shown as Note Rate/APR

Jumbo 30 Year Fixed: 4.000      /4.039

Jumbo 5/1 ARM:  3.125/3.065

Jumbo 7/1 ARM: 3.500/3.253

Jumbo 10/1 ARM: 3.875/3.559

Loan Limit Snapshot

Conforming

All Counties: $417,000

High Balance Conforming

Santa Barbara: $625,500

Ventura: $603,750

San Diego: $546,350

LA/Orange: $625,500

FHA

Santa Barbara: $625,500

Ventura: $598,000

San Diego: $546,250

LA/Orange: $625,500

Kelly Marsh

Branch Manager

805-563-1100 ext. 106

KellyM@BroadviewMortgage.com

Licensed by the Department of Corporations under the California Residential Act License #813G136.  Subject to applicant and property qualification and availability of funds. Subject to change without notice. Rates and terms apply only to subject programs. Unless otherwise noted, rates shown are based on the purchase of a primary residence with one point loan origination. Rates vary by situation, so please call for a personalized rate quote.  This is intended to be informational to the real estate industry only and is not to be used with respect to an individual consumer who may be seeking mortgage credit, as certain information is not included, such as the APR.  Registered with the Nationwide Mortgage Licensing System and registry, NMLS #245822.

If you wish to not receive this email weekly, please reply and let me know.

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Santa Barbara Real Estate through the end of December 2014 for Montecito, Hope Ranch, Santa Barbara, Goleta, Carpinteria and Summerland

This is an analysis of the Santa Barbara Real Estate market including Carpinteria/Summerland, Montecito, Hope Ranch, downtown Santa Barbara and Goleta through the month of December 2014.  For the Home Estate/PUD market the numbers of sales rose slightly from the previous month to about 80 in December rising from 73 in November but down from the 87 we saw in October. The Median Sales Price also rose for the month going to about $990,000 in December from $945,000 in November and the $985,000 we saw in October.  The opened escrows also remained stable in December going to about 74 from 72 in November but down from the 104 we saw in October while the median list price on those escrows rose from $1,010,000 in November to about $1,095,000 in December. There were approximately 59 new listings that came on the market in December with a median list price of approximately $1,295,000 million and an average list price of just about $2.075 million which left the overall inventory falling from 278 units for sale in November to roughly 220 in December.

                Year over year sales are down about 17% from 2013 but the median sales price is up to about $1.12 million for approximately an 18.5% rise. The average sales price is also up going from about $1.4 million in 2013 to approximately $1.7 million in 2014 for another 18.5% rise while the numbers of escrows are down with about 1,230 in ’13 to roughly 1,070 in ‘14 for a 13% drop with the median list price on those escrows up about 18% to approximately $1.15 million.

Looking at the Districts, Carpinteria/Summerland sales are down from 109 to 85 but the median sales price is up from $852,500 to $922,500. The numbers of escrows are also down from 105 to 93 with the median list price on those escrows rising from $865,450 in ‘13 to $949,500 in ‘14.

             For Montecito, sales are down going from 230 to 207 with the median sales price rising from $2.4 million to $2.7 million. Escrows are also down going from 237 to 204 but the median list price on those escrows is up from $2.49 million to $2.95 million.

                East of State St sales are down going from 317 in ’13 to 298 in ‘14 but the median sales price is up from $988,500 to $1,187,000. The escrows also went down from 321 to 301 with the median list price on those escrows rising from $1,025,000 in ‘13 to $1,200,000 in ‘14.

                West of State St sales are down from 280 to 231 but the median sales price is up from $872,500 to $961,000. The numbers of escrows are also down with 289 in ’13 compared to 236 in ‘14 but the median list price on those escrows is up from $895,000 in ‘13 to $950,000 in ‘14.

                Hope Ranch sales are up however from 32 to 35 and the median sales price is up from $2.375 million to $2.812 million. The numbers of escrows are also up with 27 in ‘13 compared to 40 ‘14 and the median list price on those escrows is up from $2.572 million in ’13 to $3.195 million in ‘14.

                Goleta South sales are down with 116 in ‘13 and 81 in ‘14 and the median sales price is down from $750,500 to $750,000. The numbers of escrows are also down from 101 to 84 with the median list price on those escrows rising from $719,000 to $749,000.

                Goleta North sales are down with 215 in ’13 and 163 in ’14 with the median sales price rising from $793,500 to $844,000. The numbers of escrows are down from 202 to 179 with the median list price on those escrows going from $798,500 to $848,000.

For the Condo segment of the market, sales rose to around 46 in December from 39 in November and 40 in October. The median sales price fell however from $735,000 in November to roughly $525,000 in December while the numbers of escrows fell from 44 in November to about 38 in December with the median list price on those escrows rising just a little from $572,000 in November to about $572,500 in December.

There were about 30 new condo listings that came on the market for the month with a median list price of approximately $570,000 falling from $599,000 in November and an average list price of approximately $655,000 falling from about $750,000 in November while the overall inventory fell for the month from 105 units for sale in November to approximately 85 in December.

Looking at the Districts, Carpinteria/Summerland sales are down from 83 to 48 with the median sales price rising from $445,000 to $497,000. The numbers of escrows are also down from 78 in ‘13 to 53 in ‘14 but the median list price on those escrows is up from $449,900 to $499,000.

Montecito condo sales are down with 30 in ’13 and 17 in ‘14 but the median sales price is up from $1,170,000 to $1,565,000. The numbers of escrows are also down with 29 in ’13 and 19 in ‘14 while the median list price on those escrows is up from $1,245,000 in ’13 to $1,749,000 in ‘14.

East of State St sales are even from 103 to 103 with the median sales price rising from $545,925 to $640,000. The numbers of escrows are up going from 100 to 105 with the median list price on those escrows up from $570,000 in ‘13 to $644,000 to ‘14.

West of State St sales are up from 113 to 130 with the median sales price rising from $535,000 to $644,000. The escrows went up from 112 to 135 with the median list price on those escrows going from $558,500 to $629,500.

  Goleta South sales are up from 72 to 99 with the median sales price up from $445,000 to $538,500. The numbers of escrows are also up with 76 in ’13 and 99 in ‘14 with the median list price on those escrows up from $449,500 in ’13 to $550,000 in ‘14.

Goleta North sales are up from 57 to 62 with the median sales price up from $420,000 to $455,000. The escrows are also up from 55 to 62 with the median list price on those escrows going up from $425,000 to $449,000.

Through the end of December sales of single-family homes is down about 17% while the median sales price for those homes is up about 19%. For condos, sales are down approximately 2% with the median sales price up about 10%. Of the single-family homes that sold for the month roughly 9% of those sales were over the asking price and for condos that number was also 9%.  The average over asking price for homes that sold was about 3% and for condos that number was about 4%. On the other side of the coin 15% of the single-family homes had a price reduction and 18% of the condos dropped their price.

At the end of 2014 sales of single-family homes went down significantly while the median sales price for those homes went up significantly. But, with new listings declining 4 years in row it looks like the numbers of sales will continue to decline in 2015. Also, despite the huge run up in the median sales price for the year that rise started cooling in the last 5 months of the year with the median sales price declining 4 months in a row. If interest rates start to move up then prices will fall but if interest rates remain low then prices should flatten out. For 2015 the real estate market is dependent on the inventory. If the listings start increasing reversing the trend of the previous 4 years then the sales will rise but if listings remain stagnant then sales will continue to decrease.

Gary Woods

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The $700,000+ mistake nearly 6 in 10 millennials may make

By Catey Hill, MarketWatch4 days ago

Most millennials say they’d rather rent than buy a home

— a decision that could cost them more than $700,000 over the course of their lives.

Nearly six in 10 millennials (59%) say they’d rather rent a home than buy one, with just one in four saying they are either very or completely likely to purchase a home in the next five years, according to a survey of 1,300 millennials released this week by EliteDaily. (This anti-home-buying trend can already be seen: Currently, only about one in four millennials own a home, down from about one in three in the mid-70s and early 80s, according to data from the Demand Institute.) That’s “bad news for the real estate industry,” the report concludes.

The reasons for this sentiment are many. More than six in 10 feel they simply can’t afford it, the survey revealed (whether or not they actually can’t afford it is another question entirely). Plus, millennials tend to marry and have children later (two events that often inspire home purchases) and are a generation that doesn’t like feeling stuck in one place, says company spokesperson Dan Schawbel.

Whatever the reason, this decision may be a costly one. “In most markets it is still cheaper to buy than to rent [each month]” — even when you factor in the insurance and property tax payments, in addition to the mortgage payments, says Daren Blomquist, vice president of RealtyTrac. And because interest rates are so low, now is a good time to buy in many markets — at least if you plan on staying in the home over the long term (Blomquist says that, as a very rough rule of thumb, if you don’t plan on staying in the home you are buying for at least five years, it may make sense to rent instead of buy).

Plus, you’re working toward owning an asset when you buy — that’s not the case when you rent. Considering that the median home in America costs $190,000 and historic annual home price appreciation is around 3%, according to data from RealtyTrac, a millennial who bought an average home today (and put $19,000 — that’s 10% — down) with a 30-year fixed rate mortgage at 4% would outright own a home worth $426,000 in 2045, and pay a total of roughly $373,000 for it (mortgage, taxes and insurance included) — a difference of $52,000. Plus, after 30 years, the person could live rent-free — a compelling prospect for retirement.

If that same millennial rented — let’s assume he pays $1,312 a month in rent this year (which is the average fair market rent for a three-bedroom nationwide, according to RealtyTrac) — and his rent appreciates at a rate of 2.7% a year (the average increase over the past decade, RealtyTrac says), he’ll end up shelling out nearly $717,000 in rent over that 30-year period — all without an asset to show for it in the end. Of course, he can cut that by having roommates, but at some age, he’s probably going to want out of the roommate game, unless it’s a spouse or love interest.

That said, many millennials will likely rent now but buy a home down the road. But waiting to buy has its costs, too — interest rates and median home prices are likely to rise down the road. At current rates of appreciation, in 10 years the average home (now priced at $190,000) would be selling for about $249,000. If interest rates return to their historical norm (from over the past 15 years) of 5.6%, a monthly house payment (including mortgage, taxes and insurance) on a $249,000 home would be $1,574 a month, a 52% increase over the $1,037 house payment for a median priced home now; plus, over that 30 years, you’d pay a total of $566,640 (assuming you put 10% down) for a home worth $558,356 at the end of that period. “In this scenario you wouldn’t come out positive on your investment in the property until a year after the mortgage was paid off, in 2056 — at which point the home would have a projected value of $573,608,” explains Blomquist.

Of course, there are some compelling reasons to rent. You have more flexibility when renting, as you aren’t tied to a mortgage payment, and savvy investors can likely get higher than 3% annual returns elsewhere. And, quite frankly, “if you can’t afford it, don’t buy,” says Blomquist; you don’t want to end up in a situation where you have to foreclose on a home.

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Weekly Mortgage Rate Update

Concerns about the pace of global economic growth caused bond yields around the world to decline this week. The US economic data released this week had little impact. Mortgage rates ended at the lowest levels in over a year.

THIS WEEK'S RATE TREND IS DOWN

Loan Amounts under $417K, Shown as Note Rate/APR

Conforming 30 year fixed: 3.750/3.809

FHA 30 Year Fixed: 3.375/4.413

Conforming 5/1 ARM: 3.000/3.056

Conforming 7/1 ARM: 3.125/3.114

Loan Amounts over $417K up to County Limits, Shown as Note Rate/APR

High Balance Conf. 30 Year Fixed: 3.875/4.949

FHA High Balance 30 Year Fixed: 3.625/4.681

High Balance 5/1 ARM: 3.375/3.182

Loan Amounts Exceeding County Limits, Shown as Note Rate/APR

Jumbo 30 Year Fixed: 3.875      /3.914

Jumbo 5/1 ARM:  3.125/3.065

Jumbo 7/1 ARM: 3.375/3.211

Jumbo 10/1 ARM: 3.875s/3.559

Loan Limit Snapshot

Conforming

All Counties: $417,000

High Balance Conforming

Santa Barbara: $625,500

Ventura: $603,750

San Diego: $546,350

LA/Orange: $625,500

FHA

Santa Barbara: $625,500

Ventura: $598,000

San Diego: $546,250

LA/Orange: $625,500

Kelly Marsh

Branch Manager

805-563-1100 ext. 106

KellyM@BroadviewMortgage.com

Licensed by the Department of Corporations under the California Residential Act License #813G136.  Subject to applicant and property qualification and availability of funds. Subject to change without notice. Rates and terms apply only to subject programs. Unless otherwise noted, rates shown are based on the purchase of a primary residence with one point loan origination. Rates vary by situation, so please call for a personalized rate quote.  This is intended to be informational to the real estate industry only and is not to be used with respect to an individual consumer who may be seeking mortgage credit, as certain information is not included, such as the APR.  Registered with the Nationwide Mortgage Licensing System and registry, NMLS #245822.

  

 

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