Author: The Caton Team - Realtors

Sabrina & Susan are native Californians - born and raised in the Silicon Valley with a passion for Residential Real Estate. A mother and daughter-in-law duo called - The Caton Team. With over 35 years of combined, local Real Estate experience and knowledge – would’t you like The Caton Team to represent you? Let us know how we can be of service. Contact us any time. Call | Text at: 650-799-4333 | Email Info@TheCatonTeam.com The Caton Team believes, in order to be successful in the San Fransisco | Peninsula | Bay Area | Silicon Valley Real Estate Market we have to think and act differently. We do this by positioning our clients in the strongest light, representing them with the utmost integrity, while strategically maneuvering through negotiations and contracts. Together we make dreams come true. The Peninsula is our backyard - let us help make it yours. We represent Buyer’s and Seller’s throughout the Bay Area. The Caton Team – Susan & Sabrina A Family of Realtors Effective. Efficient. Responsive. What can we do for you?

GOOD NEWS FOR SELLERS – Home prices in 20 major U.S. cities were up – biggest jump in more than 6 years!

I was beside myself when I came across this article from Money.Cnn.com. Realtors are seeing this market and are trying to get the news out there. On the SF Peninsula – we have an excess of buyers ready to move and bare bones inventory. If you are considering the sale of your home – let your Realtor know! The Caton Team enjoys sitting down with sellers and showing them where the market is and where we expect it to go. Enjoy this article!

Home prices in 20 major U.S. cities were up 5.5% in November compared to a year earlier, their biggest jump in more than six years.

The latest reading of the closely watched S&P Case-Shiller index is another sign of the growing recovery in the long-battered housing market.

The last time prices jumped this much was in August 2006, when the housing bubble was still inflating. Soon after that, prices went into a steep decline that led to a flood of foreclosures. That sparked the most serious economic downturn since the Great Depression.

“Housing is clearly recovering,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Prices are rising as are both new and existing home sales. These figures confirm that housing is contributing to economic growth.”

Housing prices have been helped by a number of factors in recent months, including increased sales of both new homes and previously-owned houses, a drop in foreclosures, and near record low mortgage rates. A drop in the nation’s unemployment rate also is helping.

The rise in home prices is good news for more than just people hoping to sell their home. The higher prices rise, the fewer homeowners that will be underwater on their mortgage, meaning they owe more on their homes than they are worth. That can help many homeowners refinance and save money, which would pump more cash into the economy.

“The ongoing price appreciation is significant, because we expect housing wealth effects to be an important factor driving economic growth in 2013, possibly matching the direct impact on economic output from the rebound in homebuilding,” said Joseph LaVorgna, chief U.S. economist for Deutsche Bank.

Michael Gapen, senior U.S. economist for Barclays, said the fundamentals for the housing market are now strong enough that his firm is forecasting another 6% to 7% rise in prices in 2013, and a 5% to 6% rise again next year. He said the tight supply of homes for sale on the market should support continued price increases, and that the decline in foreclosed homes for sale is reducing the drag that those distressed properties had on overall prices.

How to play the 2013 housing market

“I’m not worried about these increases being overdone,” he said. “Home prices overcorrected a bit on the downside, and what we’re seeing now is a recovery from that.”

Sabrina’s 2 Cents: If you want to be a homeowner – don’t shy away just because prices are moving. There is a saying in Real Estate – “Don’t Wait and Buy Real Estate – Buy Real Estate and WAIT!” Why you ask? Because investing in real estate, even if it is the home you live in, is an investment. Buy Low. Sell High. That’s the idea. So if you want to be call your self a SF Peninsula homeowner – don’t sit on the sidelines and wait – come in and sit down with The Caton Team – we’ll come up with a plan to turn your real estate dreams into realty.

Related: Home building surges 12%

The S&P Case-Shiller index tracks home prices in 20 major markets. The latest reading showed 19 of them posting a gain in prices, with only New York posting a modest decline from a year earlier. Phoenix, one of the markets hit hardest by the housing crisis, posted the biggest increase, with home prices there climbing 22.8%.

San Francisco and Las Vegas, markets that were also hit by the housing boom and bust, also posted double-digit increases, while Miami, another bubble market, posted a 9.9% rise. Detroit, a city where economic problems led to a high rate of foreclosures, enjoyed an 11.9% price increase.

But even with November’s strong gains, the overall index stands 29% below the home price peak reached in the summer of 2006.

I read this article here: http://money.cnn.com/2013/01/29/news/economy/home-prices/index.html?hpt=hp_t3b

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

What’s the Best Season for Home Buying? Great question!

Just today I was asked this very question. “What’s the Best Season for Home Buying?” And thought this article was interesting from the DAILY REAL ESTATE NEWS. I must say though – when buying a home, instead of trying to figure everything out on your own, sit down with a Realtor, ask some questions. We’re happy to meet with you. Because truly, the time to buy is when you – as a buyer – are ready to do so. These days (2012 and early 2013) the housing market is competitive no matter what time of year it is. On average, buyers entering the market today are faced with a minimum 3-6+ month house hunt due to a lack on inventory and an abundance of buyers. So writing several offers on several homes over the course of several months is standard operations these days. If you are ready to become a homeowner – jump in and get started. So much to learn, so much to see – The Caton Team is happy to help!

Enjoy this article…

What’s the Best Season for Home Buying?

After the holidays, buyers tend to start getting more aggressive with their house hunting. Search activity usually peaks around March or April in most states, according to a new study of home searches from 2007 to 2012 conducted by Trulia.

In September, searches slow down. By December buyer searches ebb to their lowest point of the year.

“Home-search activity swings with the seasons in every state,” says Jed Kolko, chief economist of Trulia. “Buyers and sellers can use these ups and downs to their advantage. Sellers looking for the most buyers should list when real estate search traffic peaks. Buyers, however, should think about searching off-season, when there is less competition from other searchers.”

The study revealed seasonal patterns of search activity state to state. Here are the months when online real estate searches peak in every U.S. state:

January: Hawaii
February: Florida
March: Arizona, California, Delaware, Georgia, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Pennsylvania, Virginia, Washington
April: Colorado, Connecticut, District of Columbia, Illinois, Indiana, Kansas, Minnesota, New York, North Dakota, South Dakota, Utah, West Virginia, Wisconsin
May: Real estate activity does not peak in any state
June: Mississippi
July: Alabama, Alaska, Arkansas, Louisiana, Maine, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Wyoming
August: Montana and Oregon
September-December: Real estate activity does not peak in any state

Source: “Trulia Reveals Best Home-Searching Season,” HousingWire (Jan. 29, 2013)

Sabrina’s 2 Cents: In my experience, especially this year with our beloved 49’ers in the Superbowl, the market doesn’t really start to pick up until after Super Bowl Sunday. It is funny to hear – but it is true. We see the buyers get off the couch once the football season is over and listings start coming on the market. We are ready when you are – give us a call or email!

I read this article at: http://realtormag.realtor.org/daily-news/2013/01/31/whats-best-season-for-home-buying?om_rid=AACmlZ&om_mid=_BRCsnAB8wncg3e&om_ntype=RMODaily

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Visit our Website at: http://thecatonteam.com/

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Existing-home sales near 5-year high – great article I wanted to share…

Hello Blog Readers!

Sabrina here, came across this great article pulling statistics from the National Association of Realtors. Please enjoy this positive report on our real estate market.

Existing-home sales near 5-year high

NAR’s year-end stats show housing markets flirting with pre-bust growth

BY INMAN NEWS, TUESDAY, JANUARY 22, 2013.

Existing-home sales, prices and inventory saw dramatic changes in 2012 reminiscent of the housing boom, statistics released today by the National Association of Realtors show.

At 4.65 million units, 2012 existing-home sales were up 9.2 percent from 2011, according to NAR’s preliminary totals for the year. That would be the highest volume since 2007, when 5.03 million were sold.

Bolstered by low inventories, the national median existing-home price was up 11.5 percent from a year ago in December, to $180,800. December saw the 10th consecutive month of year-over-year price gains, a trend not seen since May 2006.

For 2012 as a whole, the national median existing-home price was up 6.3 percent, to $176,600, the largest annual price gain since prices surged by 12.4 percent in 2005.

At 1.82 million units at the end of December, existing-home inventory now represents a 4.4-month supply, the lowest level since May 2005, near the peak of the housing boom.

“Likely job creation and household formation will likely fuel (market) growth,” said NAR Chief Economist Lawrence Yun in a statement. “Both sales and prices will again be higher in 2013.”

To finish reading this article and few their charts and graphs please visit: http://www.inman.com/news/2013/01/22/existing-home-sales-near-5-year-high

Here is another great article about home sales: http://newsgeni.us/?em=info@thecatonteam.com&p=106674

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Visit our Website at: http://thecatonteam.com/

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Can I Buy Your House Please? Great article from the Wall Street Journal

When my friend and lender Vanessa showed me this article – I was so excited. I preach to each client trying to buy a home in our beautiful San Francisco Bay Area to write a letter to the seller – just in case. It might not always work – but when it does – it’s amazing.

To read my client and friend – Tatjana and Michael’s personal experience – where the note made all the difference – please read:

http://wp.me/p1GGbd-7Z

To read the Wall Street Journal article please visit:

http://online.wsj.com/article/SB10001424127887323482504578227703128967098.html

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Visit our Website at: http://thecatonteam.com/

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

2013 – New Real Estate Laws for California

Hello Blog Readers! Happy New Year. 2013 is going to be an awesome year in real estate for our gorgeous San Francisco Bay Area Peninsula. Thought you would like to know what goes into effect this year in regards to California Real Estate Laws!

The “Pease Limitations” that reduced the value of itemized deductions, including the mortgage interest deduction, are permanently repealed for most taxpayers but will be reinstituted for high income filers. This provision reduces a taxpayer’s itemized deductions by 3 percent of the amount of his or her adjusted gross income (AGI) that exceeds the threshold amount. Under the new law, the Pease thresholds are $300,000 for married taxpayers filing jointly and $250,000 for single taxpayers (i.e., a married couple with an AGI of $400,000 would be $100,000 over the threshold; the couple’s deductions would be reduced by $3,000 which is 3% of $100,000). No matter how high a taxpayer’s AGI, the Pease reduction cannot exceed 20 percent of the amount of itemized deductions otherwise allowable for the year.

The restoration of a tax deduction for mortgage-insurance premiums, including premiums paid to the Federal Housing Administration and private mortgage insurers. This provision expired at the end of 2011 but has now been retroactively extended for all of 2012 as well as 2013.

10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

Capital gains rates will remain at 15 percent for those earning less than $400,000 (individual) and $450,000 (joint). Gains above those income levels will be taxed at 20 percent. Gains on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 taxpayers filing jointly.

I received this information for the California Association of Realtors

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

A Cinderella Story…. Russ and Natalie’s 5 Month Wait for Their Home

This past year has been very competitive for home buyers at every price point on the San Francisco Peninsula. Then again, it’s been a competitive housing market since the we hit bottom back in ’09.

I recall in 2006 when my husband and I bought our first place, a one bedroom condo in Foster City, prices were moving up fast. As a Realtor and first time buyer on a budget, I knew that if my husband and I didn’t buy soon we’d be priced out of the market…including condos. Then there was the crash and poof….prices started falling.

By 2009 homes prices had fallen as low as they could go and people were starting to feel confident in investing in real estate again. That’s when Russ and Natalie, who had just had twins, needed a home. We started our journey together and it quickly became evident – they weren’t the only people buying homes in the Bay Area. I feel like a broken record in 2012 when I say – they wrote a whole bunch of offers back then and got out bid by higher offers, offers with larger down payments or cash offers with quick timing. It was tough. Susan and I take the punches with each client when they don’t get an offer accepted. Yet Russ and Natalie were troopers, got up, dusted off and got back on the horse. Sue and I truly wanted to hand them the keys to their first home before the twins started to walk. And they were starting to walk!

Around Thanksgiving a home that was previously pending came back on the market. It was a tricky short sale that fell apart. As they can do. We showed it as soon as we could. Russ and Natalie were so great about being open to possibilities, ready to get their hands dirty and build some “sweat equity”. They saw the possibilities this particular home had to offer. It’s funny. I know the home you think you will buy and the home you actually buy are often very different. Each buyers journey is unique. I know my first time buying was not at all what I expected.

Anyway, I digress. It was the holidays and had this home popped on the market any other week – maybe we would have been outbid. Instead Russ and Natalie wrote a terrific offer and with the help of The Caton Team their offer was accepted.

That’s when the hard work really starts on a short sale property. The Caton Team was very fortunate to work with Shirley Krause, whom represented the seller during what proved to be an almost 6 month group effort.

It’s a long wait – for everyone – when buying or selling a short sale. Just around the twins birthday in the Spring Susan and I had the pleasure of handing the keys to Russ and Natalie. Yes, they waited 5 months to get their house!

Moral of this Cinderella Story, don’t give up. Not now. Not if you want to call our gorgeous San Francisco Bay Area home sweet home. So now as the malls fill up with shoppers and homes are sitting on the market ignored – give us a call – you never know the possibilities until you try.

Thank you Russ and Natalie for working with The Caton Team. Here is to many happy years in your lovely home.

Happy Holidays!

Curious about my own buying and selling experiences? Although I am a Realtor by trade, I’m no different than you when sitting in the buyer or seller seat. Enjoy my journey through homeownership at: http://ajourneythroughhomeownership.wordpress.com

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Visit our Website at: http://thecatonteam.com/

Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Thanks for reading – Sabrina

SHOULD YOU BUY A HOME DURING THE HOLIDAYS?

Funny – I was just writing my own blog about our local real estate market when I came across this article from San Diego. It’s not local – but it hits home – thought I’d share and add my two cents….

SHOULD YOU BUY A HOME DURING THE HOLIDAYS?

Once Thanksgiving is over, the real estate world starts to wind down for the holidays and it typically reawakens after the Times Square ball drops and resolutions come to life.

But if you’re a potential homebuyer who’s prepared to close in today’s competitive market, you may want to keep shopping while everyone’s waiting for spring, some real estate agents suggest.

The Caton Team has found that buyers on a concrete budget find great values if they are flexible during the holidays. We’re ready when you are.

That advice may be especially relevant this year for consumers who have repeatedly lost out on deals because of a limited and continually decreasing supply of homes, but remain persistent. Buying intensity typically cools down at the start of fall through early January, which could increase the odds for those with more patience.

Home sales have increased from October to November only four times since 1988, when DataQuick began to track home sales and prices locally.

In the other years, transactions have fallen from anywhere between 0.2 percent and nearly 26 percent. Home listings have dropped off from 3 percent to 11 percent during those months in the past three years.

“During Christmas, people will be focused on the holidays and nothing really happens,” said Ken Pecus, co-founder of San Diego-based Ascent Real Estate and 20-plus-year real estate veteran.

“The first week of January, the new mindset kicks in, resolutions kick in, and in the second and third week, people look at their taxes, and almost overnight, by the end of January, you have almost twice the buyers in the market,” Pecus added.

Would-be buyers historically have bowed out during the winter season because they are overwhelmed by holiday spending and commitments. There’s also the aversion of moving in the middle of a school year. Consumer interest typically picks back up again in the New Year and peaks in the spring.

Certain buyers may be well-served to buy during the winter because of sellers who must move because of:

• A job change or transfer.

• The possible sunsetting of the Mortgage Forgiveness Debt Relief Act, said Donna Sanfilippo, president of the San Diego Association of Realtors. The potential expiration of the law, which lets certain home sellers get tax relief on mortgage debt forgiven by lenders, has pushed home sellers scrambling to list and short sell their homes before the end of the year.

In some cases though, the rush to do that is unwarranted. Consult a tax pro to determine if short selling is right for you.

• The fact they’ve been waiting to sell their home for a long time and need to buy something quickly. If you can wait a little longer to sell your home and want to maximize your profit, then wait until the peak spring months.

Even with the expected holiday homebuying slowdown, buyers should know that the inventory level may still be a challenge.

Right now, there are more than 4,700 active listings in the county, down 11 percent from October and down more than half from the same time a year ago, based on numbers from the San Diego Association of Realtors. The current level marks at least a three-year low.

In the San Francisco Peninsula – inventory has been low all year, fueling multiple offers on homes and driving prices up due to competition outweighing supply. There has been moments, for example in San Carlos we had 25 listings and Redwood City had 36 – for the whole city. That’s not enough homes for the volume of demand out here.

Buyers also may deal with the challenges of bidding against cash buyers and investors, who can look more attractive than traditional buyers.

The Caton Team has witnessed Cash Buyers at all price points – under $500,000 to over 1,500,000. Sellers have the opportunity to pick the best offer among several. And sellers are being savvy – taking higher down payments when possible. When The Caton Team prepares an offer, it is more than just price.

Their share of the homebuying market has remained strong. Almost 28 percent of total homes sold in October were purchased by absentee buyers, many of whom are investors. That’s up from 27 percent logged a year ago and in September.

Hovering near the peak, almost one-third of buyers bought with cash in October.

“I’m expecting 60 to 70 people at my open house,” said San Diego Realtor Miguel Contreras before a recent Wednesday showing at a property in La Mesa. “The property is a fixer, so it’s mostly investors.”

Sounds familiar in the SF Peninsula market. Open houses visitors are strong, and often there is enough activity to warrant an offer day before the following weekend. I’ve seen homes have one open house and take offers on Monday. That’s a break neck pace if you ask me, and I’m a veteran. My first time buyers can’t move that fast. And with prices climbing, the early bird get’s the worm if he can’t process the information fast enough.

Contreras, who worked during Thanksgiving week, said he’ll make himself available throughout the holidays to cater to what he expects to be a continued interest from investors, cash buyers and traditional buyers.

The same goes for Cherilyn Jones, another local real estate agent. Last week, she was preparing for two new listings to come online. Her most common clients are first-time homebuyers and investors.

“The investors have not slowed down,” Jones said. “We get holiday freeze, but not for investor clients. It’s hard to find them properties because their criteria is very, very specific … and the deals are not as good as they used to be.”

Article By: Lily Leung

Last Thoughts…

In our 25+ years of local Real Estate experience, buying during the holidays can truly benefit buyers who’ve been outbid all year. We’ve found homes for buyers over the holiday season that would have been snapped up in a hot second during the spring or summer. As long as buyers are flexible and open minded – there is definitely some Christmas Miracles in the making this time of year. Keep a look out for my next Cinderella Stories about Russ and Natalie and the home we found over Thanksgiving!

I read this article at: http://www.utsandiego.com/news/2012/dec/01/does-it-make-sense-buy-home-during-winter/?page=2#article

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Visit our Website at: http://thecatonteam.com/

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

New Short-Sale Program Offers Relief for Underwater Homeowners…

Please enjoy this article I found interesting….

The Fannie-Freddie program allows short sales for owners who are current on loan payments but are encountering a hardship that could force them into default.

WASHINGTON — Though there are still some snares and drawbacks for participants, one of the federal government’s most important financial relief efforts for underwater homeowners started operating Nov. 1.

It’s a new short-sale program that targets the walking wounded among borrowers emerging from the housing downturn — owners who owe far more on their mortgages than their current home value but have stuck it out for years, resisted the temptation to strategically default and never fell seriously behind on their monthly payments.

Industry estimates put the number of underwater owners across the country at just under 11 million, or 22% of all homes with a mortgage. Of these, about 4.6 million have loans that are owned or securitized by Fannie Mae or Freddie Mac. Eighty percent of these Fannie-Freddie borrowers, in turn, are current on their mortgage payments and meet the baseline eligibility test for the new short-sale effort.

Here’s how the program works and where the potential snares are. Traditionally short sales, where the lender agrees to accept less than the full amount owed and the house is sold to a new purchaser at a discounted price, are associated with extended periods of delinquency by the original owner. The new Fannie-Freddie program — designed by the companies’ overseer, the Federal Housing Finance Agency — breaks with tradition by allowing short sales for owners who are current on their payments but are encountering a hardship that could force them into default.

Say you are deeply underwater on your mortgage and recently lost your job or had your work hours reduced. Under the new program, you can contact your mortgage servicer and ask to participate in a Fannie-Freddie short sale for non-delinquent borrowers. You’ll need to find a qualified buyer for the house, typically with the help of a real estate broker or agent knowledgeable about short sales who will list the property and obtain an offer and communicate the details and documentation to the servicer. If the proposed short-sale package is acceptable, the deal would then proceed to closing weeks — or months — later.

Eligible hardships under the new program run the gamut: job loss or reduction in income; divorce or separation; death of a borrower or another wage earner who helps pay the mortgage; serious illness or disability; employment transfer of 50 miles or greater; natural or man-made disaster; a sudden increase in housing expenses beyond the borrower’s control; a business failure; and a you-name-it category called “other,” meaning a serious financial issue that isn’t one of the above.

Borrowers who take part in the new program can expect to rid themselves of the money-devouring albatross their mortgage has become — without going through the nightmares of foreclosure or bankruptcy — and to get a chance to start anew, better equipped to deal with the financial hardship that caused them to sell their house in the first place.

What about the snares in the program? There are several that participants need to consider.

•Credit score impact. Though officials at the Federal Housing Finance Agency are working on possible solutions with the credit industry, at the moment it appears that borrowers who use the new program may be hit with significant penalties on their FICO credit scores — 150 points or more. This is because under current credit industry practices, short sales are lumped in with foreclosures. According to Laura Arce, a senior policy analyst at the agency, the government is in discussions with the credit industry to institute “a special comment code” for servicers who report the new Fannie-Freddie short sales to the national credit bureaus that would treat participants more fairly on FICO scores.

•Promissory notes and other “contributions.” In the majority of states where lenders can pursue deficiencies, Fannie and Freddie expect borrowers who have assets to either make upfront cash contributions covering some of the loan balance owed or sign a promissory note. This would be in exchange for an official waiver of the debt for credit reporting purposes, potentially producing a more favorable credit score for the sellers.

•Second lien hurdles. The program sets a $6,000 limit on what second lien holders — banks that have extended equity lines of credit or second mortgages on underwater properties — can collect out of the new short sales. Some banks, however, don’t consider this a sufficient amount and may threaten to torpedo sales if they can’t somehow extract more.

By Kenneth R. Harney Distributed by Washington Post Writers Group.

I read this article at: http://articles.latimes.com/print/2012/nov/11/business/la-fi-harney-20121111

Email Sabrina & Susan at: Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Factoring in Commuting Costs

Great article I thought I would share…. Though banks and underwriters may not consider this additional cost of community, The Caton Team does. When we sit down with new buyers we talk about where they work and the cost of living in X, Y or Z. We stopped using the lender approval as our price guideline for house hunting – instead we ask each buyer to determine their true monthly budget. What they are spending on gas, transportation, utilities, other debt and lifestyle. We then take the true picture of expenses to determine their comfort level on a mortgage payment and work backwards to find a house that fits that price and other elements. Enjoy the article….

Factoring in Commuting Costs

MORTGAGE lenders do not figure in a household’s likely commuting costs when weighing loan applications, but a recent study suggests that borrowers of moderate means would be smart to calculate these costs themselves before buying.

The study, published in October by the Center for Housing Policy and the Center for Neighborhood Technology, looked at transportation and housing costs in the 25 largest metropolitan areas. It found that transportation costs rose faster than incomes in every area over the last decade.

That has added to the financial burden shouldered by moderate-income homeowners, defined as households earning 50 to 100 percent of a metropolitan area’s median income. Transportation consumes 30 percent of their income, on average. Add housing costs to that and the combined cost burden rises to 72 percent.

“The impact is larger for moderate-income households,” said Jeffrey Lubell, the executive director of the Center for Housing Policy in Washington, “because everyone needs to get where they need to go and the fixed costs are the same for everyone. The lower you go down the income stream, the more transportation costs loom as a very big expense.”

The study also found that some metropolitan areas generally considered more affordable than New York become less so after transportation is figured in. For example in Houston, where housing development is more sprawling, transportation consumes 32 percent of income, compared with 22 percent in New York, which has a more robust transit system.

Mortgage underwriters sometimes look at a home’s location relative to where the buyer works, but in most cases a long distance between the two is an issue only if it suggests that the buyer isn’t actually going to live in the house, said W. Thomas Kelly, the president of Investors Home Mortgage, a subsidiary of Investors Bank in Millburn, N.J. Commuting costs vary too much to be figured into qualifying ratios, Mr. Kelly said, adding, “How do I say to a borrower, you don’t qualify because you live too far away from work?”

Scott Bernstein, the president of the Center for Neighborhood Technology in Chicago, argues that transportation costs are quantifiable enough that they ought to be factored into underwriting. And they were, during the first half of the last decade, in an experiment the center conducted jointly with Fannie Mae. Called a “Location-Efficient Mortgage,” the product was a contrasting proposition to the “drive till you qualify” strategy of finding an affordable home. The mortgage compensated borrowers applying to buy in areas with lots of transportation choices, and close to jobs and amenities.

“The bottom line for the borrower was that the location-efficient value would get taken into the underwriting ratio so that it would allow for more borrowing capacity for this income level,” Mr. Bernstein said.

Tested in a handful of markets before 2007, the mortgages were issued to about 2,000 borrowers and, based on the center’s evaluation of a representative sample, showed a very low default rate. But the experiment ended with the mortgage market collapse.

Or, as Mr. Bernstein put it, “The experiment was successful, and the patient died.”

Now the center is working with the Department of Housing and Urban Development on an online affordability calculator that will allow people to look by location at what their likely housing costs, with transportation, would be nationwide.

“Housing counselors can also use it to help coach people on how to pick locations, and it could help developers get a competitive advantage,” Mr. Bernstein said.

The national calculator could be ready by year’s end. Another calculator developed by the center, called Abogo (abogo.cnt.org), lets people plug in an address and find out what a typical household in that area spends on transportation.

By LISA PREVOST

I read this article here: http://www.nytimes.com/2012/11/25/realestate/mortgages-factoring-in-commuting-costs.html?ref=realestate

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Visit our Website at: http://thecatonteam.com/

Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-cityå

Or Yelp me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

A Cinderella Story – Fredric and Heather

When it came time to sell their first home Fredric and Heather called the Realtor who helped them their first go around – Susan Caton. By then, Susan and I (Sabrina) had partnered up and became The Caton Team. It was an exciting meeting, sitting around the dinning room table planing for the sale of their home and discussing the hopes, dreams and reality of their next home.

In the competitive Bay Area real estate market a buyer needs to be ready to make a fantastic offer the moment a home pops on the market. If a buyer has to sell their current home – writing an offer contingent on the sale of a home is not as attractive to the seller as a non-contingent offer. Therefore, we agreed that the best course of action was to sell their current home to be prepared to pounce when their next home came on the market.

This can be a scary moment – where will the family live if we don’t find the next home. Nonetheless, the hunt for their next home began way before the for sale sign showed up in their front yard.

So Heather and Fredric did a fantastic job getting their home ready for sale. Before our first open house The Caton Team had wind of interested parties. Within a week their home was in contract. Oh my!

So the serious house hunting hits. We’re out day and night checking out everything on the market, new and old…and we start writing offers. Good offers, solid offers. But we keep getting out bid, sometimes by all cash, sometimes just larger down payments or out of the the ballpark offers. Regardless, the sweat starts beading. Now we’re talking short term rentals as the close of escrow on their current home slowly approaches….and we are very thankful for the 30-days of rent back we negotiated to give us a little more time. That was extremely helpful, but not enough. So, a short term rental was located. More offers. Out bid.

Suddenly there is buzz around a certain Silicon Valley IPO. The weeks leading up caused a mini boom on the peninsula. Offer dates, multiple offers, no contingencies, all cash – you name it – things were a bit nuts. Then the dust settled, and as a boom of new listings flooded the market a week old listing was suddenly overlooked. We wrote an offer. Out of the blue, another offer comes in. This house was awesome. We couldn’t let it get away. Proud to say our reputation preceded us and the Selling Agents knew we’d get the job done – when it came down the the nitty gritty, we helped our friends and clients prepare a terrific offer package and in the end their offer was accepted.

The phone call to your clients when you get to share the good news that they got the home of their dreams – well, it’s one of the best phone calls around.

Thank you Fredric and Heather for trusting The Caton Team with all your real estate needs. Here’s to many happy years in your new home.

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Visit our Website at: http://thecatonteam.com/

Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-cityå

Or Yelp me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

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