20% Down Payment Takes 12 Years of Saving

20% Down Payment Takes 12 Years of Saving

 

 

First-time buyers have a whole lot of saving to do — possibly more than a decade of saving for a home purchase. It can take, on average, 12.5 years for first-time buyers to save a 20 percent down payment based on a current personal savings rate at 5.6 percent, according to new research by RealtyTrac. The figure is based on current median home prices and doesn’t take into account further home price rises.

 

In RealtyTrac’s analysis of 512 counties, it found that the median price of a home is around $259,000, which would require buyers to save $51,800 for a 20 percent down payment.

Millennials entering the workforce often have several years until they start earning the national median salary — usually that is not reached until the age of 30, according to a 2013 Georgetown University study by Anthony Carnevale, “Failure to Launch: Structural Shift and the New Lost Generation.”

If that’s the case, first-time buyers who need a 20 percent down payment would have to wait until they’re 42 years old to be able to afford to buy a house, Carnevale told The Wall Street Journal. Coupled with other debt, such as student loans, the wait could even be longer.

Melvin Watt, director of the Federal Housing Finance Agency, has suggested lowering the down payment for a conventional loan to 3 percent from the traditional 20 percent. In that case, it would take first-time buyers less than two years to save enough.

The Federal Housing Administration allows buyers to get a mortgage with a down payment as low as 3.5 percent with a 30-year fixed rate. However, buyers still have to meet the debt-to-income ratio and cash reserve requirements and they would likely qualify for better terms for a loan if they could bring a higher down payment, says Whitney Fite, managing director of Angel Oak Home Loans in Atlanta.

Source: “Saving for a Down Payment? It Could Take You Until 2027,” MarketWatch (Nov. 5, 2014)

 

Have no fear – there are other loan options available – if you’d to learn more – please contact us at Info@TheCatonTeam.com

 

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Testimonials for The Caton Team, Sabrina Caton and Susan Caton

Testimonials From Our Clients

 

Sabrina and team are fantastic.  Responsive, honest, transparent and efficient.  She’s also well-connected in the real estate community on the peninsula – whether buying or selling, you can’t ask for better representation.  I highly recommned her!

– Kenny H.

 

To future clients of The Caton Team,

The Caton Team is made up of Susan Caton and Sabrina Caton, or as I like to refer to them as the Dynamic Duo of Real Estate. They are trustworthy, honest, straight-forward, and experts in the real estate business. I might be a little biased, because of my friendship with them, but nothing will test a friendship more than the process of buying and selling a home. As everyone knows when you sell your home you want the most money for the least amount of effort and you want the process to be quick and smooth. The Caton Team will make sure you have all of the necessary information and knowledge to understand how to stage your home and what the process will be along with a realistic timeline of what you can expect. If you follow their directions and listen to what they say, your home selling experience will be painless and quick. For us this ended up being less than a week with our home selling for more than what we expected. The entire process from filling out the required paperwork to negotiating went smoothly and was overall painless on our end. At the end of the day we got more than what we wanted and were in a great position to start hunting for a new home.

This brings me to how The Caton Team helped us buy a new home for what we wanted, while making sure that we got the home that we wanted. Since we had already bought and sold our first home with The Caton Team, using them again to buy another house did not require much thought, actually required no thought. We went into the process wanting the best of the best in the best location, because who does not want that for themselves? They were kind enough to listen to our wants and desires and showed us what we could afford in the areas we were looking. It took a few homes to realize that our expectations were not in sync with the market, because currently in early 2015 homes are going like hot cakes and for more than what they are listed at by a fair amount.

This is when we sat down again and started looking at other areas that were just as nice, but we had ignored initially. The important part here is while they mentioned this information early on, they allowed us to realize it on our own that we needed to look outside of our ideal areas if we wanted our dream house. Once we realized what they were saying we expanded our search and found the home that we wanted. After our initial open house we contacted The Caton Team and informed them that we found the home that we wanted. This is when The Caton Team sprang into action, they immediately started requesting all of the disclosures from the seller’s agent and contacted the seller’s agent to gain any additional knowledge that might not be in the supplied paperwork. They then shared this information openly with us, as one would expect, and started laying down the groundwork of what we would need to do if we truly wanted this house. They supplied us with the tools necessary to make an informed decision and provided us with comparable sales (COMPS) in that particular area, so that we would have an idea of what houses were selling for and where the market was heading (spoiler alert, market was only going upwards). Their attention to detail and understanding of the market allowed us to make the best offer we could, while not overbidding or underbidding and making sure that we would have our offer accepted. As you have already guessed, our offer was accepted almost immediately and we are now homeowners of a home that we wanted in an area that is ideal.

If you have made it this far, then you realize why The Caton Team is really The Dynamic Duo of Real Estate. They make sure you are provided with the proper tools and information to make the best decision for yourself. They will work tirelessly with you and will not be a 9-5 agent, they will be honest, trustworthy, and straight-forward. You will not feel like you are getting the short-end of the deal and at the end of the day you will feel great about your decision to work with The Caton Team.

-The Liere Family

 

“I worked with Sabrina and Sue a few years back and they were so professional. I was going thru a divorce and had to sell my condo. I was beyond upset. (Not because of the divorce but selling the condo) haha… Thru this difficult time they were so amazing and made me feel at ease. The housing market at that time was not the best but they did their best to make sure I got a good deal.  The condo wasn’t on the market for too long and I was able to sell it for a decent price. Thank you to both for making that transition in my life a little easier. Definitely will be using them again if and ever I can buy again.”

-Elena

 

“We had a great experience buying a house through the Caton team. Sabrina and Susan were patient in answering our many questions, and helped guide us in the offer process to help win a bid on our second offer even in this crazy market! They are easy to get in touch with over email, text, or phone, and detail oriented to make sure nothing fell through the cracks. We’d highly recommend them!”

-Katherine

 

Hi Susan and Sabrina,

I just thought I’d take a moment to write you both to say how much of a pleasure it has been to once again have had another successful property transaction come to fruition with you both at the helm (yay, three now)!

I can’t say enough how Victor and I have been so happy you’ve been our representatives in both our buying and selling transactions, and that your dedication and hard work, creativity and professionalism have always made a world of difference all throughout the process of buying and selling our homes. From the smallest details like your fantastic web page ads and captioning to your weekly and continuous updates and presence at the property for showings and repairs. You’ve left nothing to chance!

It’s clear that experience counts, and your research and broad-based knowledge of the local real estate and larger markets in general, have always provided us with a solid backdrop from which we could make our decisions. You’ve always provided us with good information, solid recommendations, and I’m grateful that we had you both as our representatives.

Additionally, I want to say on a personal note, that you are both so considerate and thoughtful, and I always feel that we are in good hands when you’re on the job.  Thank you again for this recent and very successful sale of our property, and we look forward to our continued relationship with you in future transactions.

I did not have your Broker’s contact information, but if you would please forward him/her this e-mail, I’d appreciate it, because I’d like them to know that you have permanent fans!

Thanks again,  Helen and Victor

 

“Susan and Sabrina, The Caton (Dream)Team –

Thirteen years ago, we met Susan Caton who so kindly helped us find our first home in the Bay Area.  She was mindful of our budget and attentive to our wish list.  We landed a great starter home fit to our needs and close to work.  In 2012, when it came time to relocate into a neighborhood with great schools, we once again called upon Susan, who now was partner with her daughter-in-law, Sabrina, to find the right house for our growing family.  First, Susan and Sabrina helped sell our house within 2 weeks time at a price within our expectations.  Then, they delivered BIG by helping us find our next dream home in a competitive market with little time to spare knowing Facebook millionaires would soon bring stiff competition to the housing market.  All along, even when our first two offers fell through, Susan and Sabrina helped us keep our focus and always had our best interest in mind.  Settling for less than our hearts desired was not the answer, and our patience combined with our trust in Susan and Sabrina paid off when we stumbled upon our dream home.  We can honestly say that working with The Caton Dream Team has been a true pleasure as it has enabled us to find a wonderful place to call home, not only once, but twice.  When the time comes, we will gladly call upon their services again, and we highly recommend them to anyone looking to find their first or next dream home.”

– Fredric and Heather R.

 

“I recently worked with The Caton team (Sabrina and Sue) to purchase my first home. I was referred to the team by a co-worker who had just purchased a condo with them. He had a great experience, and recommended them for their honesty, responsiveness and availability (even at night and weekends). I found this assessment to be 100% true.

I first met Sabrina and Sue when I was interviewing realtors. They recommended I come to their office for the interview. They were the only ones to recommend this, which already set them apart in my mind. During the interview they shared their process and approach and how our relationship would work. I decided to work with the Caton team for several reasons. 1) A great referral 2) Their open and honest personalities 3) Their sincere concern that I find exactly what I am looking for 3) Their combined years of experience and specialization in the peninsula.

After our first meeting, they set up their home search for the criteria we discussed. Part way through the search, my criteria changed, and they updated the search for the new criteria. Periodically, they would check in to see if I saw anything that I liked. We narrowed the search by going through what I liked and disliked about each listing that I reviewed online.

Sabrina and Sue answered all of my questions along the process. They came to the home inspection and to sign papers at title company. The title company representative that I signed papers with commented on how lucky I was to have my realtors there, looking out for my best interests, as a lot of first time buyers come alone, signing papers they don’t understand.

After receiving keys to my new home, the Caton team continued to support me. They referred me to painters their colleagues had worked with and found multiple contractors who would do the work I needed.

Sabrina and Sue are really easy to work with. It’s like talking with friends when I reach out to them. They are very approachable, trust worthy and hard working. They always answer questions I have or research to find the answers if they do not have them right away. I highly recommend them and will use them again for future real estate needs.”

– CJ T.

 

“The Caton team is awesome! Susan and Sabrina were an awesome fit for my husband and I as first-time homebuyers, but I highly recommend them for anyone at any stage of buying a home. They went above and beyond to help us locate a wonderful home and took us step by step through the often confusing short sale process. It felt less like we were working with realtors and more like we were working with good friends or family! Thank you, thank you, Sabrina and Susan!”

-Marie B.

 

“If anyone can get it done quickly it would be you two. By far the best Realtors west of the Mississippi.”

– Josh L.

 

“The Caton Team is A-Number-One in our book.  Susan and Sabrina are consummate Pros.  They do exhaustive research, they know how to price a home in today’s competitive market, and they know how to stage a home for maximum buyer appeal.  They’ve sold two homes for us, and we’re completely satisfied with everything they do.  You go, girls!”

-Russ & Elena H.

 

“I met Sabrina and Susan during our recent rental home search.  As we were not prepared for a move (current homeowners informed us that they were selling the house after 1 year of listing the home as a rental) we needed to act quickly and diligently to find our new home.  My initial communications were with Sabrina as she was hosting an open house.  Her emails were prompt and friendly and I got to know her a bit through email.  When I met up with her for the open house, she was just as friendly in person as was her partner, Susan.  They were welcoming throughout the process and provided wonderful thorough follow up on behalf of the homeowner.  Susan made herself available on a Saturday morning for the signing of the lease and has been in contact with us as we prepare for the move-in.  We have very much enjoyed working with the Caton Team and would recommend them for rental guidance and hopefully in the near future, home ownership!”

– Angela J.

 

“The Caton team has helped me find my perfect condo within a month of looking! And then later found me great tenants to rent it out. They work quickly and are very professional. Plus, these are just a pair of wonderful women to be around. They are very trustworthy and have their Clients’ best interest in mind. I will be using them again for all my real estate needs, and I recommend them to everyone else! Thank you so much!”

-Caitlin G.

 

“The Caton Team are the best. They are very easy to work with and know what they are doing. Made a very stressful time much easier! I would recommend them to all. First time buyers and people that have sold many times will enjoy working with these wonderful ladies!”

-Chris & Gary C.

 

“The Caton Team has helped us many times. Susan and Sabrina are wonderful and we will use them again when the time comes. They know everything about the bay area and never pressure you about making decisions. We couldn’t ask for a better team.”

-Elisa D.

 

“I’m pretty sure without The Caton Team we wouldn’t have been able to buy our house. We started looking right before the housing market crashed and was going back and forth on qualifying for a loan.   They made it happen-it’s a long story and I can make short and sweet. Please use The Caton Team for you house buying needs!  Really!”

– Nisi C.

 

“I can’t say enough about what an incredibly professional job Sabrina did; she went above and beyond the call of duty! We would not be in our house today were it not for her tireless efforts. She’s so knowledgeable and works tenaciously for her clients. 
Thank you Sabrina!

-
Rip R.

 

“Great working with you guys!”

-Aaron B.

 

“I have worked with many realtors during my 15 years as a mortgage broker and Sabrina Caton is by far one of the best real estate agents I have ever had the pleasure of working with on a number of purchase transactions over the years. She is upbeat and personable with a great sense of humor. She consistently works with her clients best interests in mind and is not afraid to tackle the tough deals. I have personally seen her negotiate to lower the purchase price by $25,000 after the contract was already signed when the buyers’ appraisal came in below the purchase price. You can count on Sabrina for high energy, professional real estate services!”

-Melanie Flynn – Windsor Capital

 

“Susan & Sabrina did an excellent job, I am very happy.  I highly recommend them.”

– Heidi & Robert M.

 

“Susan & Sabrina were great, very helpful, and understanding.  They were never pushy and made sure we were making the right choices at all times.  We would use them again for our next property purchase.”

– Anthony D. & Elisa L.

 

“Susan & Sabrina did a wonderful job, they are easy to communicate with, they were willing to put in extra time and work in getting our house ready to sell.”

– Kathy & Rodney H.

 

“I knew I wanted to work with Susan   immediately because she actually         listened to our needs, and gave sound, practical advice and information without a sales pitch. I would recommend her to anyone. She was absolutely helpful and made the whole thing easy and painless. I didn’t worry about anything as long as she was working on it.”

– Alicia S. and John G.

 

“Sabrina did an excellent job, she went above and beyond from the beginning to the end of the transaction making sure we understood every detail. She made things very easy on us – we appreciate all her hard work. We used them for both our real estate deals.”

– Kathy & Rodney H.

 

“When we need to sale our home – we definitely will call them again!”

– Loyda C. & Carol J.

 

“We loved working with Susan. I feel I have gained a new friendship. She was totally honest and trustworthy. She made selling our home a pleasant                   experience.”

– Ken & Elain S.

 

“Susan went above and beyond what she had to do. She was the only help I had getting my parents home cleaned and emptied so I could sell. I live in           Sacramento and didn’t have the time to get down to San Carlos. She truly was a “God Send”. She is FABULOUS! I can’t say enough about her! Please know you have one hell of a woman working for Prudential. Please make sure she receives kudos for a job well done!”

– Andrew R.

 

“Susan was always available to us, providing information and assurance during the selling process of our home. Thank You!

– Leo & Carlotta O.

 

“We felt very relaxed and trusted their personality.”

– William & Helen G.

 

“They did an excellent job and we would recommend them!

– Steve & Stacy G.

 

“Thank you – Flawless Service!”

– Danielle C. & Thomas G.

 

“Very honest.”

– Fredric & Heather R.

 

“I will recommend them to all my friends and family.”

– Diane S.

 

“We wanted to work with Sabrina. She was wonderful. She put up with lots of emotions / family dynamic around the sale of this home, as it was our families house. I appreciated her sensitivity and solid knowledge. We would be happy to work with her again and pass along any new clients as well.

– Nancy R.

 

“I highly recommend them!”

– Derek H.

 

“Susan helped us so much. She       advised us and “rode” with us though the entire ordeal. She is a very “real” person and shares concerns. She        advises and makes one feel extremely comfortable. I would recommend her to another person unconditionally. She is an excellent agent who goes above and beyond the call of duty.”

– Russ & Elena H.

 

“They were great. They made the     entire process as fun and easy as it could be. Thank you!”

– Matthew S.

 

“Susan was extremely helpful in   making our first move in 44 years painless. It was a major undertaking. Thank you!”

– Betty C.

 

“Very thorough. Informed me of the newest listings. Made intelligent     recommendations and opinions on listings without being pushy. The attention given to me made me feel as if I were the only client. I am extremely satisfied with the service.”

– Toshinari K.

 

“They were very professional and helpful. We could not complete the   transaction without them.”

– Takeshi & Nana M.

 

“We selected Susan over two other agents because we liked her better.”

– Daniel S.

 

“EXCELLENT JOB! Lots of support throughout the process! Great             personalities and professionalism! Very responsive to our concerns during the sale – thank you!”

– Mike & Lynn A.

 

“Sabrina is a highly effective real-estate agent. She has in-depth of knowledge of the market, strong negotiation skills and provides highly personalized service…she really listens to the needs of her client and delivers based on those needs.”

– Elif S.

 

“I was impressed with the attention to detail throughout the sale process. True Professionals!

– John K.

 

“We were very happy with Susan as she helped us through a difficult situation. Thanks is just not enough to say for what she did!”

– Donald & Roseanna M.

 

“Definitely an asset to your company!”

– Rosemary P.

 

“They are such real / genuine people. I felt I could lean and trust them               particularly with some very important but difficult to understand questions. They are WONDERFUL!”

– Patricia P.

 

“Susan has impeccable integrity, what a great individual. Thank you for a         wonderful transaction.”

– Pamela G.

 

“What a great experience. I live 4 hours away and shopping for rentals is not easy. The Caton Team made my shopping experience less stressful. Always ready to answer any questions I had, anytime I had them. I highly recommend this Team.”

– Julienne E.

5 Staging Mistakes – Great Article from Trulia

5 Staging Mistakes Sellers Think Are Awesome —and How to Change Their Minds

 

Nowhere in life is the old adage that beauty is in the eye of the beholder truer than in real estate. One woman’s dream home might be a mid-century modern, Mad Men styled contemporary, while another’s includes all the gingerbread charm of a classic Victorian. But when it comes to prepping a home to be viewed and (fingers crossed!) sold, there is both art and science to staging a home before its listed to maximize its appeal to the broadest number of target buyers.

The challenge is this: staging is an investment, one every seller can’t afford to make (although studies have shown professionally staged homes sell faster and for more than non-staged counterparts). So many sellers take it on as a do-it-yourself project which, like all DIY home improvement projects, can be fantastic or, mmm, not—depending on the approach, skill, and resources of the ‘self’ who does it.

Here are a few common scenarios in which sellers think their staging is awesome and buyers, well, beg to differ. Plus, check out the tactful things agents can say to help get sellers back on track:

Love these tips? Share this helpful handout with clients.

  1. The sellers used beat up or ugly furnishings and decor.

Great staging—DIY or professional—includes choosing furniture that shows the home off in its best light, and positioning the furnishings optimally, too. Sometimes this can be done using certain pieces of the seller’s furniture. Other times, furniture must be rented or otherwise obtained. One area in which budget-minded sellers like to save money on staging is by finding cheaper alternatives than renting new furniture from a staging company or store.

In this era of Craigslist, eBay, Freecycle, estate sales and other peer-to-peer online stores and trading sites, there is an abundance of access to used furniture at great prices. I have no bone to pick with the smart sellers who use these tools to replace their own furniture with something that is in better condition, more attractive or a smaller scale than their own, so as to highlight how much space their home truly offers. That said, using old, floral sofas from Craigslist’s Free Section, unattractive thrift store ‘artwork’ or even their own truly worn out, old furniture is a recurring reason buyers cite for focusing on how bad the staging is vs. the house itself.

What’s worse, the furnishings a seller might think was THE BEST BARGAIN EVER might actually give the nice home a worn-down, unkempt feel to the buyers who come to see it.

How to help your sellers: Have a consistent message throughout the process of staging. Clean and simple typically highlight a space. Before letting sellers go to town on the staging, show them examples of a beautifully staged home and one that’s not so great. The visual examples can help get your message across better than simply talking it through.

  1. They created distracting themes and scenes.

My friend Barb Schwarz is the head of the International Home Staging Professionals Association; she defines staging as ‘preparing a home for sale so the buyer can mentally move in.’ The goal is for buyers to visualize the new-and-improved versions of their lives that the home will help them realize, so some pro stagers will set up objects to communicate the lifestyle activities that a home facilitates. It’s not bizarre to see a breakfast table and chairs on the patio of a home with lovely views, a crib and baby gear-vignette in a small room suitable for a nursery, or a popcorn maker and recliners to show off a media room’s theater-readiness.

Occasionally, though, these scenes and vignettes can go rogue, creating borderline bizarre scenarios that distract and detract more than they help.

A beach scene (ball, umbrella and all) in a midwestern bedroom, a lively Parisian mural and Eiffel tower replica in a California condo and bizarre collections (taxidermy, anyone?) are all real-life examples of staging scenes that have done more harm than good.

  1. The house is neither clean nor clutter-free.

For various reasons, some homes just take time to sell. And if a client is living in a home that is on the market for long, it can be challenging to ensure it is perfectly pristine at all times, meaning every single time a buyer enters it. And it doesn’t take a truly filthy house to turn a buyer’s impression of a home from awesome to awful. The little messes that a family accumulates through daily living can be perceived by buyers as distracting at best—disgusting, at worst.

If the home is well staged, do not underestimate the power of piles of clothes, mail, paperwork, dishes or kids’ toys to deactivate the home-selling power of all the hard work and money that went into preparing the property in the first place.

How to help your sellers: Make sure your clients understand that you know how challenging this situation can be. Empathize with them, but also consider working out a referral coupon or discount with a local cleaning service. A weekly cleaning during the 30-60 day showing period, especially with a generous discount, can be well worth the cost, and show sellers that you get it, and you’re on their side.

  1. There are glaring gaps.

Sometimes a home’s staging leaves a glaring gap, an elephant in the room house, so to speak. This often happens when sellers run out of time and money to prepare a place, but it can be avoided through smart advance planning and budgeting for the pre-listing property preparation.

How to help your sellers:

  • Rooms—Listen, I personally live in a house that is beautiful everywhere until you poke your head into my young adult son’s room. So I can relate to these sellers. This situation might be okay to live with, but it’s a real home staging fail for a property that’s on the market. Remind sellers not to let there be one or two rooms that it looks like the stager—or house cleaner—missed. And this goes for the garage, closets, cupboards and drawers, too. Buyers like to look inside these areas to see how much space they have—if they are crammed full of junk, it creates the impression that the house lacks storage and order.
  • Exterior vs. interior—Some homes have amazing curb appeal, but look like they’ve been run over roughshod on the inside. And the opposite is true: some look like Martha Stewart handled the inside and junk man extraordinaire Fred Sanford was in charge of the yard. Neither of these is ideal. Again, here a visual tour can help. Make note of the most budget-friendly or simple-to-do projects that may be able to help remedy any eyesores.
  • Multi-sensory gaps—If a home is beautiful to the eye but smells bad, is strangely hot or cold, or has a noise issue (think: neighbors’ music, freeway noise or strange in-house creaks or whirrs), buyers might appreciate the visuals but fixate on the multi-sensory challenges. Especially if there are pets, sellers may need a gut check on whether your home is smelly—sellers might be so used to it, that they can’t sense it anymore. Here, honesty is the best policy. If you have a super smelly property and don’t want to offend the seller, you may want to consider bringing in a stager for a consultation (use someone who you have a good relationship with and often send referrals to). After they look around, have them write notes for the seller. The third party perspective can help get the point across without causing tension within your client/agent relationship.
  1. The seller lacked a neutral, expert eye.

Home decorating and home staging are two different things. When an owner decorates a home, they customize it with your specific tastes, preferences and aesthetics in mind. When staging it, the goal is to neutralize the home’s look and feel so it appeals to more buyers and doesn’t have turn-off potential.
Schwarz puts it this way: ‘Decorating a home is personalizing it. Staging a home is depersonalizing it.’

I cannot count the number of beautifully decorated homes I’ve seen where the seller must have thought they needed to do zero staging, and where the seller was simply wrong. Their very personal tastes in Elvis quilt art, red lacquer furnishings or sewing machine collections had been beautifully executed for them, but also were so highly personal, so very specific that it was near-impossible for a buyer to envision their own lives or families or homes or activities taking place in that space.

This is one reason I—and every agent should—encourage even sellers who are on a tight budget and can’t afford pro staging and sellers whose homes that have been beautifully decorated to at least have a home staging consultation with their agent and a professional stager. These pros can call out little ‘edits’ (furniture or decor items you should remove) and give advice about what buyers love and hate to see in a home that clients might be able to execute yourself at a surprisingly low cost.

Tell us! What is one the biggest staging missteps you have seen (or made!)?

 

I read this article at: http://www.trulia.com/pro/sellers/5-staging-mistakes-sellers-think-awesome-change-mind/

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

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

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

 

Rush to Buy Homes During the Holidays? YES YES YES!

Rush to Buy Homes During the Holidays?

 

Home owners may be doubtful that the months of November and December will bring about a home sale. After all, aren’t potential buyers sidetracked with the holidays and likelier to postpone their house hunt due to bad weather and shorter days?

But sometimes the “off-peak” time to sell can actually be the perfect moment for sellers. Several studies show that, on average, homes listed in November and December are more likely to sell, sell more quickly, and more closely approach the asking price, according to an article at Forbes.com.

A 2011 study conducted by realtor.com® found that 60 percent of real estate professionals advise their sellers to list a home during the holidays because they believe it’s an opportune time to sell. Nearly 80 percent of the real estate professionals surveyed said that more serious buyers emerge during the holidays, and 61 percent say less competition from other properties makes it an ideal time to sell.

Thanksgiving is particularly good, the article notes. Buyers may have held out through the busy summer months hoping to find a better deal, but now they may be searching with increased urgency. Some buyers may be motivated to close before the end of the year for tax purposes. They can purchase a home late in the year to deduct home purchase costs on their taxes, such as points, interest, and property taxes. Also, certain sellers who sold their homes during the summer season may be facing a capital gains tax. They may be highly motivated to buy in November to avoid paying capital gains tax (since closing on the purchase of another house is required within 180 days).

Source: “Why November Is the Best Month to Sell Your Home,” Forbes.com/Trulia (Nov. 14, 2014) 

 

Considering a sale – call us – The Caton Team has a wonderful marketing plan for you – 650-568-5522 or email me at Info@TheCatonTeam.com

 

I read this article at: http://realtormag.realtor.org/daily-news/2014/11/17/rush-buy-homes-during-holidays?om_rid=AACmlZ&om_mid=_BUaky7B89pUcTC&om_ntype=RMODaily

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

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

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

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Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

 

Here’s What Happens to Your Data After You Die???

As I was checking my email I came across this article and thought I would share it – sorry it is a bit morbid, but in this day in age – the digital age – there is more to our legacy than just a last will and testament.  I thought this would be good for individuals and families planning ahead and for those handling estates.  I wish you all the best in health in life. – SC

Here’s What Happens to Your Data After You Die???

A couple of years ago. I logged on to one of my many social network accounts and encountered a familiar face under the People You May Know section: Emru Townsend.

Emru was indeed someone I knew. A talented writer, a good friend, and a true mensch, beloved by many. He was also dead. He had succumbed to leukemia a few years earlier at the age of 39.

Yet there he was, smiling at me just like he did in life. But it wasn’t just a social media account that survived Emru. There’s his personal blog, where he recounted in sometimes-painful detail his battle against cancer, and his professional one, featuring some of the hundreds of articles he wrote on technology and animation. There’s his Flickr account, featuring photos of him in the hospital. There’s the site his family set up in an effort to find a stem cell donor, which ultimately proved unsuccessful. Today, nearly seven six years to the day of Emru’s passing, he still receives email at his pobox.com account, maintained by his widow, Vicky.

In addition to leaving a mark on everyone he met, Emru also left a footprint on the Internet, which his family struggled to deal with because they did not have access to all of his accounts.

This is a problem all of us on the Internet will encounter eventually, whether we want to think about it or not.

What can go wrong? Lots. Your loved one may have died leaving photos and videos behind that you can’t get to. He may have locked essential financial or other information away with passwords and not left those with you. She may have online financial accounts with money or credits leftover, or social media accounts that continue to generate painful reminders of her absence.

And, each year, the personal information of more than 2.5 million dead people is abused by identity thieves, according to ID Analytics.

Data of the dead
So you want to deal with this now, before you die and leave your family a mess of locked-down digital assets. There are three key things you need to do, says Evan Carroll, co-author of Your Digital Afterlife.

  1. Make an inventory of all your digital assets. That includes the documents on your computer, the photos on your phone, any data stored on thumb drives or backup disks, and every online account, including the ones you no longer use. It’s a big job, but you don’t have to do it all at once, Carroll says. Start with the most important things and work your way down the list. Odds are your primary email account will be number one, since that’s typically where online accounts send password resets. Keep reading for advice on where to store this data.
  2. Figure out what you want to happen to all of this stuff after you’re gone. Do you want your family to have access to all your emails? How about photos? Videos and other material you’ve downloaded? There may be some things you don’t want your loved ones to see. Decide now, and make your wishes known to those you care about.
  3. Assign someone to be your digital executor. Be explicit in your will about what you want to happen to your assets. Don’t assume your survivors automatically have a right to it all, because the law varies greatly from state to state, Carroll says. On his blog, The Digital Beyond, he offers some sample power-of-attorney language to include in your will.

And if like more than half of all Americans you don’t have a will, it’s time to whip one up. Will-making software starts around $30, and some extremely simple last-will-and-testament templates are available online for free.

Things to do on Google when you’re dead
You also want to take a look at your online accounts. Of all the major online service providers, only Google lets you plan for the inevitable ahead of time. Using the innocuously named “Inactive Account Manager,” you can designate a beneficiary who will inherit access to any or all of your Google accounts after a specified period of inactivity (the default is three months).

The beneficiary will then have an additional three months to download your data before it gets pulled offline for good. You can even set up an auto-responder from the grave, so to speak, to alert emailers of your passing.

Facebook is probably the next best at this, though your options are more limited. Once a family member has passed, you can ask the network to either delete the account or “memorialize” it, essentially freezing it in time but removing it from features like birthday reminders or People You May Know. You’ll have to provide proof of death via certificate or a published obituary, however. And if you want to download content from the account, you’ll need to obtain a court order.

As for the other main social accounts, some allow you to request that a deceased person’s account be closed, once you provide proof of their demise. Others are totally silent on the matter. LinkedIn makes it pretty easy to delete a dead member’s profile; you can fill out a DocuSign form, digitally sign it, and email it in. There’s no way to preserve any blog posts or other material your loved one has shared, however.

You can ask Twitter to close the account of a deceased family member, but you’ll have to mail it paper copies of your ID, the death certificate, a copy of the obituary (if you have one), and proof that the account actually belongs to the decedent if his Twitter handle doesn’t match his legal name. If you want to remove images of your loved one posted by others, you can request that by emailing privacy@twitter.com (but Twitter makes no guarantees it will honor every request).

Sadly, Yahoo’s death policy is rather stark. It will delete the account upon request and presentation of the death certificate. There are no options to download your loved one’s email, blog posts, or photos, nor can you create a memorial. According to Yahoo’s official policy statement, this is an effort to honor the original privacy choices of the deceased.

Still, that’s better than Amazon or Apple, which offer no way to officially close an account post mortem. (An Amazon spokesperson says you can close the account of a deceased family member by contacting Amazon customer support.) Worse, you can’t bequeath any of the music, videos, ebooks, and other digital materials a deceased customer paid for. That’s because you don’t actually buy these things, you license them; your right to them expires when you do.

Grave matters
As a practical matter, the best way to ensure that your digital assets pass into the right hands is to share them and your login data before you shuffle off this mortal coil.

(This may violate some terms of service agreements, but why should you care? You’ll be dead.)

Don’t insert login information into your will, advises Carroll; those documents usually become part of the public record, allowing any stranger to gain access to your accounts. Instead, indicate a secure place where your digital executor can find them, like a safe deposit box or an encrypted file in a service like SecureSafe.

PasswordBox’s Legacy Locker offers another option. This password manager lets you designate a “digital heir” who will inherit access to your Password Box account — and, by extension, all the logins contained in it. It can also store your credit card, driver’s license, and membership card data and let you securely share your logins before you kick. The advantage here is that if your passwords change or you add accounts, your information is always up to date.

What happens if PasswordBox goes belly-up before you do? The company has secured enough funding and cloud storage to maintain users’ account data “for years to come,” a company spokesperson says.

Whatever you choose to do, start doing it now. Because you never know if your next log-in will be your last.

“Death is the final log off,” Carroll says. “You don’t have the opportunity to go back and fix it.”

 

I read this article at:  https://www.yahoo.com/tech/heres-what-happens-to-your-data-after-you-die-101447039569.html?soc_src=mags

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

COUNTY BANS SMOKING IN YOUR OWN HOME

COUNTY BANS SMOKING IN YOUR OWN HOME

Paul Stewart, SAMCAR Governemnt Affairs Director

The San Mateo County Board of Supervisors has voted 4-1 to enact a second hand smoking ordinance that, among requirements, bans smoking in ownership units. Only Supervisor Don Horsley stood up for private property rights. Irrespective of one’s stance on smoking, imagine having to tell a buyer who just paid $862,000 for a townhome—which for purposes of illustration is 20% less than the median price of a home in San Mateo County—that they are barred from smoking (or performing any other legally allowed activity) in their own home? Now you will.

What was exempted:

  • Detached, single-family residences.
  • Detached, single-family homes with a detached or attached in-law or second units (approved pursuant to code)

What was NOT exempted:

  • Townhomes – whether owned or rental.
  • Condominiums – whether owned or rental.
  • Apartments

The ordinance will be enforced by the San Mateo County Sheriff’s Department and the San Mateo County Health Department and is designed as a ‘complaint driven’ regulation (i.e., incidents of people smoking in their own home will be investigated only when neighbors complain; smokers will supposedly not be under surveillance by the Sheriff’s Department or the Health Department.)

How the voting emerged:

  • Supervisor Carole Groom has supported the ordinance as proposed since its introduction. She made the motion to approve.
  • Supervisor Tissier noted that when she met with SAMCAR, she noted the key was consistency in the application of the regulations… and that she prefers consistency “the other way and supports adoption of the ordinance as presented.” (She also seconded Groom’s motion.)
  • Supervisor Slocum stated the notion of private property rights is important but “I am swayed by the testimony of the health hazards (of second hand smoke) and can support the ordinance as proposed.”
  • Supervisor Pine said he favors the ordinance as proposed but was struggling with the ownership issue. He added that owners (townhomes & condos) who are troubled by smokers cannot move as easily as renters, so such activity “actually has impact outside your private property.”

Gratitude on this issue goes to President-Elect Michael Verdone, Peninsula Government Affairs Committee Chair Michelle Velez, SAMCAR stalwart Tom Thompson and TCAA GAD Rhovy Lyn Antonio, who were present at SAMCAR’s meetings with the Supervisors on the prohibition of smoking in a person’s own home.

 

I read this article at: https://www.samcar.org/posts/county-bans-smoking-in-your-own-home-264.htm

 

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The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

 

What Does Name “Drysdale” Mean

Our CEO announced our new DBA will be Berkshire Hathaway HomeServices | Drysdale Properties – and we all wondered what it meant.  Well, now that I know the meaning – I am proud be to a Drysdale.  The meaning truly falls in line with The Caton Team and our business ethics.

 

What Does Name “Drysdale” Mean

 

You are strong in material matters, determined and stubborn. You have good business ability. You are a good worker, steady and practical, a builder who takes responsibility well. These qualities may bring you a position of authority and power. You are a doer, down-to-earth, serious-minded, reliable, and self-disciplined; have good power of concentration. You are inventive, intuitive and extremely methodical. Since your will is so strong, you are hard to convince. You also dislike advice. You love beauty and philosophy, and you desire achievement. You have a strong need for freedom – physical, mental and spiritual.

You are very intuitive. You have a reservoir of inspired wisdom combined with inherited analytical ability, which could reward you through expressions of spiritual leadership, business analysis, marketing, artistic visions, and scientific research. Operating on spiritual side of your individuality can bring you to the great heights, and drop you off if you neglect your spiritual identity. You are always looking for an opportunity to investigate the unknown, to use and show your mental abilities, to find the purpose and meaning of life. You want to grow wise and to understand people and things. You need privacy to replenish your energy. You have a unique way of thinking, intuitive, reflective, absorbing.

I read this at: http://www.sevenreflections.com/name/drysdale

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

 

Buying a House Solo? Here are some tips…

3 Next-Gen House Hunting Tips for Singles

The American household has changed – big time. More and more, people get married later in life, if at all. Many even go from married to single and back multiple times throughout their lives. This all means that more and more people are buying homes while single. Many unmarried folks are buying homes to live in on their own, while others are looking for homes to live in with their children, parents or other partners – past, present and future.

If you’re embarking upon the process of buying a home on your own, here are a few things to factor into your thought process and your action plan:

1. Solo doesn’t necessarily mean condo. A decade or two ago, many single house hunters were automatically directed toward low-maintenance condos and townhomes. And truthfully, some singles still enjoy the tax and financial advantages of ownership without the responsibilities of caring for lawns, roofs and other so-called “single family home” features they have no use for.

That said, the descriptor of a detached, standalone property as a “single family home” is woefully out of date. Many single people are electing to purchase detached homes for a number of reasons. Chief among them include:

  • Needing the square footage to allow their household to expand to include future partners, future children, adult children, or even elderly parents
  • Needing extra rooms (or even extra apartments!) to rent out, do hobbies in or run a home business from, and
  • Having the outdoor space for dogs, cats, horses and vegetable gardens, oh my!

If you are dreaming of a life in more of a home than your friends and family members think you can handle and you can well afford the home of your dreams, don’t be daunted. Reach out to other people in your circle of friends who are single and own either single family homes or condos and townhomes to get a sense for their experience. If you decide to go with a condo, make sure you read the HOA disclosures thoroughly and that you understand what you’re getting for your HOA dollars. (Hint: HOA dues often cover expenses you would pay out of pocket otherwise, like waste management fees, landscaping, building insurance and even roof and window maintenance.)

But if you do decide to go the single family home route, make sure you ask your circle (and your agent) for referrals to the contractors, gardeners and handyfolk who can make home maintenance on your own much more doable. It takes a village to maintain a home over the long run. So get a village!

2. Pay extra close attention to home inspections and home warranty provisions. Much of what’s scary about solo home ownership are the seeming risks around things that could go wrong. The most common such fear is a valid one: What happens if something goes wrong with the house? With just one income, it can be frightening to think of how rapidly a lemon of a house could rock your entire financial world.

There are a couple of tools you can build into your transaction that can massively mitigate just this risk. First, your home inspections. Most people think of home inspections as almost pass-fail: if they reveal devastatingly expensive issues, they back out of the deal. But if they don’t surface any fatal flaws, the deal is on.

Single home buyers should view their home inspections as the opportunity to spend a few more hours in the home, discovering its warts and all, before they move forward with the deal. Take special care to attend your inspections in person, ask the inspector to show you the issues they find while they’re on site. Read the reports and get any follow-up inspections or repair bids before your contingency period runs out. That way, you’ll have a concrete idea of the financial exposure to repairs that are needed right now while you can still either (a) negotiate to get the seller to chip in or (b) back out of the deal without penalty, if you need to.

The second tool is a largely underrated one: your home warranty plan. Most buyers get one, and often sellers pay for it. But what many buyers don’t realize is that (a) they can pay to upgrade the plan so that the warranty company will cover a wide assortment of future home repairs, and (b) they can and should renew their home warranty plan annually, in the future. Having the ability to ring up the home warranty company and spend $50 for a service call when your water heater, furnace, or plumbing goes on the fritz can dramatically reduce the fear factor of solo home ownership.

3. Consult with legal and financial pros before you buy with a relative, friend or partner. Buying a home with a friend, a parent, a sibling or even a life partner can seem like the cure for what ails a single person’s home buying situation. Namely, it injects additional financial resources, allows you to buy a pricier (read: larger, nicer, better located) property than you could on your own, and even positions you to have help making hard house hunt decisions and maintaining the place going forward.

Co-buying has big benefits, but it also poses some serious questions – questions that a lawyer, tax advisor or financial planner can help you anticipate and resolve, in advance, to avoid conflicts later. If you decide to go the co-buying route, make the investment of time and money up front to get some professional advice about how to structure the transaction and the financial relationship. Doing so, and reducing the agreement to a clear, professionally-drafted written contract that is recognized by and filed on record with the relevant state and local governments can go a very long way toward helping you avoid later damage to the interpersonal relationship with your co-buyer.

BUYERS: Did your status as single or married factor into your house hunting decisions? If so, how? If not, why?

I read this article at:  http://www.trulia.com/tips/2014/03/3-next-gen-house-hunting-tips-for-singles/?ecampaign=cnews&eurl=www.trulia.com%2Ftips%2F2014%2F03%2F3-next-gen-house-hunting-tips-for-singles%2F

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

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

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office:  650-365-9200

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

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Connect with us professionally at LinkedInhttp://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

 The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

Adjustable Rate Mortgages – Making a Comeback

When I read this article, I knew I had to share it. After the real estate bust – so many people turned conservative. But now with prices steadily rising on the San Francisco Peninsula – we’re seeing the adjustable rate mortagage make a comeback – enjoy this article…

Adjustable-rate mortgages regain popularity as prices, rates rise
In November, 11.2% of homes bought with loans carried adjustable-rate mortgages. That’s double the rate of a year earlier.

When Michael Shuken recently bought his family’s first home, a four-bedroom in Mar Vista, his adjustable-rate mortgage helped them stay on the pricey Westside.
For now, his interest-only loan costs him about 35% less per month than a 30-year fixed mortgage, he said. But he’ll have a much bigger monthly bill in 10 years, when the loan terms require him to start paying off principal at potentially high rates.
“What is going to happen if I can’t restructure my loan and extend it? Are interest rates going to be 7%, 8%?” the 43-year-old commercial real estate broker said. “The home is big enough for me to grow into. The question is, will I be able to?”
Adjustable-rate mortgages, which all but vanished during the housing bust, are again gaining popularity. Home prices and interest rates rose last year, and adjustable mortgages can help keep the monthly payment affordable — at least temporarily. Such mortgages offer a lower initial rate, but that rate can rise over time with market changes.
More homeowners in Southern California were willing to take that risk last year. In November, 11.2% of homes bought with loans carried adjustable-rate mortgages, or ARMs. That’s double the rate of the same month a year earlier, according to San Diego-based research firm DataQuick.
“You saw a big swing in people taking adjustable versus fixed rates” when prices and rates shot up last year, said John Ciolino, a senior loan consultant with Luther Burbank Mortgage.
With interest rates expected to rise this year, the proportion of ARMs could increase further.
“Generally, as rates increase ARMs become more popular,” said Guy D. Cecala, publisher of Inside Mortgage Finance.
Last week, lenders offered, on average, a 3% interest rate for a 5/1-year ARM — which means a borrower receives that rate for five years, before the loan starts to adjust annually with the market. That’s compared with 4.48% for a 30-year fixed loan, according to mortgage giant Freddie Mac.
Mortgage brokers say borrowers who plan to move after a few years, or those with considerable, but irregular, income could be well-suited for an ARM.
“A big percentage of my clients are freelance employees in entertainment,” Ciolino said. “So they are going job to job, and they are concerned with having a higher mortgage payment.”
ARMs have been most popular in the region’s higher-priced communities, such as Newport Beach, La Jolla and Pacific Palisades.
That’s a contrast to last decade’s housing bubble, when lenders flooded working-class communities with extremely risky mortgages. One such product — known as the option ARM — allowed borrowers to pay even less than the interest owed, swelling the size of the loan as unpaid interest was added on to principal.
In the first three quarters of 2006, the 16 ZIP Codes with the most ARMs were all in relatively affordable, working-class communities in the Antelope Valley and Inland Empire, according to DataQuick. Many borrowers bet home prices would continue to rise, allowing them to easily refinance or sell before the first adjustment. Many got burned when home prices plummeted, preventing any refinancing.
It’s unclear whether such thinking has changed, but the loans have. The crash stung lenders as well, making them skittish about offering the riskiest products.
Largely gone are option ARMs and loans with very low “teaser” rates that quickly exploded into payments that borrowers couldn’t afford. Lenders during the bubble years also qualified borrowers based on teaser rates, increasing the likelihood of default.
“The ARM products that remain in the marketplace today … are really venerable, long-dated products,” the most popular of which is the 5/1-year ARM, said Keith T. Gumbinger, vice president of financial publisher HSH.com.
New federal regulations taking effect this month should further curtail some of the riskier ARMs, including interest-only products and those with balloon payments.
Adjustable-rate loans may work for some buyers, such as a family in which one parent will return to work after staying home with the kids, said Gary Kalman, an executive vice president with the Center for Responsible Lending.
“I don’t think the product, in and of itself, is inherently a bad product,” he said.
Of course, rates could adjust downward in favorable market conditions. But ARMs are still riskier than fixed-rate loans — especially when rates remain at historical lows but are expected to rise.
Shuken, the Mar Vista borrower, says he understands the risks. He plans to pay down some principal before such payments are required, he said. And he’ll start planning years before the interest rate adjusts to either restructure the loan or sell the house.
“If people aren’t thinking about that,” he said, “they need to.”

By Andrew Khouri
I read this article at:
http://www.latimes.com/business/la-fi-arm-loans-20140102,0,3920478.story#ixzz2pdrofw8K

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Will The Mortgage Rate Spike Slow Market Recovery?

I love finding articles with timely information – had to share this fabulous article by Jed Kolko, Chief Economist on Trulia…

Enjoy and I would love to hear your insight and comments as well!

Will The Mortgage Rate Spike Slow Market Recovery?

Ever since mortgage rates started their steep climb in early May, we’ve all been on high alert, watching how higher rates will affect the housing market. For a would-be buyer calculating the mortgage payment on their dream home, the effects are obvious: the increase in the 30-year fixed rate from 3.59% in early May to 4.73% at the end of August (according to the Mortgage Bankers’ Association, or MBA) means a 15% increase in the monthly payment on a $200,000 mortgage. That should deter homebuyers and reduce mortgage applications, sales, and prices, right? In theory, yes, but of course the real world is much more complicated. Mortgage rates aren’t rising all on their own: other housing and economic shifts are happening at the same time.

Fortunately, the recent past is a useful guide. The 30-year fixed rate jumped .47 points in May 2013 and .51 points in June 2013, comparing the levels at months’ end (MBA). (Side point: the 30-year fixed reached 4.80 this morning, September 11, .22 points higher than at the end of June, which means July, August, and early September have seen much milder increases compared with the May & June spike.) But this year isn’t the only time when mortgage rates have jumped up: they also climbed at least .4 points in seven other months since 1999. With some simple time-series regressions, we traced out the typical paths of mortgage applications, sales, and prices in the months immediately after a mortgage rate spike.

The Month-by-Month Impact of a Rate Spike
Our analysis of mortgage rates and other housing data from January 1999 through April 2013 – just before the current spike – shows that mortgage rates hit refinancing applications (MBA) earlier and harder than any other measure of housing market activity. (Not all of the data series are available back to 1999.) Here’s the timeline of what typically happens when rates spike by half a point in a month:

  • The month when rates spike: Refinancing applications typically fall by 45% in the month of a spike, with further falls one and two months after mortgage rates jump, compounding the effect. The drop in refinancing applications this year was roughly 50% cumulatively over two months, which actually looks small compared with similar rate jumps in the recent past.
  • 1-2 months after the spike: Pending home sales and home-purchase mortgage applications typically decline slightly, though the effect isn’t statistically significant. New home sales also decline modestly.
  • 3 months after a spike: New home sales and existing home sales drop. That means that the May mortgage rate spike should show up most strongly in August new home sales and existing home sales, both of which will be reported later this month (on September 25 and September 19, respectively).

Compared with the impact on refinancing, the impact of a rate spike on home-purchase mortgage applications and sales volumes is very small and not always statistically significant.

Refinance mortgage applications (MBA) Same month as rate spike (plus additional impact 1-2 months after)

-45%

Yes May data (already reported)
Pending home sales (NAR) 1 month after

-1.1%

No June data (already reported)
Home-purchase mortgage applications (MBA) 2 months after

-2.6%

No July data (already reported)
New home sales (Census) 3 months after (plus modest impact 1-2 months after)

-2.4%

Yes August data, to be reported Sept 25
Existing home sales (NAR) 3 months after

-1.7%

Yes August data, to be reported Sept 19
Sales prices (Case-Shiller, FHFA) No short-term impact

N/A

N/A N/A
Note: The “effect in month of biggest impact” equals the month-over-month change in the indicator for a 0.5 point rate spike, relative to when the mortgage rate doesn’t change, in percentage points.

The Longer-Term Impact of Sustained Rate Increases
Even if the immediate impact of mortgage rate spikes is small – aside from the huge effect on refinancing – shouldn’t sustained rate increases should depress housing activity? Again, recent history tells a more complicated story. Since 1999, mortgage purchase applications and all measures of sales activity – NAR pending home sales, NAR existing home sales, and Census new home sales – have actually been higher when mortgage rates were higher. Sales prices were also the same level or higher (depending on the sales price index) when mortgage rates were higher compared to periods of lower rates. Of all the measures of housing activity, only refinancing applications were lower during periods of higher mortgage rates.

Here’s the missing piece of the puzzle: over the past decade and a half, mortgage rates have been higher when the economy was doing better. Since 1999, the correlation between the monthly unemployment rate – a good, if imperfect, measure of how the economy is doing overall – and the 30-year fixed rate was -0.8, making it a very strong relationship.

Furthermore, every measure of housing activity (except refinancing activity) improved when the overall economy did better. That means that a stronger economy is associated with BOTH higher mortgage rates AND more sales, higher home prices, and more home-purchase mortgage applications. That’s why these measures of housing activity go up when mortgage rates are higher.

If we statistically remove the effect of changes in the overall economy (by including the unemployment rate as a control in a simple statistical regression), then we see exactly what we’d expect: mortgage applications, sales, and home prices are all lower when mortgage rates are higher. In other words: all else equal, higher mortgage rates do depress housing demand.

As Rates Rise, All Else Won’t Be Equal
When it comes to mortgage rates, all else is never equal. Three other factors will complicate or even offset the impact of the recent rise in mortgage rates, even if rates continue to climb: the strengthening economy, expanding inventory, and looser mortgage credit:

  • A post-recession economic recovery tends to push interest rates higher as demand for credit increases and if investors start to worry more about inflation. Furthermore, the Fed has said it will taper its bond-buying only if the economy seems strong enough to weather it. Both through market forces and the actions of the Fed, rising rates should be accompanied by a strengthening economy.
  • Inventory has been expanding for the past six months on a seasonally adjusted basis. More for-sale inventory on the market slows price gains: in fact, the Trulia Price Monitor and other price indexes have been slowing down before the May rate spike could have affected prices, pointing to expanding inventory as a likelier explanation for the price slowdown. While rising rates and expanding inventory should both slow down prices, these same two factors should pull sales in opposite directions. All else equal, rising rates should slow sales, but expanding inventory should boost sales – since more homes can be sold if there are more homes for sale. Therefore, even though this month’s sales data should be slowed by sales, it could be lifted by rising inventory.
  • Mortgage credit, though still tight, shows signs of loosening for two reasons. First, as they face diminishing demand for refinancing, banks might look to expand their home-purchase lending instead. Furthermore, new mortgage rules coming into effect next year will give banks more clarity about which loans are considered risky, hopefully making banks more willing to write mortgages deemed to be safer. The negative impact of rising rates, therefore, could be partially offset by looser mortgage credit.

All told, the housing market and the economy have a lot of moving parts. Aside from the sharp and immediate effect that rising mortgage rates have on refinancing, the impact of rising rates on the housing recovery is hard to pinpoint. This month’s sales reports, covering new and existing home sales from August, should show some decline from the May rate spike, but mortgage rates are just one of many factors affecting the housing recovery.

I read this article at:  http://pro.truliablog.com/news/will-the-mortgage-rate-spike-slow-market-recovery/?ecampaign=tnews&eurl=pro.truliablog.com%2Fnews%2Fwill-the-mortgage-rate-spike-slow-market-recovery%2F

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Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008