Home inventory levels are low

Record low interest rates mean that it is a great time to get a loan. However, the other factor that comes into play when deciding to buy or invest in a home is the price level of homes. As we all know, home prices have come down dramatically in nearly every market. This is in part due to the high number of properties available for sale and the, relatively, low number or buyers.

There may be a change on the horizon. While most people do not expect home prices to shoot up any time soon, there may be more stability and possibly some minor increases in prices. This is a result of the lower levels of available homes. A recent article in the Wall Street Journal stated that inventory levels dropped by an average of 22% nationwide. Of course the amount of change in the housing inventory varies depending on the city and state, but the trend is fairly evident. If this trend continues, it should be expected that prices would increase, even if it may be slightly.

Maybe we are on the road to recovery???

Interest rates are ridiculously low

The average 30 year fixed rate for January 19th, 2012 is 3.88%. According to the Primary Mortgage Market Survey (PMMS), published by Freddie Mac this is the lowest since the inception of the survey in 1971.

To gain an understanding of what this low interest rate means, you have to think about what it translates into based upon a particular loan amount. To keep things simple, I will use a loan amount of $100,000 for this example. At a fixed interest rate of 3.88% on a 30 year loan, the payment is $471 per month.

If you compare this to the 7.00% interest rate in January of 2002 (10 years ago) you would have had a payment of $665 per month for a $100,000 loan.

Going back even further, to January 1982, the interest rate was 17.48% which translates to $1,465 per month for a $100,000 loan.

These super low interest rates and the huge drop in home prices makes right now a great time to buy. In many cases, rental costs are higher than the cost to own.

Buying in the right area

One of the key considerations for purchasing a home is, of course, location. The desirability of a home’s location differs depending on your needs. Many buyers, including investors, now consider an area’s walkability in the decision to purchase.

As people have become more aware of the environmental damage caused by vehicles and the health benefits of walking, they have sought out homes that are near amenities. A great resource to help you understand areas that you may not be familiar with is called walkscore.com. This provides you with an idea of how the location you are considering compares to other areas. It also provides you with a brief look at what is nearby.

Having the grocery store and bank nearby is a benefit to people who may be getting older and for people who like to ride a bike or walk. Using a website like this will help you determine whether a location is right for you or for the tenant you are trying to attract.

Adding value to your home by fixing up your bathroom

The Northridge remodel that we are working on had a guest bathroom that was in poor condition. The bathtub had a crack in the floor, the sink and cabinet were aged, and the toilet was not in the best condition nor was it the most water efficient.

Bathtub before repair and refinishing

In the past we have handled bathtub cracks by replacing the tub. This can be costly and time consuming. Since the crack in this one was only about 3 inches long we thought we should try to repair it. We called out some bathtub repair specialists and asked their opinions. We decided to give it a try.

Porcelain & Fiberglass Maintenance Inc. came out and repaired the fiberglass by using a fiberglass patch and liquid resin to seal the crack. They then put down non-skid texture, at our request, and then recoated the entire bathtub, including the walls. It looks great and only took a few hours. It also saved us a lot of money. Normally a new tub, including removal and installation can cost $1,500 to $2,500. This repair cost $275! They also did a thorough cleaning of another shower in the house and recommended that we not refinish it because it was not necessary. They saved us even more money by recommending this.

Bathtub after repair and refinish

Refinishing a bathtub may not be the best choice in every case, but in this case it worked out great and saved money. Make sure to get a couple estimates before undertaking any project, but be sure to get the opinions of the specialists. Don’t assume that you have to replace in every case. Many times you can refinish. It is better for the environment and usually a lot less costly.

Lowest priced single family home in Granada Hills

The lowest priced house in Granada Hills, as of Jan. 17, 2012, is listed by Keller Williams and is a 4 bedroom, 2 bathroom on Lahey. It’s a short sale with a pool that looks like it needs a bit of love. This could be a nice first home or a great investment property.

Great priced SFR in Granada Hills

The list price is $219,000, but we will have to watch it to see what the short sale gets approved at.

The payroll tax cut hurts some of the least well off people

In order to continue the payroll tax cut there is going to be an increase in the fees charged to borrowers using Freddie Mac and Fannie Mae guaranteed loans. While the payroll tax cut is a good thing for people who rely on every penny to survive, the way congress and the president decided to pay for it is to increase housing costs to people who are trying to buy homes using low down-payments.

Here’s how it works. The guarantee fee, kind of insurance, on Freddie Mac and Fannie Mae loans will increase by 10 basis points (0.1%). This will translate to about $10 – $15 per month on a $200,000 loan. While this is not a tremendous amount of money, it does add up. Most people using these types of government loans already have limited funds for monthly payments and down-payments. That is why they are using the government backed loan. It seems silly to cut the payroll tax and then increase fees on the same group of people.

The increase is due to take place April 1st, 2012 and that’s no April fool’s joke. Take a moment to tell your representatives to find a different way to fund the payroll tax cut. The only way to get the economy back on track is to get housing back on track. Hurting first-time buyers is not the way to do it.

Lowest priced condo in the Santa Clarita Valley

The lowest priced condo in the Santa Clarita Valley, as of Monday Jan. 16, 2012, is listed by Re/Max of Santa Clarita. 27240 Luther Dr. #509 in Canyon Country is a 1 bedroom, 1 bathroom of 652 square feet and it’s listed for only $69,000. This could be a great investment or first place for a young couple or single person.

An image of the kitchen on a really great priced listing.

GOOD listing photos are critical

People, including agents, often underestimate the importance of photographs in home listings. Given that most home buyers now start their search online, it is critical that there be photographs of homes and that the photos are good.

Some agents are a bit lazy and neglect to put more than one or two photos. This should be unacceptable to sellers because it does not properly showcase the home and in this market sellers need every advantage they can get. I often see listings that have 1 photo and it is a screenshot from Google Earth. While Google is great, using a street view photo as a lead photo in a listing is not good marketing.

Most good agents take the time to provide a sampling of photos that show many of the attributes of the home. In some cases, even with the best intentions, the photos just don’t do justice to the home. I ran across this photo the other day. The listing is great and has lots of detail, there are many photos and most are great, but this one photo was just not up to the par of the others.

Nice home, but out of focus photo

I recently found a great new camera that can help solve these types of out-of-focus shots. The Lytro camera would have helped with this photo, because the agent could have corrected the focus when he got home even if the original shot was a little off.

This camera is not only great for real estate agents, it is also great for any camera user. Using the Lytro to take a photo of kids playing allows you to go back and change the focus later. It is great for action shots.

Northridge remodel project -Termites

We have been working a remodel project in Northridge for the past week and opened up a wall that had minor

Termite damage inside a wall near a window.

indications of subterranean termites. Subterranean termites, as their name indicates, generally come from the ground and do damage to wood located near the ground.

In this case the termites did damage up to 9 feet from the ground. It is amazing to see how one stud can be completed destroyed and the next stud can be untouched. The photo shows the damage to a stud near a window.

This is a perfect example of why it is important to have a termite inspection performed by a professional inspector. We did and therefore were able to account for the possible repair costs when we determined the purchase price.

I will have more posts to come about the progress of the remodel.

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