Costa Mesa Real Estate Week In Review

August 24, 2010

Not an Ice Cream Cone

They keep talking about the "double dip" in the news and we just found out that a double dip is not what you do to an ice cream cone! Well, these days, it is always good to introduce some humor when the news is not always great. However, there is some really good news right now. Rates are the lowest they have been all year. That is really saying something, because rates have been very low all year. As a matter of fact, rates on home loans are the lowest they have been in our generation. That is pretty low. Why is that good news? If someone is thinking about purchasing a home or a car or refinancing, it is a great time to move now. Prices are low and rates are ridiculously low. So the time is right. We need more people to buy homes and cars over the next few months so we can avoid a double dip recession. And that would be a very good thing.

What is the bad news? Rates as low as these are indicative of a slow economy. We just need to see one number from this week to demonstrate how slow things are: first-time claims for unemployment insurance went over the 500,000 mark in the past week. While still lower than the heights of the recession, it was the first time we had crossed the 500,000 barrier since late last year. Once people step up their purchases of homes and cars, this will prompt companies to hire more employees. In turn, this will make consumers more confident to purchase more homes and cars. Then the cycle of economic growth will start back up and talk of a double dip will quiet down. And when that happens, we promise rates will go up. We just can’t say when. So, for those who are waiting for the economy to get better, it will be costing more for you to spend if you are behind this curve. The trend setters will just buy their ice cream now while there are enough sprinkles to double dip.

The Markets. Again, the weak economic data continues to contribute to the current string of record-breaking rates. Freddie Mac announced that for the week ending August 19, 30-year fixed rates averaged 4.42%, down from 4.44% the previous week. The average for 15-year fixed fell to 3.90%. Adjustables were stable with the average for one-year adjustables at 3.53% and five-year adjustables at 3.56%. A year ago 30-year fixed rates were at 5.12%. Attributed to Amy Crews Cutts, deputy chief economist, Freddie Mac. "Investors in long-term bonds appear very confident that inflation will remain in check, and as a result long-term fixed rates have continued to fall. This week marks the ninth straight week in the survey that 30-year-fixed rates have met or set a new record low. "This week’s release of the Consumer Price Index indicates that current inflation is very low. The 12-month growth in the core consumer price index has held at only 0.9 percent for four straight months ending in July. The last time price growth was this low was the year ending January 1966. "The housing market is in a lull following the expiration of the homebuyer tax credits. Single-family starts fell for the third straight month in July to an annual pace of 432,000 homes, the fewest since May 2009." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated August 20, 2010

Offers contingent on buyers’ ability to sell their current residence are increasing in popularity. They were almost unheard of during the go-go early 2000s, but common 20 years before that. Sellers generally don’t like these kinds of offers because it puts them in limbo. If their buyers’ home doesn’t sell, they can be back at square one. Also, once sellers accept a contingent sale offer, they must disclose this to other potential buyers, and that can discourage a buyer prepared to make a better offer. Sellers who accept contingent-sale offers can include an escape clause in the contract. This clause allows the sellers to notify the contingent-sale buyers of a competing offer and they must remove the contingency in 72 hours (on average) or lose the home. Source: Inman News

From the Realtor Content Resources, "Audit Your Insurance," here are two tips on how to save on homeowners insurance:

1. 1. Understand cash value coverage. Actual cash value coverage reimburses you for the value of your home based on its current condition. If your home was built 10 years ago, you’d receive only the depreciated value of decade-old windows, cabinets, appliances, and so on.
2. 2. Consider replacement cost coverage. Most insurers recommend the more comprehensive replacement cost coverage. With it, you’ll be reimbursed for the amount it will cost to rebuild your home like new with the same kind and quality of materials. Depreciation doesn’t factor into the settlement equation. To get the full benefit of replacement coverage, you need to purchase enough insurance to cover the total cost to rebuild your home, excluding the value of the land. Source: NAR

More homeowners are refinancing into shorter-term loans, saving a bundle by taking advantage of the lowest rates in decades. Nearly a third of borrowers refinancing fixed 30-year loans in April through June picked loans with 15- or 20-year terms, according to housing finance giant Freddie Mac. It was the highest share since 2004. The trend has been driven by near-weekly drops in rates all summer. Average rates on fixed 15-year loans fell below 4% for the first time in mid-August, dropping to 3.92%, according to Freddie Mac. A year ago, the average 15-year rate was 4.68%. Meanwhile, the rates on fixed 30-year loans now averaged 4.44% in mid-August, Freddie Mac found. At today’s rates, a borrower with a 30-year loan at a 6.5% rate and a $200,000 principal balance could save some $70,000 in interest over the life of a shorter 20-year loan. "It’s borrowers looking to build equity more quickly, and borrowers have generally been paying down their loans more quickly," says Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information. Source: USA Today

A passion for his community is the driving force behind Costa Mesa real estate professional Kurt Galitski of the Kurt Real Estate Group, one of Costa Mesa’s most fervent residents. In addition to representing the needs of buyers, sellers, investors and asset managers within his city and throughout Orange County, he has also dedicated himself to making a difference in the lives of his fellow citizens. A determined entrepreneur and proud family man, Kurt strives to provide every client with an exceptional level of attentive and knowledgeable representation.

The ability to adapt to ever-changing market conditions has enabled Kurt to thrive even in the most challenging of times. His thorough knowledge of the industry- from residential and commercial transactions, to new construction and development, to short sales and REO properties– ensures he is always available to meet the needs of his diverse clientele. Kurt’s concierge-level service is a professional signature; he has built a team of Costa Mesa real estate professionals, The Kurt Real Estate Group, designed to care for each client’s unique needs.

On Your Team,

Kurt Galitski

The Kurt Real Estate Group

Vice President, Weichman Realtors

877-957-6677

Ca. Broker #1348644