The Party Might Just Be Ending for Low Interest Rates

It’s safe to say that mortgage interest rates have been at historic lows since the summer of ’09, mostly around and sometimes even under 5%.  Currently, they’ve been floating around the 5 & 1/8% range.

Part of the reason for these low rates has been because the Fed has been on a buying binge of Mortgage Backed Securities (MBS).  The Fed has been buying $1.25 trillion in mortgage-backed securities in its effort to prop up the economy but has said it will end those purchases March 31.

As I speak fairly regularly with seasoned, well-informed, and intelligent mortgage lenders and brokers, one thing they all seem to agree on is that the expectation is that, after March 31st,  rates will head upwards, and will likely be in the 6% range.

Still pretty low, historically – but, a significant impact to the buying power of home buyers out there.

Just think about it, if you’re looking at a loan amount of say $700,000, this means that a 1% increase in interest rate translates to paying $450 MORE per month on the same loan.  Or looked at another way, a 1% increase in rate just reduced the sale price you can afford by about $80,000.

Quoting some highlights from a recent WSJ article:

What happens when it (the Fed) stops buying hundreds of billions of dollars in financial assets?

In its monetary-policy statement, the Fed said it would “gradually slow the pace of these purchases in order to promote a smooth transition in markets.” Suddenly cutting to zero, presumably, could prove too much of a jolt.

But even a gradual pullback could have big repercussions. Zero interest rates and Fed purchases — financed by printing money — have played a massive role in reviving stocks and bonds and rekindling the economy.

Mortgage rates will likely move up, as private-market buyers will charge more than the Fed for bearing the risks of holding government-backed mortgage securities. Now, the Federal Reserve has said they would consider reopening its program to support the mortgage market if interest rates spiked or the economy showed new weakness

In its best corporate-speak, the Fed said they will “evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets.”  That is, if markets play along. Investors are already balking at the heavy use of printing presses. Just look at the sliding dollar.

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When Does YOUR Street Get Sweeped? …Some Cool Online Tools on Redwood City’s Website

Upon receiving my latest email installment of Redwood City e-news (which you can get by signing up at www.redwoodcity.org), Malcolm Smith, their Public Communications Manager, highlighted to me useful tools that the city provides on their website.

Want to know when your street is going to get a visit from the City Street Cleaning sweepers, for every month in 2010? Then check out this link here:  http://www.redwoodcity.org/publicworks/streets/pdf/Street-Cleaning-Schedule.pdf

An even more cooler tool is the Community GIS (Geographic Information System). This tool is a computer-based mapping tool that takes location information — such as streets, water features, schools and day care centers, neighborhood associations, census and demographic info, zoning, parks and places of interest, historic resources, parcel information, community information centers and more — and turns it into visual layers on a map, while also providing detailed data about a specific parcel.   Check it out at: http://pubgis.redwoodcity.org/communitygis/

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New Mount Carmel Listings – Week of Jan. 12

A few new listings have recently popped up here in the Mt. Carmel area. The first of which — a bit of a fixer — looks like a great value in terms of price (at least on paper). Take a look:

  • 327 Jeter: $585,000 – 2br/1ba, 1140 sq. ft. on a 6500 sf lot.  Already has an offer date set (tomorrow, 1/13).
  • 532 Ruby: $549,000 – 2br/1ba, 980 sf on a 4800 sf lot
  • 266 Lowell: $949,000 – 3br/3ba, 1370 sf on a 6500 sf lot (this one is a re-list. Had been on the market for the past year or so, at a higher list price).

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E-waste Recycling Event at Mt. Carmel, Next Saturday, Jan. 9th

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Got a new TV for Christmas? How about a new game system or microwave, cell phone, or DVD Player/ Recorder? Don’t know what to do with the old ones?

Bring your used, broken or unwanted electronics to school Saturday, January 9 and recycle them for FREE.

  • Computers/Laptops/Servers
  • Televisions/Monitors
  • DVD/CD Players
  • Fax Machines/Printers
  • Telecom Equipment/Telephones/Cell Phones
  • Speakers/Stereo Equipment
  • Microwaves
  • Cables/Computer Mice/Keyboards

Bring all your old TVs, along with other broken, unused and/or unwanted electronics to the Mt. Carmel parking lot – 301 Grand St., Redwood City – on Saturday, January 9th from 9:00 a.m. – 3:00 p.m.

Your car will be unloaded for you and those items will be safely recycled for FREE. You will be benefiting both the community and the school. You can also check www.mountcarmel.org for more details.

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What’s Sold in Mt. Carmel – Q4 So Far

So wrapped up in a statistic that would make any pessimist say “No way”, is the tell tale “% of LP” — or, the percentage of list price that a home sells for.  In the last few months in the Mt. Carmel area, that average number was….drumroll, please…. 100%.

But of course, averages don’t always tell the whole story. I’ve always been one to point out that averages are never an indicator of future performance.  Location, neighborhood, condition, the economy — all play a role in what any particular home will sell for.  The fact of the matter is, that some homes sell for more that asking, some for less.  Pretty black and white.The good news is that the average points to some relative stability in our recent market.

Here, in no particular order, are the recent sales in the last 90 days:

174 Jeter – 4br/2.5ba – Original List Price (OLP): $969,000, Sale Price (SP): $889,000.  98 Days on Market (DOM) – 92% of LP

313 Topaz – 3br/2ba – OLP: $739,000, SP: $730,000. 12 DOM – 99% of LP.

270 Jeter – 2br/1ba – OLP: $675,000, SP: $680,000. 12 DOM – 101% of LP

491 Topaz – 2br/2ba – OLP: $669,000, SP: $654,000. 17 DOM – 98% of LP

1740 Whipple – 3br/1ba – OLP: $650,000, SP: $675,000. 14 DOM – 104% of LP

188 Inner Circle – 2br/1ba – OLP: $579,000, SP: $612,000. 9 DOM – 106% of LP

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Crazy Urban Legend Hits the Real Estate World

Be forewarned — no, this is not about kidney harvestingNigerian Lottery winnings, or Bill Gates giving everyone lots of money for forwarding an email — there is an email making the rounds titled “HR 2454: CAP AND TRADE ENERGY BILL”, which purports that new legislation will require all homes to retroactively pass new energy standards before they are sold.

Some even say that all homes will now be required to get a “label” for your house every year, proving that your home meets new energy standards.

This is all patently and unequivocally FALSE. (and you can even checkSnopes.com here to doublecheck)

Firstly, whoever started this email has a serious conspiracy theory complex. They also probably fall into the category of “birther”, “teabagger party member”, or “Glenn Beck-lover”.

Bottom line, our gub’mint is not going to do anything – ANYTHING – that will adversely affect the real estate market, which is absolutely one of the key elements in our ongoing, slow economic recovery. Why do you think they recently overwhelmingly voted to extend the first time buyer $8K tax credit bill, as well as extend the $729K conforming loan limit? They want to encourage people to have more confidence in home ownership.

Anyway, I also consulted our National Association of Realtors (NAR) position on this, and below is what it said. The most revealing statement, which contradicts this email is that this bill  “Does not create a federal energy audit requirement for real property”

“The U.S. House of Representatives approved H.R. 2454, the American Clean Energy and Security Act by Reps. Waxman (D‐CA) and Markey (D‐MA). Following NAR’s long‐standing policy to only take a position on legislation, or provisions within legislation that have a direct affect on real estate, NAR worked with our Congressional allies to strip the Energy Bill of provisions that would have adversely affected our industry.

After multiple consultations with the NAR Climate Presidential Advisory Group, the NAR Land Use, Property Rights and Environment Committee, and state associations who had dealt with energy audit legislation at the state level, the Land Use, Property Rights and Environment Committee directed NAR staff to concentrate on the real estate provisions in the bill.  As a result, NAR issued calls for action and made this a talking point for Capitol Hill visits during its recent Midyear meeting.

Overall, REALTORS® succeeded in making a number of positive changes affecting the real estate provisions of the bill. The House‐approved bill:

  • Does not create a federal energy audit requirement for real property;
  • Exempts existing homes and buildings from any federal guidelines for new construction energy efficiency information labels.
  • Prohibits the implementation of any labeling during a sales transaction.
  • Leaves the decision to states as to whether to require energy audits, disclosures, etc.
  • Provides property owners with significant financial incentives, matching grants and tools to make property improvements and reduce their energy bills;
  • Prohibits the Environmental Protection Agency from regulating residential and commercial buildings under the Clean Air Act;
  • Eliminated an early proposal to allow citizens to sue over minor climate risks under the Clean Air Act; and Establishes green building incentives for HUD housing, including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.”

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Here Comes the Mt. Carmel Holiday Home Tour!

It’s that time of year again, for the Mt. Carmel Holiday Home Tour!


Event Logo Image On Saturday, December 12th, from 11:00 a.m. – 3:00 p.m., you can visit four beautiful Mount Carmel and Edgewood Park area homes splendidly decorated for the holidays. Even if you can’t make the Tour, come shop the wonderful Gift Boutique at the school, at 301 Grand Street! The boutique is open to the public from 10:00 a.m. –4:00 p.m.


Tickets can be purchased directly through me (contact me at ed@edgory.com), or online here.

There will also be a Holiday Home Tour Raffle. First prize will be: Your choice of Six Waterford “Lismore Jewels Diamond” Toasting Flutes and a Limited Edition Champagne Bucket, as well as extra New Year’s goodies, or Pottery Barn Holiday Table ware – 12 “Twelve Days of Christmas” salad plates, 12 large white dinner plates and coordinated napkins.

Second prize will be Williams-Sonoma “Nutcracker” dessert dishes, cereal bowls and mugs for 6!

Raffle tickets are $5 each or 5 for $20! You can also purchase these from me (ed@edgory.com) as well!  The raffle will be pulled at the end of the Home Tour Event.  No need to be present to win.  All proceeds benefit Our Lady of Mount Carmel School.

Please note that this event has been planned with adults in mind. Strollers will not be allowed in the homes and we ask that you do not bring young children.

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