2013 Year In Review

By Gino Blefari President & CEO Intero Real Estate Services, Inc. It's hard to believe another year has come and gone. Looking back, 2013 indeed was a pivotal year for housing markets nationwide. Many markets saw an incredible bounce back, homeowners regained equity and mortgage rates for the most part remained incredibly low. Here's a look back at the highlights that stood out and will help us understand how housing will perform in 2014. 1. Home sales soared for the most part Despite the fact that home sales have hit some seasonal slippage here near the end of the year, it's hard not to remember the amazing summer that took place in many markets. Home sales hit their highest level in over six years in August, and took prices along for the ride. NAR data showed that end-of-summer sales hit an annual rate of 5.48 million in August, the highest pace since February of 2007. 2. Home values inched toward record highs Perhaps even better news for America's homeowners and sellers was that the national median price for existing homes made major strides in 2013. After a hot summer, the median price was $212,100 in August, up 14.7% from the same month in 2012. 3. Negative equity eased  Of course, one of the best side effects of the rising strength of home values was the easing of negative equity for homeowners. One of the big stories of the fall was data released from RealtyTrac that showed 8.3 million homeowners – or about 18% of homeowners with mortgages – were on track to gain enough equity to sell their homes in the following 15 months without resorting to short sales. Of course, this doesn't mean that 8.3 million homes will come on the market for sale next year. But it does mean a lot more options for sellers who've wanted to sell. 4. Seasonal cooling landed The year was not immune to occasional doses of more sobering news. An expected period of cooling off indeed took place in the fall. It almost had to, given the booming summer that real estate markets experienced. Total existing home sales fell to a rate of 5.29 million in September from August, though it's worth noting they remained 10.7% above year-ago levels. 5. Access to mortgage improved, despite pockets of interest rate increases This month, we saw two great pieces of news that have to do with improving overall access to mortgages. Federal housing officials said they would leave the GSE loan limits as is, which means borrowers in higher-cost areas will still continue to see opportunities for Freddie Mac and Fannie Mae-backed loans. And a report showed that loan eligibility continued to increase for borrowers in the first half of the year. 6. Smaller cities took the lead In NAHB's fall housing index, the builders group found that smaller cities are leading the way to a housing recovery. Smaller cities accounted for 43 of the top 50 markets in the NAHB's index released in October, underscoring how much local economies play into housing activity. 7. House flipping made a comeback – at the high end A Reuters story in August investigated a rising trend in flipping homes, revealing that the number of flipped homes valued at $1 million or more had risen nearly 40% nationwide since 2011. RealtyTrac also cited a few specific markets where high-end flipping has become rampant. Luxury flipping was up 867% in Orlando between 2011 and 2012, and increased 456% in Phoenix. 8. 'Boomerang' buyers returned What's a boomerang buyer? A former homeowner who's gone through short sale, foreclosure or bankruptcy in the past few years who is now preparing to buy a home. 2013 saw many more of these folks coming into the market – a good sign as it shows positive sentiment for homeownership from a group of folks who perhaps have the biggest reason to run far far away. Wow, 2013 was exciting, fast-paced and overall really positive for our housing markets. Of course, there's still more work to be done in 2014. www.JulieWyss.com   |  Julie@JulieWyss.com

What is a Supplemental Tax Assessment

State law requires the Assessor's Office to reappraise property immediately upon change of ownership or completion of new construction. The Assessor's Office must issue a supplemental assessment which reflects the difference between the prior assessed value and the new assessment. This value is then prorated based on the number of months remaining in the fiscal year, ending June 30th.

For example, if property is purchased on September 15th with a market value of $150,000, and it has a prior assessed value of $50,000, this will result in a supplemental assessment for the difference ($100,000) prorated for the remaining months in the fiscal year (9 months from October through the following June):

$150,000 New Purchase Price/Market Value
-$50,000 Prior Assessed/Taxable Value
$100,000 Supplemental Assessment
x 9 1/2 Remaining months in Fiscal/Tax Year
$75,000 Supplemental Assessment
x 1% Tax Rate
$750 Supplemental Tax Bill

This supplemental tax bill is in addition to the regular tax bill which is based on the assessed value as of March 1st of each year. If a second sale or transfer of the property occurs during the same fiscal year, but before the mailing of the first Supplemental Tax Bill, the taxes will be prorated between May 31st, a second Supplemental Assessment will be required for the next fiscal year.

408.687.2026   |  Julie@juliewyss.com  |  www.JulieWyss.com

Real Estate Documents: Definitions & Abbreviations

The following is a list of some documents that may be recorded and a description or definition of each document. The descriptions are general and are not intended to be complete legal definitions.

Abandonment of Homestead

ADB HOMESTEAD

Document recorded to terminate a homestead.

Abstract of Judgment

ABST JDGT.

A summary of the essential provisions of a money judgment. When recorded, it creates a general lien on real property of the judgment debtor in the county in which the abstract is recorded.

Assignment of Rents

ASSIGNMENT RENTS

A documents which gives the beneficiary the right to collect rents of the secured property in the event of a default.

Certificate of a Tax Lien

CTF TAX LIEN

A lien for nonpayment of property taxes. Attaches only to the property upon which the taxes are unpaid.

Covenants, Conditions, and Restrictions

(CC&R's) RESTRICTIONS

A term used in some areas to describe the restrictive limitations, which may be placed, on property. In other areas, they are simply called restrictions.

Declaration of Homestead

HOMESTEAD

Document recorded by a homeowner to protect his home from forced sale in satisfaction of certain types of creditors claims

Deed

Written instrument which, when properly executed and delivered, transfers title to real estate

Deed of Reconveyance

RECON-RECONVEYANCE

An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt. Most commonly used upon payment in full of a trust deed.

Deed of Trust

See Trust Deed

Easement

The granting of a right which one has in the land of another. It is either for the benefit of land, such as right to cross, or "in gross," such as public utility easement.

Federal Tax Lien

A lien attaching to property for nonpayment of a federal tax (estate, income, etc...)

Fictitious Deed of Trust

FICTITIOUS TR DD

A deed of trust recorded by a trustee which discloses all the terms of the trust deed but does not relate to a specific transaction and is used for reference only.

Grant Deed

Form of deed, common in California, that contains implied warranties to the effect that the grantor has not previously conveyed or encumbered the property.

Judgment

The final determination of a court of a matter presented to it. Money judgments, when recorded, become a lien on real property of the defendant.

If you have a need for a real estate professional, please contact me. I would also appreciate your vote of confidence by passing my name to anyone you may know who would benefit from my services.

www.JulieWyss.com  |  Julie@JulieWyss.com   |  408.687.2026

The Latest Edition of Intero's Prestigio Magazine

The new issue of Intero’s Prestigio Magazine features Exotic Living on the California Coast.  Click the image below to browse through over 60 pages of content, with oversized photos and detailed information describing some of Intero’s most extraordinary luxury properties.

The Wyss Weekender for September 20th-22nd ~ Enjoy!

What Can I Afford?

There is a rule of thumb that says that if you have the capacity to repay the mortgage, you can afford a single-family house that costs up to two and one-half times your annual gross income. (Annual gross income is the amount you make before taxes are deducted.) Like other rules of thumb, this is a general idea of how large a mortgage you can afford. But, because it is so simple, it doesn't take into account all the information that will help you feel comfortable with your mortgage payments.

If you are buying a house with someone else (spouse, parent, adult child, partner/companion, brother or sister or other relative), you should consider your co-purchaser's earnings and existing debts as well. Remember, if you apply for a loan with somebody else, you and your coborrower are both legally responsible for repayment of the mortgage.

Your buying power depends on how much you have available for the down payment and how much a financial institution will agree to lend you.

Your down payment

If you are a first-time home buyer, the price you can afford to pay for a house may well be limited by your ability to come up with the required down payment and closing costs. If you haven't accumulated much savings, you may want to set aside funds for a down payment on a regular basis from your paycheck. Monies in your checking and savings accounts, mutual funds, stocks and bonds, the cash value of your life insurance policy, and gifts from parents or other relatives may all be suitable sources for a down payment.

Private Mortgage Insurance

Depending on the lender and loan type, you may be able to get a mortgage with as little as 3 percent or 5 percent down. However, putting less than 20 percent down often means you will be required to purchase private mortgage insurance. Private Mortgage Insurance (PMI) helps protect the lending institution in case you fail to make payments on your mortgage.

Avoiding PMI

It is possible to get financing with 0-10% down and not pay PMI (Private Mortgage Insurance). This is why 80-10-10 financing was created. It is called 80-10-10 because a lender provides a traditional 80% first mortgage, a 10% second mortgage, and makes a cash down payment equal to 10% of the home’s purchase price. The same principle applies if the borrower can only afford to make a 5% down payment: 80-15-5 financing is also available.

Your closing costs

In addition to the down payment, you will also need to consider closing costs. The closing is the final step during which ownership of the house is transferred to you. The purpose of the closing is to make sure the property is ready and able to be transferred from the seller to you.

Closing costs generally range from 3 percent to 6 percent of the amount of the mortgage. So, if you were to buy a $100,000 house with a 5 percent ($5,000) down payment, you could expect to pay between $2,850 and $5,700 on your $95,000 mortgage. Sometimes, you can negotiate with the seller of a property to pay some of your closing costs, which will reduce the amount of money you will need to bring to closing.

How much a financial institution will lend you

Apart from having available funds for a down payment and closing costs, the other major factor limiting how expensive a house you can buy will be how much you can borrow.

When you apply for a mortgage, the lender will consider both your earnings and your existing debts in determining the size of your loan. Lenders generally use the following two qualifying guidelines to determine what size mortgage you are eligible for:

The amount of money you owe for mortgage payments, property taxes, insurance, and condominium or co-op fee, if applicable, should total no more than 28 percent of your monthly gross (before-tax) income. This is called the Housing Expense Ratio. The amount of money you owe for the above items plus other long-term debts should total no more than 36 percent of your monthly gross income. This is called the total Debt-to-Income Ratio.

Basically, lenders are saying that a household should spend no more than about one-fourth of its income (up to 28 percent) on housing and no more than about one-third of its income (up to 36 percent) on total indebtedness (housing plus other debts). Lenders feel that if they follow these guidelines, homeowners will be able to pay off their mortgages fairly comfortably.

These lender ratios are flexible guidelines. If you have a consistent record of paying rent that is very close in amount to your proposed monthly mortgage payments or if you make a large down payment, you may be able to use somewhat higher ratios. Some lenders offer special loans for low- and moderate-income home buyers that allow them to use as much as 33 percent of their gross monthly income for housing expenses and 38 percent for total debt.

Don’t Despair, There is a Loan For You

When you go to apply for a mortgage, the lender will use all the relevant data -- your income, your existing debts, the purchase price of the house, your down payment, the interest rate on the loan, and the cost of property taxes and insurance -- and calculate whether you qualify to borrow the amount of money you need to buy the house.

If you have a need for a real estate professional, please contact me.  I would also appreciate your vote of confidence in my service by passing my name to anyone you may know who would benefit from my services.

The Wyss Weekender - Enjoy!

See what's happening in the Bay Area this weekend!

Have a safe and fun holiday!

"If you have a need for a real estate professional, please contact me. 

I would also appreciate your vote of confidence in my service by passing my name to anyone you may know who would benefit from my services."

Julie Wyss Broker Associate

Top 1% Intero Real Estate & Santa Clara County Realtors!

Intero Real Estate Services, Los Gatos Branch

Cell: 408-687-2026 Assistant: 408-357-6151

Julie@JulieWyss.com  I  www.JulieWyss.com