San Fernando Valley Real Estate Blog

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

It also reiterated plans to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is "picking up following its severe downturn" and that financial markets have "improved further".

It's the second consecutive post-FOMC statement in which the Fed appears somewhat optimistic -- a signal that the recession will end soon, or has already ended.

That said, the economy still has some soft spots and the Fed made a point to single them out.  Each poses a distinct threat to economic recovery.

1. Ongoing job losses
2. Sluggish income growth
3. Tight credit conditions

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market.

However, the FOMC changed its timeframe on the mortgage-backed bond buys, extending its deadline to March 2010.  This move should help the Fed keep mortgage rates from rising too high as the economic expansion takes hold.

Market reaction to the Fed's press release is positive.  After an early day sell-off that drove rates higher by about a quarter-percent, most of the pressure is easing.  Pricing is worse on the day overall, but well off its lows.

The FOMC's next scheduled meeting is November 3-4, 2009.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

Are you thinking of selling your home? Over-pricing your home in today’s market could be detrimental to your ability to get it sold. In today’s market, only wise sellers are getting their homes sold because they are pricing their homes to sell (at fair market or just under).

The things you should consider when setting your listing price are:

1) unique amenities and features of your home

2) the state of the current market

3) why you are selling

4) sales comparables in the last few months in your neighborhood

Your agent should provide you with a market evaluation which contains the actives, pendings and closed sales in the last few months. They will recommend a listing and selling price and make suggestions on things you can do to stage your home properly.

Do not try to sell your home in today’s market unless you are motivated. Testing the market today with an unrealistic price is not a wise thing to do. If you truly need to sell you need to price your home at market value, be willing to be flexible with repairs and credits to your buyer.

Pricing is important but it is also crucial you have a good marketing plan to expose your home to the maximum number of buyers. You should work with an experienced local agent who will put your home in the MLS, advertise it in print as well as online to reach the most buyers possible. There are a number of bank owned and short sale properties on the market that you will be competing with therefore setting the right price working with a good Realtor who will provide you with a great marketing campaign can help you get top dollar in the shortest amount of time.

As reported by the National Association of REALTORS®, the number of Existing Home Sales dipped last month, ending the metric's 5-month winning streak.

Newspaper headlines today are overwhelmingly negative on housing. You'd almost believe this year's housing recovery had ended. 

That's hardly the case.

See, the other side of the Existing Home Sales story is that -- while the number of units sold did fall by 3 percent -- the existing supply fell by nearly an entire month.

To home buyers and home sellers, this is huge.  Home prices are based on supply and demand and with supplies plummeting, it means that home prices are poised to rise.

Indeed, dwindling inventory isn't "news" to today's buyers.  Multiple offer situations have been common since the start of the summer and, should supplies fall further, they may soon be the home-buying rule rather than the exception.

Since peaking in November 2008, existing home supplies are down 23%.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

As reported by the government, home prices are rising nationwide, up 0.3 percent in July.

Furthermore, versus November 2008, the Home Price Index has clawed back to unchanged.

The housing market appears to be holding its own.

However, we have to be careful about putting our full faith in the Federal Housing Finance Agency's data.  It's somewhat flawed.

1. The Home Price Index is a national statistic and all real estate is local
2. The Home Price Index's methodology specifically excludes key housing demographics

As an obvious example, HPI only accounts for homes with Fannie Mae- or Freddie Mac-backed mortgage. Lately, the percentage of homes meeting that description is shrinking. 

As FHA financing rises in popularity, Fannie and Freddie back far fewer loans than in the past.  Furthermore, the HPI sample set also excludes newly-built homes and multi-unit properties.

Because of these exclusions, some analysts call the HPI incomplete.  The same could be said of all home price metrics, however -- including the venerable Case-Shiller Index.

Therefore, what should be of interest to today's buyers and sellers is that all of "popular" home valuation models seem to be telling the same story -- home prices have stopped falling and look like they're beginning to rebound.

For a region-by-region breakdown of the Home Price Index, visit the FHFA website.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

The Federal Open Market Committee starts a 2-day meeting today in Washington. 

The scheduled get-together ends at 2:15 PM ET Wednesday after which the FOMC will issue a press release to the markets.

Consider locking your mortgage in advance of the press release. 

The FOMC meets 8 times annually and its adjournments are among the biggest market-movers of the year. 

The Fed's post-meeting press release is a direct look into the mind of the Federal Reserve and Wall Street is looking for clues anywhere it can find them.

After its August 2009 meeting, the FOMC said in its press release:

1. Financial markets have improved, relative
2. Household spending remains constrained
3. Although weak, the economy is "leveling off"

Since then, however, credit risks have lessened on Wall Street, consumer spending have shown signs of life and Fed Chairman Ben Bernanke said the recession is "very likely over".

This is why tomorrow's FOMC press release is so important.  Markets don't expect the Fed to raise or lower the Fed Funds Rate, but they do expect the Fed to shed light on its next series of moves.

If the Fed alludes to inflation and stronger growth ahead, mortgage rates should rise. By contrast, reference to slower growth ahead should help keep rates steady.

The FOMC is expected to leave the Fed Funds Rate within its target range of 0.000-0.250 percent -- the lowest it's been in history.  However, it's what the Fed says Wednesday that will matter more than what the its does.

If you're floating a mortgage rate or wondering if the time is right to lock, the safe approach is to lock prior to 2:15 PM ET Wednesday.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

Housing Starts on single-family homes took a step backwards last month, falling month-over-month for the first time since January.

A "housing start" is new home on which construction has started.

Don't let the slowdown fool you, however -- the housing market's recovery is still very much underway.

• Sales volume is up in most cities
• Home values are up in most places
• Low mortgage rates are making homes affordable

Builders were bound to take a construction breather sometime -- especially with the looming expiration of the First Time Home Buyer Tax Credit.  The last thing they want is to be saddled with excess supply.

Some of the news coverage categorized August's Housing Starts as troubling.  That's likely overstating it.  One down month after 8 consecutive increases is not only acceptable, but it's expected, too. 

Single-family starts are up 34 percent on the year.  The housing market is recovering just fine.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

According to the country's home builders, the housing market is looking good.

Each month, the National Association of Home Builders releases its Housing Market Index report, a survey geared at taking "the pulse of the single-family housing market".

Respondents report on three facets of their business, each series weighted and averaged:

1. How are market conditions today?
2. How do market conditions look 6 months from now?
3. How is the traffic of prospective buyers of new homes?

For the 3rd straight month, the Housing Market Index improved.  It's now at its highest level since May 2008.

The housing market has shown signs of life since March.  Both Existing Home Sales and New Homes Sales have soared and home values are up in a lot of towns.  Builders showing confidence is another positive signal.

Fed Chairman Ben Bernanke said that the recession is "very likely over" and strong housing data corroborates that statement. 

As the economy strengthens and housing does, too, home sellers will start to regain the upper-hand in contract negotiations.  If you're an active home buyer, therefore, and looking for "a deal", be aware that time is close to running out.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

On the 1-year anniversary of the Lehman Brothers collapse, Fed Chairman Ben Bernanke said Tuesday that the "recession is very likely over at this point".  

His comments were supported by a Retail Sales report for August that was much better-than-expected.

Equities improved on the day, mortgage markets worsened, and home affordability suffered. 

The days of ultra-low mortgage rates may be coming to an end.

Since last September, mortgage bonds markets have been in Rally Mode.  As the Financial Crisis of 2008 worsened, investors fled the relatively risky world of stocks and moved dollars into safer investments like cash and bonds -- including the mortgage-backed kind.

Risk aversion is common when market uncertainty exists but last year's aversion was so strong that, by late-November, it had forced mortgage rates down to an all-time low. 

Since November, however, rates have been on the rise.  Stronger economic data and a general feeling of optimism have helped stock markets recover and some of those gains are coming at the expense of low mortgage rates.

Therefore, if you're wondering what mortgage rates might do going forward, listen to the words of the Federal Reserve Chairman. If he sees economic recovery ahead, it's probably going to happen.

It should spell higher mortgage rates into 2010.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

As downpayment requirements increase, anecdotally, home buyers are tapping 401(k) plans for extra cash.

Classified as a "hardship withdrawal", loans against your retirement funds can be cheap and simple.

1. There's no credit check or approval process
2. There's only a small set of paperwork
3. Money can be available in as little as a day

But just because you can get access to your retirement money doesn't mean that you should.  401(k) withdrawals should only be made after careful consideration. 

There are some serious negatives, specifically with respect to taxation. 

If you open a 401(k) loan and don't repay according to the loan terms, the withdrawal ends up getting taxed as income, plus a 10 percent penalty for people under 59 1/2. 

That's a stiff penalty.

But, even if you do repay the loan on time, you're still getting leaving yourself subject to double-taxation. 

• Taxation #1 occurs when the loan is repaid using post-tax dollars
• Taxation #2 occurs upon final withdrawal at retirement

Furthermore, when you borrow against a 401(k), you assume the opportunity costs of having that money out of the market.  Since March, the Dow Jones Industrial Average is up 44 percent.  If your 401(k) was empty, you'd have missed those gains forever.

Taking a loan against a 401(k) isn't necessarily a bad idea, there just may be better choices. If you're planning to withdraw from your 401(k) to make a downpayment on a home, talk with a qualified financial professional first.

You can never have too much good information.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

At some point, every home fights with fruit flies.  2.5 millimeters in length, the airborne animals linger near garbage and circle fresh fruit, hanging around for weeks at a time.

Fruit flies are pests, but they can be dealt with.

In addition to the large number of homemade remedies, there are inexpensive, commercial ones, too. 

One notable product is the Terro Fruit Fly Trap.  Shaped like an apple, the Terro trap sits in your kitchen.  It's filled with a vinegar-like solution meant to attract and trap nearby fruit flies.  Once the flies are contained, they can no longer breed, and the pest problem subsides.

The Terro product sells for about $8 at local hardware stores.  It's sold for $5 on Amazon.com.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

Since 2007, mortgage lenders have clamped down in many areas of underwriting, but none more so than in the area of credit scoring.

Minimum FICO levels are up 120 points or more and conforming mortgage lenders now levy large fees on borrowers whose scores are below 740.

Keeping your credit scores high is a worthwhile goal, but it's not always easy to do -- especially when you don't know the ins-and-out of how the credit scoring system works.

The Wall Street Journal wrote a terrific piece on credit scoring this week. It's full of helpful, relevant tips for home buyers, homeowners, and everyone else.

Aside from covering the five basic components of a credit score -- shown at right -- the piece provides insightfukl advice on credit-related topics including:

• The difference between a "hard inquiry" and a "soft inquiry"
• Why paying for your credit report is a foolish use of funds
• Why it doesn't matter if you have an 800 FICO

The article also talks about the optimal balance a person should carry on their credit cards to get the biggest FICO boost.

Credit scores determine your mortgage rate.  Therefore, do what you can to keep your scores high. Follow the tips in the Wall Street Journal article and lean on public resources like myFICO.com.

Having good credit can be a real money-saver.  Month after month after month.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

Once again, the country's foreclosures are concentrated in just a few states.

As reported by foreclosure-tracking company RealtyTrac.com, more than 50 percent of the country's foreclosure-related actions in August occurred in just four states:

• California : 25.76 percent
• Florida : 17.4 percent
• Michigan :  5.4 percent
• Nevada : 5.0 percent

The rest of the "Top 10" foreclosure states included Arizona, Illinois, Georgia, Ohio, Texas and New Jersey.

Versus July's numbers, the U.S. foreclosure rate improved last month.  However, the August data is awful in comparison to last year -- foreclosures are up nearly 18 percent.

The silver lining? High foreclosure rates are yielding tremendous opportunities for today's home buyers. Buyers of distressed properties now account for about one-third of all home sales and low mortgage rates and a federal tax credit are spurring sales.

Search the complete August 2009 foreclosure report for yourself, including foreclosure heatmaps and other trends on the RealtyTrac website.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

It's also a way for an owner of a home to remove himself from the title to the property.

Often misspelled as "quick claim deed" or "quit claim deed", quitclaim deeds have a multitude of applications, including:

• Assigning a home to a trust or entity
• Adding a partner to title after marriage
• Removing a partner from title after divorce

In order to quitclaim a property, the grantor must have the legal right to assign the property to a grantee, or else the quitclaim deed is worthless.  For example, you can't quitclaim your interest in City Hall to your neighbor because you don't actually own City Hall. 

This is where quitclaim deeds vary from warranty deeds (or grant deeds) -- the types of transfers that occur when real estate is sold.  In instances of the former, the title to a home is guaranteed to be clear.

Before using a quitclaim deed on your own home, consult an estate planning attorney.  Transferring real property can trigger ruin a will, or trigger taxes -- it's important to consult a professional for help.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

If you've ever dealt with a broken garbage disposal, you know that just having a plumber show up costs in the neighborhood of 65 dollars -- even if the repair takes 30 seconds.

That's why every homeowner should have basic, garbage disposal-fixing skills.  Most disposal repairs are the simple kind.

In this 2-minute video from eHow.com, we learn the basic tools for fixing a jammed garbage disposal.  It's nothing more than a broomstick, an allen wrench, and needle-nose pliers.  Anyone can do it, and it's cheaper than calling for a pro.

Of course, for disposal problems bigger than a simple jam, there's always Angie's List.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

Volume figures to be light on Wall Street today as traders get a head start on Labor Day weekend.  It could make shopping for a mortgage a bona fide challenge.

Expect rate volatility this morning and afternoon and, therefore, by extension, expect wild swings in the Home Affordability Index.

As mortgage rates rise and fall, monthly mortgage payments do, too.

The relationship between "vacation days" and mortgage rate volatility stems from 2 facts -- (1) Conforming mortgage rates are based on the price of mortgage-backed bonds, and (2) mortgage-backed bonds trade just like stocks.  You can't make a deal without matching a buyer and a seller at a specific price.

With so many traders on vacation today, therefore, there are fewer opportunities to match buyers and sellers.  As a result, expect mortgage bond prices to rise and fall with more velocity than on a "normal" day -- especially because the August jobs report was just released.

So far this morning, mortgage rates have been jumpy and are higher versus Thursday's close.

That said, mortgage pricing is fluid, changing every minute of every day.  Today, expect those changes to be exaggerated.  If you have a chance to lock a favorable rate, consider taking it because, before long, the rate could be gone.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

In what's becoming a regular occurrence, housing data blew away economists expectations Tuesday.

As reported by the National Association of Realtors®, the Pending Home Sales Index posted its 6th consecutive monthly gain in July.

After a meteoric rise that started in January, the index is now at its highest levels in more than 2 years.

A "pending home sale" is a home that is under contract to sell, but not yet closed.  It's not the same as an actual home sold, but data shows that nearly 80% of homes under contract close within 2 months and many more close in months 3 and 4.

Home buyers -- take note.  When the Pending Home Sales Index is rising, it means that market activity has picked up.  This can lead to any one, or a combination, of the following:

1. Multiple-offer situations
2. Reduced negotiation leverage over sellers
3. Higher home sale prices with fewer concessions

So, consider yourself alerted.  If you're buying a home in the next several months, expect the recent run in Pending Sales to lead to a run in closed sales, too.  That should lead home prices higher in most markets.

Indeed, we're already seeing it.  Case-Shiller says prices are on the upswing.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.

In a bit of good news for the economy, Consumer Sentiment fell to 4-month lows in August.  The drop wasn't "good news", per se, but because it wasn't nearly as large as economists expected, Wall Street cheered it. 

The index, jointly published by the University of Michigan and Reuters, measures how Americans feel about their situation today, and how they envision it six months in the future.

Since bottoming 5 months ago, consumer sentiment has added more than 10 points. 

Rising Consumer Sentiment figures can foreshadow economic growth because confident consumers are more apt to spend money on big-ticket items including appliances, automobiles, and, of course, new homes.  

The recent run of sentiment data is one more reason to believe a full economic recovery is underway.

That said, the Consumer Sentiment survey has its flaws.

For one, the survey's sample set includes just 500 households nationwide and that's not a true cross-section of America. And second, just because people feel more confident about their finances doesn't always mean they'll spend more money -- sometimes, they choose to save.

For now, though, stronger-than-expected sentiment data should help propel both retail sales and home sales volume through the fall season, and may even create some inflationary pressure on the economy.

If these levels are sustained, expect that mortgage rates will rise.

David Hitt - San Fernando Valley Realtor and Training Director - has been serving buyers and sellers in the San Fernando Valley areas for over 13 years. His knowledge of the real estate market in Encino, Sherman Oaks, Lake Balboa, Studio City, Van Nuys and North Hollywood have helped him achieve an excellent reputation throughout the Coldwell Banker network.