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Tiny Housing Bubble may be forming amid buying pressure - By Dan McSwain SD U~T

Is the San Diego housing market blowing naother bubble?

It quite probably is, but it's still a great time to buy a home. In a market that is unusually prone to boom and bust, we are very early in the process, judging by market fundamentals.

Indeed, our latest bubble is minuscule compared to the global bank-wrecker that triggered the Great Recession. Yet it's still worth taking seriously. The questions now are how big it will get, when it will eventually pop, and what — if anything — you should do about it.

For families who dream of buying a home for the long run, bubble risk should be way down the list of considerations. Except for last year, now is the best time to buy since 1997. Mortgages are near historic lows, but risIng, while prices are climbing fast from their lowest levels in a decade.

Still, investors and speculators should be wary, and do plenty of homework. Buying a home is vastly easier than making money on a rental house or timing the market.

The best evidence for a nascent bubble in San Diego County is behavioral: Buyers are showing signs of growing impatience. As detailed in a slew of stories by Lily Leung, the U-T's housing reporter, homebuyers returning to market over the last two years have encountered tight inventories and stiff competition from investors.

Meanwhile, prices have rebounded strongly. The value of the overall market was 12 percent higher in March than a year earlier, according to the S&P/Case-Shiller Home Price Index, which is the gold standard because it tracks recurring sales of the same homes.

Dataquick figures show the median rising a scorching 21.4 percent in April, with price inflation accelerating over the past year. The homes were flying off the shelves: In March, there were 3,762 sales and only about 4,200 active listings, yielding a sales velocity that's probably a record high.

Coupled with fears that mortgage rates will rise, this has buyers in a tizzy. In scenes reminiscent of pre-crash 2005, they are joining waiting lists for new construction, writing offers on the hoods of cars, and sending "love letters" to persuade sellers to pick them.

The sense of urgency is increasing along with prices. It's the classic sign of early bubble formation.

"In a normal market, higher prices mean that sellers sell less. But the market becomes pathological when higher prices cause more buying," said Ed Leamer, an economist at the UCLA Anderson Forecast who in 2002 warned of the last bubble. "People are starting to think, 'I've got to buy a house before it is too late.' That's a bubble."

Leamer hastens to add that he doesn't think California has entered true bubble territory — yet — based on market fundamentals.

Prices are still below their long-run trend. Mortgage payments haven't outstripped incomes. The cost of owning and renting are roughly comparable. So value inflation could continue for some time.

Although I admire Leamer's precision, there is no academic consensus on the definition of an asset bubble. And economists say nobody can reliably predict the timing of its demise.

Still, history suggests that we're already in a bubble, however momentarily modest. Robert Shiller, the Yale economist who foretold both the 2000 stock market crash and the recent global housing crash, has shown that housing markets are unusually prone to boom and bust cycles, using transaction data from Amsterdam, Norway and the U.S. housing markets from 1628-2005.

San Diego is more susceptible than other markets. Strict zoning, which is popular with the public and unlikely to ease, keeps land prices relatively high and delays new developments. This prevents builders from quickly responding to higher prices by adding new houses, a dynamic that moderates price volatility in much of the nation.

Combined with tight financing conditions for smaller builders, zoning restrictions have sent San Diego County's inventory of new construction plummeting – down 89 percent since 2006 to just 1,783 units in the first quarter, according to Russ Valone of MarketPointe Realty Advisors.

Certainly, construction will come roaring back if prices rise enough. In the meantime, zoning gives the housing market a built-in supply lag.

San Diego has produced three housing bubbles in four decades: 1976-1982, 1985-1989, and 1997-2006. The market rarely purrs along at the rate of general inflation.

That's not to say prices will keep rising at today's blistering pace. Increasing values will flush out more sellers, increasing the resale supply. A sharp rise in mortgage rates would clip affordability and dampen demand.

Yet Shiller argues that such fundamentals are surprisingly weak at explaining housing prices. "The market for homes is a very risky place," he says. Psychology is a major factor.

Leamer says that the next phase in a bubble is for banks to relax lending standards, as rising values build optimism that foreclosures won't cause big losses. My reading of Federal Reserve data suggests we are very early in this process: 10 percent of banks reported easing standards for "prime," or low-risk, loans in the first quarter, up from 5 percent in the previous quarter. And more buyers are seeking loans; the Mortgage Bankers Association's purchase index in May is about 10 percent higher than last year.

Meanwhile, the federal government, which dominates the mortgage market, continues to boost demand with loans requiring 5 percent or zero down payments.

We are a long way from the reckless lending that fueled the 1997-2006 mega-bubble, which burst and triggered a global financial panic. But those who say bankers have learned their lesson don't read history.

For homebuyers, the lesson is to avoid getting carried away. If you can cover the costs, save for retirement, and keep a prudent cash reserve for emergencies, then by all means buy a house.

If we are lucky, this bubble will be mild. The U.S. housing market last had a "soft landing" in 1947. One can always hope.

Tiny Housing Bubble may be forming amid buying pressure - By Dan McSwain SD U~T

Is the San Diego housing market blowing another bubble?

It quite probably is, but it's still a great time to buy a home. In a market that is unusually prone to boom and bust, we are very early in the process, judging by market fundamentals.

Indeed, our latest bubble is minuscule compared to the global bank-wrecker that triggered the Great Recession. Yet it's still worth taking seriously. The questions now are how big it will get, when it will eventually pop, and what — if anything — you should do about it.

For families who dream of buying a home for the long run, bubble risk should be way down the list of considerations. Except for last year, now is the best time to buy since 1997. Mortgages are near historic lows, but risIng, while prices are climbing fast from their lowest levels in a decade.

Still, investors and speculators should be wary, and do plenty of homework. Buying a home is vastly easier than making money on a rental house or timing the market.

The best evidence for a nascent bubble in San Diego County is behavioral: Buyers are showing signs of growing impatience. As detailed in a slew of stories by Lily Leung, the U-T's housing reporter, homebuyers returning to market over the last two years have encountered tight inventories and stiff competition from investors.

Meanwhile, prices have rebounded strongly. The value of the overall market was 12 percent higher in March than a year earlier, according to the S&P/Case-Shiller Home Price Index, which is the gold standard because it tracks recurring sales of the same homes.

Dataquick figures show the median rising a scorching 21.4 percent in April, with price inflation accelerating over the past year. The homes were flying off the shelves: In March, there were 3,762 sales and only about 4,200 active listings, yielding a sales velocity that's probably a record high.

Coupled with fears that mortgage rates will rise, this has buyers in a tizzy. In scenes reminiscent of pre-crash 2005, they are joining waiting lists for new construction, writing offers on the hoods of cars, and sending "love letters" to persuade sellers to pick them.

The sense of urgency is increasing along with prices. It's the classic sign of early bubble formation.

Hoping to grab a low mortgage rate? Then you better make sure you have done everything you can to make yourself an attractive borrower!

Mortgage Rates nationwide for 30-year fixed rate loans generally have hovered around 3.5 percent since August 2012. But as enticing as these rates are, only the best borrowers can qualify for them. If you are thinking about buying a home, consider the following to help become mortgage-ready.

BE REALISTIC. Gone are the days when banks would let you stretch unrealistically for a higher mortgage amount. Borrowers should look to spend less than 28% of their monthly gross income on a mortgage, including your property taxes, insurance and homeowners association fees. Take the steps to get pre-approved - just know that your bank or mortgage broker may have you qualified for much more than you should actually spend.

ADVICE. To be ready to purchase your new home have your down payment and closing costs saved and available.

DO YOUR HOMEWORK. Make sure there are no surprises on your credit report. Your bank or mortgage broker will want to know that you are not a credit risk - so remember that your credit is VERY important. I highly recommend a few months before you plan to buy a home to run your credit and make sure there are no surprises.

ADVICE. Most banks or credit agencies offer for a minimal fee monthly credit monitoring to stay on top of your credit.

TREAD CAREFULLY. Once you have been pre-approved and start house shopping the golden rule is do not make any drastic financial moves or changes! Keep up good spending and saving habits. You should focus on paying off debt not incurring more. DO not go out and buy a car or open credit card lines. This has caused one too many deals to fall apart I can assure you from experience.

ADVICE. Make sure to pay all your bills on time and avoid any major purchases.

If you are gearing up to get pre-approved and make the move to buy be " Borrower Fit" - Check your credit in advance for no surprises, have your tax returns and financials in order and ready to go for your mortgage Broker to get the ball rolling without any bumps in the road!

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U.S. HOUSE PRICES ROSE IN Q1

Upward momentum in U.S. house prices remained strong in the first quarter rising 1.9 percent from the previous quarter, according to the Federal Housing Finance Agency (FHFA) House Price Index. This is the seventh consecutive quarterly price rise in the purchase-only, seasonally adjusted index.

The Index is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac. Compared with last year, house prices rose 6.7 percent from the first quarter of 2012 to the first quarter of 2013. FHFA's seasonally adjusted monthly index for March was up 1.3 percent from February.

FHFA's expanded-data house price index rose 1.9 percent compared with the latest quarter. Over the last four quarters, that index is up 6.4 percent.

While the seasonally adjusted, purchase-only Index rose 6.7 percent from the first quarter of 2012 to the first quarter of 2013, prices of other goods and services rose only 1.4 percent over the same period. Accordingly, the inflation-adjusted price of homes rose approximately 5.2 percent over the latest year.

Have you always wondered if you have the right to cut down overhanging branches or roots from a neighbors tree? The answer is yes, but only under certain circumstances.  If the trunk of a tree is located entirely on the neighbors property, an adjoining owner can remove overhanging branches up to the boundary, but cannot cut down the tree.  The rule for roots is different. An owner cannot remove encroaching roots from a neighbors tree unless the roots are damaging the homeowner's property. Furthermore, an owner who acts unreasonably in removing encroaching roots can be held liable for damages.

So there you have it - happy tree trimming!

 

BUY? SELL? REFINANCE?

If you blinked in the last 90 days you may have missed that the San Diego Real Estate market is on FIRE! Prices have jumped significantly across the board creating a frenzy among buyers who have been on the fence for too long. Historically low interest rates have only increased the need for inventory among buyers.

What does any of that have to do with refinancing? As a homeowner who has no plans to sell at all this could be a GREAT time for you to refinance your home as it could very well be worth much more than you think. If you need a free comparable analysis of your home let me know. If staying put is the right move for you I am happy to offer information to make the best decision and see if a refinance is the way to go - who doesn't want to save money?

Some of my past clients in the last 3 months that have refinanced are now saving significant money on their mortgage payments by getting into the historically low interest rates we are seeing! Don't miss out. Call me anytime Felicia ~ 858.414.1617

A Smooth Move: Across Town & Across the Country

 

You’ve probably heard of the 5 stages of grieving. Well, what about the 3 stages of moving? They go like this:

 

  1. 1.Excitement
  2. 2.Panic
  3. 3.Scrambling around trying to get everything together at the absolute last possible moment

 

If you’re reading this, chances are that you’re past stage 1, excitement about your upcoming life change. So why not skip stages 2 and 3 altogether? Simply follow the tips I’ve offered below and you won’t need to panic or scramble.

Determine Your Moving Budget

 

This is a great place to start the moving process because it can help you make a lot of decisions. Consider costs like packing supplies, movers, and meals. If possible, add some extra discretionary funds. Small, unexpected expenses can add up quickly. Once you know how much you can spend, stick to it.

Decide How You’ll Move

 

Are you going to be brave and do everything yourself, using your own vehicle? Do you have family and friends who can help? Or are you going to hire movers?

 

If you’re just moving across town, handling things yourself or with the help of family and friends is a great option. You can save a lot of money this way. If you pick this option and can afford it, you should buy your helpers a meal during or after the move. They deserve it! Also, make sure you make everything as easy as possible for them. If your friends and family are happy, you will be too.

 

If you’re heading across the country, or any other long distance, movers may be the easiest way to get your belongings to your new home. Movers are also beneficial if you have large, fragile items. When you make the decision to hire movers, you still have some options. You can hire full-service movers who put your already packed items on their truck and then unload them at the destination. There are moving companies that allow you to load and/or unload the truck, leaving only the driving to the company. You can also hire freight companies that will ship your belongings according to the overall weight.

 

If you plan on hiring movers, rely on services like Yelp and Angie’s List for reviews. Make sure the movers you hire are bonded and/or insured.

Finding a Home in San Diego, the City with the World’s Best Weather

So you’re moving to San Diego. Congrats! You’re moving to the city with the world’s best weather! Even if you’re only starting to consider your move to California’s second biggest city, you have a lot to be excited about. From the many vibrant neighborhoods to the booming housing market, San Diego has everything you could want in a city.

San Diego Neighborhoods

When searching for your next home, choosing a neighborhood is a great place to start. No matter what you look for in a neighborhood, you’ll find it in one—or maybe a few—of San Diego’s many eclectic regions. One end of town features beautiful houses with ocean views. At the opposite end, your backyard can be nestled in the La Mesa foothills. And in between, you’ll find, well, everything in between.

But don’t only rely on your proximity to the Pacific or the many other spectacular sites when choosing your neighborhood. Consider the following factors too.

San Diego School Districts

Your school district affects a lot more than just your children’s education. School districts are closely tied to the local tax code and property value. When it comes to San Diego, there’s good news. The sun shines equally on all of the county’s excellent school districts!

Find out more about San Diego County school districts here: www.sdcoe.net/district.asp