Local economist, Steven Thomas, recently wrote in the Orange County REALTOR® Magazine an article entitled “Affordability is Fueling an Increase in Demand”.  While it is recognized that housing prices are at 2003 levels, what about your purchasing power in terms of monthly payments?

Steven’s numbers indicate that the current median price of $449,000 and the average interest rate of 3.9% yields a monthly payment of $2,118.  The last time you could purchase a median priced home for a lower monthly payment was 1999.  The median home price was only $280,900 but the average interest rate of 7.4% netted a monthly payment of $1,945.

Have we returned to a Seller’s Market?

Every month I look at the Inventory Snapshot for Orange County as I believe this is a great indicator of our current housing market.  For the last couple of years we have been averaging over 6 months of inventory.  A 6 month supply is considered an equilibrium between a Buyer’s Market (more than 6 months) and a Seller’s Market (less than 6 months). 

In January our inventory was reduced  to just over 3 months.  This could be the beginning of a Seller’s Market.  If this trend continues it could signal a major turn in our Orange County Real Estate Market.  We’ll watch this for the next few months.  Stay tuned.

LOS ANGELES (Aug. 19) — California Regional Multiple Listing Service, Inc. (CRMLS) and the Southern California MLS (SoCalMLS) have agreed to merge, creating the largest multiple listing service in the nation, it was jointly announced today by Len Herman, 2011 president of SoCalMLS and Rob Arrietta, 2011 president of CRMLS.

“This union was long overdue,” said 2011 SoCalMLS President Len Herman. “Combining two highly complementary organizations is what our brokers and subscribers want, and now we have the opportunity to offer even greater value to our customers.”

“The combination of two of the largest MLSs in the nation simply makes sense for brokerages, agents, and REALTOR® associations,” said 2011 CRMLS President Rob Arrietta. “The combination of our products and services gives real estate professionals throughout California an extremely cost effective solution for their MLS services.”

The combined entity will remain as CRMLS, which is based in San Dimas, Calif, with Rob Arrietta serving as president of the organization. Len Herman will remain on as part of the transition team. CRMLS will now be providing products and services to more than 68,000 participants and subscribers throughout California.

About CRMLS
CRMLS delivers, through local member associations, the most affordable, reliable, and convenient listing technology service available, and provides products and services that support real estate professionals in maximizing the use of property data to achieve their business goals.

This is an excellent time to buy a home.  Ask almost anyone in the Real Estate or Mortgage industry and they’ll agree.  Sometimes however, qualified buyers are uncomfortable with purchasing.  They worry about the economy and high unemployment and are often unwilling or uneasy about committing.

Interest rates are low, as are home values but rents are high and climbing higher.  This is the perfect time for First Time Home Buyers to seriously consider taking advantage of the situation.  Renters would be wise to examine the cost of renting compared with the cost of Home Ownership and make the smart and obvious move.

If you rent for 3 years at $3,000/month you will have spent $108,000 in rent, in 10 years you would have spent $360,000.  For the same $3,000/month you can purchase a $400,000 home and the same monthly payment will include principal, interest, taxes and insurance. When you add in tax deductions for the mortgage interest and property taxes you are paying less to own a home than the cost of rent.

The most common objective for the First Time Buyer is the lack of a down payment.  Bank of America offers a Platinum Program which in conjunction with an FHA loan features a 3% Grant. After the grant the buyer purchasing a $400,000 home with an FHA loan would need an additional $2,305.  The returned security deposit on your rental is probably more than this.

The Seller is allowed to credit the Buyer for all of the buyer’s closing costs, approximately $8,685.  There is no reserve fund requirement by FHA.  Leaving $2,305 for the Buyer to come up with, and the $2,305 can be a gift from relative.

Call the Herman White Scarcelli Real Estate Group today so that we can get you an appointment with our lender to see if you qualify.

Thank you to the Kevin Budde Team at Bank of America for providing us with this great information.

Loan Limit Changes

On September 30, 2011 the temporary high balance loan limits are set to expire.  At this time it does not seem likely that Congress will extend the temporary higher loan limits, but rather allow the legislation to expire, which will revert loan limits to the lower permanent high balance levels.

Fannie Mae, Freddie Mac and FHA maximum loan limits will be reduced in high-cost counties from $729,750 to $625,500, for 1 unit properties. Orange County is a high-cost county. The VA new maximum loan limit has not yet been announced.  All loans must be funded by September 30, 2011 to be eligible for the current loan limits. Most lenders will halt taking applications 60-90 days prior to this date, which is quickly approaching.

How will this affect YOU?

Calculating using an FHA 3.5% down payment, in order to obtain the new maximum reduced loan amount, the sales price will fall from approximately $756,000 to $648,000.

Fannie Mae and Freddie Mac is 10% down payment. In order to obtain the new maximum loan amount, the sales price will fall from approximately $810,000 to $695,000.

Above the new high balance loan limit the financing is considered Jumbo and the down payment minimum currently is 20%. The interest rates are higher and the underwriting approximately restrictions are more stringent with Jumbo financing.

If you are currently waiting to buy with a minimum down payment, please realize that unless sales prices fall another approximately $110,000 you may miss out on the opportunity to purchase a home when the loan limits change.

Len has been an active participant on the SoCalMLS Board of Directors for several years. Commenting about his newest position as President, Mr. Herman said, “I am honored to assume the presidency of this great organization, which truly is one of the best in the nation.  We’ve got huge plans ahead for 2011, one of which is introducing Fusion the browser neutral hybrid of Tempo MLS. I can guarantee it will be a year of excitement and positive transformations!”

“We’re very pleased and excited to have a dynamic president with proven leadership, diverse interests as well as a strong background and passion for the real estate industry”, said SoCalMLS General Manager, Adrese Roundtree.

After graduating from Temple University with a Business degree, Len went to work as a Vice President of Sales and Marketing in the Philadelphia hi-tech industry segment. Ten years later, he relocated to Silicon Valley to open a West Coast sales office for his company. After changing companies he was relocated to Orange County California.

In 2002, Len decided to combine his long career in technology and sales with his interest in Real Estate and obtained his real estate license. In addition to running a busy real estate practice, Len volunteers his time by serving in a number of organization positions: besides his SoCalMLS presidency, he is an Orange County Association of Realtors Director and a California Association of Realtors Director.

Len is a principle in the Herman White Scarcelli Real Estate Group at Keller Williams Realty in Mission Viejo California.