Tips from your listing agent: Who is the biggest influence in the home buying process?

You may think it's the bread winner.  You may say "it's the Mrs., of course"!  You may think...it's you!  So who is it really?  It's often actually the buyers' Realtor.  They are, after all, the resident expert with experience and exposure to confidently guide home buyers toward the right home!

Like many of my posts, I'm pretty certain that this post will annoy a few agents.  No disrespect or judgement intended, but it is what it is.  These are simply my thoughts. I write what I practice, and I practice what allows me to sleep peacefully, knowing that I've given my clients the very best possible representation possible.

Here's a bit of background on commissions.  In the areas I serve, since the beginning of my real estate career, 6% is the standard sales commission paid buy the seller.  This commission is typically shared equally between the cooperating brokers; 3% and 3%.  Listing Agents and Buyer's Agents both have their fair share of responsibilities, tasks, hurdles, and headaches that they encounter throughout their days, weeks, and months.  Some transactions are simple.  Some are complex.  It's my belief that, at the end of the day, it all comes out in the wash.  "But I worked so hard on this one!  I deserve more!"  Yea?  Maybe you don't?  Maybe you made bad choices when screening your client.  Maybe the property you wrote on was a money pit.  Maybe you had a cash buyer with low expectations who's buying everything in site and all those transactions are simple!  It all evens out in the end.

So looking at the question posed at the beginning of this blog, why does it even matter who is the biggest influence in the home buying process?  Because, and here comes the part that can make folks uncomfortable, it's very easy to see how (with a Realtor's personal income as a direct function of the sales price of the house and percentage commission to be received at closed) an agent might encourage their buyers to write on one home over another 'like' property, based on the commission.

Of the 85 homes sold in Brentwood in April of 2013, only 14 had the buyer's agents commission at 3%.  Most were 2.5% with a few as low as 1%.   As someone looking to sell my home, don't I want the market (buyers' agents) to be motivated to show my house as often as possible, with as much enthusiasm as possible?

Here's the cold, hard, ugly question.  If an agent is looking at like properties, one paying her 2% and another paying her 3%, which one is she likely to encourage her buyer to write an offer on?  But aren't agents supposed to have their clients best interest in mind? Absolutely!  Many, many agents do!  Some...don't.  After all, although sometimes we're not treated as such, we are actually human.

There are exceptions to this rule, as there are to most.  But it's a safe bet that a relevant percentage of homes closing with a cooperating broker commission split that is out of balance likely closed at a price lower than they might have if the buyer's agents had been sufficiently (or equally) motivated.

As someone looking to sell your home, please discuss this topic with your Realtor.  If your Realtor addresses this topic in a manner that leaves you with a comfortable understanding...game on!  If they hem and haw around the issue, press on until you have an answer that satisfies you.

Until next time, and thank you in advance for remembering me when the topic of real estate arises.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com

Active homes In Alamo, CA for those in the market. For for the rest of us, a pleasant day-dream.

Homes for sale in Alamo, CA on May 3, 2013

For a $13,800.000, it's nothing a quick coat of paint can't fix up! 

Start your window shopping with this beautiful home at 9 Country Oak Lane.  Active homes in Alamo, CA range in price from $13.8M to $849,900.

Click here to view active listings in Alamo as of 1PM on May 3rd, 2013.

Until next time, and thank you in advance for remembering me when the topic of real estate arises.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com

Is the Real Estate Market Getting Better? ~ March of.2013

Current Real Estate Market Trends in Alamo, Walnut Creek, Brentwood, and Oakley, CA

Several months back I posted a sort of snap-shot of the real estate market in the areas I service most often.  As this post continues to be the most read on my blog, I thought it could use a little freshening up!  So what are the real questions and answers?

Q: Is the real estate market getting better?

A: For whom? Let's be more specific. 

Q: Ok.  Are home prices increasing in Contra Costa County?

A: Yes; dramatically. 

Q: How long are they likely to increase?

A: With no sarcasm intended...the answer is and always will be, "Until something changes!" (Read, wouldn't we all like to know?)

If you're looking to buy a fixer-upper and flip it, or if you are ready to take that that jump and risk and buying at auction, then cleaning it up and renting it out,...that ship has sailed!  

Or has it?   

Looking at the graph below, home prices have risen consistently over the last four years.   

(click on all images for a larger view)

Median Home Prices in Contra Costa County between March of 2009 and March of 2013

So looking above, at trends over the last four years, it appears prudent to invest in real estate.  (I honestly believe it always is: Yes, even in a seller's market) If you bought in March of 2009, or March of 2012, you did well!  Sincere congratulations.  And what is it going to look like in March of 2014?  It's hard to tell. Let's widen the lens a bit:

Median Home Prices in Contra Costa County between March of 2007 and March of 2013

The chart above illustrates the same data going back two more years; to March 2007.  What do you think now?  It looks like we have a lot of room for growth!  

Go back yet again, to 10 years back.

Median Homes Prices in Contra Costa County between March of 2003 and December of 2012

Median home prices in Contra Costa County are, for practical reasons, back to where they were before the bust; before the boom. 

So back to the question at hand:  

Q: Is the Real Estate Market Getting Better?

A: Again, I have to ask: For whom?

Are you a home buyer?

Do you have enough cash to cover a down-payment and closing costs on a conventional loan?  Are you looking to purchase using an FHA or VA loan and need to ask for a seller's credit in order to close?  Are you a cash buyer who thinks cash is going to land you any house you choose to write on?  

Are you a home seller?  

Are you willing to wait for the ideal buyer?  Are you willing to negotiate with the 'best' buyer?  Are you willing to do inspections on your own and possibly make repairs proactively in order to market the availability of your home to FHA and VA buyers?  

Keep in mind that home prices (thus, median home prices as well) are a function of several factors: 

• Interest Rates (the cost of borrowing money)
• Demand (the number of willing and able buyers)
• The supply of homes on the market (what the industry calls 'inventory')
• Relative confidence in the economy (am I going to have a job it 6 months?)
• ...and many other factors.

Look at the four charts below as they apply to your specific area's of interest.  If you don't see your area, drop me a line and I'll e-mail you market data for your specific market(s).

Above: Homes for Sale in Walnut Creek - Homes Sold in Walnut Creek - New Listings in Walnut Creek 2 years back

Above: Homes for Sale in Alamo - Homes Sold in Alamo - New Listings in Alamo 2 years back

Above: Homes for Sale in Brentwood - Homes Sold in Brentwood - New Listings in Brentwood 2 years back

Above: Homes for Sale in Oakley - Homes Sold in Oakley - New Listings in Oakley 2 years back

The number of homes for sale in each area have fallen dramatically over the last two years.
The number of homes sold continues to remain almost predictably cyclical.
The number of new listings is down a bit, but appears to be reacting to continued price increase and limited inventory.

Q: So what does this mean to you?
A: After reading this blog post, it simply means that you're better informed.  The best indicator of future events is past event.  That said, it's only the best indicator, not a precise and fool proof indicator.

More to come!

(Previous post below)

Sunday, August 19, 2012

Is the Real Estate Market Getting Better?

Not if you're an investor, or looking to do your first flip!  If you're trying to buy auction properties (foreclosed homes) on the courthouse steps, the environment is like the proverbial feeding frenzy.  Lots of buyers. Very few homes.  Investors' margins are dwindling as the supply of foreclosed homes at auction continue to dry up.

However, if you're in a position to sell, you're in the strongest seller's market that I've seen in the 6 years I've been practicing real estate.  How might today's market conditions help you in your current circumstance?

"I'm upside down in my home. Should I short-sale now even though the market is going up?" 

That is a complex question that depends on a number of important circumstances, unique to each homeowner.  That said, considering that the Mortgage Forgiveness Debt Relief Act of 2007 applies to homes that close escrow on or before December 31st of 2012, and the limited supply of homes on the market are driving prices up quickly, I can guarantee one thing; it's definitely time to stop guessing and get the facts.  My partner, Macky Hensel, and I are truly experts at closing short sale transactions. (see our contact information below to have your questions answered).

"Should I sell my home now that I'm in the black?"

This seems like is a more cut and dry question, but this answer too depends on a number of critical factors as well.  Although we're in an excellent market to sell, home values are still well below where they had been several years back. As a rule, a down market is an excellent time to upgrade, but not an ideal time to "get out of the market." Lets look at a simplified illustration of how upgrading in this market, even though it's a seller's market, is ideal:

Imagine that you want the buy a larger house, or you'd like to move to a more convenient or sought after area, so you're selling your current residence. We'll call this property "A", which was originally purchased at $500,000, but now has an assessed value of $300,000.  This is a difference of 40% or $200,000.  One might say, "We are going to lose $200,000 if we sell." But now you'd like to purchase property "B", a home that originally sold for $800,000.  For simplicity's sake, we'll say that this property also dropped by 40%.  That puts the new purchase price at $480,000.  This is a difference of $320,000.  One might say, "We saved $320,000 when we bought."  Compound that virtual savings with the literal savings of historically low interest rates, and you may just land that home you've dreamed of...locked into a 30 year fixed rate mortgage...at or below 4%. 

US 30 Year Mortgage Rate data by YCharts

The example above is a simplified example of how to upgrade in this market. There are many variables that change the value of a given property, but this example is not unrealistic at all.  In fact, in many communities the larger, more sought after homes took the biggest hit. In other words, the bigger they are, the harder they fall.

Perhaps the best thing you could take from this post is that the real estate market is simply a market; not good or bad; not better or worse.  "Is the Real Estate Market Getting Better?" By itself, it has no "quality".  Your unique circumstance; your point of view make it so.

I'll leave you with this "Taste of Wisdom" from Mark Twain:

" Always tell the truth. You'll surprise some and amaze the rest." 

Until next time.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

Click here to e-mail me.

Click here to reach Macky Hensel.


Ps. If you enjoy Social Medial, please "like" this post, Re-Tweet, etc. this blog at will.
I appreciate your support, and thank you in advance for remembering me when the topic of real estate arises.

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What You Paid Has Little or Nothing To Do With Your Homes Value: Part 8 of 8 - How To Effectively Price Your Home For Sale

Are you going to list your house for sale?  Are you writing offers to purchase, only to be turned down?  This post is for you.  Perhaps the hardest thing for sellers (and buyers for that matter) to wrap their heads around is the cold, hard fact that what you paid for your home, improvements, upgrades, etc. has absolutely nothing to do with its market value.  

Maybe you bought at the height of the market?  Maybe you bought at the bottom?  Maybe the home was part of your inheritance?  Maybe you bought it 45 years ago? Maybe the home across the street fell into the ocean and now you have the ocean view you always dreamed of!  It's all irrelevant.  100 years ago, today, and 100 years from now, real estate is, and always will be worth exactly what an able buyer is willing to pay.  

The house I grew up in was purchased, in Alamo, for $188,000 to be sold at a later date for  $1.4M.  Move forward 30 years and I hear, over and over, "I paid $859k for my house 5 years ago, now it's valued at $340k!  That's just not fair!"  What isn't fair?  Making a million dollars or losing it?  It's not a matter of fairness.  It's a matter of fact.

I recently had an experience with a buyer (whom I subsequently fired) who repeatedly remarked, "But this home was just bought at auction for $X!"   Had my filter not been in place, my response would have been more along the line of my thoughts, "So what!"  As a buyer, the only home values that matter are recent (and in the market the VERY recent) comparable homes sold.  I appreciate that it's difficult to sort of divorce yourself from this information, but...it's effective, and that's where we need to be. Pending home prices tend to be inaccurate.  Active prices are just that, asking prices.  Recently sold homes is the data you're looking for; specifically, that data as it compares to the subject property.

If you're selling, the same principles apply to you.  Don't get hung up on the amount you paid for your backyard hardscape.  Don't over estimate the value of that imported Italian ceramic tiles.  Your ideal buyer may rip it out anyway.  Yes, talk closely with your Realtor, sharing everything you've done to improve your property, but don't get caught up with how exactly how much each project cost.  Look at the market trends, and at comparable properties (if there are any). Depend on your Realtor to establish the best price to list at, then have him or her explain exactly why that is the right price!  Ultimately, the price you list your home for is your choice.  One thing is certain: If that price is too high...or too low...the market will let you know!

Until next time, and thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.

Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook 
Finally, please comment or ask questions.  Other readers may be wondering the same thing.  I love the feedback, critical or otherwise, and love the interaction: I love this job.

Thank you always for your support.

How Micro-Markets Effect Home Prices: Part 7 of 8 - How To Effectively Price Your Home For Sale

Micro Markets 

~Make sure you're comparing Apples to Apples~

Micro Markets - Make sure that you're pricing your property according to trends and comps within your unique "Micro-Market."  You may live very close to another property or development with a particular activity level, yet that area may have very, very different features that attract...or detract willing and highly qualified buyers.  Using a local area expert is the safest way to ensure that you are listing your special and unique property at the absolute best price.

So...your neighbor across the street just sold their house for $X, and their house is virtually identical to yours!  Virtually, except for the fact that it's on the other side of the street...with an unobstructed view of the Golden Gate Bridge.  One 'smallish' feature that your property may or may not have.  How much is that view worth anyway?  Doesn't that depend?  That's a pretty subjective question, isn't it?  Sure! On a property by property basis, it is impossible to be exact.  However, looking at dozens of closings, over a long period of time, an experienced agent can determine, with great accuracy, the market value (or percentage over like models without the view) of that view; that pool; that lot; etc. 

Here are a few features that often heavily influence the final sales price of a home:

• Is your community gated?
• Are your comps all custom custom homes that are varied in age and architecture?
• Is there an HOA?
• Are the Melo Roos, Special Assessments, or other high-tax burdens?
• Are there plans for new residential or commercial properties in the immediate area?
• Are you on the gold course, or simply in the golf community?
• ...and on and on.  

Using a local area expert can pay big dividends with regard to listing your home for sale within a Micro-Market. It can also save you big money when you're looking to purchase a home.  If you're not working with a Realtor already, interview at least three local area experts in order to get a strong opinion of pricing.   If you interview only two, you don't really have a choice, but really just an "either-or."  Three or more opinions starts to create a more statistically relevant picture to base your decision on. Ask several Realtors to name subtle variances in properties that yield notable differences in sales prices.  When you do, you'll get dozens of examples illustrating exactly why they are a highly qualified local area experts!

Wishing you well in your real estate endeavors.  Thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.

Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook 
Finally, please comment or ask questions.  Other readers may be wondering the same thing.  I love the feedback, critical or otherwise, and love the interaction: I love this job.

Thank you always for your support.

How many days on the market is ideal, when selling your house?: Part 6 of 8 - How To Effectively Price Your Home For Sale

DOM - Days on Market Trends in Contra Costa County

First off, I'd like to apologize for not updating more recently.  Simply put, my personal and professional life filled my days and nights.  We're back to smooth sailing and ready to hit it again. Thanks for following.   Again, if you find value in the information presented here, please forward, share, and make comments.  It helps me keep the flood gates open!

Is 45 days to get into contract too short or too long? YES! Wait, no!...Maybe!  How about 4 1/2 days? The answer to this question depends completely on the seller's willingness to price their property appropriately as well as the motivating factors behind the sale of the home.  

If the trend of DOM is decreasing, it means that buyers are snatching up houses more quickly than in the recent past, further reducing inventory and increasing demand.  How much weight should be put on this data when establishing the sales price of your home?  That is the real question.  Let's dig a little deeper.

Immediately below is the averages days on the market for single family homes in Contra Costa County for the past year.  Note the trend.  Also, keep in mind that these are averages.  One stubborn seller can skew any of this data pretty dramatically.

Graph 1 ~ Average Days on Market for all of Contra Costa County

The past year in Brentwood specifically:

Graph 2 ~ Average Days on Market for Brentwood, CA

If you've had your finger on the pulse of real estate of late then you know that home prices have been going through the roof.  Looking at the above graphs illustrates one reason why.  Although Days On Market is more of an indicator than a cause, it is an important indicator when it comes to establishing demand; a function of price. .  Again, remember mind that these are averages.  In today's market it is not uncommon for homes to go on the market and come back off in as little as "Zero Days on Market."  

Side note:  I don't know why any listing agent would advise a seller to pull their home off the market after less than one full day is beyond me.  There are reasons to do this, but few and far between.  I advise, as many ethical agents do, that leaving your home on the market for at least two full weekends (reviewing offers the Tuesday following the 2nd weekend) give adequate exposure.

Wishing you well in your real estate endeavors.  Thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.

Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook 
Finally, please comment or ask questions.  Other readers may be wondering the same thing.  I love the feedback, critical or otherwise, and love the interaction: I love this job.

Thank you always for your support.

Home Prices as a Function of Inventory: Part 5 of 8 - How To Effectively Price Your Home For Sale

Home Prices as a Function of Inventory

Let's take a detailed look at the correlation between Median Home Prices and Inventory in Contra Costa County  over the past 10 years.

Graph-1 

Median Homes Prices in Contra Costa County over the last 10 years.

Graph 1 shows the Median Home Price within Contra Costa County over the past 10 years, with a peak of +/- $660k in the summer of 2007.

Graph-2 (below) illustrates "Months of Inventory".  This is not the number of homes on the market, but a relative inventory level.  This take into account not just the number of homes on the market, but the number of willing and able buyers at that given time. In plain English...if no additional homes came on the market, this is how long it would take for current inventory to dwindle to zero.

Graph-2  Months of Inventory in Contra Costa County over the last 10 years. 

The key point of this post is to demonstrate the correlation between the above graphs.  Note how at the very point in time when homes went to their highest median price ever (Graph 1)...the amount of time it took to sell those homes went up dramatically (Graph 2).  Then....look what happened afterward.  With prices at their highest, followed immediately by a surplus of inventory at that price, we suffered arguably the biggest crash in real estate prices in history.

The contrary is also valid.  Today, the "Months of Inventory" is .5.  That means we've gone from 18 months, to 15 days of inventory.  As these two bits of data are always correlated, sellers now know that a) they can list a property at a price higher than in the immediate past, and b) as long as these trends stand true, if the home doesn't sell at this 'optimistic' price, all the seller needs to do is wait until it will.

So what?  What does this mean to you?  That answer is simple.  

• If you're selling, it's OK...be optimistic.  
• If you're buying, realize that:
• a) prices are still VERY low, considering even recent history
• b) mortgage rates are unreasonably low (perhaps an unsustainable rate)
• c) this is a sellers market. You need to submit your very, very strongest offer to be considered.  15, 20, 40 offers on each home is not uncommon in today's market.

If you get nothing else from this post, get this: Housing Inventory is never a function of only one variable.  While reviewing market data, remember what happened with pricing and what might happen with pricing is not the only variable to consider when agreeing on a realistic price to list your property...or to offer for purchase.

Until next time, and thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.

Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook 
Finally, please comment or ask questions.  Other readers may be wondering the same thing.  I love the feedback, critical or otherwise, and love the interaction: I love this job.

Thank you always for your support.

Real Estate Trends: Short and Long Term Trends in Home Prices: Part 4 of 8 - How To Effectively Price Your Home For Sale

Graph 1 - Median Homes Prices in Contra Costa Counter over the last 10 years. (Quarterly)

"How Do Pricing Trends (Market Pricing Trends) Affect Home Prices?"

If you get nothing else from this post, get this: Market pricing is NEVER a function of only one variable.  While looking at trends, remember what happened with pricing and what might happen with pricing is not the only data to look at in order to establish a realistic price to list your property.

Market Pricing Trends:

What is a trend, and why do trends matter,...or do they?
A trend is "A general direction in which something is developing or changing." An analysis of trends gives buyers, sellers, and their respective agents an idea of where the market is heading. A Comparative Market Analysis is completed with the understanding that based on what happened in the past we an excellent indicator of what will happen in the future.

Graph 2 - Median Homes Prices in Contra Costa Counter over the last one year. (Monthly)

How long is a trend? A trend might be a two year period, or a two week period depending on the market.  Looking at graph 1, you can see that the last four bars; 1 year (the previous 4 quarters) is relatively stable as compared to the 9 previous years.  However, broken down into months graph 2, we see that there's been a 27% increase in median home prices: Hardly stable. Looking at one without the other could cost you!  Why the big increase in prices, then a big drop, then a rise again?  There are several reasons....OK TRILLIONS of reasons.  And the end of the day, however, simply be aware of trends and price your home accordingly.  

How to price your home if home prices are dropping?

Don't price your home at the top of the market.  This often results in what we call "Chasing the market" as the sellers is forced to drop their asking price over and over and over in order to find a buyer.  Simply pricing the home realistically would have prevented that.  I personally know of a homeowner who was offended by a particular offer...only to accept an offer 15% lower less than a year later.  That's money on the table in my book!  

How to price your home if home prices are increasing?

If trends are looking up, don't base your price on dated transactions or you'll again be leaving money on the table.  Determine your motivating factor for moving.  Do you have to sell now?  Could you list the property realistically at the top of the market and see if you get an eager buyer?  Sure!  But be realistic.  "Can't I just pull it off the market if it doesn't sell...then put it back on again later?"  Yep!  But I don't recommend it.  Multiple Listing Services show a property's listing history, and some might look back (as the market continues to change) and think, "Hmmm...why didn't this sell back then?  The price looked right."  leaving doubt in their mind.

Ultimately, be realistic.  Follow the ideas in this post and the expertise of your local area expert...and you'll do phenomenally well.

Part 3 of 8 to come!

As always, I'll leave you with this tip:

There are countless Real Estate websites online now with dozens more on the way.  These sites DO serve a purpose.  They are a wealth of data.  However, "Zestimates" and the like are solely based on just that...data, which can be close to accurate...or way, way off.  No...that house up the street didn't sell for 30% of market value!  It was probably public record of a 2nd lien that was defaulted on. These sites pull data from various sources and do a very good job at combining that data and provide a free service to it's users.  That said, their not vested.  Use your Realtor.  Use a Realtor you can trust.  If you have questions about how to find one...call me...  or just read this post.

Until next time, and thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.

Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook 
Finally, please comment or ask questions.  Other readers may be wondering the same thing.  I love the feedback, critical or otherwise, and love the interaction: I love this job.

Thank you always for your support.

How Do Interest Rates Affect Home Prices? Part 3 of 8 - How To Effectively Price Your Home For Sale

This post will cover the 2nd point of the "How To Effectively Price My Home For Sale"  post:

 

"How Do Interest Rates (Mortgage Rates) Affect Home Prices?"

Interest Rates and/or Mortgage Rates:

Interest rates and home prices always inverse coincide: They affect in opposite directions.  Standing alone, when interest rates rise...home prices decrease.  When interest rates decrease...home prices increase.  Why is that?

It's important to remember that when you borrow money to purchase real estate you don't actually just pay for your house.  You pay the price of your house (Principle) + Interest (along with other costs/fees/expenses).  If you've qualified to purchase a home for $500,000, that qualification is based on your ability to pay all of your expenses. Interest is a huge part of that equation; especially in the early years of your mortgage.  That means that the higher the Interest payment is, the less Principle you can afford; the less home you can afford.  Put this inverse relation into the free market and you create a condition in which low Interest rates afford higher Principle amounts attracting more buyers.  More buyers increases demand.  With the number of homes on the market (inventory or supply) remaining equal, the price of homes increase until the market is in balance again.

Simply put, low interest rates means that it's really inexpensive to borrow money.  So borrow is what the market does!

Circumstances to consider:

• What is the current interest rate?
• How long has the interest rate been at that level? Does history show that we're due for a change?
• Looking at longer term trends in mortgage rates, are we likely to have an increase coming next, or a decrease?
• There is no crystal ball.  The Federal Reserve determines the price of money.  They can and do change interest rates as they see fit.  
• Election gaols, fear, optimism, unemployment, recent economic trends, the state of the affairs domestically as well as over seas, and many more factors are the 'food for thought' that the Federal Reserve uses in determining the cost of money.  If anyone other than the Fed had a handle on interest rates...there'd have been no boom...and no bust in our economy.  

The best we can do is to anticipate, educate ourselves, and make the best decision we can with the information we have as to our home's market value.

Part 3 of 8 to come!

As always, I'll leave you with this tip:

We live in an "information era".  Use the internet AND your personal financial resources (banks, credit unions, etc.) to get informed feedback as to the direction of the mortgage industry.  We can't do any better than that.  At least I can't.

Until next time, and thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.

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Finally, please comment or ask questions.  Other readers may be wondering the same thing.  I love the feedback, critical or otherwise, and love the interaction: I love this job.

Thank you always for your support.