Ed's Blog

Here's some information that I sent out to my clients the other day and it has created a lot of discussion! Thought it would make a good post also.

One point I'd like to clarify is regarding buying homes at 20% to 40% below market highs. This isn't possible in all markets. For example, San Francisco is holding values in most price ranges and neighborhoods. In fact, the median price has still been rising.

And you can't get 20-40% off on all homes for sale in markets where those discounts are available. However, in a number of markets these kinds of discounts are readily available. This is particularly true for homes that have been foreclosed upon and lenders want to get them off their books. I've seen discounts like this in Bay Area markets like Santa Rosa, Vallejo, Fairfield, Antioch, Pittsburg, Brentwood, Concord, Livermore and southern Santa Clara County just to name a few. And in the Central Valley cities, Inland Empire (So Cal) cities, and various markets around the US.

One of my appraiser friends tells me he'd like to go out and raise a million dollars to buy homes at these prices!

So take a read and let me know your thoughts.

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I hope you had a great Thanksgiving and are all set for the holiday season! I want to bring you up to date on some important developments in the mortgage and real estate markets that may be of benefit to you. (Yes Virginia, there is some good news in the real estate world!)

There is certainly no shortage of bad news being reported on the state of the housing market. I don’t deny that some of it is warranted. However, I’d like to bring “the upside to this down market.” If you are looking to refinance, trade up for a new home, or invest in real estate there are some great opportunities out there.

Refinancing: Take Advantage of Lower Rates

If you’re considering refinancing, this could be a great time to do it because interest rates are incredibly low. In fact, rates for conforming loans ($417,000 and under) are near their all time lows again. And rates for jumbo loans (over $417,000) have finally stabilized and drifted downward after their spike in August due to the subprime crisis.

Many of our clients are not only lowering their rates, but also are paying off equity lines and credit cards. Some are switching from adjustable rate loans to fixed rate loans (and vice versa) while they’re at it.

Trading Up: Make Money By Buying At a Bigger Discount Than You Sell For

If you are ready to move to a larger home (trade up), there is great news. It is true that you may have to sell your current home for less than your ideal price. However, consider that the home you plan to buy will be discounted as well. In nearly all cases, the discounted price on a more expensive home, will more than make up for the discounted price your home commands.

And if you can swing it try this strategy that many of my clients used in the downturn of the early 1990’s. Buy up without selling your current home. Instead, rent it until the housing market recovers. Then sell it.

Investing: Take Advantage By Buying Houses At 20-40% Below Their Market Highs

As long as your intention is to invest for the long term, the current market presents great opportunities. Because of the discounted prices on homes for sale, you stand to buy a property below market value, only to see it appreciate dramatically after the housing market returns to a calmer state. In many cases you can buy a house at 20% to 40% below the market highs of just a year or two ago. Wow!

Please note that I don’t advise you make a decision on any of these options without a great deal of consideration and calculation. I simply wanted to share with you the often overlooked upsides to a down market.

If you’d like to learn more about these options, contact us at Smith Craine Finance. We will work with you and review your particular circumstances and goals, to ensure that refinancing, trading up, or investing in real estate is a financially sound decision for you. Give me a call at 415-406-2330 or send me an email to ed@smithcraine.com and we’ll set up a time to talk.