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Defying Predictions, Mortgage Rates Are Dropping—Here’s Why

May 4, 2017

Daniel Acker/Bloomberg via Getty Images



Written by: Clare Trapasso,

Anxious would-be home buyers have been watching mortgage interest rates finally begin ticking up again in 2017, ` years of historical lows. And when the Federal Reserve raised the short-term interest rate in March, the conventional wisdom was that mortgage rates would follow suit—as they typically do.

But that’s not happening this time around. Despite a Fed hike just last month and two more looming on the horizon, the average interest rate for a 30-year fixed-rate mortgage fell back below 4% for the first time since November, according to Freddie Mac.

They were at just 3.97% as of Thursday, down from 4.08% the previous week and a high of 4.3% for the year, on March 16.

“If you had an answer to that question, you’d probably make millions trading on Wall Street,” says Danielle Hale, managing director of housing research at the National Association of Realtors®. “Interest rates are really tricky to predict.”

Yet even a small change in the interest rate can be a game changer for buyers. A fraction of a percentage point can add up to hundreds of extra dollars a year in mortgage payments. And that extra money can make a real difference in the kinds, sizes, and locations of homes that buyers can afford.

What’s really driving down mortgage interest rates

Mortgage interest rates are influenced by the Federal Reserve’s short-term interest rates, but in fact they’re more closely tied to the 10-year U.S. Treasury bond market. That’s because as investments, bonds and mortgages are similar: Investors consider them significantly safer bets than the more volatile stock market.

So when investors got spooked by the rising stock market (fearing a downturn) and the unpredictability of the current U.S. administration, they put their money into bonds. And since mortgage rates are generally an inverse reflection of the strength of the bond market, when bonds are up, mortgage interest rates drop.

“Investors are a little skeptical because the stock market keeps climbing,” says Don Frommeyer, a mortgage officer at Marine Bank in Indianapolis. “They’re looking for safe ways to invest their money, and they’re going back to the bond market.”

They’re also not quite as optimistic about how quickly President Donald Trump’s infrastructure plans will come to fruition, after having invested in sectors expected to profit from those plans. So they’re turning back to bonds.

“Now people are re-evaluating and coming to the conclusion that [these promises] are going to take a lot longer than they expected,” says Freddie Mac’s chief economist, Sean Becketti.

How long the downward trend might last

The lower rates aren’t just confined to conservative 30-year fixed-rate loans. Rates averaged 3.23% on 15-year fixed-rate loans and 3.1% on five-year adjustable-rate mortgages as of Thursday, according to Freddie Mac.

“It’s good news for people who are already in the market,” says Hale. “Lower mortgage rates translate into a lower monthly payment.”

But this situation might not last. With two more Fed hikes expected this year, mortgage rates are likely to fall back in line with their usual pattern. They’re anticipated to keep going up gradually, Hale adds.

Of course, life can always throw us a curveball.

“There’s so much uncertainty and volatility in the market,” there’s no way of knowing what the mortgage rates will do next, says Becketti.


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How Healthy Is Your Condo Board? How to Conduct a Thorough Checkup

April 27, 2017



By Margaret Heidenry | Apr 25, 2017

As uncomfortable as it might be to get poked and prodded while you’re clothed in a paper gown, medical checkups are essential to maintaining your health. Well, guess what? That same wisdom applies to buying a home—particularly if that home is a condo. Why? Because with condos, you’re paying someone else to be in charge of a lot of the maintenance, from lawn mowing to repairs. What if they slack off and let that stuff go? If so, things will start to break down from neglect—and, like a sneeze spreading through an office, this could ultimately infect your own home, and how much it’s worth. So whether you’re shopping for a condo or just curious to know whether the one you’re already in is healthy, here’s how to conduct a thorough checkup.

General appearance

Most doctors start a physical by taking a good look at the patient—likewise, you’ll want to give any association a thorough once-over.

“It’s a matter of observing the condition of the entire development, not just the home you’re considering buying,” says Lance Stendal, president of Omega Property Management in Maple Grove, MN. A well-kept association usually signals a robust bank account; one with a rundown appearance may suggest a lack of cash.

In the waiting room, you fill out a stack of papers about your health history because the past informs the future. Same goes for a condo association’s paperwork. As a purchaser, you’ll get a packet that typically contains the proposed annual budget and last year’s approved budget, says Scott Reidenbach, founding partner of Reidenbach & Associates, a Wayne, PA–based law firm.

Make sure the current budget accurately reflects needed routine maintenance; an association that’s consistently over budget is a sickly one. Capital improvements on the horizon should be mostly funded. If there is a shortfall, that money is more likely than not going to come out of your pocket—and possibly bleed you dry.

Questions to ask

A routine checkup may not reveal problems if you don’t ask the condo association board or managing agent the right questions. Here are two biggies:

How many delinquent owners are there? Size matters in determining this. Two tardy owners will have more impact in a 10-unit association than a 100-unit association.
Is there any pending or threatened litigation? If so, say hello to pricey lawyers’ fees.

Beware if condo fees are too high—or low

Condo fees are the price you pay so that you can kick back at home while others are hired to repair roofs and clean the communal pool. So, condo fees aren’t bad per se, but nothing makes a condo owner’s blood pressure rise like constant hikes in fees.

Fee hikes are unpopular and can be prevented with responsible budgeting. So, ask if the board has raised the monthly dues on existing unit owners in the past—or plans to in the future. A consistent rise in fees is a symptom of financial trouble.

On the flip side, Stendal says to be wary of the siren song of low—or no—assessments, which could mean the board isn’t focused enough on the needs of the association. And deferring repairs in order to keep fees low simply digs a deeper hole. Don’t use the fee amount as a gauge for buying in one condo building over another until you understand how those monies are allocated, says Stendal. A fee of $250 might be better than $200 if it’s properly spent on operating expenses, budget, and contributing to reserves.

Measure your condo board’s immune system

A condo’s reserve account is like its immune system—it’s a special force that fights whatever curveballs come its way. To determine if it’s readily stocked with enough antibodies, check out the condo’s Replacement Reserve Study. This report helps a condo prepare for any major financial hits it might face in the future by detailing anticipated income and expenses over the next 30 years for capital projects.

The current balance sheet should show that the association has the money in the bank that the RRS recommends, not just what may seem like a large sum.

For perspective: Divide the total reserve balance by the number of units.

“A million dollars looks like a lot,” says Stendal. “But when you have to divide that among 400 homes, a share is only $2,500!”

If the condo faces an emergency and doesn’t have a full coffer, the owners might be bled dry with a surprise assessment or a permanent hike in condo fees.

The prognosis

If your condo is ailing, many states allow you to back out of a contract. For example, Minnesota mandates the seller provide the buyer with current financials, the most recent annual report, and a copy of the RRS, says Stendal. The buyer is given 10 days to review them. During that time, the buyer can cancel the contract for any reason and without penalty.

If your condo is suffering and you want to help revive it, become engaged in the process. Hold the board and management company accountable for the situation, and consider serving on the board yourself. It might take some work, but this ensures you’ll call the shots on your own condo’s health.

Margaret Heidenry is a writer living in Brooklyn, NY. Her work has appeared in The New York Times Magazine, Vanity Fair, and Boston Magazine.


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How is California’s Housing Market Doing?

April 20, 2017

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San Diego 8th Hottest Market in March

April 13, 2017


Post by:  North San Diego County Association of REALTORS®

Spring has barely sprung, but it appears we’re already in the thick of a frenzied spring home buying season. Depending on who you’re listening to, San Diego County’s housing market seems to be off to a blooming start. Industry sources confirm the market is growing and getting stronger. Low inventory continues to be a significant problem, as well as high prices are keeping waves of buyers at bay. However, thanks to uncommonly low interest rates, mortgage payments have remained pretty reasonable even in the face of increasing purchase prices.

Among the latest housing market headlines:

— According to the University of San Diego Burnham-Moores Center for Real Estate, the local economy is picking up steam and is expected to do better than what had previously been expected. The Center’s Index of Leading Economic Indicators is now forecasting employment growth at 30,000 new jobs in 2017, compared with a previous forecast of 25,000 jobs announced at the end of 2016. Analysts say the economy is growing because of improved local labor conditions, rising prices of local stocks and stronger measures of U.S. consumer confidence due to President Trump’s business-friendly policies.

— According to, the National Association of REALTORS® official website, San Diego was the 8th “hottest” real estate market in March with the typical home taking just 38 days to sell. California led the United States with six of the top 10 real estate markets. Nationwide a home is typically on the market for 69 days, eight days less than this time last year. It’s much less in California, however, with homes in booming Silicon Valley homes typically selling after just 25 days.

— According to the latest housing market report from the California Association of REALTORS® (C.A.R.), the median number of days it took to sell a single-family home dropped from 37.4 days in January to 33.4 days in February and was down from 41.5 days in February 2016.

— According to CoreLogic, an Irvine-based real estate data and analytics information service, the median sales price of a home in San Diego County jumped by 8.1 percent in February, compared with the same month a year earlier, while the number of homes sold fell by 1.6 percent. The median price of a San Diego County home was $492,000 in February, up from $455,000 in February 2016. In Southern California, the median price of a home was $460,000 in February, up 1.1 percent from the month before and up 7 percent from the same period last year.

— Also according to C.A.R., existing single-family home sales totaled 400,500 in February on a seasonally adjusted annualized rate, down 4.7 percent from January and up 4.9 percent from February 2016. February’s statewide median home price was $478,790, down 2.2 percent from January and up 7.6 percent from February 2016.

Also, closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for the 11th consecutive month and totaled a seasonally adjusted annualized rate of 400,500 units in February, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

Finally, C.A.R. said the share of homes selling above asking price dipped from 31 percent a year ago to 30 percent in February. Conversely, the share of properties selling below asking price increased to 37 percent from 35 percent in February 2016. The remaining 34 percent sold at asking price, down from 35 percent in February 2016. The homes that sold above asking price, the premium paid over asking price edged up to 12 percent, up from 11 percent a year ago.

“While it’s encouraging to kick off the year with back-to-back yearly sales increases, moving forward, California’s housing market could lose steam in the long term as the Fed begins to adjust the federal funds rate,” said C.A.R. President Geoff McIntosh. “In the short term, however, the specter of higher interest rates may push buyers off the fence to purchase a home before mortgage rates move even higher.”

Consider me your #1 resource for all things Real Estate! Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more. Just send me an email or call me at 619-888-2117. 

Real Estate on Opening Day

April 6, 2017

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Borrowing Against 401(k) to Purchase a Home: Financial “Do”, or “Don’t”?

March 30, 2017




Many first time homebuyers are ready to take on the expense and responsibility of homeownership but lack the significant down payment that is generally required as part of a mortgage loan, or that is required in order to avoid the additional purchase of private mortgage insurance (or, PMI). While many prospective homeowners may not have a lot of cash in liquid savings, they do have alternate investment resources which inevitably leads down the train of thought in which the wonder, “what about tapping into our 401(k) or other retirement savings to use as a down payment and closing costs?” If this situation sounds all too familiar, and you are many years from your expected retirement age, ask yourself this question: Does it make sense financially to either withdraw, or borrow money from your 401(k) to help fund your home purchase?

Can you either withdraw or borrow money from a 401(k) account before you reach retirement age?

Yes; there are no laws or rules that prevent individuals from withdrawing money from their retirement accounts before they reach retirement age. That said, there may be some tax penalties associated with early withdrawals from retirement accounts that you’ll want to take into consideration before taking any money out of your retirement funds. 401(k) generally allow for the owner of the account to borrow money from the retirement account for the purchase of a home. These withdrawals are not subject to a tax penalty, but they are in the form of a loan, which must be repaid to your retirement account.

Things to consider before borrowing money from your 401(k)

Borrowing money from your 401(k) to purchase a home is often a pretty quick and pretty easy process; but does it make sense for you to tap into your retirement savings to purchase a home? In order to determine what makes the best financial sense for you and your family, you’ll want to weigh the pros and cons to borrowing money from a 401(k) to fund your home purchase.

— You will have to pay back the money you borrow. When you borrow from a 401(k) to purchase a home, you generally will have several years to repay the amount borrowed. You’ll want to make sure that you can swing this extra monthly payment in addition to your new mortgage. Additionally, if you leave your employer (the company sponsoring your 401(k)) before you repay your loan, you may have to repay the entire balance of the loan within just 60 days or be subject to a tax penalty. If you plan on changing careers and employers in the near future, this is definitely something you’ll want to keep in mind.

—You may impact your future retirement savings. If you are able to quickly repay the amount borrowed from your 401(k), you may not impact your savings significantly over the long term. But, any money you withdraw from your 401(k) won’t be growing towards your retirement savings.
Finally, if you are borrowing money from your 401(k) in order to avoid paying for private mortgage insurance or PMI, you’ll want to calculate what your monthly PMI payment would be and whether it makes more sense to just pay that until you reach the needed equity in your home to request PMI removal.

Article by: MDC Financial Service Group


Are you considering buying a home? I can meet with you and guide you through the process. Just send me an email or call me at 619-888-2117. 



Inventory Balance

March 23, 2017



  1. What exactly is “housing inventory” and how is it calculated?

  2. How do you know if it is a Buyer’s market, Seller’s market or neutral market?

When deciding to sell or buy a home it is important to discuss the marketplace with your Realtor to understand the current climate.

Currently the inventory in San Diego County is currently less than two months making it a Seller’s market HOWEVER, interest rates are still historically low giving Buyers good reason to purchase.

How to Compute Months of Inventory

  1. Find the total number of active listings on the market last month.
  2. Find the total number of sold transactions for the last month.
  3. Active listings divided by the number of sales = the number of months of inventory remaining.

Buyer’s Real Estate Markets

In these markets there are more homes available for sale (higher inventory) than buyers to purchase them.

In Buyer’s markets serious sellers are often more willing to negotiate. This means you may be able to buy a home for less than list price, and the seller might be willing to pay some of your closing costs and make more repairs.

Signs of a Buyer’s Market

  • More than six months of inventory is on the market.
  • Prices are reduced before going into escrow.
  • Sale prices are lower than listing prices.
  • Fewer buyers are purchasing, resulting in lower closed sale numbers.
  • Median sales prices are declining.
  • Days on the market are longer.

Seller’s Real Estate Markets

In these markets there are more buyers than available houses to buy.

In Seller’s markets serious buyers are often willing to pay more than list price, tighten or and/or waive contingencies. Properties usually receive multiple offers and don’t stay on the market very long.

Signs of a Seller’s Market

  • Less than six months of inventory is on the market.
  • Prices are not reduced before going into escrow.
  • Sale prices are higher than listing prices.
  • More buyers are purchasing, resulting in higher closed sale numbers.
  • Median sales prices are increasing.
  • Days on the market are shorter.


Neutral Real Estate Markets

These markets are balanced. Typically, interest rates are affordable and the number of buyers and sellers in the marketplace are equalized. The scales don’t tip in either direction.

Signs of a Neutral Market

  • Three to six months of inventory is on the market.
  • Sale prices are close to listing prices.
  • Sales numbers have stabilized.
  • Median sales prices are flattened.
  • Days on the market are 30-60 days.

Please contact me to discuss the current climate and how you can best use it to your advantage! Just send me an email or call me at 619-888-2117. 


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