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Woodminster Real Estate News

Tracking San Francisco Bay Area Real Estate Trends

Alameda County Home Prices are the Fastest Rising in the Nation

Alameda County Home Prices are the Fastest Rising in the Nation

Home prices in the San Francisco area grew faster during the past year than prices in any other U.S. city surveyed, according to a report released Tuesday.

The S&P/Case-Shiller Home Price Index shows prices in the census area that includes San Francisco, Alameda, Contra Costa, Marin and San Mateo counties grew by 10.3 percent in March compared to the same time in 2014.

Prices in the area grew faster in March than any other metropolitan area surveyed in the report. Prices were up 3 percent in March in the San Francisco area compared with February. That’s after a 2.1 percent gain in February, according to the index. The monthly values are not adjusted for seasonal affects. Seasonally adjusted data would make the monthly increases 1.7 percent in March and 3.4 percent in February.

Home prices also rose nationally, with both the 10-city and 20-city indexes published by S&P/Case-Schiller showing growth over both the past year and the past month. The only area that did not experience a month-over-month increase in home prices was New York City.

 

Cover Photo Courtesy of David Sawyer

 

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Is Bay Area Real Estate in a Bubble Yet Again?

Is Bay Area Real Estate in a Bubble Yet Again?

Some parts of the Bay Area’s real estate market are entering bubble territory and could pop in the next recession, a University of San Diego real estate expert said Wednesday.

The trend in the Bay Area and a few other cities where the market is being driven by high valuations of tech stocks counters what’s happening around the country, which is far from being in a bubble, said Norm Miller, the Hahn Chairman of Real Estate Finance in the School of Business Administration’s Burnham-Moores Center for Real Estate.

In research conducted along with a Hawaii-based consulting firm, Miller found that Denver, Miami and Portland, Oregon, plus Bay Area cities like San Francisco, Oakland, Berkeley and San Rafael, are also showing signs of being in a bubble.

“When the next recession hits, prices could decline in the ‘San’ markets, including San Francisco, San Rafael and San Diego,” Miller said. “Less a real estate bubble, this is more of a ‘tech bubble’ that will affect some real estate markets when the stock prices dip significantly.”

Miller and his colleagues monitored around 400,000 neighborhoods around the U.S., and about 20,000 zip codes.

“When home prices collapse, they do not do this evenly across a metro level, so it’s important not to focus too much on averages,” Miller said. “Those neighborhoods with the least equity or highest loan-to-value ratios tend to also be the most volatile.”

Miller said he sees median household income, the value of the U.S. dollar against foreign currency, a demand for housing in coastal regions with limited supply and a dependence on low interest rates as significant contributors to localized price bubbles in the seven markets.

 

Cover Photo Courtesy of Fibonacci Blue

 

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How to APR to Compare Mortgage Loan Offers

How to APR to Compare Mortgage Loan Offers

Everyone wants to know they’re getting a fair and reasonable mortgage offer. The federal government supports the annual percentage rate disclosure as the benchmark barometer of loan cost.

 

Quick APR Facts

 

The annual percentage rate is a disclosure only seen in the origination of new credit or in advertisements of various credit products such as loans and credit cards. You will never see APR on a mortgage loan statement as the APR is used as a cost measure at application. APR is simply a function of the costs of the mortgage loan added to the interest rate and re-amortized based on the size of the loan you’re seeking over the loan term e.g. 360 months for a 30 year fixed rate mortgage. The sole purpose of the annual percentage rate disclosure is to make credit shopping easier.

 

  • The APR does not change your loan amount.
  • The APR does not change your payment.
  • Your note rate is what determines your principal and interest mortgage payment.

 

Why APR Is Higher Than The Note Rate

 

The annual percentage rate is higher than the note rate because APR it takes into consideration the fees (whether or not you are actually paying them) adds them to your loan amount and re-calculates the figure over the loan term, thus the APR rate disclosure is higher. This rate vs. APR relationship can seem convoluted because you are not paying the fees based on the APR rate, but rather the note rate, as the note rate is the real cost of funds.

For example, it is not uncommon to see a 30-year fixed-rate mortgage with a note rate at 3.875%/APR 4.137%. The 26 basis points spread between the 4.137 and a 3.875% is the fees disclosed as expression of cost based on the size of a loan you are applying for.

APR can be best used to distinguish amongst mortgage offers in order of priority, starting with the highest APR offer, and working down.

Mortgage Tip: The APR disclosure fails to divulge total cost to the consumer. The total cost of the mortgage over time, is indeed a more accurate representation of true loan cost.

 

Cover Photo Courtesy of Wilson Hui

 

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California Values Improve but at Cost to New Home Buyers

California Values Improve but at Cost to New Home Buyers
California's housing market will continue to improve into 2016, but a shortage of homes on the market and a crimp in housing affordability will persist as well, the California Association of Realtors said Thursday in its 2016 California Housing Market Forecast. The association's forecast sees an increase in existing home sales of 6.3 percent n...
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