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Andrew Hong's Blog

By Andrew Hong | Agent in Fremont, CA
  • Is it Too Late to Sell?

    Posted Under: Market Conditions in Fremont, Home Selling in Fremont, In My Neighborhood in Fremont  |  October 15, 2013 6:32 PM  |  296 views  |  No comments

    By Andrew Hong

     

                Hello everybody.  This year has had an amazing recovery from a distressed market in the past few years.  The question now is, how long will it last?  Sellers everywhere are also wondering the same thing.  So is it too late to sell this year and should people wait until next selling season?  There is no definitive answer to that question.  First of all it depends on various factors; secondly it depends on what sellers are looking for. 

                There are a variety of factors that will affect the market and how much of a seller’s market it remains to be.  The biggest factor is location.  There are some locations around the bay that are seeing a rapid slow down in amount of offers and appreciation compared to 3 months ago.  Meanwhile, in other areas, the market is still rapidly appreciating at almost the same speed as it was a few months ago.  Let’s look at some numbers based off of real estate sold in the East Bay of Fremont, Ca. The following graphic depicts the average $/sqft. price of single family homes sold in the City of Fremont.

                You can see that in Fremont the average $/sqft. as become pretty stable for now.  We’re still looking at an average around $465/sqft in the city of Fremont.  Of course, Fremont is a huge city and there are many different micro-markets within it.  There is an apparent cool down in the market and the appreciation is not as strong.  There was even a slight dip between May to June.  Now let’s look at another area here in the bay to compare.  The following graphic depicts the average $/sqft. price of single family homes sold in the city of Hayward.

                You can see from this chart that the $/sqft. is still increasing and has not shown much evidence of slowing down.  Also, notice that the increase from January to present is approximately 18%, while the increase in Fremont was approximately 24% throughout the year.  The reason being that the market is not showing signs of slowing down in Hayward is because the homes are still affordable to many families, while homes in Fremont many of the homes are no longer within the price ranges for many people.  Thus, the buyer pool for Hayward is still larger.  You can interpret this data any way you choose.  Figuring out how the market is in your area will vary, so if you would like some data in your neighborhood please feel free to e-mail me and I can send you something similar for your specific area. 

                Sometimes determining if it is a good time to sell is not solely dependent on how the market is doing but necessity.  If you are a seller that is moving out of area or need to sell soon then obviously selling now is a better choice than selling your home in November.  However, if you are a seller that can hold onto your property until next year, I would actually suggest doing so.  Everybody’s situation is different but before you decide to sell think about the factors that I had brought up in this post and determine how you are affected by them.

                

  • Home Loan Rates Rising?!

    Posted Under: Home Buying in Fremont, Home Selling in Fremont, Financing in Fremont  |  June 12, 2013 5:14 PM  |  485 views  |  No comments

    The Home Mortgage market is changing significantly right now and it is going to affect the real estate market entirely.  Buyers all over are already starting to feel the pressure to buy now before it’s too late.  In fact, not many buyers know that a $400,000 mortgage at 4% has the same monthly payment as a $320,000 mortgage at 6%.  We may not be seeing 6% rates anytime soon, but it’s just a good way to keep everything in perspective.  The cost of money is going back up once again and a lot of people should know how it will impact their home purchase.

    The average home mortgage rate for a 30-year loan is just hovering at 4% right now.  Just 3 months ago it was as low as 3.5%.  In fact, it’s at it’s highest it has been within the last year.  This increase in rate is very significant and every buyer really should be keeping their eye on it.  I wanted to put together an example to help people understand how much the interest rates can affect their purchase:

     

    A person purchased a $500,000 home 3 months ago with an interest rate of 3.5%:

    Home Purchase Price: $500,000

    Down payment: 20% ($100,000)

    Principal: $400,000

    Interest rate: 3.5%

    Mortgage payment: $1,796.18

    PITI: ~$2,387.85

    Total interest to be paid: $246,624.35

     

    A person to purchase a $500,000 home today with an interest rate of 4%:

    Home Purchase Price: $500,000

    Down payment: 20% ($100,000)

    Principal: $400,000

    Interest rate: 4%

    Mortgage payment: $1,909.66

    PITI: ~$2,501.33

    Total interest to be paid: $287,478.03

     

    The difference in monthly payments between the two scenarios is $113.48.  This may not seem like too much to some people, but over time it really adds up.  This means that in just the first year of owning the home you are already paying an increase in monthly payments of $1,361.76.  Also, at the end of 30 years, you will have paid $40,853.68 in additional interest if you were to have the 4% rate during the entire lifetime of the loan.  Of course, these affects are compounded the higher the purchase price is.  Even more so if you are going to be using a jumbo loan.  I hope this helps people really keep interest rates into account.  If you ever have any questions, we are always available to help any way we can.

    If you would like to learn more regarding the impact of increasing interest rates, here is a great article to read:

    http://www.bloomberg.com/news/2013-06-06/home-loan-rates-near-4-send-buyers-scurrying-mortgages.html

    Although the interest rates are seeing a rise recently, a lot of people should understand that the rates are still at an all time low.  Granted that we may be back into the 5% range within the next couple of months, the cost of money is still lower than it was a couple of years ago.  Below is a chart that will show you the interest rates over the past 8 years.  Even if they start to climb back up now, they are still considered low historically.

    Interest Rates

  • New Federal Lending Rules for 2013

    Posted Under: Market Conditions in Fremont, Home Buying in Fremont, Financing in Fremont  |  January 29, 2013 1:19 PM  |  444 views  |  No comments

    By Andrew Hong

    I hope everybody had a great New Years and Holiday season.  Now that 2012 has come to a close, there are plenty of things for us to begin to look forward to for the New Year.  It is time for people to start anew and change aspects in their lives that they’ve always wanted to before.  So what is changing in the Real Estate industry for this year?  It looks like the federal government has set one of its own resolutions in motion to prevent another 2005 housing crash from happening again.  The CFPB has just released some new mortgage rules for lenders to follow beginning of 2013 and you should know about them.

     

    Back in the day, like 10 – 40 years ago, Real Estate was almost the biggest and fastest markets here in California.  People would be lining up for loans, lining up to just place an offer on a house, and placing offers dozens of thousands over asking price.  In fact, in some areas by the time you placed an offer on a house and get the deal closed, the house had already appreciated 5%.  Those were the good old days.  The problem was that nobody had the foresight to see the end of it.  Everybody was too busy counting their money, mainly the lenders.  They set incredibly lenient underwriting standards and getting a loan was as easy as buying milk, until it all went sour.  Soon the slight depression began in 2005 and now thousands of people were suddenly in default.  All those people that were truly un-qualified to begin with, now are foreclosing, defaulting, and looking to lenders for alleviation.  Now for 2013 there are going to be some new rules for lenders to follow.  These rules are setting the bar much higher for the average borrower and if these lenders don’t follow these rules, then they will not be protected from lawsuits.  So what has changed and how will it affect you?

     

    Lenders will not only be protected by federal law if the mortgage in question is a “qualified mortgage”.  In order for a mortgage to be “qualified” they must fit these following factors:

    • Income and assets must be sufficient to repay the loan
    • Borrowers must document their jobs
    • Credit scores must meet minimum standards
    • Monthly payments must be affordable
    • Borrowers must be able to afford other debts associated with the property such as home equity loans
    • Borrowers must be able to afford all home-related expenses such as property taxes
    • Lenders must consider a borrower’s other obligations like student loans, car loans, and credit cards

     

    There are still a few exemptions to these rules.  For instance, if a borrower does not meet these guidelines then their payments may not exceed 43% of the borrower’s pre-tax income.  There are also some requirements for the lenders.  Lenders cannot use payments based off interest-only loans and they cannot use any teaser rates.  All of these rules and restrictions have been enacted since January 21st 2013.  However, they will not be enforced for a full 12 months.

     

    So what does this mean for you?  This enables buyers to feel more confident in their home purchase.  It also serves as a safeguard for borrowers from themselves.  A lot of people, especially in this market, have been tending to outreach their qualified means.  People need that extra $30k over asking price just to get into contract or to pay the over appraisal value.  It also protects lenders from creating any more sub-prime loans and lending to people that is under qualified. Overall, these new rules not only are good for the borrowers but also the lenders.  As a borrower, this doesn’t change much for the actions that you must take to get a loan.  Keep a clean credit report and do not overstep your bounds then you won’t have any issues.  Check out my site for other informative blog posts:
    www.FremontExcelRealty.com

  • When can you purchase a home after a recent Short Sale or Foreclosure?

    Posted Under: Market Conditions in Fremont, Home Selling in Fremont, Foreclosure in Fremont  |  January 11, 2013 4:15 PM  |  422 views  |  No comments

    By Andrew Hong

     

    The year is 2013 now and a lot has changed over the past few years.  The housing collapse in 2007 has left a long trail of short sales and foreclosures nationwide.  Specifically in the Bay Area, the rate of households in financial distress has been at an alarmingly high rate within the past 2 to 3 years.  This leaves a lot of families renting or staying with loved ones to weather the hard months that were ahead.  However, now that times are changing, real estate is on the rise again, and interest rates are at an all time low, many of these past families are beginning to consider the notion of purchasing a home again.  If you, a loved one, or a friend is one of these families, then this post is for you.

    Many people will wonder how a foreclosure or a short sale will affect their credit rating and if it will enable them to purchase a home in the future.  The short answer is yes, a short sale or foreclosure will definitely affect your credit score, and impact is lesser with short sales.  How much it will drop depends from person to person.  On average I would say that it would drop your score by at least 150 points.  However, you still will be able to purchase a home in the future.  How soon you can purchase it is what I intend on answering in this post.

    Here is a chart that specifies the general rule of waiting periods before someone can purchase a home post short sale or foreclosure:

    Type of Loan

    FHA

    VA

    USDA

    FNMA/Freddie Mac

    Jumbo

    Short Sale

    3 years

    2 years

    3 years

    2 years

    4 years

    7 years

    7 years

        

    <80%*

    81-90%*

    > 90%*

    Foreclosure

    3 years

    2 years

    3 years

     

    7 years

     

    7 years

            

    *Loan to value Ratio

                    This is the general rule for time periods following short sales and foreclosures.   There are still some exceptions and some lenders can be more lenient or offer special programs specifically for these situations.  There are some exclusions I want to point out.  For example, if you recently had a short-sale and would like to purchase a home with 10% down then it is possible to do this within just two years.  However, you will need to supply proof of extenuating circumstances.  These circumstances include reasons for the short sale such as a job transfer, death of mortgage holder, accident, illness, etc.  Also, it is possible to have a shorter waiting period post foreclosure if you offer proof of extenuating circumstances.

    What I want people to understand from this post is that it IS still possible for you to purchase a home even if you had to go through a short sale or foreclosure recently.  You may have a waiting period and you may also have to do some work on cleaning your credit, but it IS still possible.  I do want to remind people that this is the general waiting periods.  Everybody has their own financial situations which will affect their ability to purchase a home or qualify for a loan.  If anybody has anymore questions or would like some help on seeing where their personal financial situation is, then please feel free to contact me anytime.  Have a wonderful day, everybody.

     

  • Fremont California Real Estate Yearly Market Analysis

    Posted Under: Market Conditions in Fremont, Home Buying in Fremont, Home Selling in Fremont  |  January 2, 2013 5:30 PM  |  417 views  |  No comments

    By Andrew Hong

     

    Today I am going to introduce my annual Fremont California Yearly Market Analysis…starting this year.  So congratulations on being some of the first readers of my long tradition!  Almost every time I meet a new client, they will ask me this question, “so how’s the market going?”  And there will never be a right or wrong answer to that because it varies greatly by location.   Sure, the market is doing great here in the Bay Area, but what about Sacramento?  Ehhh…not so great.  I can give you a broad and vague answer that encompasses the entire nation but what good is that to you?  So, now how does one answer this question correctly?  One can by simply using facts and analysis.

    I’ve gone ahead and crunched a few numbers comparing the sales between this year and the year of 2011 in Fremont, CA:

     

    Year 2011

    Sample Size1331
    Average Sale Price$612,381
    Low$118,000
    High$2,488,000
    Median$532,000
    Average DOM"40.43
    Average Sale $/sqft343.555891
    Average SP - LP($12,345)


    Year 2012
     

    Sample Size1464
    Average Sale Price$659,833
    Low$180,000.00
    High$3,465,000
    Median$579,700
    Average DOM"29.11
    Average Sale $/sqft362.77
    Average SP - LP($593)

    Now let’s see how the trend is going between the two years. In terms of number of listings sold between the two years.  There was a small increase in about 10% of listings sold.  This shows that people are beginning to sell again, though 10% isn’t enough to draw any conclusions. 

    In terms of sales prices, in 2011 the average sales prices for single family homes in Fremont, CA were $612,381 while in 2012 it was $659,833.  That’s a difference of $47,452 or in other words a 7.75% increase from 2011.  That’s a pretty significant increase in my opinion.  Therefore, one would say that overall the sales prices in Fremont, CA have gone up about 8% compared to the previous year.  However, the high for the year 2012 is also higher at $3,465,000 which could have possibly affected the average sales prices.  You may also infer that more luxury homes were sold in the year 2012 than the year 2011.  This statement is also supported by the median during year 2012 was higher than the median for 2011 at $579,700 and $532,000 respectively.  My point being is that in order to evaluate the trends we cannot solely base it on sales prices.  Therefore, let’s move on.

    The average days on market in 2011 were 40.43 days while in 2012 it was 29.11.  This is a decrease by 11.32 days or -28%.  I believe this is very significant.  This means that people aren’t waiting on listings anymore.  Buyers are no longer waiting for listings to grow old and lower their listing prices before writing their offers.  This signifies a shift from a buyer’s market to a seller’s market, which could mean much more to come.  I imagine if I were to do this analysis again in 6 months, the numbers would be more drastic.

    The average $/sqft for 2011 was $343.55 as opposed to in 2012 it was $362.77, an increase by 5.6%.  This is very significant and let me tell you why.  We already stated earlier that the average increase in sales prices was 7.75%.  Now that we know the avg. $/sqft has also risen a significant amount we can eliminate the chance of outliers skewing our sample.  We can also mitigate some, not all, of the impact from inflated sales prices of luxury homes.  With this, we can say that the market has definitely gone up between the two years in Fremont, CA.  One can even confidently say that the market in Fremont, CA has gone up about an average of about 5%.

    Last but not least let’s talk about the difference in sales price from list price.  Notice how both years are in the negative, meaning that there are more listings selling for less than asking price.  In 2011 the average difference was -$12,345 and in 2012 it was -$593.  WOW.  Look at the difference in these numbers.  I was actually surprised that the number was still in the negatives for 2012.  This goes hand in hand with the decrease in the days on market.  Typically as a seller, you want your home to sell within the first 3 – 5 weeks if you want to get the most money for your home.  In 2011, homes were on average on the market for over 5 weeks before finding a buyer, while in 2012 it was taking just under 4 weeks.  This yet again, shows evidence of the market shifting from a buyer’s market to a seller’s market.  People are beginning to offer more than asking price, and the only time this happens is when there are multiple offers.

    After going through this analysis, I hope this helps people understand “how the market is going”.  The market is going just fine and I believe it’s going to grow at a gradual rate in the upcoming year.   I don’t see anything that will drastically hold it back or hinder its upward movement.  However, nobody can tell the future, if I could, I would be playing the stock market. If this analysis interested you, then I can do something similar for any other areas you are interested in as well.  Just send me an e-mail or give me a call and I can give you some data to work with.  Have a great day everybody and happy holidays.

  • How to Save Money on Your Mortgage

    Posted Under: Home Buying in Fremont, Financing in Fremont  |  November 30, 2012 3:40 PM  |  359 views  |  1 comment

    How to Save Money on Your Mortgage
    By Andrew Hong with Excel Realty

        Who loves to save money?!  I know I do, but I’m not talking about a few dollars here and there.  I’m not talking about coupon cutting or a couple of rebates.  Did you know you can save tens of thousands of dollars by modifying your mortgage plan?  Yes that’s right, I said TENS OF THOUSANDS, and it’s relatively simple.  Before I can get into the details however, first I need to explain and go over how a conventional mortgage is structured.

        To begin with, people have to understand that finding a mortgage or a lender is just like shopping for apples at a grocery store.  However, mortgages are incredibly expensive apples that you have to pay over the length of years and probably give you a couple headaches down the line.  Loans are products that vary from lender to lender.    However, the most important differences between loans and groceries are that they are negotiable and flexible.  This is the key to saving money.  To better help people understand, I am going to lay out a few numbers illustrating how a conventional loan works using two separate scenarios.

    You take out a conventional loan with good credit:

    Loan #1:

    • 3.3% APR (today’s common rate 11/29/2012)
    • $450,000 Loan
    • $562,500 Purchase price
    • 30-year loan
    • 20% down
    • 12 monthly payments of $1,970.80          
    • Total payments $709,487.45
    • Total interest paid $259,487.45

    Loan#2:

    • 3.3% APR (today’s common rate 11/29/2012)
    • $300,000 Loan
    • $375,000 Purchase Price
    • 30-year loan
    • 20% down
    • 12 monthly payments of $1,313.87
    • Total payments $472,991.63
    • Total interest paid $172,991.63

        So even with today’s amazingly low rates, if you take out a loan of $450,000 over a 30 year lifetime, you will be paying a total of $259,487.45 in interest.  Hey, who said money is cheap right?  So how do we cut this down?  The simple answer is a Bi-weekly Mortgage.  Not many people have ever heard of this nor do they even know it exists.  Let’s go over what a bi-weekly mortgage is.  A bi-weekly mortgage is a mortgage plan where the borrower will make payments EVERY two weeks.  As opposed to once at the end of each month.  The bi-weekly payment is exactly one half of what the normal 12-month plan payment would be.  The key to a bi-weekly mortgage plan is that instead of being 12 monthly payments there are actually 26 bi-weekly payments per year.  This is caused because there are 52 weeks per year.  Therefore, at two points during the year you will be making two additional bi-weekly payments or equivalent to one additional monthly payment.  This is why this plan is also sometimes known as a 13-payment plan, because essentially you are making 13 payments a year instead of 12.  Now how does this extra payment per year affect your mortgage plan?  It affects it IMMENSLY.  Let’s look at our scenarios again:

    Loan #1 biweekly:

    • 3.3% APR (today’s common rate 11/29/2012)
    • $450,000 Loan
    • $562,500 Purchase price
    • 25-year biweekly loan
    • 20% down
    • 26 bi-weekly payments of $985.40
    • Total payments of $673,027.68
    • Total interest paid $223,027.68
    • Savings comparison $36,459.77

    Loan#2:

    • 3.3% APR (today’s common rate 11/29/2012)
    • $450,000 Loan
    • $562,500 Purchase price
    • 25-year biweekly loan
    • 20% down
    • 26 bi-weekly payments of$656.93
    • Total payments of $448,685.12
    • Total interest paid $148,685.12
    • Savings comparison $24,306.51

        By using a bi-weekly plan you will save tens of thousands of dollars off of your interest.  You can save enough money to buy yourself a car.  Now, you also have to remember that right now interest rates are amazingly low and that this effect compounds with interest rates.  Therefore, if the rates begin to rise again, the amount of savings from this plan will be even MORE drastic.

        Now is there a catch?  There are a few drawbacks to using this plan as there is for everything that sounds too good to be true.  First of all, not all lenders offer this payment plan.  You will have to ask around to see if the lender you are with will allow you to have this plan.  Secondly, some lenders will actually charge you a “fee” for them to take your money earlier.  Sounds silly right?  I thought so too, but this is how they make their money.  This fee is usually low, however, over the life of the loan it can add up to a couple thousands of dollars.  This fee is monthly, though I am sure with enough persistence and today’s low rates you could probably persuade them to either waive this or at least lower it.  Thirdly, many lenders will not help you make these payments; therefore you have to be diligent and make sure you manually send or e-wire your funds to them.  As opposed to a conventional monthly payment loan, many lenders will set up an automatic payment system for you.  So if you ask me, the drawbacks aren’t really that bad considering you you’re saving so much more.  The upside from using a biweekly payment plan definitely outweighs the downside.  Look into it, and let me know how it turns out.  Feel free to use our mortgage calculator as well if you would like to crunch some numbers.  You can find it here.

    I hope this article helps some of the readers out there.  Have a great day and happy holidays!

    You can visit my site for  the original article, relatable content, or other useful resources  at www.FremontExcelRealty.com.  

  • How about now, is it a good time to buy?

    Posted Under: Market Conditions in Fremont, Home Buying in Fremont, Financing in Fremont  |  November 16, 2012 4:01 PM  |  425 views  |  No comments
    How about now, is it a good time to buy?
    By Andrew Hong with Excel Realty

        Back in last October I wrote a post titled, “Is It a Good Time to Buy?”  And now I want to write another post that addresses the same topic as market changed drastically.  As many people know, or can guess, the housing market is seasonal.  Low inventory during the winter means low turnover and high inventory during spring and summer typically lead to increased sales.  In my last post, I explained that it was situational whether it was a good time to buy or not.  However, things have changed and allow me to explain.

        Here in the Bay Area, there are several locations that have drastically gone up in market value the past couple of months.  The reason for that is simply supply & demand.  During this last winter there were many homeowners very hesitant to sell, and many of the available listings were only foreclosures and short sales.  There have been buyers for months now looking for places but there were simply no inventory available.  Now, however, many people are finally deciding to sell for this selling season and the market suddenly has something for all those waiting buyers out there to look at.  The demand increased dramatically and you have dozens of buyers fighting for the same homes.  It is actually difficult to buy a home now because the demand is so high.  Right now, the difficult part isn’t finding the home; it is getting into contract for the home that you want.  So what does this have to do with knowing if this is a good time to buy or not?  Mortgage rates, inventory, and season

        Mortgage rates are still at an all time low.  I don’t know for how long, but they do seem to climb up ever so slowly.  Right now is the best time to buy because the market is on an upturn.  Whether it will keep going up or drop back down, I cannot tell.  I would like to think that the economy is on a rise and people are gaining confidence, but I can’t guarantee that.  What I do know, is that many homes on the market are selling in less than two weeks and above asking price.  If you would like to know if the area you are looking in is experiencing this then send me an e-mail and I can let you know.

        How does an increased inventory incline you to buy now?  If you were searching for a home last winter then you would know the answer to this.  It is not fun looking for a home when there are no homes in sight.  I am showing property to the same client multiple times a week because the inventory is growing so rapidly.  This is good for you because you don’t want to miss out on your dream home right?  The more on the market, the more you get to see.  As a great buying agent, I want to make sure all my clients see everything on the  market before they decide to purchase a home.

        Lastly, we are halfway through spring.  Many people want to purchase a home before the coming school year, which is most commonly September.   Right now is the time to buy, especially if you have kids and want to make sure they get into the right school before it begins.

        I hope these points all help everybody in deciding whether it is a good time to buy and I also wish everybody good luck.  It is defiantly a good time to buy but its also a tough time to buy.  Many more buyers than sellers and the competition is fierce.  Keep your head up and be aggressive is my advice to all current home buyers out there.

     You can visit my site for  the original article, relatable content, or other useful resources  at www.FremontExcelRealty.com.  

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