3 Signs the Housing Market Is on the Rebound

The residential real estate market has been plodding along for most of the year. However, three recent reports show the market may be on the verge of a rebound:

1. Existing Home Sales (closed sales) are up, marking two consecutive months of growth.

2. Pending Home Sales (contracts signed) are up with each of the four major regions reporting both month-over-month growth and year-over-year gains in contract activity.
Here is the month-over-month growth:

• The Northeast rose 0.7%

• The Midwest increased 0.6%

• The South increased 1.4%

• The West grew 3.1%

3. Buyer Traffic (the number of people shopping for a home) is up compared to the same time last year, and for the first time in 13 months.

• The Northeast is up 5.9%

• The Midwest increased 1.3%

• The South is up 2.7%

• The West grew 2.2%

In their most recent report, ShowingTime Chief Analytics Officer, Daniil Cherkasskiy explained:

“The trend we saw in year-over-year buyer traffic in previous months continued across the United States. For all four regions there were more showings per listing this year compared to last year, making it the most competitive August in the last five years.”

Lawrence Yun, Chief Economist with the National Association of Realtors, believes the uptick in activity will continue into the future:

“It is very encouraging that buyers are responding to exceptionally low interest rates…With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020.”

Bottom Line

If you are thinking about selling your house, there are purchasers out there who are ready, willing, and able to buy.

Simon Bull's Meuse Gallary Opens in Downtown St. Helena

St. Helena’s most conspicuously vacant storefront is now occupied, with artist Simon Bull’s Meuse Gallery holding a grand opening last Friday.

Bull said he’d been searching San Francisco and the rest of the North Bay for a space to complement his gallery in Carmel, and the “epic, humongous” space in St. Helena’s Richie Block is a perfect fit.

“We could use a space like this because I have big, colorful art that likes big, colorful space,” said Bull, who lives in Carmel but still bears the accent of his native England. “We want this to be like St. Helena’s museum of modern art.”

The 4,200-square-foot space had been vacant since Goodman’s moved to Calistoga in December 2015.

Bull obtained one of the city’s new pop-up permits because it allowed him to open right away, but he said he plans to apply for a permanent use permit “well before” the pop-up permit expires next August.

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“We didn’t come here for a year. We came here forever,” he said.

The Masons, who own the building, had already made substantial improvements to the space after Goodman’s moved out. All Bull did was add track lighting.

“We wanted to light this space up like a Christmas tree,” he said. “We wanted the center of St. Helena to be bright and full of light and color.”

Bull’s Carmel gallery attracts guests from the South Bay, and he hopes the St. Helena gallery draws people from San Francisco and the North Bay, as well as tourists from farther away.

According to his website, Bull is one of the top-selling artists in the U.S. He was the official artist of the 2002 U.S. Winter Olympics, the 2019 National Cherry Blossom Festival in Washington, D.C., and boxer Muhammad Ali from 2007 until his death in 2016.

4 Tips to Improve Your Home and Save on Your Energy Bill

As a homeowner, it’s important to keep your home running efficiently, not only to save money, but also to help the environment thrive. October 2nd is Energy Efficiency Day, a perfect time to think about making some key upgrades that will improve the efficiency of your home. If you’re looking to sell your house and increase the pool of potential buyers in your market, the upgrades below are truly a must.

According with Wallet Hub,

“In the U.S., energy costs eat between 5 and 22 percent of families’ total after-tax income.”

What should you spend on utilities?

Money Management says,

“If you’re working with a budget, and trust me, you should be, your utility costs should be no more than 8-10 percent of your monthly income.”

How can you make your home more efficient?

EnergyEfficiencyDay.Org provides some handy tips that can help you improve the energy efficiency of your home. Here are a few simple ones to consider, and how to make them happen:

1. Make the Switch to LED

LEDs are a great example of how innovation and technology can make your life easier. They last at least 25 times longer and consume up to 90 percent less electricity than incandescent bulbs.

Tip: By switching five of your home’s most frequently used bulbs with ENERGY STAR® certified LEDs, it’s possible to save $75 on energy costs annually.

2. Seal Those Leaks

On average, heating and cooling account for almost half of a home’s energy consumption. In fact, all the little leaks can be equivalent to leaving open a 3-foot-by-3-foot window.

Tip: Take simple steps like caulking windows, sealing leaks around chimneys and recessed lighting, and sliding draft guards under your doors to save up to 20% on heating costs.

3. Heat and Cool Efficiently

Don’t waste money heating or cooling an empty home. Install a programmable thermostat and in colder weather schedule your home’s heat to lower when you are away or asleep and increase when you are returning home or waking-up. In warm weather, schedule the thermostat to raise the temperature when you are away or asleep, and lower it at other times.

Tip: Follow the U.S. Department of Energy recommended temperatures and be energy-efficient all year. 

4. Maintain Your HVAC System

Make sure to clean or change your furnace filters regularly. A dirty furnace filter will slow down air flow, making the system work harder to keep you warm (or cool) and costing you more money.

Tip: Consider getting a winter tune-up. Just as a tune-up for your car can improve your gas mileage, a semi-annual or yearly tune-up of your heating and cooling system can be vital to improve efficiency, saving you money and making your home more comfortable. 

Bottom Line

By making a few key upgrades to your home, you’ll save on your utility bills and improve the energy efficiency of your home. When you’re ready to sell your house, these key features will make it even more attractive to potential buyers. Contact a local real estate professional to learn what buyers are looking for when it comes to energy efficiency options in your area.

What to Expect from Your Home Inspection

You made an offer and it was accepted. Your next task is to have the home inspected prior to closing. Agents often recommend you make your offer contingent upon a clean home inspection.

This contingency allows you to renegotiate the price you offered for the home, ask the sellers to cover repairs, or in some cases, walk away if challenges arise. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector

Your agent will most likely have a short list of inspectors they’ve worked with in the past to recommend to you. HGTV suggests you consider the following five areas when choosing the right home inspector for you:

1. Qualifications – Find out what’s included in your inspection and if the age or location of your home may warrant specific certifications or specialties.

2. Sample Reports – Ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. In most cases, the more detailed the report,
the better.

3. References – Do your homework. Ask for phone numbers and names of past clients who you can call to discuss their experiences.

4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations does, however, often mean continued training and education are required.

5. Errors and Omission Insurance – Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human, after all, and it is possible they might miss something they should see.

Ask your inspector if it’s okay for you to tag along during the inspection, so they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof or crawling around in the attic and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating and air conditioning systems, ventilation, windows, fireplace and chimney, foundation, and so much more.

Bottom Line

They say, ‘ignorance is bliss,’ but not when investing your hard-earned money into a home of your own. Work with a professional you can trust to give you the most information possible, so you can make the most educated decision about your purchase.

How Does the Supply of Homes for Sale Impact Buyer Demand?

The price of any item is determined by supply, as well as the market’s demand for the item. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

The darker the blue, the stronger the demand for homes is in that area. The survey shows that in 3 of the 50 U.S. states, buyer demand is now very strong; only 2 of the 50 states have a ‘weak’ demand. Overall, buyer demand is slightly lower than this time last year but remains strong.

Seller Supply 

The index also asked: “How would you rate seller traffic in your area?”

As the map below shows, 18 states reported ‘weak’ seller traffic, 29 states and Washington, D.C. reported ‘stable’ seller traffic, and 3 states reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are looking for homes.

Bottom Line

Looking at these maps, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, meet with a local real estate professional in your area who can help you capitalize on the demand in the market now.

St. Helena’s New Station Convenience Store Open This Weekend

Station, the new upscale convenience store at the corner of Main and Spring streets in St. Helena, continues its soft opening this weekend from Friday through Sunday.

For the past three weekends, restaurateur Joel Gott’s latest venture has been offering coffee and a variety of food items – sandwiches, quiches, egg tacos, etc. – prepared in the former Cindy’s Backstreet Kitchen on Oak Avenue and sold at the storefront in front of the Napa Valley Petroleum pumps.

“Everything’s grab-and-go, but we wanted some healthier food options in town,” said General Manager Emelie Poisson. “Local, healthy and convenient.”

Staffing challenges have prevented Station from opening seven days a week, but Poisson hopes to fill some open positions soon.

Two new baristas are already in the hiring process, and Poisson is still looking for more baristas who can also step in to take people’s orders and hand out food.

“Weekends have been fairly easy to staff because all of the high-schoolers want to work here, but that obviously doesn’t help us during the week,” Poisson said. “Kitchen staff has been much harder, in particular bakers. Nobody wants to work those early-morning hours anymore.”

The coffee beans are from Sightglass Coffee in San Francisco, but Poisson tries to incorporate as many local ingredients as possible, including nuts, whole grains, produce, milk and butter.

Poisson is a St. Helena native who worked at Model Bakery for almost 10 years during and after high school before pursuing another career in Denver. Shortly after she moved back, she got a call from Gott offering her the job.

“When I got it, I was just going to put a simple little food kiosk in there,” Gott said. “But then I painted it and I realized the building needed a lot more work. So we completely gutted it. Now it’s a perfect little gem.”

“I’m not trying to compete with Model (Bakery) — that’s so iconic,” Gott said. “We just have little snacks and things and a few baked goods.”

Behind the building will be a 120-foot-long public bench where people can eat their lunch.

“You can get a burrito at Villa Corona or a sandwich at Giugni’s, and then you go over the bench and it’s sort of like town central,” Gott said. “It becomes a little meeting spot. ... I’m hoping it adds to the liveliness of downtown.”

Gott also plans to open a restaurant in the former Cindy’s space in 2020.

This weekend Station will be open from 7 a.m. to 3 p.m. Friday through Sunday and Thursday through Sunday the following weekend.

By JESSE DUARTE jduarte@sthelenastar.com

What Is the Cost of Waiting Until Next Year to Buy?

Some Highlights:

• The “cost of waiting to buy” is defined as the additional funds necessary to buy a home if prices and interest rates were to increase over a period of time.

• Freddie Mac forecasts interest rates will rise to 3.8% by Q4 2020.

• CoreLogic predicts home prices will appreciate by 5.4% over the next 12 months.

• If you’re ready and willing to buy your dream home, now is a great time to buy.

Summer Housing Boom Not Quite Done Yet According to Pending Sales

Pending home sales resumed their upward trajectory in August after declining 2.5 percent in July, making for positive results in three of the last four months. It was also the third winning sales report this month after solid existing and new home sales.

The National Association of Realtors'® (NAR's) Pending Home Sales Index is a leading indicator of existing home sales based on signed contracts to purchase those homes.  It rose 1.6 percent to 107.3 in August from a July reading of 105.6.  This puts pending sales 2.5 percent higher than in the previous August.

The number was at the high end of analysts projections. Those polled by Econoday had expected pending sales to be anywhere from flat compared to July to a 1.8 percent gain.  The consensus was an increase of 0.6 percent.

The index rose in all regions, but the West put in the best performance, with a 3.1 percent increase to 96.4.  This would put it 8.0 percent higher year-over-year. Pending sales in the Northeast rose 1.4 percent for the month and 0.7 percent on an annual basis to 94.3.

The Midwest posted a 0.6 percent gain to 101.7 in August and was 0.2 percent higher than a year earlier. The South's PHSI rose 1.4 percent to 124.4, a 1.8 percent annual bump.

NAR Chief Economists Lawrence Yun said, "It is very encouraging that buyers are responding to exceptionally low interest rates.  The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply."

He noted that historically low interest rates will affect economic growth, especially home buying, going forward. "With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020," said Yun. "Unfortunately, so far in 2019, new home construction is down 2.0 percent. The hope is that housing starts quickly move into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity."

With sales picking up, NAR is forecasting they will end the year 0.6 percent higher than in 2018 and will grow another 3.4 percent next year. Housing starts are predicted to increase by 2.0 percent in 2019 and jump an additional 10.6 percent in 2020, which in turn raises GDP growth to 2.0 percent in 2020.

The PHSI is a leading indicator of existing home sales and is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the Index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

 An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

BY: JANN SWANSON

One of the Top Reasons to Own a Home

One of the benefits of homeownership is that it is a “forced savings plan.” Here’s how it works: You make a mortgage payment each month. Part of that payment is applied to the principal balance of your mortgage. Each month you owe less on the home. The difference between the value of the home and what you owe is called equity.

If your home has appreciated since the time you purchased it, that increase in value also raises your equity. Over time, the equity in your home could be substantial. Recently, CoreLogic revealed that the average homeowner gained more than $65,000 in equity over the last 5 years.

Unlike last decade, homeowners are no longer foolishly tapping into that equity. In 2006-2008, many owners used their homes like an ATM by pulling equity out to purchase new cars, jet skis, or lavish vacations. They were pulling out cash (equity) from an appreciating asset, and then spending it on rapidly depreciating items. That is not happening anymore.

Over 50% of Homes Have at Least 50% Equity

The number of homeowners that currently have at least 50% equity in their home is astonishing. According to the Urban Institute, 37.1% of all homes in the country are mortgage-free. In a home equity study, ATTOM Data Solutions revealed that of the 62.9% of homes with a mortgage, 25.6% have at least 50% equity. That number has been increasing over the last five years:

By doing a little math, we can see that 53.2% of all homes in this country have at least 50% equity right now. Of all homes, 37.1% are mortgage-free and an additional 16.1% with a mortgage have at least 50% equity.

Bottom Line

Homeownership is different than renting. When you own, your housing expense (the mortgage payment) comes back to you in the form of equity in your home. That doesn’t happen with your rent payment. Your rent helps build your landlord’s equity instead.

Should You Fix Your House Up or Sell Now?

With the fall season upon us, change is in the air. For many families, children are growing up and moving out of the house, maybe leaving for college or taking a jump into the working world. Parents are finding themselves as empty nesters for the first time. The question inevitably arises: is it finally time to downsize?

If you’re pondering that thought, you may also be wondering if you should fix-up your house before you sell it, or go straight to the market as-is, allowing a potential buyer to do the updates and remodeling. If you’re one of the many homeowners this camp, here are a few tips to help you decide which way to go.

1. Analyze Your Market

A real estate professional can help you to understand your market and the potential level of buyer interest and demand for your home. Are you in a seller’s market or a buyer’s market? This can change based on the price range of your home, too. A professional can also give you some insight on what you can change or remodel, and how to declutter your house to make it attractive to buyers in your area.

2. Get an Inspector

Right now, the average length of time a family stays in a home is between 9-10 years. That’s a little longer than the historical average, so if you’ve been living in your home for a while, it might be time to make some significant improvements. Think: electrical system, HVAC units, roof, siding, etc. An inspector can give you a better idea of the condition of your home, if it is up to current code standards, and recommendations on how to have your house ready before you put it on the market.

3. Decide If You Need to Remodel

You may also be thinking about driving buyer appeal with something like a kitchen or a bathroom remodel. If so, first dig into the market value of your home, and compare it to the actual cost of the remodel. A local real estate professional can help you determine your home’s market value, and you’ll want to get a few quotes from contractors on the potential remodel pricing as well. Once you have those two factors narrowed down, you can to decide if a remodel will give you a return on your investment when you sell. Oftentimes, it is actually more advantageous to price your house to sell, list it competitively, and then let the buyer pick the colors they want for their bathroom tiles and the type of countertop they prefer. The 2019 Cost vs. Value Report in Remodeling Magazine compares the average cost for remodeling projects with the value those projects typically retain at resale.

Bottom Line

Nationwide, inventory is low, meaning there is less than the 6-month housing supply needed for a normal market. This drives buyer demand, creating a perfect time to sell. If you’re considering selling your house, sit down with a local real estate professional. Partner with someone who can help you confidently determine what will be the best choice for you and your family.

Is Your House "Priced to Sell Immediately?"

In today’s real estate market, more houses are coming to market every day. Eager buyers are searching for their dream homes, so setting the right price for your house is one of the most important things you can do.

According to CoreLogic’s latest Home Price Index, home values have risen at over 6% a year over the past two years, but have started to slow to 3.6% over the last 12 months. By this time next year, CoreLogic predicts home values will be 5.4% higher.

With prices slowing from their previous pace, homeowners must realize that pricing their homes a little over market value to leave room for negotiation will actually dramatically decrease the number of buyers who will see their listing (see the chart below).

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price their house so demand for the home is maximized. By doing so, the seller will not be negotiating with a buyer over the price, but will instead have multiple buyers competing with each other over the house.

The secret is making sure your house is Priced To Sell Immediately (PTSI). That way, your home will be seen by the most potential buyers. It will sell at a great price before more competition comes to the market.

Bottom Line

If you’re debating listing your house for sale, reach out to a local real estate professional to discuss how to price your home appropriately and maximize your exposure.

Homeownership Equity Reaches All-Time-High in Q2

BY: JANN SWANSON

Total home equity, not surprisingly, increased again in the second quarter of the year.  CoreLogic's quarterly Homeowner Equity Insights report, which looks only at properties with one or more mortgages, puts the aggregate increase at $428 billion year-over-year, a 4.8 percent gain.   The company says that 63 percent of residential properties have a mortgage.

"Home values have continued to rise in most parts of the country this year and we are seeing the benefit in higher home equity levels. The western half of the U.S. has experienced particularly strong gains in home equity recently," according to CoreLogic CEO and President Frank Martell. In July 2019, South Dakota and Connecticut were the only two states to post annual home price declines. These losses mirror the states' home equity performances during the second quarter as both reported negative home equity gains per borrower."

The number of mortgage properties that were underwater, owning more on the mortgage or mortgages than the property is worth, totaled 2 million homes or 3.8 percent of all mortgaged properties. This is 151,000 fewer underwater properties (a 9 percent decrease) from the second quarter 2018 total.  At that time the negative equity rate was 4.3 percent.

Frank Nothaft, CoreLogic Chief Economist, said "Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started. Combined with low mortgage rates, this rise in home equity supports spending on home improvements and may help improve balance sheets of households who could take out home equity loans to consolidate their debt."

Negative equity at the end of the second quarter of 2019 had an aggregate value of approximately $302.7 billion. This is down quarter over quarter by approximately $2.6 billion, from $305.3 billion in the first quarter of this year.

Negative equity peaked at 26 percent of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009.

When broken down by household, the aggregate increase in equity averages a gain of $4,900 since the end of Q2 2018. Idaho had the highest year-over-year average increase at $22,100.

2018's Home Sales Slump Now Fully Erased

BY: JANN SWANSON

While the increase wasn't as strong as in July, last month's existing home sales posted a second straight month of gains and, as previously, the National Association of Realtors® (NAR) credited falling interest rates.  Sales of previously owned single-family houses, townhouses, condominiums, and cooperative apartments were up 1.3 percent compared to July when sales rose 2.5 percent.  The seasonally adjusted annual rate of 5.49 million units was 2.6 percent higher than the August 2018 pace of 5.35 million. The increase was felt in three of the four major regions while the West continues to demonstrate some weakness.

The month's results were better than predicted.  Analysts polled by Econoday had expected them to come in at an annual rate of 5.30 to 5.42 million with a consensus of 5.38 million.

Single-family home sales rose from 4.84 million in July to 4.90 million in August, a 1.2 percent gain and 2.9 percent above the August 2018 rate. Existing condo sales rose 1.7 percent from July to 590,000 annual units, largely unchanged from the previous August.

Lawrence Yun, NAR's chief economist, said, "As expected, buyers are finding it hard to resist the current rates. The desire to take advantage of these promising conditions is leading more buyers to the market."

The median existing home price for all housing types in August was $278,200, up 4.7 percent from the median a year earlier of $265,600.  It was the 90th straight month of year-over-year gains. The median existing single-family home price also rose 4.7 percent to $280,700.  Condo prices were up 5.2 percent to a median of $257,600 in August.

"Sales are up, but inventory numbers remain low and are thereby pushing up home prices," said Yun. "Homebuilders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income."

Inventory fell in August, down from 1.90 million available homes to 1.86 million and 2.6 percent fewer homes than a year earlier. Unsold inventory is at a 4.1-month supply at the current sales pace, down from 4.2 months in July and from the 4.3-month figure recorded in August 2018. Properties typically remained on the market for 31 days in August, up from 29 days in both July and the prior August. Forty-nine percent of homes sold in August were on the market for less than a month.

Yun criticized the quarter point cut in the Fed Funds rate made by the Federal Reserve on Wednesday.  "[The Fed] should have been bolder and made a deeper rate cut, given current low inflation rates," he said. "The housing sector has been broadly underperforming but there is huge upward potential there that will help our overall economy grow."

First-time buyers were responsible for 31 percent of sales in August, the same as a year and investors and second home buyers accounted for 14 percent, up from 11 percent in July.  All-cash sales accounted for 19 percent of transactions in August, about equal to July and moderately below August 2018. Distressed sales remained negligible, representing 2 percent of August sales, a 1-point decline from a year earlier.

 "Rates continue to be historically low, which is extremely beneficial for everyone buying or selling a home," said NAR President John Smaby. "The new [FHA] condominium loan policies, as well as other reforms NAR is pursuing within our housing finance system, will allow even more families and individuals in this country to reach the American Dream of homeownership."

There were month-over-month increases in existing home sales in the Northeast, Midwest, and South and sales in all four regions bested their 2018 numbers. Sales in the Northeast increased 7.6 percent from July to an annual rate of 710,000 units, 1.4 percent higher than in August 2018. The median price fell 0.3 percent on an annual basis to $303,500.

Existing-home sales grew 3.1 percent in the Midwest to an annual rate of 1.31 million, topping sales from a year earlier by 2.3 percent.  The median price jumped 6.6 percent to $220,000.

In the South there was a gain of 0.9 percent in sales to a rate of 2.33 million and sales were 3.6 percent higher year-over-year. The median price of $240,300 was a 5.4 percent annual increase.

While sales remained 1.8 percent higher on an annual basis, the West was an outlier in August. Existing home sales declined 3.4 percent to 1.14 million. Prices, however, continued their strong appreciation, rising 5.7 percent to $415,900.

The Fed and Mortgage Rates

One of the greatest potential sources of confusion for prospective mortgage borrowers is the relationship between the Fed and mortgage rates.  While the Fed's policy changes absolutely have a big impact on all sorts of interest rates (including mortgages), a drop in the Fed's policy rate DOES NOT result in lower mortgage rates. 

The main reason for confusion is the fact that there's a huge difference from an investment standpoint between a rate that governs the shortest-term transactions (The Fed Funds Rate applies to loans that last for 1 day or less) and a rate that can remain in effect for up to 30 years in the case of mortgages.  Even if we use the average life span of a 30yr fixed mortgage, we're still talking about 5-10 years depending on the broader market landscape. You may have heard about the "inverted yield curve?"  That's a reference to vastly different behavior between longer and shorter term rates, and it stands as evidence of the different sets of concerns that apply to each side of the duration spectrum.  The differences are only more pronounced when we take the shorter end of the spectrum all the way down to the "overnight" level (Fed Funds Rate) and all the way up to the duration of the average mortgage loan.

Beyond the fact that a mortgage rate is very simply a different animal than the Fed Funds Rate, there's also the matter of frequency of movement.  The Fed only meets to potentially change rates 8 times a year.  Mortgage rates change every day--sometimes more than once.  And the bond markets that underlie mortgage rates change thousands of times per day.  That means the mortgage market can easily and quickly get into position for any expected move from the Fed.  In today's case, where the rate cut was seen as highly likely, any effect that the Fed Funds Rate could ever have on mortgage rates was already priced-in weeks ago.

But let's say the first two points don't quite convince you.  The third is irrefutable.  The Fed doesn't just take the stage, cut rates, and go home.  They release a ton of other info and hold a press conference to discuss their present and future policy decisions.  The rates market (for mortgages, Treasuries, and everything else) is tremendously interested in all that "other stuff."  Today, particularly, there was a set of updated forecasts for future rate movements.  These were a bit less market-friendly than the average investor expected.  In addition, market participants interpreted Powell's press conference as being a bit less friendly than expected.

Long story short: there are multiple reasons for mortgage rates to go their own way regardless of the Fed rate cut. 

BY: MATTHEW GRAHAM

What Buyers Need to Know About HOA's

When searching for a home, you may end up selecting a property in a community with a Homeowners Association (HOA). Before you buy, it’s important to know how an HOA works and what they mean for you.

According to a recent article on realtor.com,

“In a nutshell, an HOA helps ensure that your community looks its best and functions smoothly…The number of Americans living in homes with HOAs is on the rise, growing from a mere 1% in 1970 to 25% today, according to the Foundation for Community Association Research.”

An HOA is governed by a board nominated by those living in the neighborhood. It is designed to make sure the residents have a support structure to maintain the value of the community while abiding by a set of guidelines called Common Restrictive Covenants (CC&R),

“Simply put, CC&Rs are just the rules you’ll have to follow if you live in that community. Unlike zoning regulations, which are government-imposed requirements on how land can be used, restrictive covenants are established by HOAs to maintain the attractiveness and value of the property.”

It’s important for homeowners to understand that each HOA is a little different, and they usually have monthly or quarterly fees required for homeowners. These fees can vary based on property size, number of residents, amenities, and more. There may be additional fees charged to homeowners if the reserve fund for the HOA cannot cover a major or unexpected cost, like severe storm damage.

The fees, however, also help maintain common areas such as swimming pools, tennis courts, elevators (for high-rise buildings), and regular wear and tear. Although they are an added cost to the homeowner, an HOA can be a major benefit when it comes to maintaining the value of your neighborhood and your property.

The same article continues to say,

“After your offer to buy a home is accepted, you are legally entitled to receive and review the community’s CC&Rs over a certain number of days (typically between three and 10)…If you spot anything in the restrictive covenants you absolutely can’t live with, you can bring it up with the HOA board or just back out of your contract completely (and keep your deposit).”

Most lenders will factor your HOA fees into your loan package, ensuring the amount of the loan is appropriate for what you can truly afford.

There are some great benefits to having an HOA oversee your neighborhood, and it’s important to understand what fees, structures, and regulations will come into play if there is an HOA where you’d like to live.

Bottom Line

When you’re looking at a potential property to buy, be sure to work with a professional who can help you understand the neighborhood’s HOA structure and fees. This way, you’ll feel confident and fully informed when buying a home.

Hotel Plans for the Earthquake Damaged Historic Post Office in Downtown Napa

JENNIFER HUFFMAN jhuffman@napanews.com

Developers this week presented the city with refined designs for the approved boutique hotel on the site of the former Franklin Street post office in downtown Napa.

The changes were made after receiving initial comments from Napa County Landmarks and the city’s Planning Commission during a preliminary design review in June.

At that time, some reviewers thought the first version of the wrap around design overwhelmed the post office building and covered too much of it.

“I think we’ve done an over-the-top job” in both preserving and presenting the historic building, said developer Jim Keller. “It’s really exciting.”

Wings of the new hotel still wrap around the old post office building, but in this latest version there are more transparent panels, which allow greater visibility of the post office, located at 1351 Second St.

Not only is his group preserving the front of the building, it’s also preserving the sides as well – something that wasn’t explicitly required, said Keller.

“We came up with a plan that’s really going to have an awesome look,” Keller said. “I think we’ve overachieved as far as the preservation of the building.”

The changes were made after receiving initial comments from Napa County Landmarks and the city’s Planning Commission during a preliminary design review in June.

At that time, some reviewers thought the first version of the wrap around design overwhelmed the post office building and covered too much of it.

The last version was more of a rough draft, compared to the new refined design, Keller said. “We took it up another level or two.”

These new images create what he described as “a jewel box effect,” with the crown jewel – the Art Deco-style post office building — in the middle, said Keller. The historic building is the “obvious the centerpiece and focal point.”

The historic post office lobby would be fully renovated and used as the hotel lobby and bar, accommodating guests as well as the general public, according to design documents. The interior features of the post office will be visible to all, rather than turning the post office into a private office or other commercial use, said the documents.

The Third Street-facing side of the project, currently home to Zeller’s Ace Hardware, has also been refined. “We made that a little more user friendly and broke up some of the massing. The design has been elevated,” yet still fits within the parameters of the already approved project, he said.

Plans call for a 175,000-square-foot, five-story, 156-key hotel using the site of the former post office and adjacent land where Zeller’s Ace Hardware now operates.

A separate, five-story parking garage would be built at the southeast corner of Second and Randolph streets, a corner now used for surface parking.

The project will cost more than $100 million, Keller said.

Keller, a Napa developer, bought the post office building in 2017 for $2 million. He’s since partnered with Cypress Equities, based in Dallas.

The hotel’s footprint will take over much of the block along Second between Franklin and Randolph streets, and along Randolph between Second and Third streets. The Napa City Council granted a rezoning and a building agreement in November 2018.

Having financial partners lined up in advance has helped move the project along, Keller said. Being located within a state-designated Opportunity Zone, which offers tax breaks to investors, is another. Napa has two such zones, including one in downtown Napa.

As the process continues, Keller said he remains mindful of the fragile state of the post office. “If we get hit with another earthquake,” the building might not survive.

“We’re trying to move as fast as we can,” said Keller.

His next steps include final design approval from the Planning Commission and Cultural Heritage Commission. Meeting dates have not been set.

If all goes as planned, “I’m hoping in the next 12 months we can be” under construction, he said. The hotel could take two to three years to build.

The hotel project was never a sure thing. After the 2014 earthquake, the USPS originally moved to demolish the damaged post office building.

The agency said that it would cost $8 million to repair quake damage, while it would cost only $500,000 for demolition.

The Napa Franklin Station was built in 1933 with funding from the federal Public Works Administration. In 1985, it was placed on the National Register of Historic Places.

After considerable public outcry, the USPS decided to try selling the building to a buyer who could repair the structure and preserve its architectural integrity.

6 Graphs Showing the Strength of the Current Housing Market

Some Highlights:

• Keeping an eye on the current status of the housing market is one of the best ways to make powerful and confident decisions when buying or selling a home.

• Mortgage rates remaining near historic lows and houses selling in an average of only 29 days are just two key elements driving the strength of today’s market.

• With the national data shown here, make sure to also determine what’s happening in your local market so you are fully informed when you’re ready to make your next move.

What is the Probability That Homes Values Sink?

With the current uncertainty about the economy triggered by a potential trade war, some people are waiting to purchase their first home or move-up to their dream house because they think or hope home prices will drop over the next few years. However, the experts disagree with this perspective.

Here is a table showing the predicted levels of appreciation from six major housing sources:

As we can see, every source believes home prices will continue to appreciate (albeit at lower levels than we have seen over the last several years). But, not one source is calling for residential real estate values to depreciate.

Additionally, ARCH Mortgage Insurance Company in their current Housing and Mortgage Market Review revealed their latest ARCH Risk Index, which estimates the probability of home prices being lower in two years. There was not one state that even had a moderate probability of home prices lowering. In fact, 34 of the 50 states had a minimal probability.

Bottom Line

Those waiting for prices to fall before purchasing a home should realize that the probability of that happening anytime soon is very low. With mortgage rates already at near historic lows, now may be the time to act.

Fishing the Madison River

We can’t just work all the time and this year my husband and I took a vacation to Madison Valley Ranch in Ennis, Montana. This was our second year visiting and will now turn into an annual visit. The staff at the Ranch make you feel like family, the executive Chef, Matt, prepares the most delicious meals, the guides that take you drift boat fishing on the Madison River are incredible and the ranch is beautiful. The accommodations are lovely and there is a Moose with her family who frequent the property with plenty of deer, sandhill cranes and more. While fishing you will certainly see beautiful scenery but you may even see a bear, moose, deer, bald eagle, golden eagle, osprey and others.

We can’t say enough about this beautiful place. Below is a picture of my husband catching a 21 inch Brown Trout. Our guide (his name is River) said he had not seen anyone catch a fish that large on a dry fly. I caught an 18 inch Rainbow Trout. Both were caught with a Grasshopper fly. The grasshoppers were hatching so there were many of them around that the fish were biting on including ours!

The Role Access Plays in Getting Your House Sold

So, you’ve decided to sell your house. You’ve hired a real estate professional to help you with the entire process and you’ve been asked what level of access you want to provide to potential buyers.

There are four elements to a quality listing. At the top of the list is Access, followed by Condition, Financing, and Price. There are many levels of access you can provide to your agent to be able to show your home.

Here are five levels of access you can provide to a buyer, each with a brief description:

• Lockbox on the Door – This allows buyers the ability to see the home as soon as they are aware of the listing, or at their convenience.

• Providing a Key to the Home – Although the buyer’s agent may need to stop by an office to pick up the key, there is little delay in being able to show the home.

• Open Access with a Phone Call – The seller allows showing with just a phone call’s notice.

• By Appointment Only – Example: 48-hour notice. Many buyers who are relocating for a new career or promotion start working in that area prior to purchasing their home. They often like to take advantage of free time during business hours (such as their lunch break) to view potential homes. Because of this, they may not be able to plan their availability far in advance or may be unable to wait 48 hours to see the house.

• Limited Access – Example: the home is only available for a couple of hours a day. This is the most difficult way to be able to show your house to potential buyers.

In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.