Yourmoney’sWorth
Gold has passed; go for the silver It’s official Federal Reserve Board chairman Ben Bernanke announced last month that the Fed bond buy-back program ends mid-2014 AND the Fed will decrease bond buy-back activity this year through mid-2014 as the economy continues to strengthen. Continued increases in realestate sales and real-estate prices, as well as rapid growth in consumer confidence, led to this decision. The Fed projects continued modest growth in the months and year ahead and forecasts increasing employment. It was the Fed program of buying $85 billion a month in Treasury and mortgage-backed securities which caused rates to hit their 2013 lows through the spring, with 30year fixed rates in the 3’s. As a result of the announcement, interest rates on fixed-rate mortgages increased almost a full point last month and moved into the mid to high 4’s. Bond funds saw enormous liquidations given that the bottom of interest rates seemed to have passed.
For all of you who heeded the hints and warnings that this announcement was soon to come, congrats! You may have just won the gold medal by crossing the finish line by early June with 15- and 30-year fixed-rate mortgages in the 2’s and 3’s. If you are sitting on the sidelines waiting for a return to rates in the 3’s, this writer believes the gold medal has already been awarded and you need to go for the silver and grab rates in the still-record 4’s to 5’s while you can. Remember: In 2008 the 30-year fixed was 6.57 percent before the government bond-buy program and quantitative easing began. The difference on a monthly loan payment is… not that bad! For example, on a $300,000, 30-year, fixed-rate loan: • A 1/8-point difference in rate = approximately $25 a month difference in payment (principal and interest); and • A 1/2-point difference in rate = about $100 a month difference. And you bet it still is a great time to refinance. Here are two scenarios when
refinancing makes sense: 1. Reducing your interest expense. Moving from a 30-year, fixed-rate loan with APR’s in the high 4’s to a 15-year, fixed-rate loan in the high 3’s can save tens of thousands of dollars of interest over the life of the loan — and on your bottom line. 2. Debt consolidation. Paying off high credit-card debt, higher-rate land loans, and other higher-rate debt instruments by refinancing can work by refinancing your current first mortgage to a lower rate or obtaining a second mortgage (a home equity line of credit, or HELOC) to 85 percent or 90 percent of the home value and using the funds to pay off debts and to lower interest payments. If you have investment accounts, beware. As bonds sell off and values fall, be sure to contact your financial advisor for updates on your portfolio holdings. Statistics continue to flow in strongly suggesting that Santa Fe real estate is in recovery mode. Grab the opportunity while we
FR A N C IS PH ILLIPS
have attractive home prices combined with low rates. Francis Phillips (FPhillips@fcbmtg.com) is senior mortgage loan originator with First Choice Loan Services in Santa Fe. He has served as director of business development for national mortgage companies. He and his mortgage partners have funded and built three homes for Santa Fe Habitat for Humanity.
SpousessellingHouses
Market improving slowly but steadily There have been a lot of crazy stories in the news about double-digit appreciation and bidding wars in markets around the country, but sellers in Santa Fe are not finding the market quite as robust. The Santa Fe Association of Realtors just released its second-quarter reports and it looks, overall, as if the real-estate recovery is ongoing but it’s going to be a bit bumpy. The current market is a study in opposites. While the average sales price for the second quarter is up over this same time last year, $401,000 from $376,000, the overall average sales price year to date is down. This time last year we had an average sales price of $385,000 while it is presently at $379,000. A similar phenomenon is occurring with our inventory levels. The month’s supply of homes fell from this quarter last year by almost 25 percent. However, Santa Fe has experienced an 18 percent increase in new listings in that same time frame. Bolstered by the activity from the last quarter of 2012 and the first quarter of 2013, we saw inventory levels increase in 56
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the spring from optimistic sellers. However our pending activity fell from March to June. The 2013 pending sales to date is 14 percent less that 2012. So despite the great activity and the huge decline in inventory that we experienced only a few months ago, we are back to a buyer’s market with over 11 months of supply. There are some exceptions, with pockets of robust activity, and in some instances multiple-offer situations. We see the most activity at $300,000 and below. Buyers in that price point are the most serious and the feeling is that the best inventory is quickly being bought up, urging buyers to make quick decisions and not dicker too much about prices. If a property in that market segment is in good condition and priced well, it will sell in a matter of weeks. The northwest city limits had an 18 percent increase in price to $385,000 but a decline in closed sales of 13 percent. The southwest city limits experienced only a marginal price increase to $215,000 from $209,000 but sales dipped 1 percent. The
northeast and southeast city areas both saw gains. The northeast had a 20 percent increase in closed sales and a 7 percent increase in median sales price to $687,500 while the southeast had a 35 percent increase in sales and movement in price to a median of $570,750. Eldorado showed big gains in median sales price, now up to $348,000 and a 33 percent increase in closed sales. The Highway 285 corridor along with Old Las Vegas Highway had an increase in median sales price to $390,000 with a big increase in closed sales over last year, from 59 to 76. But the northwest county had a 36 percent decline, from 49 homes sold last year to 31 for the same quarter. Southwest county also had a 25 percent decline in sales but a small increase in the median sales price to $300,000. Be clear, just because the median price rose in certain areas, it does not suggest that overall values went up by that percentage. Purchases of homes in the higher price points has helped move the median upwards as have the decline in bank
MELISSA PIPPIN - C A R SO N R O G ER C A R SO N
owned properties and short sales, which were roughly 35 percent of the market this time last year. Overall, our market is steadily improving and that is the best news yet. Roger Carson and Melissa Pippin Carson are Realtors Carson & Carson at Keller Williams. Call them at 505-699-3112 or email them at twicethesellingpower@gmail. com.