J.J. Rodriguez Real Estate & Mortgage Report July 2011

  December is upon us and the last three weeks of the year await us with holiday parties, shopping, eating, drinking, eating, drinking, & hopefully getting in some workouts too. Next month I will be wrapping up all the real estate activity that happened in 2011. But for now, here is the latest real estate news delivered right to your inbox.

There are 10,425 single family home listings as of December 6, 2011.

Table of current listings:

As far as sold transactions, there were 1103 closings from Nov 1- November 30, 2011. But there were 1269 closings last November in 2010. That equals 166 fewer sales this November than in November of 2010. That is about 13% less sales volume. Here’s the way that table looks.

This next chart is quite a valuable chart as it shows the activity in several different zip codes around the city. The market where you live may be doing better or worse than your neighbor’s across town. Check these zip codes and see what is going on in your neck of the woods!

Here is the legend: MOI= Months of inventory, ASP= Average sales price, ACDOM= Average cumulative days on the market,(total # of days a house was on the market) AOLP:SP= Average original list price to final sales price ratio. This shows how much a seller is coming off the original list price in relation to the final sales price. For instance, if the ASP is $200,000 and the AOLP:SP is 95.0%, then the original list price was $210,527. The seller conceded $10,527 dollars off the asking price. This list was compiled on December 6, 2011. Sales are compiled from November 1 through Nov 30, 2011. These numbers are courtesy of the San Antonio Board of Realtors. (SABOR).

Interesting stuff, eh? If you would like to see how your neighborhood in particular or zip code are doing in terms of real estate sales activity, send me an email and I will be happy to analyze your particular community.  Based on the previous table, it looks like 78232 & 78247 both have less than 5 months inventory which means those areas are starting to tilt in favor of the sellers. The less inventory there is, prices start to go up gradually. By the same token, those areas greater than 9 months are still buyers market territory with high inventory. 6 months of inventory is considered a neutral or balanced market.

Factors that help determine how quickly and for what price a house sells:

1. Seller motivation- Why is the seller selling? Do they have to be somewhere for a job, is there a death in the family, are they empty nesters or is their family expanding, can they not afford the house anymore, etc. The answer to these questions will gauge how badly they need to sell and in turn dictate the final price.
2. Price- Studies have shown that the closer a house is priced to market value, the quicker it normally sells. If a seller prices their house too high, it will be forced to compete with higher priced houses that have more amenities, size, etc. Or it will become a “ bounce house”, where buyers may look at it, but invariably choose another property because it is better priced.
3. Location- Not only is the area important in terms of crime, freeway accessibility, & schools, but are there power lines behind the house, railroad tracks nearby, is the house next to a freeway, water tower or other structure, does it back up to a busy street with noise & lots of traffic, is there construction going on at or near the house, etc.
4. Condition- is the house clean, does it smell good or does it have a smoke smell or pet smell or cooking smells, has it been updated with flooring, lighting, kitchen remodel or bathroom remodel or upgrade, what about the yard, is the grass dead, is the landscaping pretty, does it need interior or exterior painting, etc
5. Real estate broker or agent marketing, exposure- is the agent or broker you are hiring experienced, how many houses have they sold in that area, are they technologically savvy, do they have a good marketing plan, do they have testimonials from previous sellers, do they have good understanding of the internet, do they offer professional photography, do they keep in touch with their clients, etc. Do you trust them to get the job done for you?

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Let’s talk about the mortgage side for a moment. The most important thing you can do if you are planning to buy a house is to get pre-approved for a mortgage beforehand. Then once you find out exactly what you can afford, then you can go out with an agent and find the house you really want. And you will know where to look because you have been pre-approved and can safely shop in your price range.

The biggest challenges to getting pre-approved and ultimately finally approved for a mortgage loan are these:

1.      Credit score- It is imperative that your score be as high as it possibly can. For FHA and VA 620 is usually the minimum, for USDA it’s 640, and for conventional financing with less than 20% down, it’s 680. I have access to a credit vendor who specializes in not only what your score is, but has computer models  that will let you know what to pay off or not pay off, and in general what to do to raise your credit score. It is a remarkable piece of technology that has helped me guide and counsel potential borrowers so that they can eventually raise their score and buy.

2.      Self employed vs w2 wage earner. If you’re a salaried employee, then your pay stubs and w2 will confirm your income. Bonuses and commissions can only be counted if you have been receiving them regularly for at least the past 2 years. Part time work earnings only count if you have been working part time steadily the past 2 years or more. Self employed people have to show their tax returns for the last couple of years to document income. Unfortunately, some people don’t claim all the money they make (imagine that), so when an underwriter looks at the tax returns, they may decline due to lack of income when in reality the borrower does make enough, but doesn’t want to pay taxes on that income.

3.      Debt to income ratios. This is certainly a biggie. Your gross monthly income is the basis. For just the house payment alone, this payment should not exceed more than 31% of income. If you make $5000 a month your total mortgage payment should not exceed $1550. For all debts, including the house payment, the ratios shouldn’t exceed 41-45%. That would be $2050 to $2250 for all monthly debt payments. FHA is a little more lenient and sometimes allows more debt. It all depends on what the automated underwriting results come back with.

4.      Of course the house must appraise for at least the sales amount and be insurable.

As an example only, Interest Rates as of this writing are hovering around 4% for a 30 year fixed and about 3.5 or slightly more for a 15 year fixed. This is with 1 origination point. If you want to pay more than 1 point, then you can get a rate that is even lower. The point is it’s an extraordinary time to buy. We are living in times that in a few years from now we may not see interest rates this low again for a long, long time.

I want to thank you if you have referred anybody to me this year for real estate or mortgage assistance. As anybody in the industry will tell you referrals are the lifeblood of the business. I have said many times before your referral will be a good reflection on you. And if you have actually been a client of mine, then I thank you for the trust you have placed in me. It is a pleasure to help you in the sale or purchase of a property or help you obtain a mortgage loan. I have been a mortgage loan officer for 11 years and a Realtor for 13 years and each year I strive to get better. So the next time you hear someone who wants to buy or sell or get a mortgage, I hope you will think of me first.

May the blessings of the season be upon you and your family.

J.J. Rodriguez, ABR, CRS, GRI, SFR, SRES, Loan Officer, Realtor

ERA Troy Realtors,

Mortgages Direct

105 Galleria Fair

San Antonio, Tx 78232

NMLS#282353,

Equal Housing Lender

210-601-7074

JJRodriguez@earthlink.net

www.JJRodriguez.com

www.BestLoansByJJ.com