Will Appraisals Continue to be a Challenge in 2016?

First American Title issues a quarterly report, the Real Estate Sentiment Index (RESI), which “measures title agent sentiment on a variety of key market metrics and industry issues”. Their 2015 4th Quarter Edition revealed some interesting information regarding possible challenges with appraisal values as we head into 2016. “The fourth quarter RESI found that title agents continue to believe that property valuation issues will be the most likely cause of title order cancellation over the coming year.” This shouldn’t come as a surprise. In a housing market where supply is very low and demand is very high, home values increase rapidly. One major challenge in such a market is the bank appraisal. If prices are jumping, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the price when performing the appraisal for the bank. Another monthly report by Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation. Here is a chart showing that difference for each month through 2015. Bottom Line Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. That is why we suggest that you use an experienced real estate professional to help set your listing price.                    Social Media Links for Jodi Salazar "JoSal your Real Estate Gal"               Find Me @homesbyjosal

Should you Rent or Buy? Rents are crazy high right now!

When Is It A Good Time To Rent? NOT Now! People often ask whether or not now is a good time to buy a home. No one ever asks when a good time to rent is. However, we want to make certain that everyone understands that today is NOT a good time to rent. The Census Bureau recently released their third quarter median rent numbers. Here is a graph showing rent increases from 1988 until today: A recent Wall Street Journal article reports that rents rose “faster last year than at any time since 2007, a boon for landlords but one that has stoked concerns about housing affordability for renters.”  The article also cited results from a recent Reis Inc report which revealed that average effective rents rose 4.6% in 2015, the biggest gain since before the recession. Over the past 15 years, rents have risen at a rate of 2.7% annually. Where are rents headed? Jonathan Smoke, Chief Economist at realtor.com recently warned that: “Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”  Bottom Line According to the WSJ article: “In general, the higher rents go, the more difficult it will be for young people to save for down payments, making them likely to rent even longer.” One way to protect yourself from rising rents is to lock in your housing expense by buying a home. If you are ready and willing to buy, meet with a local real estate professional who can help determine if you are able to today! Mortgage interest rates are going up, don't wait, call me today for your FREE Home Buying Guide and Evaluation! Jodi Salazar 714.612.6446. Social Media Links               Find Me @homesbyjosal