RecessionStone.org

Kiplinger’s has advice on how to Save Money on Practically Everything:  investing, food, transporation, travel – it’s all there.

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Recently I’ve been hearing that many people are waiting to buy homes or refinance until the market stabilizes and interest rates drop further. Below are a few reasons why we don’t expect rates to get much lower.

Last week the Federal Reserve announced that it would invest 300 billion in long-term Treasuries and purchase an additional 750 billion of Mortgage Backed Securities (MBS). This infusion of additional funds is aimed at stimulating economic growth, stabilizing the housing market and keeping interest rates low. It also has the potential to eventually create more inflation.

Here’s how it works:

The Federal Reserve is buying Treasury Notes with maturities between 2 year and 10 years while also purchasing MBS. Both are efforts to keep interest rates low to stimulate our weak economy. In particular, the Fed wants to keep mortgage rates low in order to support nationwide demand for housing and provide an opportunity for existing homeowners to refinance, lower their monthly payments, and increase their spendable cash flow. Lower interest rate yields on Treasuries and MBS reduce borrowing costs for consumers and businesses.

What about mortgage rates?

Rates have come back down to where they were earlier in the year, but we don’t anticipate rates going much lower. Rates wouldn’t be as low as they already are without the huge amount of Federal money that is supporting the market.

Other considerations:

Through the bail outs, stimulus packages and this recent announcement, the government continues to amass more debt. And, with that debt is the potential of inflation. In fact, this announcement saw Oil rise by $5 and Gold by $60 (Gold is often purchased as a hedge against inflation). If and when inflation becomes a factor it will quickly force interest rates higher. When the economy begins to stop its decline and move closer to coming out of this recession, the Fed will move to raise interest rates to try and moderate the inflationary push.

The best hedge for inflation is to fix as many costs at today’s prices as you can. A home purchase today with record low mortgage rate allows buyers to fix the price of the home and the associated financing costs.

Please contact me with any questions you may have.

Janice Reisman Fincher
OPES Advisors
400 So El Camino Real, Suite 200
San Mateo CA 94402

(650) 931-0608

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I’ve got some exciting news to share… The Federal Reserve announced yesterday that it will pump $1 trillion into the U.S. economy to try to pull it out of deep recession, in part by buying long-term government debt for the first time in more than 40 years.

This is POSITIVE NEWS for it will help reduce interest rates.  Currently, the traditional Agency conforming 30-year fixed (< or = $417K) is available for 4.50% and the Agency high balance conforming is at 4.75%.

It is time to step-up to the plate and refinance or purchase!  Let me know if I can help.

My best,
Pete

Peter James Guichard, MBA
The Guichard Report
Bridgeline Capital Group
330 Townsend Street, Suite 114
San Francisco, CA 94109
Office: (415) 512-7536

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Sharp Park Beach, Pacifica, CA

There are thousands of articles about home buying.  Google says there are 56,800,000.  Now that’s a lot of people telling you how to buy a house.  Problem is most of them are authors, not realtors; and if they are, they’re not in San Mateo.

Real estate’s local – whether it’s housing statistics or how-to.

HUD – The Department of Urban Housing Develpment – has tips.  They’ve got home buying down to 9 steps.  Wow.  Sounds simple.

1. Figure out how much you can afford.  Good advice.  Those handy web calculators aren’t enough.  They don’t know if you qualify for the new first time buyer program, whether an FHA loan will work, if you need a jumbo or a conforming loan.

You need a human – a local human.  Not one that you found on Google out of Texas.  Nothing against Texans.  But let’s say it all together now, “real estate is local.”

Get face time.  What are all those papers?  What do those disclosures mean?  What about all those numbers?  What’s a Good Faith Estimate?  What’s an ARM?  What is a jumbo?  What’s the difference between that and conforming?

So how do you find this all-knowing number cruncher?  Get a referral – a referral from your real estate agent.   We’ve tried this guy out already.  Know if he return calls.  Know if he can explain something in non-tech speak.  Know whether or not he shows up for appointments on time.  Because otherwise – just like The Donald says: You’re fired!

Got a real estate question?   Ask it here!

If you like what you’ve read, subscribe to the San Mateo Real Estate Blog feed.

Start your home search here with me at San Mateo Real Estate Blog.

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David Bach, writer of The Automatic Millionaire Homeowner, Start Late Finish Rich and about ten others has added Fight For Your Money to his financial information series.  David wants you to stop getting ripped off and he’s going to show you how.

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Kacy used to be a client; now she’s a friend too.  I sold her a house in Pacifica.  Then when she and her husband were transferred out of state, I sold it for them.

So whenever she comes out, she loves to visit the beach.  We spent a windy but perfectly clear afternoon at Sharp Park hanging out with Myron.

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It’s not the money tree to save the economy but it’s a bit of an incentive for those buyers who were just about to jump in to buying a home.

The American Recovery and Reinvestment Act has a treat for first time home buyers – even the definition of first-time buyer isn’t what you might think.

A first time buyer isn’t one who’s never, ever owned a home.  The California Association of Realtors explains it this way:  A “first-time homebuyer” is defined as any individual (or spouse) with no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which the tax credit applies (26 U.S.C. § 36(c)(1)).

So you have to be purchasing a home you’ll be living in and you can’t have owned a home for 3 years prior.  In order to avoid paying this credit back, you must live in this home for 3 years.

This is a tax credit, not a tax deduction.  The significance of a tax credit is that “a tax credit is ‘refundable’ means that any credit amount not used to reduce the tax owed may be added to the taxpayer’s tax refund check.  In other words, a taxpayer may receive a tax credit even if he or she has no tax liability to offset that credit.

As an example, let’s say a taxpayer filing his tax returns on April 15 would have owed $2,000 to the IRS.  If the taxpayer can now claim an $8,000 refundable tax credit, he can expect to receive a refund check from the IRS for $6,000.”

There’s an income restriction:  “The first-time homebuyer tax credit may be restricted by the taxpayer’s income.  The tax credit starts to phase out for an individual taxpayer with a modified adjusted gross income from $75,001 to $95,000 (or $150,001 to $170,000 for joint filers).  The tax credit is eliminated entirely if an individual’s modified adjusted gross income is over $95,000 (or $170,000 for joint filers).  (26 U.S.C. § 36(b)(2).)”

Lastly, your purchase must be completed January 1, 2009 to November 30, 2009.

There are other things you should know so be sure to talk your real estate and tax professionals to explain further.

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When I wrote 20 Great Places to Eat in Pacifica I didn’t realize that Gorilla Barbeque was soon to be discovered.

FoodNetwork favorite Guy Fieri featured the BBQ place in an old train car on a recent episode of Diners, Drive-Ins and Dives.  So next time you’re in the area be sure to stop by.

• Gorilla Barbeque

  2145 Coast Highway

  Pacifica, CA 94044

  650-359-7427

  www.gorillabbq.com

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I’ve been reporting on the absorption rates for several months now but I haven’t seen anything this dramatic in the numbers; many, many cities are now showing the serious impact the economy is having.

Look at cities like Atherton, Foster City,  Millbrae, Redwood Shores; the cities that overall have held fairly steady in their rates.

Looking back, we’ve seen the number of months’ inventory double from year to year but Atherton, Foster City, and Redwood Shores are five plus times what they were last year at the same time.

Another thing that I find so interesting is that, once again, the markets that are considered to have the “deals” show declining inventory:  Daly City, South City, Pacifica.

The absorption rate doesn’t necessarily mean that it will take 18 months for a given house to sell; but that if no other homes came on the market, it could take 18 months for all of these houses to sell.  It’s really a measurement; a market barometer.  In some cases it’s a quite striking snapshot of where the market is at this moment.

It’ll be interesting to see the month-to-month rates.  I ran them January through November 2008.  So I’ll add December, January and February.  Unfortunately the site won’t allow a chart that large, so if you’d like to see the results contact me directly and I’ll email it to you.

The absorption rate is a quick way to see the direction of San Mateo’s real estate market when compared to a previous period. You can also see if the area is a buyer or a sellers’ market.

The National Association of Realtors defines a balanced market as one is which there is 6 months of inventory. More than 6 months, it’s a buyers’ market; less is a sellers’ market.

Got a San Mateo County real estate question?   Call me at 650.888.9268 or send me an email Vicki [at] CallVicki.com.   If you like what you’ve read, subscribe to the San Mateo Real Estate Blog feed.

Start your home search here with me at the San Mateo Real Estate Blog.

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