According to John Burns, CEO of John Burns Real Estate Consulting, real estate has “never been more affordable”. He backs up that statement by illustrating how the 3.5% interest rates are allowing home buyers to purchase more home for the same price as when rates were around 6.1%. Conversely, it’s also reflected in how little the average mortgage payment eats into our monthly budgets as a percentage.

He also predicts that home values will rise about 40% over the next two years because the Fed will not be moving on interest rates at all in the near future, and supply is beginning to dwindle.

So, does this mean we’re headed for a new bubble? Or, could this be the major correction the real estate market has been waiting for? Depends on who you ask, I suppose.

There are those who believe that this is just what the doctor ordered. Values are beginning to come back to normal. People are earning their equity back, and it’s a seller’s market again. Low interest rates have made all this possible so it must be good, right?

Well, yes and no. Low interest rates are definitely fueling the housing recovery but what we absolutely do not want again is another ginormous bubble that’s just going to leave us worse off than when we started. Quantitative easing and low interest rates are fine… until you have to pay the piper. Have you ever wondered why the stock market is doing so great in such a bad economy?

Low interest rates.

When investors can’t make a buck on traditionally secure long term instruments, like bonds and treasury notes, they have to park their money somewhere that's going to bring a return. But what do you suppose is going to happen if rates start shooting up again because inflation is out of control? There will be a mass exodus from equities and back into safer investments. Can you say “Geronimo”?

And what if these low rates begin to again artificially inflate the values of homes? It's like deja vu all over again. You see where I’m going here?

What we need is a smart Fed policy that can do the high-wire act of keeping rates low enough to fuel the recovery but not too low so that we don’t have runaway inflation. I agree, it’s a tricky gig and I don’t think I’d want to be in Ben Bernanke’s shoes right now.

That being said, we need to get while the getting’s good, so if 3.5% is going to be here for a little while this may be the time to make your move on a new home or refinance.

Well, the Feds are at it again, issuing even more rules and regulations aimed at protecting homeowners who may be facing foreclosure. It’s been almost a full-time effort just keeping up with all the mandates out of Washington, so we’ll try to give you the straight skinny here; unfiltered and in the simplest terms possible.

These new regs, which take effect in January of next year, are coming out of the Consumer Financial Protection Bureau. The one that’s going to probably have most people talking has to do with something called “dual –tracking”, which prevents lenders from foreclosing on borrowers who are actively seeking a loan modification. This rule requires lenders to seek other alternatives to foreclosure in order to assist the borrower, and if the lender is “tracking” the borrowers application for a loan modification they cannot file the first foreclosure notice until the borrower is at least 120 days past due.

So far, so good.

But the rule goes even further. If, after the house is scheduled to on the auction block by the bank, the borrower decides to apply for a loan modification, the bank must respond to the application as long as the application is received 37 days or more prior to auction. They also have to give additional time for the homeowner to find alternative ways of avoiding foreclosure if the loan mod is declined.

It’s easy to see how this could be used as a way for borrowers to use this time as leverage in either saving their home or having the time to make other arrangements.

The only problem for California homeowners is that this is what’s known as a “non-judicial” state and most people are not going to be given more than 37 days notice if there’s a foreclosure auction. So, unless these rules are going to uniformly applied to all “judicial” and “non-judicial” states, it could become confusing.

For a complete rundown on the new regulations, we recommend you follow this link for all the details:

Consumer Financial Protection Bureau

One question we get asked all the time is, "When is the housing market coming back?"

Well, for Bay Area home owners that answer may already be self-evident as prices in many areas have soared more than 20% in the last year alone.  While much of the news out of California has been bleak, Silicon Valley has been charging back with a vengeance.  There have been the blockbuster IPO's like Facebook, and others not so well known, but there is also a recent phenomenon also playing a major role in the recovery: Chinese capitalists.

Now, for many of us that term may seem like an oxymoron but the fact is that there are more millionaires being made in China than anywhere else in the world right now.  It is a booming economy and these nouveau riche are looking for safe places to invest their money.  Apparently, the word has gotten out that Silicon Valley is just such a place.

One of the big draws, besides the technology centered economy, beautiful landscapes and amazing weather, are the excellent school systems in places like Palo Alto, Cupertino and Los Altos.

There is so much enthusiasm for Bay Area real estate right now that bidding wars are taking place on many listings, a spectacle not seen for at least 10 years.

We're hoping that this upsurge will spill over to other parts of California, like Sacramento, but for now, the Peninsula and South Bay are leading the nation in a real estate recovery.

Now, with the election finally behind us, we can start looking ahead to the new year with a little more clarity on what to expect for the economy and the housing market.  One of key changes in the real estate outlook that we’re predicting is an extension of the Mortgage Forgiveness Debt Relief Act.

Just a quick refresher, this law was passed by Congress in 2007 as a way to minimize the potential tax liability of homeowners who sold their homes by way of a short sale and had large amounts of debt forgiven by banks as a result.  This legislation has helped to pave the way for millions of upside down borrowers to sell their homes without being penalized by the IRS for a deficiency that wasn’t their fault.

Although this law was scheduled to expire on December 31^st of this year, there is already a bill moving through the Senate which would extend it to the end of 2013, giving borrowers another full year to take advantage of the relief.  This bill also includes tax credits for remodeling and home construction. Because President Obama was re-elected, we anticipate that, if passed, he would sign this bill into law since he has previously signaled that he would support such legislation.

So, for all you Sacramento and Bay Area homeowners out there who are still on the fence about this whole short sale concept, this may be your chance to give it another look.  We’ve had tremendous success negotiating short sales for our clients and can do the same for you.  If you’re upside down in your home loan and are looking for a way out of your current situation, just give us a call.  The consultation is always free.

Since the housing bubble burst several years ago, one of the greatest challenges for lawmakers and the marketplace has been how to assist borrowers who, through no fault of their own, found themselves upside down in their mortgages. There is still a backlog of about 5 million delinquent mortgages and one of the most popular remedies for these homeowners has been the Short Sale.

We’ve talked about short sales many times on this site and our blog but here’s a quick refresher: a short sale is when the lender agrees to allow the house to be sold for less than what is still owed. So, for instance, if someone borrowed $500,000 six years ago at the top of the market, and today that house is worth only $300,000, the borrower may accept a loss of difference just to get the bad debt off the books. Foreclosure is the worst case scenario, not only for the borrower, but also for the banks because it can end up costing them even more in the long run.

One of the only problems with the short sale option had been the fact that, traditionally, debt forgiveness has been looked upon by the government as taxable income. This fear of taxation kept the market somewhat stagnant with regard to short sales until the Congress passed the ”Mortgage Debt Relief Act and Debt Cancellation”, which essentially eliminated the tax penalty for short sale sellers. Once the public became aware of this loophole, the short sale business exploded.

Unfortunately, all of that momentum may come to an end as the Mortgage Debt Relief Act expires, along with the “Bush tax cuts”, on December 31st of this year. It’s hard to believe, but this is a mere 3 months away!

What that means is that if you are a homeowner who is considering a short sale, NOW is the time to get started on the process. Short sales can take time, but if the paperwork is filed and accepted by your lender prior to the expiration date, you can still take advantage of the tax savings. For many homeowners in Northern California that could translate into thousands of dollars in savings!

Although some are calling for the extension of this law, there are no guarantees that the Congress will act on it. We don’t know how the election in November may change the attitudes towards taxation and the real estate market, but we do know that waiting until the last minute is not a recommended strategy. The banks will be flooded with requests as the deadline grows closer, so the operative phrase at this particular moment is ACT NOW.

We at Granite Equity Group cannot stress this enough. If you have questions about whether a short sale is right for you, just pick up the phone and give us a call. We’ll be happy to advise you on your options depending on your particular situation. The call is free and so is the consultation.

We’d like to pass along some good news just received from Bank of America. They are now offering what they call, “enhanced relocation assistance.” This is available only to qualified homeowners who initiate a Preapproved Price Short Sale through their bank. Upon doing so, you could be eligible to receive from $5000 - $30,000 in relocation assistance whiling eliminating the remaining balance on your mortgage!

Of course, there is plenty of fine print along with terms and conditions that must be met but this is a nice spot of good news for those who qualify. Imagine successfully short-selling your home, being debt-free on the mortgage, AND letting BofA pick up the tab for your move!

We think it’s well worth looking into, so we’ve reposted some of the press release below for more detail. Call us at Granite Equity Group if you’ve got questions or would like to apply for a short sale on your home.

CALABASAS, Calif. – Adding to its foreclosure prevention initiatives, Bank of America has launched a nationwide program that offers delinquent mortgage customers increased assistance with relocation expenses – between $2,500 and $30,000 - at the completion of a qualifying short sale.

“Bank of America is committed to providing alternatives to foreclosure whenever possible,” said Bob Hora, home transition services executive for Bank of America. “This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home.”

The short sale relocation assistance program builds on the bank’s already robust short sale initiatives, which led to 200,000 completed short sales in the last two years and another 30,000 in the first quarter of 2012. This program is based on a similar incentive offer that Bank of America tested in Florida last year.

To qualify for the enhanced relocation assistance payments under the new program, the seller must work proactively with the bank to obtain a preapproved sales price prior to submitting a purchase offer to the bank. A short sale must be initiated by the end of this year and close by September 26, 2013, to be eligible for the payment. Qualifying short sales that have already been started but have not closed may be eligible for the relocation assistance.

The amount of assistance provided under the new program will be determined on a case-by-case basis using a calculation that includes the value of the home, amount owed and other considerations.

Initially, the program will be offered on mortgages that are owned and serviced by Bank of America.

While available nationally, Bank of America anticipates greatest response to the program will come from borrowers in California, Nevada, Arizona, Florida and other states hardest hit by the economic downturn and falling property values.