The Lawhead Team recently came across and article from Realtor.com about the Fiscal Cliff and what it means for the future of interest rates.

This article on Fiscal Cliff, QE3, and the Future of Interest Rates is from Realtor.org:

The ‘Fiscal Cliff,’ QE3, and the Future of Interest Rates

Economists from the Mortgage Bankers Association sounded an optimistic note at a press conference yesterday afternoon during the organization’s Conference & Expo in Chicago, with predictions that unemployment will go down, home purchase loan originations will go up, and mortgage rates will remain low in 2013. All of these point to a continued housing recovery, but they cautioned that major economic challenges loom that could bring about a reversal — particularly in interest rates.

“The most immediate threat is the fiscal cliff,” said Jay Brinkmann, the MBA’s chief economist and senior vice president of research and education, referring to the deep cuts in taxes and government program spending that will take place at the end of this year if some sort of financial compromise isn’t reached by legislators on both sides of the aisle before then. The Congressional Budget Office estimates that U.S. gross domestic product will fall four percentage points in 2013 if an agreement isn’t forthcoming, which would make it a recessionary year.

Mike Fratantoni, vice president of single-family research and policy development for the MBA, predicted there will be some sort of resolution. “It may not be clean, and it may not be timely,” he added. Any major delays would likely lead to a spike in interest rates and, consequently, declines in home sales.

Over the long haul, interest rates will likely remain below historical lows because of the flight of global capital to the U.S. caused by the continuing European debt crisis and the Fed’s rollout of another round of quantitative easing (often referred to as QE3). This Fed initiative — which will probably last at least a year and possibly as long as two — will involve the central bank purchasing tens of billions of dollars in mortgage-backed securities each month.

“[QE3] wasn’t surprising,” Fratantoni said. “The aggressiveness, the open-ended nature of it, and extreme focus on the mortgage market was a surprise.”

However, if the Fed determines that they’re crowding liquidity out of the market with QE3, they may shift to purchasing longer-term securities such as Treasuries, Brinkmann added.

Article on Fiscal Cliff, QE3 and the interest rates can be found here: http://realtormag.realtor.org/daily-news/2012/10/24/fiscal-cliff-qe3-and-future-interest-rates

The Lawhead Team recently came across an article from the Home Buying Institute about the low inventory of homes in the San Diego area.  As a leader in our industry, we would like to share this important article with our readers.

Buyers Struggle to Find Homes in San Diego, as Inventory Plummets

Currently, the San Diego real estate market can be summed up with a single phrase — inventory shortage. Home buyers are having a hard time finding suitable properties, especially in hot neighborhoods near the coast.

The supply-and-demand situation has completely reversed itself over the last few years.

Given all of this, it’s no wonder prices are rising. According to the San Diego Association of Realtors, the median sale price for single-family homes jumped 13% over the last year. The median for townhomes and condos rose by nearly 19% during the same 12-month period.

Inventory is Way Down in San Diego

According to Realtor.com, the number of homes for sale in San Diego County fell by nearly 35%, from October 2011 to October 2012. Some of this is the work of investors who sensed the ‘bottom’ months ago. They are now scrambling to purchase homes before prices rise any further. Investors typically pay cash, and they are willing to bid over the asking price in many cases. This makes it hard for regular home buyers to compete, especially first-time buyers who don’t have a lot of capital.

Real estate inventory has fallen for 15 months in a row, according to the San Diego Association of Realtors. The trend will likely continue into the first quarter of 2013, and possibly beyond that.

Investor demand for housing is still strong. But the level of demand among regular buyers is growing more slowly, tempered by high unemployment. But the job market is improving. San Diego’s unemployment rate fell to 8.4% in September, down from a high of 10.9% in January 2010. If demand continues to grow while inventory remains tight, we could see home prices rise even further next year.

Looking Ahead: More of the Same in 2013?

So what does the San Diego real estate market look like in 2013? Here’s a likely scenario for the first quarter, at least:

Mortgage rates are expected to remain low into the first part of 2013. This is partly the result of actions taken by the Fed. Earlier today, Freddie Mac announced that the average rate for a 30-year fixed mortgage had fallen to 3.34%, the lowest in more than 40 years. This will act as a powerful incentive for San Diego home buyers in 2013, especially if the job market continues to improve.

Demand for housing is growing across the price spectrum. Investor activity may level off as prices continue to rise and there are fewer deals to be had. But this should be offset by rising demand from live-in home buyers. Low mortgage rates and a slowly improving job market will bring more of these buyers into the market.

Inventory will probably continue to fall over the next few months, as it has since the summer of 2011. All of these factors combined will make the San Diego real estate market highly competitive in 2013.

According to RealtyTrac, foreclosure activity in San Diego fell by 26% in the third quarter, compared to the same period last year. This means there will be fewer distressed properties coming onto the market in the months ahead — always a boon for home values.

Next year, we will likely see buyers paying over the asking price for homes, in many cases. Buyers will also have to make numerous offers before getting a home, as investors bid properties right out from under them. The low-ball offer will become a thing of the past.

In fact, we are seeing some of these trends already. The North County Times recently told the story of a couple who made offers on nearly 100 homes, offering $20,000 above the asking price in some cases.

Though inventory may be low in San Diego, having The Lawhead Team on your side will help you in finding your next dream home.  Because Two Lawheads Are Better Than One^TM.

Article can be found at: http://www.homebuyinginstitute.com/news/inventory-plummets-280/

The Lawhead Team recently came across an article from the Union Tribune.  Did you know the biggest problem in real estate at the time is lack of inventory?  Check it out.

No. 1 Real Estate Issue? Inventory.

Lack of housing inventory to feed consumer demand is a growing concern in San Diego County and statewide, a chief housing economist told local Realtors on Friday. Real estate pros fear this dynamic could keep the housing market from making progress because qualified buyers are edging each other out of slimmer pickings.

Leslie Appleton-Young, with the California Association of Realtors, said competition for homes began to heat up earlier this year in light of declining foreclosure resales and increased investor activity. The result, she said, has been increases in both sales and prices statewide, though we are still far from pre-recession peaks.

“The market is in the process … of healing,” she told local real estate pros at a housing summit held by the San Diego Association of Realtors. The event’s other keynote speakers — Gary London, with The London Group Realty Advisors, and Lawrence Yun, chief economist at the National Association of Realtors, echoed similar thoughts about inventory and the fact that California is in the middle of a tepid recovery.

Appleton-Young broke down housing inventory into three key categories, all very different from each other: equity, bank-owned and short sales.

“Equity” sales, or traditional sales, now make up almost 60 percent of total statewide home sales, up from 30 percent in January 2009, Appleton-Young’s numbers show. The share of bank-owned properties in the market have fallen from 60 percent three years ago to 20 percent now. And lastly, short sales, a process more lenders have now streamlined, are up.

This shift in the sales make-up indicates an increased demand in inventory, a higher presence of investors and a lack of distressed homes hitting the for-sale market. In other words, more potential buyers are competing for fewer homes, which can keep the market from moving forward, or at a stand-still, speakers said.

London and Yun, other speakers at Friday’s event, highlighted San Diego’s lack of housing construction due to an issue that’s specific to this county.

“You’re running out of land,” said Yun, who added that new-home construction has hit a 50-year low nationwide.

London said the age of traditional subdivision construction is over, pushing homebuilders toward going vertical and building in smaller batches.

The lack of inventory and the county’s population growth will help push up prices though the escalation will not be as rapid as in pre-recession days, London said.

Article at: http://www.utsandiego.com/news/2012/sep/07/sdar-summit/