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Cool House! Hot Price!

My objective this week was two-fold: Find a great starter home in a rising neighborhood that would also illustrate how buying now makes more sense than renting. This 2 bedroom, 1 bathroom 900 square foot house is move-in ready at $599,000. The average rent in this area for a similar size property is $2,100/month. If you bought this home, the average all inclusive payments at today's interest rates would be around $2,900/month. Your owning the house plus the home mortgage interest tax deduction makes up the $800 difference!

Improving Economy - Source: Bloomberg 2015

About 5.2 million renters say they expect to purchase a house in 2015, up from 4.2 million a year earlier, a reflection of the improving economy, according to the Zillow HCI released this month. The share of renters aged 18 to 34 who want to buy grew in markets where job growth has been strong, according to the survey of 10,000 households in 20 cities.

While limited inventory, tight credit and down-payment requirements make it hard for many millennials to achieve the American Dream, soaring rents and the likelihood the Federal Reserve will increase interest rates later this year may drive more of them to explore buying, said Stan Humphries, chief economist at Seattle-based Zillow Group.

Humphries said he expects rent increases to outpace price gains by the end of the year as higher mortgage rates limit affordability and the rental market remains tight. The U.S. rental vacancy rate hit a 21-year low at the end of last year, according to the Census Bureau, giving landlords leverage to charge more.

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Fast Facts

California median home price: February 2015:

  • California: $428,970
  • Calif. highest median home price by region/county February 2015: San Mateo, $1,200,000

Calif. Pending Home Sales Index:
March 2015: Increased 16.3 percent from 111.9 in February to 130.2 in March.

Mortgage rate averages: Week ending 5/9//2015 (Source: Freddie Mac)
• 30-yr. fixed: 3.80% fees/points: 0.6%
• 15-yr. fixed: 3.02% fees/points: 0.6%
• 1-yr. adjustable: 2.46% Fees/points: 0.4%



New-Home Prices Are on Fire
Source: Wall St. Journal

The uptrend in resale values is nothing compared to the speedy rise in new-home prices, according to research by economists at TD Securities. New homes generally command a 10 to 20 percent premium over existing houses because new construction tends to be of higher quality and have more up-to-date amenities, the TD economists said.

But by 2014, the price gap between new and existing houses had widened to 40 percent. Bargain-seeking plus the flood of existing homes into the market caused the median resale price to plummet by about one third during the bust; meanwhile, the median price for a new home fell only about 25 percent during the bust and surpassed its boom peak way back in early 2013.

Ask me about the new development above in a great part of Central Los Angeles! Priced at $1.2m to $1.3m

Susan K. Sanford
Sales Consultant/Cal DRE#01965277
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DRE#: 01965277
131 S. Rodeo Dr. Ste. 100 Beverly Hills, CA 90212

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