Monthly Payments of Home Buyers Almost at 1981 Levels?

OK, when I saw this headline I had to read the article.

Monthly Payments for Home Buyers

On October 6, 2011, in Economist Commentaries, by Lawrence Yun, Chief Economist

A home buyer purchasing a typical American home at the prevailing average mortgage rate today would have a mortgage payment of $698 a month. This figure is not much different from what a home buyer would have faced 30 years ago. In 1981, home prices were much lower but mortgage rates were reaching 18 percent. Today, home prices have come down by about 33 percent on average from the bubble years, but prices still remain comfortably higher than those of the 1980s. However, thanks to record low mortgage rates, the monthly payment obligations have been greatly reduced.

After reading the article I still didn’t believe it and had to run the numbers for myself. I decided to take real world numbers, here in Sacramento, on a listing that I currently have in Downtown. I mean, maybe this is true for a home in Columbus GA, but it can’t be true here…

The condo that I have listed at 958 Q Street is listed for $195,000. When it was first built in 1982 the units in it’s complex were selling for $55,000. Back then you had interest rates at 18%. If you did a 3.5% down loan like today’s common FHA loans, factoring in average rates for tax and insurance, your payment would have been $867 per month (not counting HOA or any possible PMI). Today you can get a FHA loan at 4% (one of my buyers just locked at 3.675 with no points!). That makes a payment of $1167 per month or about $290 more today than 30 years ago.

I was feeling pretty smug for about 5 seconds until I started to think about what $867 would have bought me 30 years ago compared to today. Going back to my youth when a quarter bought you a candy bar and now I think they cost a buck, I had to go to an online inflation calculator. $867 from 1981 after adjusted for inflation is $2150 today!

Well, me and my short lived smug self will just have to contemplate these numbers and the buying power of today’s interest rates over a long over due candy bar…

39th & M Final Stucco

My upcoming listing at 39th and M has its final coat of stucco on and the scaffolding has been removed! It is looking like an amazing East Sac house now, not just one in the throes of construction.

They are in the process of putting in the hard wood floors. The rooms are all painted, the kitchen and bathroom cabinets are in and it is getting close to being finished.

The estimates are that in two or three weeks all the final finish work will be done and the listing will go live.

I’m greatly looking forward to holding open houses in this amazing property!

Sacramento, City of Trees

One great benefit of having family at UC Davis Medical Center in Sacramento is going up onto the 14^th floor of the Davis Tower and seeing all the trees in the surrounding neighborhoods of Elmhurst, East Sac and Oak Park.

I do love this city!

39th and M Floor Plans

39th and M is getting very close to being completed. We expect to list if for sale in early November, the exact date dependant on getting all the finish work and landscaping completed.

PJ recently asked on my blog if I had the floor plans for this property. Well, here they are!

Of course as the builders went through the process there have been little changes to improve the design, so the floor plans are a little different than the finished product.

It is amazing how quick this has gone up and how much the builder has paid attention to all the little details. I get regular emails for feedback on doorknob choices, the hardware for the kitchen cabinets, paint colors and everything else. I love being this involved in the building process.

QR Codes

OK, I’ve been asked what that little box of boxes is on my 39th and M Street flyer. In short, it is like a bar code, but more advanced and smart phones are often used to read them to take the user directly to a website.

Here is what Wikipedia has to say about QR Codes.

A QR code (abbreviated from Quick Response code) is a type of matrix barcode (or two-dimensional code) first designed for the automotive industry. More recently, the system has become popular outside of the industry due to its fast readability and comparatively large storage capacity. The code consists of black modules arranged in a square pattern on a white background. The information encoded can be made up of any kind of data (e.g., binary, alphanumeric, or Kanji symbols).^[1]

Created by Toyota subsidiary Denso Wave in 1994 to track vehicles during the manufacturing process,^[2] the QR code is one of the most popular types of two-dimensional barcodes. It was designed to allow its contents to be decoded at high speed.^[3]

The technology has seen frequent use in Japan; the United Kingdom is the seventh-largest national consumer of QR codes.^[4]

Mortgage Rates Below 4%

OK, being 40 years old I know of times when rates were 18% but I wasn’t yet buying houses in those years. I’m used to 8-12% for most of my adult life and seeing rates below 6% has been exciting. Now rates are dipping under the 4% mark and I’m in shock.

It makes me want to run out and refinance the few properties that I have and buy several more. Given that home prices are as low as they are, I’m not sure I’ll be able to resist the urge to buy more properties…

From CNN Money

“Mortgage rates have never been cheaper, with the 30-year rate falling below 4% for the first time in history.

The interest rate on a 30-year fixed-rate loan fell to 3.94% this week, the lowest rate since mortgage giant Freddie Mac (FMCC, Fortune 500) began tracking it. Meanwhile, the average for a 15-year fixed-rate mortgage also hit a record, falling to 3.26%.

"Average 30-year conventional fixed mortgage rates fell below 4% for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew," said Freddie's chief economist, Frank Nothaft.”

East Sac and the Fab Forties

The Fab 40's are the center of the amazing East Sac neighborhood. When there is talk of amazing homes in Sacramento, no other neighborhood is mentioned as often.

The properties on 38^th to 48^th Street, between J Street and Folsom Boulevard have the largest lots and command the highest value and are considered by most to be the official Fab 40's boundary. The prestige of these properties flows into the neighboring blocks and can be seen in the homes surrounding it. The common misconception is that the Fab 40's is from 40^th to 49^th street, but take a drive through the neighborhood and you will see why the general boundary is where it is.

There have been many notable residents but the most famous is President Ronald Reagan who lived at 1341 45^th Street when he was the Governor of California.

Every year the Fab 40's are host to a variety of great events like the 4^th of July parade and block party and an incredible display of Christmas lights.

46^th Street was the turnaround point for the J Street Line back when there was a streetcar network that served the historic neighborhoods of Sacramento, resulting in it being one of the widest streets in East Sac, but 45^th street boasts the largest lots of the area.

Over the years many of the homes have been remodeled or completely rebuilt, making it a wonderful, eclectic mix of home styles. On some blocks you will have homes that are just over 1,000 square feet and homes that boast over 8,000 square feet. All the varied styles, wide streets, large lots and canopy of trees it makes it a joy to stroll through the neighborhood.

Back yard concert

Got to love a back yard concert. This one features the Mekons in my friend David's back yard in Davis.
Must be about 60 of us enjoying the amazing sounds of this group. Not sure how David gets such great talent, but I'm happy to show up, kick in a donation for the band and enjoy some good food, drinks and company.

39th and M Stucco

This is the first coat of the exterior/colored stucco for 39^th and M. Early next week the second and final coat of stucco should go on the property. The half wall for the yard should also be finished early next week and then the large green fence can come down and we will have a much better look at the property.