While David Letterman’s Top 10 lists
generally culminate in a No. 1 ranking, the following list includes in no
particular order 10 things that are important to buyers today, especially
Millennials or generation Y, generally born in the 80’s, who represent a significant buyer niche in
today’s market.
1. Quality
of the neighborhood – The National Association of Realtor’s 2012 Profile of Buyers and Sellers revealed that neighborhoods are
really important to buyers, but that neighborhood choice varies by household
composition.
2. Convenience
to job – Commuting is a
necessary evil, but homes that are close to work enhance work-life balance, a
growing priority for many Americans, especially Millennials.
3. Overall
affordability of homes
– With job markets tight and retirement funds depleted or eroded thanks to the
great Recession, it has never been more important to keep housing related costs
as low as possible, ideally no more than one third of your pre-tax income.
4. Quality
of schools – A recent survey by realtor.com revealed
that nearly 45 percent of today’s buyers are willing to pay a premium for
quality schools. High ranking Carmel schools attract many
buyers here.
5. Homes
suited for the next 15 years
– Just five years ago, buyers were looking to stay in their home about 10
years. Today, buyers expect to stay closer to 15, so it’s important to
find a home that can support lifestyles as they evolve through that time
period.
6. A
mortgage – In today’s
tight credit environment, getting a mortgage can be a challenge. Buyers should
be willing to consider homes below what they may quality for in order to bump
up the loan to value ratio. (mortgage amount divided by homes appraised value) For
example, Jim needs to borrow $92,500 to purchase a $100,000 property. The LTV
ratio yields a value of about 92.5%. Since bankers usually require a ratio at a
maximum of 75% for a mortgage to be approved, it may prove difficult for Jim to
get a mortgage.
7. Energy
efficiency – The National
Association of Homebuilders surveyed buyers to see what
was most important to them in new home construction and energy efficiency
topped the list. Four of the top most wanted features involve saving
energy: 94 percent of home buyers want energy-star rated appliances, 91 percent
want an energy-star rating for the whole home, 89 percent want energy-star
rated windows, and 88 percent want ceiling fans.
8. Open
floor plans – Spaces that are
great for entertaining mean quality time with friends and family, something
especially important to Gen Y.
9. High
ceilings – Taller ceilings
are not only aesthetically pleasing in that they impart a grandness to the
home, they also promote greater air circulation and more natural light than
lower ceilings
10. Technology – Can you run your home from a cell
phone? A Millennial prizes a home’s
technological amenities prized over curb appeal!
So this is what
buyers are looking for, let’s talk a bit about the challenges ahead for
buyers. The Qualified Mortgage Rule was
passed in 2010 and takes effect in January 2014.
A Qualified Mortgage is one that establishes minimum
standards to determine the ability to repay a mortgage.
1.
Underwriting Factors: there are 8 minimum
factors that must be verified by a 3rd party in addition to
what a borrower provides as evidence of each.
a. Current
or reasonably expected income or assets
b. Current
employment status
c. The
monthly payment on the loan applied for
d. The
monthly payment on any simultaneous loan
e. The
monthly payment for the mortgage-related obligation (taxes and homeowner’s
insurance)
f. Current
debt obligations, alimony and child support
g. The
monthly debt-to-income ratio or residual income
h. Credit
history
2.
Prohibition of loans with:
a.
Negative amortization, a
loan with a payment structure that allows for a scheduled payment to be made
where it is less than the interest charge on the loan at the time the scheduled
payment is made. When a payment is made which is less than the interest charge
at the time, deferred interest is created. The amount of deferred interest
created is added to the principal balance of the loan, leading to a situation
where the principal owed increases over time instead of decreases.
b. Balloon
payments
c. Terms
exceeding 30 years (no 40 year loans)
d. Interest
Only
3.
Max debt-to-income ratio of 43% (calculated as
minimum monthly payments on all credit cards, loans and mortgages rating on a
credit report plus the proposed housing payment of the new loan—including the
taxes and insurance and dividing this by the gross income)
4.
And the clincher—which is not mentioned in the
Summary of the Ability to Repay and Qualified Mortgage Rule document—is that of
the proposal of a required 30% down payment – yikes!
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24805 VALLEY WAY, Carmel 93923
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Class:
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Single Family Residential
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List Date:
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07/19/2013
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Beds:
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2
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List Price:
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$799,000
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Baths:
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1 (1/0)
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Sale Price:
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SqFt:
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1,012 (Assessor)
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HOA Fee:
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Lot Size:
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4,100 Sqft (Assessor)
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X-street:
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Lower Trail
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Elem Dist:
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Carmel Unified
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High Dist:
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Carmel Unified
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List Agent:
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Patricia J Ross
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List Office:
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Sotheby's Int'l Realty-Rancho
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Direction:
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Carpenter to Lower Trail- Corner
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Remarks:
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Smart and sophisticated, this Mid Century modern home was
designed by a protege of Frank Lloyd Wright. The 2/1 has been remodeled with
wood laminate floors, granite counters, wood burning fireplace with gas
starter, and built in stereo speakers. Ocean view and walls of glass bring
Carmel woods inside completing this close-to-town gem.
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So to avoid all this, if you can get into contract before Jan 1st,
it will be much easier and quicker to obtain a loan this year! Having said that, prices are still low,
interest rates are still low and inventory is still plentiful in many areas on
the peninsula.
Patty Ross
831-236-4513
Click here
to listen to Patty discuss the latest trends in Northern California Real Estate
including the communities of Carmel, Carmel
by the Sea, Carmel
Valley, Marina,
Monterey,
Pacific
Grove, Pebble
Beach and Seaside
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