WHAT’S GOING ON WITH INTEREST RATES: INTERVIEW WITH MICHELLE ROBICHAUD

Lisa Doyle, TheDoyleTeam.com, Greg Doyle, San Ramon Real Estate, San Ramon Homes, Danville Homes, Bay Area Real Estate, Bay Area Short Sales, Bay Area Foreclosure, Short Sale in San Ramon, East Bay Real Estate Market, Hardship, Michelle Robichaud, Diversified Capital, Mortgage Rates, Mortgage

Hi there, I’m Lisa Doyle with J. Rockcliff Realtors, and I’m with a very special guest today, my favorite mortgage broker. Thanks for joining us today Michelle. This is Michelle Robichaud with Diversified Capital.  I’ve had in the last couple of months so many questions, probably even more so in the last 30 days.  What is going on with our interest rates and what’s going on with the market.

 

So tell them a little bit about where we are with our interest rates, we have had a little bit of a jump unfortunately. Yes, we have, but the good news is, it’s stabilized somewhat. Okay. So what we saw was due to the strength of the economy and some news that came out about all that and when that happens what you see is people kind of react, the market reacts and so we saw a jump in the rates go into the fives. But what’s happened in the last week or so is we’ve seen that stabilize, so now we’re like back in the fours.

 

So those rates under four percent, you think those are pretty much gone forever? Hopefully not forever and I’d be a billionaire if I could predict for sure. Right. But I do think that they’re gone for a long time.

 

You don’t want to wait forever. The more likely fear I have is that they’ll probably rise. I see a consistent rise, and hopefully not too high. I mean we have been incredibly spoiled the last several years with rates that are under 4%.

 

The average rate in the last 20 to 30 years has been what, 7 percent or a little bit more? Right, yes. So we are historically still at very very low express. So what do you think is going to happen over this next year? Is there any rumor about when we should see the rise or are we going to for length of time, what do you think?

 

I think that we’re gonna stay about where we are from at least the end of I would say 2014, just like how The Feds have come out and said they were going to keep the rates low. Right. You know it is helping, right. So Bernanke come out in his comments he made during his speech yesterday and the day before supported kind of what everyone feels I think, is that we’re probably going to stay right around in this but eventually it will start to rise.

 

Well and the thing that I’ve noticed in the past you know is, I’ve been in the business since in the eighties, and of course, we’ve gone through a roller coaster ride with interest rates is when they rise, they tend to rise pretty fast. When we went from 8 percent up to like 16 percent in the mid-80’s, it happened over night and then they’d come down very slowly, so it’s just something to keep their eye on. Yeah. You know, as a buyer, if you’re looking at buying or refinancing, I have a lot of people buying and refinancing still right now, even more than I did in the threes. They’re fearing that they’re gonna miss out.

 

So I’ve had a couple of people ask me, so right now rates are still very good but they have been worse. So what would it cost me to buy my rate down to being under the four. Good question. Would that make any sense? Yeah in some cases it would. It’s so specific to each scenario anymore now, but I do see that with the high balance conforming you can buy it down not quite as deep as you can with a conforming loan amount.

 

Ok. So just to give you a brief number so 417,000. If you paid right now about two points, you could buy your rate down about 3/4 of a point. So if your loan amount was only up to that 417?

 

Up to 417. 417,000 loan amount, correct. And then with high policy performing, which goes up to the 625,500 loan amount, I don’t see as much of an offering out there and as you all know, I’m an employee of a bank and I am also a broker. And just you know the spread is only I’m seeing about a third of a point and it only changes your rate by about an eighth of a percent.

 

Right. So the extra cost up front would take years to pay to make it worth it.

 

Unless I have some offshoot pricing, which I’m always willing to call in it’s a chance to see if I can do that with people.

 

What about adjustables? Adjustables in todays world I don’t recommend for most people because interest rates at a 30 year fixed, if you can still get a good rate, that’s a good thing to consider but for those that do want adjustables, what’s possible right now? Right. How  low can they get?

 

I’ve really only looked at one lately because everyone that I’m working with is a 30 year fixed range or program, but I want to say that you can go about a percent lower than what the third year fixed offers. Ok. So still in the high three’s with the adjustable. Yeah. For those that 100% know they’re not going to be in their home longer than say 7 to 10 years, that might be something to consider, so we can talk about that.

 

Thank you so much Michelle. As you guys know, we are gonna keep you up to speed on exactly where we are with interest rates. If you’re looking at buying or refinancing, definitely call Michelle any time she’s best we’ve ever worked with. You’re so nice. Thank you so much and the feeling is mutual. Give them your contact information if you would.

 

My cell phone number is 925-876-1213. And Michelle again she works with a company called Diversified Capital. So I’ll look forward to seeing you guys soon, call me if you have any que

WHERE IS OUR MARKET HEADING: INTERVIEW WITH CAROLE RODONI

Lisa Doyle, TheDoyleTeam.com, Greg Doyle, San Ramon Real Estate, San Ramon Homes, Danville Homes, Bay Area Real Estate, Bay Area Short Sales, Bay Area Foreclosure, Short Sale in San Ramon, East Bay Real Estate Market, Hardship, Carole Rodoni, Bamboo Consulting

Where is our Real Estate Market heading – Interview with Carole Rodoni

 

Hi there, I’m Lisa Doyle with J. Rockcliff Realtors, and I wanted to bring you a little bit of information about the market conditions right now. And so I brought a very special guest, Carole Rodoni. She is the owner of a company called Bamboo Consulting. And Carole speaks all over the country basically about the economic, what’s going on with our real estate market and financial market.

 

She spoke to groups all over the country, written books, articles, Wall Street Journal interviews, and columns in the San Francisco Examiner, on a regular basis. Well I have always respected your opinions about our economics and what we can anticipate so the biggest question that I get from clients right now is, what’s going on with the market, is there a bubble, so share a little bit about that.

 

Okay let’s start with, first of all talking a little bit about the economy, because the economy is so important, it relates to real estate, and I want people to understand we really have the economy, a national economy and a San Francisco bay-area economy. The national economy, just to give you a few statistics, I think GDP will be about 2.5 percent.

 

That’s not where it should be coming out of a recession, but it’s probably the best we’re going to get. And the reason why ours looks so much better is probably really is, because if you look at the rest of the world, you have China that came out today with terrible numbers, Japan is still in inflation, you have Europe in a recession, and you have the Middle East on fire so we look pretty good compared to the rest of the world.

 

The stock market, obviously, has been absolutely stellar when you look at it. Way back in 2009 the DOW was down to seven thousand, we’re now at fifteen thousand. 200 people have gotten back 146% of everything that they lost. Both the Dow and Nasdaq are up for the year. We’ve had some corrections. You know the big one that we had when Mr. Bernanke came out and said oh my gosh I might pay for some of my buying, and eventually all this free interest has to go away the world went crazy, of course, and we were down 100 points in one week.

 

But when you look at that, that’s only a 5 percent drop, and you’re not even in a bear market until you get to 10 and it came back the next week. The stock market has been wonderful this year. I think that basically when you look at where gold is, gold is not the place to be. The bond market, it went from one up to 2.6.

 

I think that that’s where it’s be, probably almost 3 percent by the end of the year. So, nationally our economy is doing okay, we’re coming out of slow, but we’re moving forward. The San Francisco Bay area is on fire. Looking at San Francisco, 5.4 percent unemployment you have a little bit more over in the east bay, but absolutely magnificent.

 

First quarter, thirty-three thousand new jobs created in San Francisco, 27,000 just in Silicon Valley, and when you think that in the whole nation we’ve had a hundred and fifty to two hundred thousand, we’re carrying about twenty percent of the weight of all of that. And when you look at Silicon Valley, they can’t hire enough people, average pay down there now is 125,000 dollars a person.

 

When you look at San Francisco and all the rebirth, it’s going in on all rebuilding, that’s going on. Apple is going to be building a new campus. Basically, Intel’s going to be building a new campus, so here we live and move to a different drummer. San Francisco  is really an international city, because it’s one of the most visited places on the earth.

 

Basically, we have Stanford and Cal, two world famous institutions, we are the gateway to the pacific rim: cultural diversity, great employment diversity, you are four or five hours from everything and anything you would want in your whole life, and basically we have silicon valley.

 

So our economy here is better, and that’s probably why our real estate market is the best in the nation. You asked me about this bubble. Yeah. Well, I don’t think we have a bubble, I think right now, we have what I call a powerful market. Here’s the difference. We did have a bubble. Let’s go back to 2007 when anybody and everybody could get basically a loan.

 

Well yeah with very little down and no money. And that’s what I call a bubble. And the reason why I call it a bubble is when you take a thing like real estate is just an asset and you artificially inflate it, and that’s what they did. They made the values go up by giving everybody a free loan basically nothing down, these people couldn’t afford the terms and conditions, and so what happens when you artificially inflate something?

 

After you blow it up it bursts like a balloon and it falls back on itself goes flat, and that’s exactly what happened, and we went from five million to seven million people that were in the real residential oh lets go buy a house day trading business and what they all found out is that’s not the kind of thing that you do with real estate.

 

This one is different, let’s talk about it: yes, you’re getting multiple offers; yes, 27 percent is  cash, but you have ready, willing, and very able buyers. Yeah.  I’m sorry to interrupt. They have to show them they can actually sustain the mortgage, after paying cash. These are people that are going to stay 5 to 7 years, it’s not day trading.

 

If you have investors, the investors are good investors, they are either international, or they are paying cash, or their hedge funds now that are starting to get into the foreclosure short sale market, and a lot of them are going to hold these properties three to five years just necessarily spinning them, and then they are taking advantage of the increase in rent.

 

Basic idea that they get cash flow positive day one, and then they’ll wait four / five years. With the appreciation they’ll get the best of both worlds. So I call this a powerful market. Now here’s the thing I think you need to understand about a power it’s probably in it’s bloom, and started probably five or six months ago, I think we’re beginning to feel it tapering off.

 

It’s definitely a cooling, it’s like we’ve seen our inventory double in the last thirty days, interest rates creeping up despite a little bit of cool down, I think. I mean that you can share what you believe what caused the tapering. I think that not only the tapering came, but I think it’s a great thing, and I’ll tell you why.

 

Because we had this market that was beginning to get a little bit out of control, with thirty, forty offers on properties. That’s ridiculous. And so at the end of the day, I think  interest rates going up probably made people step back. Now, let me talk a minute about interest rates. Anybody who thinks 4% on a jumbo or 4.04% on a jumbo is astronomical interest rates, tell them to sit down and get a grip.

 

Go on the Freddie or Fannie website and look back at what’s happened over the last 30 years. We’ve averaged 7%. I remember when interest rates were 15%. We all, I remember when they were basically down to twelve percent, and we thought we had died and went to heaven. Single digit nine percent was, yeah, unbelievable, three and a half percent, four, four and a half percent.

 

You need to get in, that’s the key, because what I can tell you is, you’ve got a few more months  and I think it’s gonna be three percent on the ten year note by basically the end of the year and then what I think is gonna happen is we are gonna go back to more interests rates  and begin to see that three and four change to four and five, so if you’re a buyer.

 

Change to five and six maybe. Yes, so if you’re a buyer and you think it’s going the other way, let me just try to give you a prophecy and tell you stop already because this free money is going to eventually stop. I think Mr. Bernanke is going to keep it low as long as he can, but I think early next year he is going to have to start to raise interest rates.

 

I think interest rates have tapered our market a good thing. The other is that I think more people are more willing to put their houses on the market now that they’ve seen appreciation, and they’ve seen the multiple offers, and I think that  there’s more inventory and more choice for people and that’s a good thing.

 

If you’re a buyer let me give you some of the things to consider. Understand what’s affordable for you, because if you think you have 800,000 dollars in cash. And right now, you can go buy an eight hundred thousand dollar house, probably not gonna happen, ’cause we’re still, eight hundred is basically the list price, but that may not be the market price.

 

We are still seeing multiple offers, price is just not as aggressive. Not as aggressively, so you have to understand what you can afford. The second thing is, I love it when people say, “I’m all cash.” You know, there’s different kinds of cash. There’s liquid cash, which is in the bank, sitting there.

 

You can go get a cashier’s check today at four o’clock and you have that money. Then there’s mid-liquid cash, which is always stock market and the stock market could go up and down one down and your eight hundred thousand might be worth seven hundred thousand. And then the cash is coming on a boat in a Louis Vuitton suitcase from somewhere place.

 

We don’t know exactly where the government’s gonna stop it when it gets here because is it drug money, or was it terrorist money, and how is this money, and where did you get it, who got it, who owns it, so cash is nice, but what kind of cash is important. I think the main thing, however, is for these buyers to understand that list price may not be the right price.

 

Because people are basically pricing these sums one to three percent below where the market really is, and therefore you have to really work with an agent like Lisa Doyle, because they know where the market really is, where you need to start. And then Lisa knowing how many bids have been coming in on similar properties, she could help you get into the competition of trying to on these houses, because that’s what you’re really doing.

 

Well, especially in that mid price range. In our market, over a million, of course. You have more choices, you have more time. Eight hundred is strange. It’s pretty high. Tough. Very hot and very tough, and you need to understand how to play the game. And if you don’t wanna do that, then you either need to wait out the market or go look someplace else.

 

Because it’s the way that it is, and I think it’s going to continue. It may taper a bit, so instead of twelve multiple offers, there’ll be five. But see, that doesn’t change the fact that list versus market versus where you need to go to get a winning bid is going to be any different. It’ll be just that you’re looking a little bit less that you have to do it aggressively but you’re still going to have to play the game the same way.

 

I think they need to understand that. We’ve seen in our market, of course, our decline is about 30-36% in most neighborhoods. It’s neighborhood-sensitive, we’ve risen back about 22% of that. Yes you have. So we made that 22% jump very quickly, and now we’re likely to see a rise of just a little bit more Hopefully, we’re stable enough.

 

Yeah, and that’s a good thing. That’s a good thing. The other thing that we’re seeing now is, I think really instead of making offers and going back and forth and back and forth and all these contingencies and things. You need to basically rely on someone like Lisa who will tell you we have to write a contract going in.

 

Which to me means it’s 90% done on the first shot of the book, because if there’s going to be multiple offers what I’m going to tell you is, agents are going to look at the strongest, best offers. That’s the ones that are going to get the counter offers or the one that’s going to get going to get the one that wins.

 

So you have to understand that. Some of the other things we’re seeing across the Bay is that what they’re doing is increasing their deposits. So that’s one thing that may make a seller open their eyes. Wow I got an increased deposit, shows the commitment of the buyer. And the other thing is that a lot of buyers are saying, “Look.

 

I’m all cash, no financing, no appraisal contingency.” the reason I had thought that my offer’s only going to be good until 4:00 tomorrow. Put a little pressure on the sellers, that can’t hurt, you know. It’s a good thing to do. Because you don’t want to be going back and forth and back and forth and competing.

 

And then sometimes they’ll say I want to wait because we’re going to hear offers on Tuesday. Well, you just got the best offer that’s coming in because and what’s gonna happen to you if you don’t listen to that? Your triple-A buyer’s walking out the door. Can you afford to have someone who has all cash, no financing, no appraisal, increase their deposit basically, can sign papers today at four o’clock.

 

Are you that confident that someone else is gonna come in and be better than that, and that they’re gonna come in on Monday and do that? So you need to think about that seller. I’ve had a few clients who unfortunately have done what you’ve said. Opted to wait against my better judgment and ended up selling for less.

 

Yes, that’s right. You definitely want to be cautious of that. So listen to somebody like Lisa and her husband are so good at what they do on an ordinary market. But in this kind of a market, you definitely need to listen to them, because, this isn’t just, oh, let’s go buy real estate. This is a market that requires strategy, positioning, and intelligent reasoning, and believe me, I know there’s five thousand web sites out there.

 

I know you read every article that’s written, but believe me, you don’t know the market. Right. Real estate can turn on a dime in an instant momentous kind of thing, it’s terribly emotional, and believe me, you need to do it every single day and live it in order to understand how you have to play this to win.

 

Well, we can see the subtle changes coming before they actually hit. So I think over the next three to five years that’s gonna be basically what I think is the time frame for this market, and here’s what I think is gonna happen. It’s gonna taper down, but in this area it’s still going to be good.

 

I think we have a good market here. I think you’re going to get the best of both worlds. And let me just try to tell people what I think is the magic of real estate. I think you can be in the stock market. You can be in anything, but real estate right now is what I call the TINA, there is no other alternative right now, whether it’s commercial or residential, and it’s because of the low interest rates.

 

That’s why I’m telling you, get in now while you can. Let me give you an example. You bought a house for $600,000 in 2002 and you got a twenty 5% down, 30-year fix, and you paid 6 or 7 percent. Your payment’s about 4000 a month, and here’s the way it goes at the bank every month. When you make that mortgage payment, 9% reduces the loan and all the rest went to the bank in interest.

 

Fast forward to today, same house, six hundred thousand hasn’t appreciated one dime. But now, you get the loan for 4.40%. Your payment is a thousand dollars less and now when you make your mortgage payment, here’s what is happening ten percent of that payment goes to pay down the loan, the rest goes to interest.

 

What I just told you is, you build well in real estate, because every month, you’re owning the difference of 9 over 27, every month. So in three to five years, if you both sold those house, the person that had 27% going into equity when he walks away with wealth. A lot more than the person that only got 9%.

 

That’s why there is no other investment out there right now that can give you that kind of return. So what I just told you is, you build wealth, and it doesn’t even have to appreciate. If it appreciates, it’s like a bonus. Yeah, you get the bonus. So at the end of the day, three to five years, and here’s what I think is gonna happen.

 

In the really hot, hot, hot areas you probably will look back and you will have double digit appreciation of some kind. In the areas that came back slower that went down further in the downturn you’re probably going to see some single digit appreciation at the end of the day. But I think right now is really a sweet spot because it’s beginning to taper just a bit, it’s cooling down a little bit, it was frenetic, this is the best thing that could happen across the board, especially for us, because we are considered the hottest real estate market in the nation.

 

And just to tell you what that means, San Francisco, medium average price now is bordering close One million dollars that is absolutely unbelievable back already to where it was and they are going to be on the peak in some areas. Look, get good advice, listen to the real estate person that you work with, make sure that they understand how to work in this market, because I’m telling you: it’s a good investment, but you need to know how to do it.

 

Yeah, I agree. And thank you Carole, so much for sharing your knowledge, it’s always so appreciated, I know. It’s a pleasure. Yeah, we’ll come back and see you again in six months, we’ll get an update. Yeah, we’ll see if we’re right. Thanks so much for tuning in. I’ll talk to you soon.

July 4th Events In San Francisco! By Greg & Lisa Doyle, J. Rockcliff Realtors

Here are more events going on in the city tomorrow!  Let us know if you go to any of them!  Happy 4th of July!

SAN FRANCISCO

Alcatraz fireworks

http://www.alcatraz.us/?event=offer.detail&offerId=3718

Fourth of July Dinner Dance & Fireworks Cruise in San Francisco – Four-course seated dinner, open premium bar, fireworks, live bands and dancing, 6:30pm – 11pm. Thursday, July 4th , 2013. 1(800)-410-8233.

Blue and Gold Fleet fireworks

http://www.blueandgoldfleet.com/special-events/

Fourth of July Fireworks Cruise – Music, fireworks, dancing, drinks and snacks. Watch San Francisco fireworks from the bay. Sailings begins Thursday, July 4, 2013 from Pier 39 in San Francisco and Tiburon at 8pm. (415) 705-8200.

Fillmore District

http://www.fillmorejazzfestival.com/

Fillmore Jazz Festival – Free live jazz music, arts and crafts, and gourmet food. Saturday July 6 and Sunday July 7, 2013 10am – 6pm RAIN OR SHINE. Fillmore St. between Jackson & Eddy, San Francisco, CA. (800) 310-6563.

Hornblower 4th of July cruise fireworks

http://www.hornblower.com/port/category/sf+JulyFourth

4th of July Premier Dinner Dance Cruise – Watch San Francisco fireworks from the bay. 4-hour cruise, dinner, cocktails, music, views, fireworks and more. Departs Thursday, July 4, 2013 from Pier 3, San Francisco, CA at 6:30pm. 1 (888) 979-7116.

Pier 39 fireworks

Events

Fourth of July Celebration at The PIER – PIER 39 celebrates Independence Day with fun for the whole family featuring musical entertainment, activities, and fireworks. The City of San Francisco will treat spectators to an elaborate fireworks display over the San Francisco Bay. Thursday, July 4, 2013. Pier 39, San Francisco, CA 94133. (415) 705-5500.

Stern Grove

http://www.sterngrove.org/home/celebrate75/july8/

San Francisco Symphony – The San Francisco Symphony performs with conductor Edwin Outwater in a program featuring Gershwin’s An American in Paris, Ravel’s Bolero, and traditional French and American songs with soprano Measha Brueggergosman. Sunday, July 7, 2013, 2pm. 19th Ave. & Sloat, San Francisco. (415) 252-6252.

Lisa Doyle, TheDoyleTeam.com, Greg Doyle, San Ramon Real Estate, Real Estate in San Ramon, Danville Homes, Bay Area Homes, Bay Area Short Sales, Bay Area Foreclosure, Short Sale in San Ramon, East Bay Real Estate Market, Hardship