MAY 2017

Ali BavafaReal Estate & Mortgage Advisor

(949) 212-2154

MAY 2017

CalBRE# 01389539 | NMLS# 234635

34.2

58.9

69.2

34.3

59

69.4

Less than 35 Years Old 35-44 45-54

2016 1st Quarter2017 1st Quarter

NAHB

Homeownership Rate % by Age of Household Head

Frank MartellPresident & CEO of CoreLogic

“A potent mix of strong job gains,household formation, population growth and still-attractive mortgage rates in the face of tight inventories are fueling a continuing surge in home prices across the U.S. Price gains were broad-based with 90 percent of metropolitan areas posting year-over-year gains.”

Tax Advantages of Homeownership

Mortgage Interest Deduction “Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also may deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds. Taxpayers who do not own their home have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”

Property Tax Deduction“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”

According to the Tax Policy Center’s Briefing Book…

Imputed Rent“Buying a home is an investment, part of the returns from which is the opportunity to live in the home rent-free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords.”

Profits from Home Sales“Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their home if they satisfy certain criteria: they must have maintained the home as their principal residence in 2 out of the preceding 5 years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous 2 years.”

34%

26%

18%

13%

5%Real Estate Stocks / Mutual Funds Gold Savings Accounts / CDs Bonds

America’s Choice of Best Long Term Investment

Gallup 2017

Best Long Term InvestmentBy Income Category

27%

36%38%

17%

23%

35%

22%19%

13%

19%

13%

7%6% 5% 5%

Less than $35K $35K-$74,999 $75K and over

Real Estate Stocks/Mutual Funds Gold Savings Accounts/CDs Bonds

Gallup 2017

The Impact of Monthly Housing Inventory on Home Prices

LESS THAN 6 MONTHS

BETWEEN6-7 MONTHS

GREATER THAN7 MONTHS

SELLERS MARKETHome prices

will appreciate

NEUTRAL MARKETHome prices

will only appreciate with

inflation

BUYERS MARKETHome prices

will depreciate

CoreLogic

Actual Year-Over-Year % Change in PriceBy State

KEEPINGCURRENTMATTERS.COM 6

HOW TO GET THE MOST MONEY FROM THE SALE OF YOUR HOMEEvery homeowner wants to make sure they maximize the financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to insuring you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counter intuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house. (see chart below)

Privacy: Having a space that is solely your own

Stability: Having control of your future direction & security

KEEPINGCURRENTMATTERS.COM 8

DON’T WAIT! MOVE UP TO THE HOME YOUR FAMILY ALWAYS WANTEDNow that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. Prices are still below those of a few years ago and interest rates are still near 4%.

Sellers should realize that waiting to make the move while mortgage rates are increasing probably doesn’t make sense. As rates increase, the price of the house you can buy will decrease if you plan to stay within a certain budget for your monthly housing costs.

The chart on the right details this point.

With each quarter percent increase in interest rate, the value of the home you can afford decreases by 2.5%, (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.

Act now to get the most house for your hard-earned money.

6%

10%

28%

24%

13%14%

5%

Under $150K $150-$199K $200-299K $300-$399K $400-$499K $500-$749K Over $750K

% of sales by price range

New Home Sales

Census

January February March April May June July August September October November December

Pending Home Sales

NAR 5/2017

2014

2015

20162017

0.8%

-2.4%-2.7%

1.8%

3.9%

U.S. Northeast South

PENDINGHome SalesYear-Over-Year By Region

Midwest West

NAR 5/2017

Home Prices

-7.1%

4.9%

19.0%

23.9%

32.1%30.7%

$0-100K $100-250K $250-500K $500-750K $750K-1M $1M+% -7.1% 4.9% 19.0% 23.9% 32.1% 30.7%

% Change in Salesfrom last year by Price Range

NAR 5/2017

BUYERDEMAND

NAR

Buyer TrafficBy State

INTERESTRATES

3.39

3.49

3.59

3.69

3.79

3.89

3.99

4.09

4.19

4.29

1/7 2/4 3/3 4/7 5/5 6/2 7/7 8/4 9/1 10/6 11/3 12/1 1/5 2/2 3/2 3/30 4/27

30 Year FixedRate Mortgages

from Freddie Mac

Freddie Mac 5/2017

4.02

3.97

Mortgage Rate Projections

5/2017

Quarter Fannie Mae MBA NAR Average of All Three

2017 3Q 4.2 4.4 4.3 4.30

2017 4Q 4.3 4.6 4.5 4.47

2018 1Q 4.3 4.7 4.7 4.57

2018 2Q 4.3 4.9 4.9 4.70

2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4Rate 3.7 3.8 4 3.9 3.7 3.6 3.5 3.8 4.2 4.4 4.5 4.5

Freddie Mac

Mortgage RatesFreddie Mac 30 Year Fixed Rate

- Actual- Projected

2015 2016 2017

0

100

200

300

400

500

600

700

800

900

June 2004 June 2005 June 2006 June 2007 June 2008 June 2009 June 2010 June 2011 June 2012 June 2013 June 2014 June 2015 June 2016 March 2017

Historic Data for the MORTGAGE CREDIT AVAILABILITY INDEX (a report from the Mortgage Bankers Association)

MBA

0.02% 0.47%

9.0%

20.8%

24.8%

32.5%

12.4%

500-549 550-599 600-649 650-699 700-749 750-799 800+

FICO® Score Distribution

54.6% All Closed Loans as per Ellie Mae

KEEPINGCURRENTMATTERS.COM 17

Do you really need an agent to sell your house in today’s market? Here’s what Fannie Mae suggests to sellers on the “Know Your Options” section of their website:

“Select how you’ll market and list the home (e.g., with a real estate agent or for sale by owner). There are pros and cons to each, but unless you are experienced at selling homes, it usually makes financial sense to get professional help—homes sold by agents typically sell at a higher price and spend less time on the market. An agent will also help you determine the best pricing for the house, they’ll market the home, and they’ll be your advocate throughout the process.”

Let’s go over the points they made:• Homes sold by agents typically sell at a higher price• Homes sold by agents typically spend less time on the market• An agent will help you determine the best pricing for the house• An agent will market the home• An agent will be your advocate throughout the process

If Fannie Mae says that using an agent probably makes sense, perhaps you should interview an agent before putting your house up for sale.

EVEN FANNIE MAE AGREES: HIRE A PRO TO SELL YOUR HOUSE

CONTACT ME TO TALK MORE

Insert Your

Photo

ALI BAVAFAReal Estate & Mortgage Advisor

Ali@BavafaGroup.comwww.BavafaGroup.com

(949) 212-2154CalBRE# 01389539 | NMLS# 234635

I’m sure you have questions and concerns…

I would love to talk with you more about what you read here, and help you on the path to selling your house. My contact information is below. I look forward to hearing from you…