Vol. 264 - Crossing the Street Safely

While setting up my "Sunday Open" signs last weekend, I noticed a smart couple in an SUV driving slowly beside their two young kids on bikes.  I used to see a version of this every once in awhile while jogging through the Presidio in San Francisco, only then, it was invariably a dog owner, exercising their dog. (Hey whatever works for you.)      

"We're teaching them to safely cross the street," the mom shouted as she stuck her head out the window and waved, letting me know that they weren't just stalking their children, but actually on an important mission.   

No explanation necessary; I totally get it. Cliff and I did a version of this same exercise when we moved to Piedmont, only on our bicycles.  We've all been there.  It's every parent's duty to make sure their kids can cross the street safely and get home in one piece - a responsibility we repeat as our kids learn how to drive later on. (Oh vey!)  

But whether it's navigating the mean streets of Piedmont, learning to take the wheel on the highway, heading off to out-of-state college , or moving into the GREAT WIDE WORLD beyond, I suppose there are versions of "crossing the street" that we face with our children throughout our entire lives (and theirs).   

I face them with my clients as well . . .  

And like any good crossing guard, I need to inform you that "crossing the street" is part-and-parcel of your journey to owning a home.  In other words, you can't get to the other side without putting one foot in front of the other.   

Not surprisingly, some of you are more prepared to step off the curb, while others tentatively hold back waiting for a break in the traffic. With news that the high-end market is up 29%, that 43% of home purchases are trading as ALL-CASH transactions, that inventory is significantly down while at the same time, buyer demand is way, WAY UP (!) waiting on the sidewalk for the light to change your way, may be an unfortunate misstep.   

With a much more competitive field now in play, you may be asking yourself if it's worth crossing the street at all?    

It is and here are five reasons why (taken from the KCM Blog) you should step off the curb . . .   

1.  Prices Are on the Rise!The latest Case Shiller Home Price Index revealed that home prices have appreciated 5.5% over the last year. This is occurring across the nation as increases were reported in 19 of 20 metropolitan areas, with expectations for continued appreciation over the next five years by leading economists and housing strategists.

 2.  Mortgage Interest Rates Are Expected to Increase!The Mortgage Bankers Association has predicted that, after reaching record lows in 2012, mortgage rates will creep up slowly in 2013 to 4.4%. (Rates have already increased by 2/10 of a point (3.32 to 3.53) in the last two months.)

 3.  Rents Are Continuing to Skyrocket!  Recently, Zillow reported that rents in the U.S. increased by 4.2% over the last year. Increases were 5% or more in many major metropolitan areas including Chicago, Boston, San Francisco, Detroit, Baltimore, Denver, San Jose and Charlotte.

 4.  New Mortgage Regulations Will Be Announced Later This Year (and they won't be easier)!Six regulators, including the Department of Housing and Urban Development, the Office of the Comptroller of the Currency and the Securities and Exchange Commission, are currently drafting the new Qualified Residential Mortgage (QRM) rule. Expectations are that they will decide on two major requirements for buyers looking to qualify for a mortgage: minimum down payment and minimum FICO scores. Many experts believe the new rules will be MORE stringent than current requirements.

5. Timelines Will Be Shorter!The dramatic increase in transactions caused many challenges to the process of buying or selling a home in 2012. We waited for inspections, dealt with last minute appraisals, and prayed that the bank wouldn't ask for "just one more piece of paper" before issuing a commitment on the mortgage. There are fewer transactions this time of year. That means that timetables on each component of the home buying process will be friendlier for those involved in transactions over the next 90 days. (These are national predictions. In the Bay Area, that 90-day timeline suggestion is far less.)

 With that said, it's time to cross the street.  But don't worry, I'll be there to hold your hand.