Palos Verdes Blog

Palos Verdes blog is about Palos Verdes real estate market trend, valuable news about how to buy, sell, or lease homes, condos, town-homes, apartments, multi-family homes, and land, including short sales, and foreclosure information.

March 27, 2020

First-time homebuyers prefer lower interest rates to bigger tax breaks

money market low interest rates mortgage

Forget a two-car garage and a white picket fence — first-time homebuyers want lower interest rates.

A recent Redfin survey of homeowners who purchased their first home within the prior 12 months found lower interest rates were highest on first-time homebuyers’ wish lists. Of the first-time homebuyers surveyed about what the government can do to make homebuying easier:

  • 66% said lower interest rates;
  • 49% said tax credits;
  • 45% said easing lending standards; and
  • 24% said encouraging more home construction.

While tax credits are nice benefits for homeowners to have access to come tax season, they don’t actually help in the homebuying process. And yet, the federal government loses out on approximately $30 billion a year in tax revenue due to the mortgage interest deduction (MID).

This amount is equivalent to granting every first-time homebuyer a theoretical one-time refundable tax credit of $10,000, according to the Brookings Institution. The MID is worshipped by real estate professionals as a major enticing factor for homebuying. But homebuyers don’t have access to the savings until tax time (after they’ve purchased), and even then, it only makes a significant dent in their taxes as long as their mortgage payments consist mostly of interest.

Related article:

The mortgage interest deduction, explained

On the other hand, the factor least cited by first-time homebuyers — more residential construction — is likely to be the most helpful, since it directly translates to more inventory.

Here in California, residential construction decreased 5% for SFRs and 6% for multi-family units in 2019. This trend is the opposite of what needs to occur to meet the ever-rising demand for new housing across the state. The lack of inventory caused by the construction shortage over the past several years has led to home prices increasing well beyond the pace of incomes, lifting entry-level homes steadily beyond the reach of most first-time homebuyers.

The good news: lower interest rates are here

Fortunately for real estate participants of all types, mortgage interest rates are at an all-time low in March 2020.

The average interest rate on a 30-year fixed rate mortgage (FRM) is below 3.4% in mid-March, down from 4.3% a year earlier. All other factors being the same, this increase in buyer purchasing power alone allows the average homebuyer to borrow 10% more today compared to the same time last year.

This purchasing power boost is helpful for homebuyers hoping to qualify for higher prices. But the thing is, everyone else has access to the same low interest rates. Thus, today’s low interest rates will essentially act as a boost for home prices — not a boost for first-time homebuyers.

The true cure for today’s entry-level housing crisis will be more residential construction. California’s government is well aware of the housing market’s supply-and-demand imbalance and has been making efforts to add to the entry-level housing inventory for the past couple of years now. But, evidenced by 2019’s lower construction starts, these efforts continue to fall short.

Individuals can get involved and encourage more residential construction at their local level by being advocates for:

  • looser zoning;
  • higher density in desirable urban centers;
  • quicker permitting for multi-family developments;
  • incentives for accessory dwelling units (ADUs); and
  • fewer parking restrictions near public transit.


March 23, 2020

National Market Update Week of March 23, 2020



Entering the economy's coronavirus contraction, February Housing Starts showed strength, off 1.5% after January's large upward revision, but up 39.2% from a year ago, at a 1.599 million annual rate.

Single-family starts shot up 6.7% at the fastest pace since 2007, and single-family permits hit a post-recession high. Builder confidence was positive, but expect declines soon, followed by a big rebound after coronavirus issues get resolved. 

Existing Home Sales grew 6.5% in February, to 5.770 million annually, the highest level in 13 years, but these contracts were signed before coronavirus. Once the emergency passes, low inventories will still be a challenge.



WORST WEEK SINCE 2008... By the end of a very bumpy five days of trading, the three major stock market indexes were off big time, marking their worst week since the 2008 financial crisis. But now the driver is a health crisis.

The volatile selloff persisted as the number of coronavirus cases continued to grow and no one can say when the growth curve will start to reverse. Social distancing measures should flatten the curve but contract the economy.   

Companies curtailing operations will shrink incomes and jobs. But Congress passed $8.3 billion of worker relief, is looking at $1.2 trillion of economic stimulus, the President waived student loan interest, and taxes aren't due until July 15.

The week ended with the Dow down 17.3%, to 19,174; the S&P 500 down 15.0%, to 2,305 and the Nasdaq down 12.6%, to 6,880.

Even safe-haven bonds sold off, suggesting investors were opting for cash. The UMBS 4.0% ended down 1.11, to $103.39. Freddie Mac's Primary Mortgage Market Survey saw the national average 30-year fixed mortgage up again "to help manage refinancing demand." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... 2019 saw more than 2 million first-time home buyers for the third year in a row, the first time that's happened since 1993. First-timers bought 38% of the single-family homes sold and took out 56% of all mortgages.



NEW HOME SALES, Q4 GDP UP, INFLATION OK, CONSUMERS SPEND... Data should continue to depict economic strength to help weather coronavirus economic  impacts--New Home Sales up in February, Q4 GDP up above 2%, PCE Prices barely rising, and Personal Spending showing consumers supporting 70% of the economy for another month.

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.



Forecasting Federal Reserve policy changes in coming months... Fed bankers canceled their March 17-18 confab after they dropped the rate to near zero March 15. Wall Street believes they'll keep it there. Note: In the lower chart, a 0% probability of change is a 100% certainty the rate will stay the same.

Current Fed Funds Rate: 0%-0.25%



Apr 29 


Jun 10 


Jul 29



Probability of change from current policy:



Apr 29 


Jun 10 


Jul 29


via CB Loans

March 21, 2020

Happy Spring!

As Maslow once said, "Almost all creativity involves purposeful play." Wishing you a playful and creative spring.
We are always here to help you with any home financing needs.
Call or email anytime!

Posted in Palos Verdes Blog
March 18, 2020

Recovery News in Coronavirus

-China has closed down its last coronavirus hospital. Not enough new cases to support them.


- Doctors in India have been successful in treating Coronavirus. Combination of drugs used: Lopinavir, Retonovir, Oseltamivir along with Chlorphenamine. They are going to suggest same medicine, globally.


- Researchers of the Erasmus Medical Center claim to have found an antibody against coronavirus.


- A 103-year-old Chinese grandmother has made a full recovery from COVID-19 after being treated for 6 days in Wuhan, China.


- Apple reopens all 42 china stores,


- Cleveland Clinic developed a COVID-19 test that gives results in hours, not days.


- Good news from South Korea, where the number of new cases is declining.


- Italy is hit hard, experts say, only because they have the oldest population in Europe.


- Scientists in Israel likely to announce the development of a coronavirus vaccine.


- 3 Maryland coronavirus patients fully recovered; able to return to everyday life.


- A network of Canadian scientists are making excellent progress in Covid-19 research.


- A San Diego biotech company is developing a Covid-19 vaccine in collaboration with Duke University and National University of Singapore.


- Tulsa County's first positive COVID-19 case has recovered. This individual has had two negative tests, which is the indicator of recovery.


- All 7 patients who were getting treated for at Safdarjung hospital in New Delhi have recovered.


- Plasma from newly recovered patients from Covid -19 can treat others infected by Covid-19.


So it's not all bad news.


We are a strong resilient species and will emerge even stronger from these events

March 13, 2020

Finishing This Week Stronger Than Last

Let’s take these quotes as they will allow us to finish this week stronger and have a great weekend!

- “Practice like you have never won … perform as you’ve never lost."

- “Use the 5 x 5 rule … if it’s not going to matter in 5 years … don’t spend more than 5 minutes being upset by it.”

- “Not all storms come to disrupt your life … some come to clear your path.”

- “Don’t save anything for a special occasion … being alive is a special occasion.”

- “Do not listen with the intent to reply … listen with the intent to understand.”

“Inner peace begins the moment you choose to not allow another person or event to control your emotions.”

March 12, 2020

Your 2020 Cleaning Checklist

Your Spring 2020 Cleaning Checklist

Spring is a season of fresh starts: The weather is getting nicer, and plants are in bloom. So it’s no wonder that spring-cleaning is a tradition that goes back decades — if not centuries.

Why not bring some of that freshness into your home? Whether you plan to spend an hour focusing on one area of your house or an entire weekend getting everything in shape, this spring-cleaning list should help.

Get ready to open your windows and let in some crisp spring air as you cross off the tasks on this handy checklist.

via Loan America

Posted in Palos Verdes Blog
March 9, 2020

National Market Update Week of March 9, 2020


Freddie Mac's Primary Mortgage Market Survey reported the national average 30-year fixed mortgage rate hit "the lowest level in its nearly 50-year history," as noted by their chief economist. 

He added that mortgage applications are up 10% from a year ago "and show no signs of slowing down" and with "recent increases in new construction...the housing market continues to be a positive force for the broader economy." 

Attom Data reports that flipped home sales in 2019 hit their highest level since 2006, yet returns hit an 8-year low. But the average gross profit on flips was still $62,900, a nice 40.6% return on investment (ROI).


ROLLERCOASTERING UP... Stock prices swung wildly up and down daily, as investors speculated about the still unknown impact of the coronavirus on global economies. However, all three market indexes ended up for the week.

Efforts to control the spread of the virus do work, as the growth rate of new cases in China peaked at the start of February. To soften any economic impact, the Fed voted a 0.5% rate cut at an emergency meeting Tuesday.  

Our economy appears poised to withstand any coronavirus shocks. February saw a blowout 273,000 new jobs--358,000 including upward revisions to December and January--and a solid boost in wages, as unemployment fell to 3.5%

The week ended with the Dow UP 1.8%, to 25,865; the S&P 500 UP 0.6%, to 2,972; and the Nasdaq UP 0.1%, to 8,576.

Investors seeking safety sent bond prices through the roof. The UMBS 4.0% ended UP .50, at $105.77. As covered above, the national average 30-year fixed mortgage rate hit an all-time low in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Thanks to the strong job market, more people are paying their bills on time, which sent the average U.S. FICO score to a record high 703 in 2019--great news for the mortgage and real estate markets.


INFLATION HOLDS STEADY... The key economic reports will all track inflation. The Consumer Price Index (CPI) should come in flat, with Core CPI, excluding volatile food and energy prices, up a little. The same for the Producer Price Index (PPI) of wholesale prices, which foretell where consumer prices may go.

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.


Forecasting Federal Reserve policy changes in coming months... After last week's 0.50% Fed rate cut, Wall Street expects a 0.75% drop next week and a 0.25% trim in April, but an even chance for a bounce back up in June. Note: In the lower chart, a 100% probability of change is a 0% probability the rate will stay the same.

Current Fed Funds Rate: 1.00%-1.25%



Mar 18 


Apr 29 


Jun 10



Probability of change from current policy:



Mar 18 


Apr 29 


Jun 10


March 6, 2020

Welcome to the month of March

If you look carefully at the last couple of weeks, there’s been a little turbulence in almost everybody’s lives. Between the coronavirus … the stock market adjusting … the overall interest in the Democratic potential candidate … the extremely low inventory that most of North America is experiencing … remaining positive and strong is a little bit more of a challenge. Hopefully, these thoughts will take you into the month of March and carry you through the end of the first quarter of what’s going to be a great year.

1.    Always be the calming force in every situation … Joan Pate

2.    Even if you’re on the right track, you’ll get run over if you just sit there … Will Rogers

3.    I am convinced that about half of what separates the successful entrepreneur from the non-successful ones is pure perseverance … Steve Jobs

4.    Never confuse education with intelligence.

5.    If you work just for money, you’ll never earn as much as you want. However, if you love what you’re doing and put the customer first … both success and money will be yours … Ray Kroc

March 2, 2020

National Market Update Week of March 2, 2020

What a week for home sales data! New Home Sales spiked 7.9%, to a 764,000 annual rate in January, the hottest sales pace since 2007. Single-family home sales are now a healthy 18.6% higher than a year ago.

For existing homes, the National Association of Realtors index of Pending Home Sales rose 5.2% in January, "due to the good economic backdrop and exceptionally low mortgage rates," according to their chief economist.

Yet price gains continue to slow. The FHFA price index for homes bought with conforming mortgages is up 5.1% annually, down from 5.9% a year ago, and the Case-Shiller price index is up only 3.8% from a year ago.


BUSY TIME FOR BUFFET... Legendary investor Warren Buffet says he buys when everyone's selling, so he must have been very busy last week, as the Dow, S&P 500, and Nasdaq suffered their worst weekly selloffs in a decade. 

These were totally motivated by growing uncertainty about how far the coronavirus will spread and how soon it will be brought under control. We all care about the human impact, investors the economic impact as well.

Meanwhile, inflation was subdued in the Core PCE Prices read, and Q4 GDP stayed at a decent 2.1%. Personal Income rose strongly and University of Michigan Consumer Confidence came in just short of its expansion peak.

The week ended with the Dow down 12.4%, to 25,409; the S&P 500 down 11.5%, to 2,954; and the Nasdaq down 10.5%, to 8,567.

An avalanche of flight to safety trades powered bonds to monster gains. The 30YR FNMA 4.0% bond ended UP .46, at $105.27. In Freddie Mac's Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate fell back to its three-year low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... First American's chief economist tells us, "In 2020, 4.8 million millennials will turn 30--the peak age for home buying...fortunate to be entering the housing market at a time of historically low mortgage rates and a strong economy."



MANUFACTURING, SERVICES SECTORS GROW, SO DO JOBS... Both sectors of the economy keep expanding, as the ISM Manufacturing and ISM Non-Manufacturing indexes should remain north of 50. Nonfarm Payrolls are also expected to grow to just south of the 200,000 mark, with Average Hourly Earnings also predicted to rise. 

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

via CB Loans

Feb. 28, 2020

Real Estate Tips: Home-Maintenance Checklist for March

Now that the winter season is coming to a close, finally, it is time to see what all of the wind, snow, and colder temperatures have done to our homes. Indeed before it is time to spring clean, we must first ensure our property is properly maintained and has no significant damages. Follow some of the steps below and consider this your March home-maintenance checklist, something that you should follow each and every year.

    •    Work on the front entry - 
The saying ‘you never get a second chance to make a first impression’ certainly works in real estate as well. Perhaps the most important way to stay on top of your homes image and your overall investment is to make your entrance more appealing with paint, flowers, a new front door, railings, pathway, and more.

    •    Check the roof dams - Pull up a ladder now that the worst of the damaging home weather is behind us. Go up to your roof and make sure that the valleys are clear and that any sticks, potential rodents, leaves, tree needles, and other debris are out of your gutters. Dammed up items on your roof can lead to penetrating moisture and thus structural issues including mold, cracks, and more. If the repairs are too much for you to tackle yourself, get in touch with a professional immediately.
    •    Search for water under the house - Get beneath your house to see if there is any accumulated water that may have built up from the snowy season. Even if it’s raining outside, it should be dry under your home. Clearly if not, leaks, cracks, and more exist. If you are able to get to the root of the problem, brilliant. If not, consult a plumber to see if there are pipe leaks, or call a maintenance professional if an exterior issue such as dirt mounded around shrubs, hills leading into the house, drainage issues, water gathering slopes, trees, or more may be directing water towards your home and thus severely damaging it.
    •    Book a home inspector - Do not wait until the time when you are hoping to sell your home to book a home inspector. By then, troubles with your foundation, roof, siding, and more may be beyond repair, or at least will be more expensive for you to fix then as opposed to if you solved the problem at an earlier date. Stay on top of your home’s maintenance and head off expensive repairs by having this professional search from top to bottom. Go along the search with them so that you are aware of any current or future problems, and to also help you learn more about your property and the way it works and reacts to weather and other factors.

    •    Banish household smells - 
Regularly cleaning your home is always the best way to go to ensure that there are no unwanted apparent odors. Since the winter is gone, clean then store away larger jackets, muddy boots and the like that are no longer needed until next season. While doing an entire home cleaning takes a great deal of time, and if a professional is sought, it can be rather expensive, instead look to just maintain a cleanly lifestyle so that tasks are not daunting and too much to handle. Clean the garbage disposal, all sinks, the fridge, garbage cans, and other areas where there may be lingering smells.

    •    Install two water-saving devices - As kitchens and bathroom faucets consume a great deal of water, cut down on your property’s water usage by installing aerators inside faucet heads. These mix air with the water and maintain a solid water pressure while at the same time reducing the amount of water flowing. Also, toilet-tank displacers are brilliant investments especially for older toilets as they hold more water than they need for flushing.
    •    Inspect drywall and repair where necessary - Every year around this time, walk around the interior of your home and be meticulous to see if there is any peeling, bulging, bubbling, nail holes, gouges, dents, or cracking in your drywall. A wise tip is to use a spatula and a container of lightweight putty and smoothly put it in the holes and scrape the repaired spot until it is flushed with the wall. After the putty is dry in roughly 24-hours time, rub it with fine-grained sandpaper, retouch with primer, and then paint accordingly. If you are uncomfortable doing this job, of course there are many professionals who are more than capable of handling such a task.

via tedpietras