We Specialize In These SoCal Area Communities

Alhambra - Arcadia - Duarte - Azusa - Pasadena - West Covina - Chino Hills - Diamond Bar - Glendora - Fullerton - Rancho Cucamonga - Brea - Walnut

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Did Our Market Improve in 2016?

From 2015 to 2016, our market improved greatly. Here are some numbers to supplement that. 

How did our southern California real estate market do in 2016? I pulled the year-end data and compared it to how the market did in 2015, and the news is good.

According to the U.S. Bureau of Labor Statistics, the 2016 inflation rate was around 1.8%. In our market, the median home price increased by 3.6% from $564,000 in 2015 to $585,000 in 2016. In other words, we doubled the inflation rate. The number of homes sold only increased by 0.5% from 2015 to 2016, but the average number of days needed to sell a home decreased by three days. In 2015, it took 61 days. In 2016, it took 58 days.

For a more in-depth look at our local market activity over the past year, I pulled the numbers from three separate regions and did the same comparison with the previous year.

Alhambra: The median home price increased by 2.25% from $550,000 in 2015 to $562,000 in 2016. The number of homes sold decreased by 6% from 405 in 2015 to 370 in 2016. The average days on market increased from 53 days in 2015 to 57 days in 2016. This increase in the number of days needed to sell a home can be partially explained by the fact that Alhambra is a more mature city, age-wise, with fewer new homes and less overall movement between them.

Chino Hills: The median home price increased by 3.6% from $606,000 in 2015 to $628,000 in 2016. The number of homes sold increased by 3% from 884 in 2015 to 908 in 2016. The average days on market decreased from 69 days in 2015 to 60 days in 2016.

Rancho Cucamonga: The median home price increased by 4% from $467,000 in 2015 to $486,000 in 2016. The number of homes sold increased by 9% from 1,791 in 2015 to 1,807 in 2016. The average days on market decreased from 64 days in 2015 to 58 days in 2016.

As you can see, our market improved in 2016, and a 3.6% overall appreciation rate is fantastic. Keep in mind that you have a one-to-five leverage ratio for your down payment on the average home that you purchase. Paying 20% down to control 100% of the value constitutes a one-to-five leverage ratio. A 3.6% appreciation rate multiplied by five equals 18%. Therefore, your down payment has increased by 18%

If you have any questions about our market, please feel free to give me a call. I look forward to talking with you!

What Can You Expect From These Rising Interest Rates in 2017?

While interest rates have shot up since the end of the election and are predicted to rise even further, 2017 will still be a great year to buy a home, and today I want to tell you why. 

Since the election was decided, interest rates have shot up, and many of you have been wondering how that’s going to affect the housing market next year. Today I’ve brought in Dave Brown, Vice President of Catalyst Lending, to help explain in detail what we can expect to see.

The good news is that, according to Dave, our market is strong enough to bear this higher rate. Rates will probably continue to increase slightly, but there are a couple strategies a good Realtor and a good lender can help you implement to mitigate this effect.

First of all, a lot of people don’t realize that instead of getting a reduction on a sales price, you can take those same dollars and use them to buy down the interest rate. That will actually have a much greater impact on keeping the payments low than a reduction in the sale price.

The other strategy is using an adjustable rate mortgage, such as a 7/1 ARM. The average term that people keep their loan is seven years, so why pay for a 30-year fixed rate if you’re not going to keep it for all 30 years? 7/1 ARM rates today are right about where the fixed rates were prior to the election. Speaking from experience, I have an adjustable rate loan from the 80's and 90's until I switched to a fixed rate in 2004. Dave himself has never had a fixed rate mortgage on any of his homes or investment properties.

Lastly, the Mortgage Bankers Association has predicted that we’re actually going to see more purchase transactions in 2017 than we did in 2016. In Dave’s opinion, 2017 is going to be a great year to buy.

If you have any questions, please feel free to give me a call or shoot me an email. Until next time, we wish you a very merry Christmas and a happy New Year.

What Is Senate Bill No. 833 & How Will It Help CA Residents?

Recently, California passed Senate Bill No. 833, which will take effect on January 1st. I’ll go over how Senate Bill No. 833 will protect your estate from Medi-Cal fees today.  

Many of you may not know this, but if you or a loved one file a claim with Medi-Cal, upon your passing, the California Department of Health can file a claim against your estate to reclaim all of the Medi-Cal fees. 

Many people use Medi-Cal to pay for nursing homes, hospitalization, long-term care, or assisted living. The good news for California residents is that Senate Bill No. 833 will prevent Medi-Cal from filing a claim against your loved one’s estate after they pass away. 

How does this work? Starting on January 1st, 2017, if your loved one has a living trust, Medi-Cal cannot go after your estate. Make sure that you and your family have set up a living trust. If they already have one, make sure that it is set up properly so that you won’t have to worry about Medi-Cal coming after the estate. 

A lot of you have asked me about the best way to hold title. I am not an attorney, but I can give you my advice as a real estate practitioner. If you have a residential property and a conventional loan from a lender or bank, the best way to hold title is a living trust. If you have a commercial property with an LLC, the LLC can have a living trust as well. Doing so will help your family avoid a lot of problems in the future. 

A living trust is the best way for you to hold title.

I also recommend that you set up a durable power of attorney. That way, you can appoint someone to handle your business if you are sick or otherwise unable to do so. You should also set up an alternative health care directive determining who can make a decision on whether to operate or not.

So, make sure you set up a living trust. A lot of people worry about long-term care, but now you can have Medi-Cal pay for it without worrying about your loved one’s heirs selling the estate to pay for your Medi-Cal fees. Regardless of who the president is, Senate Bill No. 833 is great news for California residents. 

If you have any other questions about Senate Bill No. 833 or about setting up a living trust, give me a call or send me an email. I would be happy to help you!