The Federal Funds rate is what banks charge each other for overnight loans, which allows banks to lower interest rates to their best customers. Chairman Bernanke lowered this rate by ¾ of a point on Tuesday 1/22, which was the largest drop in 18 years. There is even talk that the fed may drop rates once again when they meet next week. Bear in mind there is not just one rate there are many! Click here for a list of major rates.

Many people incorrectly assume the federal funds rate is directly connected to home loan rates. The health & movement of Wall Street is a better indicator of where home loan rates are. As the stock market rises, investors look to place money in shorter-term stocks, so rates rise. When stocks fall, investors look to place money in more secure long-term investments like home loans. The movement of the ten-year Treasury note highly corresponds with home loan rates. What may cause the common misconception that links federal rates to home loan rates is this scenario: when the market is down and home loan rates are subsequently down, the fed sometimes drops rates to spur the economy - that is why the federal rates and home loan rates do sometimes correspond.

However, the drop in federal rates does have an immediate effect on people who have adjustable rate mortgages or equity lines tied to major indexes like the LIBOR index or Prime. These rate cuts may help those most in danger of foreclosure with lower monthly payments.

So, Wall Street and many foreign markets took big plunges this week after a poor fourth quarter in 2007, which is why home loan rates are currently near all-time lows. With slowing economies around the world, we may see home loan rates once again at record lows in coming months. All of this, of course, is in response to economic woes in the US and around the world. The Fed hopes that lowering rates will stimulate spending and avoid or lessen a possible recession.

So how can I benefit from these market conditions?

1. Buy a Home: If you are thinking of buying a home, you have an excellent opportunity to not only lock in some of the best rates in history, but our local housing market is near the end of a 2.5 year correction. Find San Diego Homes for sale at my website.
2. Refinance a Lo­an: If you own a home and want to stay in it, contact a lender to discuss refinancing. This only applies if your home is worth more than what you currently owe the bank. Call me at 858-761-1707 for a list of the best lenders in town.
3. Get An Equity Line: If you own a home and have significant equity, you can pull money out with an equity line of credit to do upgrades, repairs, buy a car, or take a 2-month vacation around the world.

Adam Pascu, San Diego Realtor

On December 13th, the US Senate voted on a watered down version of the bill that left alternative energy supporters agast. By a vote of 59-40, just one vote short of the number needed, the Senate failed to include a tax title in the 2007 energy bill that would have provided investment and production tax credits for renewable energies.

Please read the full blog posted at my new Green Housing website, which is not done yet, but should be in January....any suggestions for what I can add to the site would be greatly appreciated!

thanks,

adam pascu 

I wrote this article a few months ago for a local portal that publishes me once/month:

http://www.discoversd.com/articles/sd-real-estate/205.html

The title says it all - talks about main reasons new homes take some of the worst hits during a down market. I also have some ways that I've negotiated good values for my buyers and would like to hear the experiences of other local Realtors as to ingenious ways to get the most for your buyer's when working with builders.

One thing I'd add to this article that I've discovered lately is that although the builders are always ready to build another, and hence have a large inventory to sell, they are actually only building a very small number of homes at a time in response to the slow sales market. So after viewing all the models with a builder, I find that there are usually less than 5 homes that will be ready in the next 3 months.

Any thoughts you have on taking advantage of new home construction as a buyer's agent would be most appreciated!

Adam Pascu

San Diego Homes for sale

Will the San Diego wildfires affect San Diego real estate? The answer to this question is yes, but not nearly as much as you might think. Today we will examine a few distinct aspects of the situation and how they will affect the whole:

1. Lending & home prices
2. Inventory
3. Defensible space
4. Rental market
5. Insurance buyer confidence
6. Construction & contractors

What is happening right now?

Let's start with people who are currently buying. Right now, there are people in escrow who are having trouble closing on their house for a few reasons. If they are in an area affected by the fire or nearby a fire, many lenders are not funding loans until the fires are a safe distance away or completely contained.

Another issue involved with closing deals right now is insurance and home warranties. Some home warranty companies are not issuing warranties on homes anywhere near the affected fire areas. Insurance companies are also being cautious about homeowner's policies.

There is also a short-term effect on buyer confidence, most notably in nearby areas where the fires were centered (like in Rancho Bernardo Real Estate). We had a client looking in Rancho Santa Fe who called us this week, and requested to postpone their home search for now. So a few scared buyers are dropping out of escrow or postponing their home searches.

What will happen in the near-term?

One of the main issues we have is a number of San Diego home owners who will need temporary housing. With a low rental vacancy rate already going on, it is going to be very tough to find a home to rent. In addition, insurance companies are giving homeowners a monthly allowance for renting, making them less discriminating about saving money on their rental. All this will cause a spike in rental rates on top of the rates that have been steadily on the rise for over 5 years.

As of October 28, most estimates of homes lost in San Diego County are at over 1,600 homes. The inventory of San Diego homes for sale will not decline much. The number of homes lost comprises less than 0.5% of the total homes in our county; thus, such a small amount of inventory burnt should not affect the overall sales market. It is possible that a small percentage of investor's homes currently for sale may turn into short-term rentals in order to take advantage of the tight rental market, in lieu of a strong market to sell in.

In the 3-6 month range, we will also see a lot of construction, which will seriously limit the availability of skilled professionals, contractors and even unskilled labor. With all the construction going on, this may help boost our economy a small bit, which always helps the local housing market by increasing the pool of available buyers.

Taking a step back: The history of wildfires in San Diego

To really predict the future effect of this event, we must first examine historical models. Many people are beginning to realize - if they didn't know already - that wildfires have always been a regular occurrence in the county.

Most recently, we had the Cedar Fires in 2003, as well as fires in 1996, and they've been regularly occurring for as long as scientists can tell, even beyond modern records. The frequency and size of these fires are not changing much, although a small trend is that the fires are a little more regular, but smaller in scope. The real difference is that we are now populating the areas of East County where these fires have, in the past, had little effect on our general population.

What will happen in the long-term?

Neither of the last big fires seems to have affected the market trajectory, nor do I believe these fires will have a serious impact or change in our market today.

The savvy buyer will take advantage of the current situation and negotiate a great deal while market confidence is low. We've had an outpouring of support and positive response to these fires, which shows the great quality of our San Diego citizens and their ability to rebound and stay positive about the wonderful area in which we live.

Adam Pascu, Realtor

Stay on top of the San Diego Real Estate market on my website.

Have you ever looked at the news headlines regarding local or national real estate and been shocked by the conclusions made??  I have. It never ceases to amaze me what these writers get away with by using the type of scare tactics that should be saved for little children being told not to go straying into the woods alone.

Whenever I get done reading the article, I always find that the writer has some statistic that they are referencing to make the conclusion written in the headlines. But to get from the statistic to the conclusion is usually a large stretch and utter simplification.

Click here to read the blog I wrote for DiscoverSD on this topic of San Diego Real estate news headlines:

I appreciate any feedback you have on using statistics to reach a better estimate of home values.

Hello,

I personally feel that I will pay more for a product that better maintains/effects OUR environment than a less expensive one that burns fossil fuel all day long, but not everyone feels that way. Money still motivates - always has and always will to a certain degree.

So I found an insert in my last power bill (San Diego Gas & Electric) that suggested I can save money on my power bill by using/purchasing "green products". Here is the link:

http://www.sdge.com/residential/rebates_services.shtml

Is there anyone in the area that is familiar with going about this?  What I am looking for, if possible, are monetary benefits to using green products. If we can find products that are about the same cost, or less (even if it takes time to realize those savings), it will be much easier to promote green products and help protect OUR environment.

I welcome your comments,

adam pascu, REALTOR

Mission Hills Real Estate specialist  

ps. If you noticed my deliberate usage of "our environment" rather than "the environment" i hope you will continue this usage. Using "the" denotes the environment as something other, something foreign, and this needs to be changed. It is clear that we are connected to our environment, a part of it, and our language needs to reflect that. People have a natural tendency to help that which is connected to them and disregard that which is foreign, so let's do something simple by using language to correct the public viewing of OUR environment so that we can gain support in bettering things!

I wanted to see if anyone has any thoughts on this topic for me.  Obviously, it is not kosher to copy and paste an article written by someone else (i.e. plaigerism - a federal offense). If you like their article, link to it and make your own comments regarding the topics the original author discussed.

So my main question is how best to post articles that I write in different spaces across the web. For example, I am now writing articles for DiscoverSD.com (view our profile here). I would like to post articles that I write on various websites to reach a larger audience, however, I am concerned about duplicate content with how it relates to search engines. Basically, the idea is that if a search engine finds 2, 3 or 4 different pages on the web that have the same text in them, they disregard all but one of them as duplicate content and will not be available in the search engine index.

What I plan to do, is write the original article for discoversd and then repost a summary of the article here on active rain with a link to the original article on discoversd.com.

If anyone has any comments on this, I would like to hear it. I've seen a lot about reposting other people's content, but nothing yet about reposting your own uniquely written content.

thanks!

adam

2007: First Quarter for San Diego real estate