With many businesses hit hard by the recession lawmakers in Sacramento are cutting employers a big break. Putting a stop to legal proposals that would make business in California more costly, possibly leading to more unemployment as employers have to find a way to make up the difference somewhere….
One of the plans, to raise permanent disability payments, would have added to workman’s comp expenses. Making hospitals’ insurers absorb costs of neck and back injuries allegedly suffered at work, without making claimants prove they were job related.
Another would have made it mandatory to pay employees for traveling to the job site from a remote parking lot…this would include workers at airports, amusement parks and sports venues.
They also wanted to eliminate farm worker secret ballots in considering labor representation in the workplace. Employers worry that if the process were transparent, unions could intimidate workers into submission.
Greg Cowart :: Sacramento Living
Is today "Black Wednesday" for Mortgage Backed Securities? It certainly looks like it. The last four trading sessions have brought mortgage pricing down by over 1.25%, equalling about 0.5 - 0.75% worse for interest rates...
Rate's in the high 4's are gone. But it's not the end of the world. Mortgage rates are still below 6% and anything below 6% is a great interest rate historically. While today's rates are not what they were even this time last week homes in Sacramento are still very affordable when all things are considered. And rates in the low 5's are nothing short of fantastic!
~Greg Cowart :: Sacramento Living
Today you hear from the real estate and mortgage industry all the advantages of buying vs renting but many pass it off because it is coming fromt he mouths of people that feed their families by selling homes or doing the loans for homes sold. Well, according to the Wall Street Journal...
"The relative cost of owning versus renting is swinging back in favor of homeowners in some U.S. markets, buoyed by several quarters of sharp declines in home prices.
At the height of the housing boom, as home prices surged, demand for rentals started to rise as the gap between owning and renting widened significantly. Even after the housing market soured, apartment demand grew as former homeowners became renters, allowing landlords to push healthy rent increases.
Now, after two years of rapid home-price depreciation, the relationship between the cost of rental payments versus after-tax mortgage payments is tilting toward ownership in a number of metropolitan areas."
Currently the gap between after tax mortgage payment and rents is at 24%, the lowest in 8 years! Just three years ago after-tax mortgage payments were 66% higher than rent payments! My how things have changed? And these figures assume a 5.5% interest rate, rates have been below 5.5% for qualified borrowers for most of the year. Given that statistic the gap is actually less than 24%, the narrowest in history.
On top of those striking numbers none of this takes into account normally rising rents, fixed mortgage rates, property appreciation, or tax savings over the years of owning vs renting. When taking all of this into account, it is actually LESS EXPENSIVE to own than to rent in many Californian markets!
So what is keeping most renters renting rather than taking the dive to achieve the American Dream? The WSJ claims it is still a psychological barrier, potential buyers still think homes will become more affordable. I call this greed. Others may call it being cautious, and it is, but there comes a point where it just becomes greed. When first time buyers are spitting in the face of the most affordable housing market (compared to renting) that we've EVER seen it's greed. Waiting for something even better. The only question is how many of them will be left out of the party. This won't last forever. But some renters may end up renting forever...
It seems like everyone is an expert these days. You've got the doom and gloom sayers spewing their nonsense on CNBC and the other new networks. You've got Realtors and Real Estate related associations advertising every day, telling you the same thing they always have, "NOW IS THE TIME". Who is telling the truth? Is it one or the other, might it be somewhere in between?
The wealthiest man in the world, Warren Buffet said he is very optimistic about the future of the economy and sees signs of a turnaround in the real estate market. Making now the perfect time to benefit from today’s affordable home prices and historically low interest rates. (I’ll be preparing a special post about the Home Affordability Index and how it effects all real estate and loans in the Sacramento area shortly)
When your Realtor tells you “now is a good time to buy” they may just be trying to get you in the right frame of mind to get out there and become a homeowner, but they would also be right. With home prices and mortgage rates at all time lows here in the greater Sacramento market there really has not been a better time in recent memory. And it will change… As the economy recovers, both interest rates and housing prices will follow suit. Locking in current home prices as well as a low mortgage interest rate a buyer can’t go wrong. But don't take it from me, take it from Mr Buffet!
~ Your Local Expert ~
Greg Cowart
Senior Loan Consultant - Comstock Mortgage
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