In Escrow! 102 Plateau in Aliso Viejo

Barely had time to blink before we got this wonderful property into escrow.

This single family detached home located at the end of a cul-de-sac features three bedrooms, three baths and 1439sf of living space. Super floor plan that has great flow, spacious rooms bathed in light, and nicely updated and maintained throughout. Super private yard and garden, beautiful curb appeal and views from the serene master bedroom. Great home has so much to offer and at a great price! Listed at $722,000.

Call for more info or if you are ready to buy or sell 949-525-5905.

In escrow! 102 Plateau in Aliso Viejo

Trying Something New…

Life hands us things we don’t expect, and we can choose what we want to do with them. Keeping an open mind helps, and working with what you have been given can often lead to a happy discovery. I, myself, usually try to make the best of things, but have not always been successful.

In the latest episode of my free podcast, I give several examples of what I am talking about. Hoping you can relate and maybe get a laugh or two from my trials.

Buyer Home Purchasing Power

Purchasing Power: An increase in interest rates by 1% translates to an 11% drop in the home a buyer is able to afford.

The experts and prognosticators may have had their timing off, but they collectively understood that it was not a matter of “if” interest rates would rise, but “when” they would rise. With the massive manipulation of the monetary policy by the Federal Reserve, the United States has been in economic, uncharted waters, making the art of forecasting rates not an exact science.

At this point, the pressure on interest rates to rise is real. But, after more than a decade of extremely affordable rates, everybody has become accustom to these affordable levels. It is time for a brief history lesson:

  • 1981 = 18%
  • 1990 = 10%
  • 2000 = 8%
  • 2007 = 6.5%
  • Today = 4.5%

Yes, 3.5% is a better rate; however, 4.5% is still a very low rate in historical context. Buyers should not wait for another drop. Instead, they should cash in on today’s mortgage rates. These low levels are an absolute gift based upon the economic history book.

Buyers must understand that the longer they wait to purchase, the greater the risk that rates will rise. As they rise, a buyer’s purchasing power erodes considerably the higher then climb. If mortgage rates climbed by 1% from where they are today, buyers looking for a $2,500 monthly payment would see their purchase power drop from $616,750 to $550,375; that’s a $66,375 drop in purchase price. For buyers looking for a $3,500 monthly payment, it drops from $863,500 to $770,500, a drop of $93,000. And, for buyers looking at a $4,500 monthly payment, it drops from $1,110,125 to $990,625, plunging by nearly $120,000.

Keep in mind, 5.5% is still a very low rate. The trouble is there are younger buyers in the marketplace who have never experienced rates above 5%. The housing market is not going to implode. It will not be the end of the world. But, it will eat into affordability and purchasing power. That 1% increase in mortgage rates will result in an 11% drop is what a buyer is able to afford.

With an improving economy, the new tax law, trade reform, and a new infrastructure plan, expect rates to rise. Buyers should not sit on the sideline and wait for them to drop. If they do, they will watch their purchase power crumble.

Choosing a Neighborhood

Location is most likely the one feature that adds most value to any real estate property. Therefore, much consideration should be given to the neighborhood where that home is located. Here are some items to consider:

Property Taxes

Property taxes can play a huge role in your overall cost of living. In California, we have Proposition 13, so property taxes have caps on how much they may go up each year. But there may be special taxes associated with the property above the base rate. It may be a good idea to check out the Orange County  Tax Collector site ; they provide an interactive map with multiple layers for your use.

Safety and Crime

Before you sign on the dotted line, search sites like City-Data.com and CrimeReports to get a sense of the safety level of a particular neighborhood. As with all homebuying decisions, determining what level of crime you feel safe with is all part of the process of choosing a neighborhood.

Topography and Geography

Geographic features like views and privacy can add value, but they may also include additional costs and/or considerations. Are you in a special flood zone or a seismic zone that could impact your insurance costs?

Schools

School zones come to mind when thinking of location, especially if you have children (or plan to have them soon), as they tend to affect home values. If schools are important to you, evaluate the schools in your neighborhood and which homes fall into which district. Additionally, there may be community centers or parks that increase the value of the neighborhood.

If you are targeting Mission Viejo, I have a great site where you can check out the schools, homes, parks, etc. in the area. Check it out here.

There are other things to consider when choosing a home and and neighborhood such as current and future property values, access to area amenities, public transportation, hospitals, etc. I can help you research your target neighborhood so you can make the best decision possible as a home buyer.