SUPERBOWL and SWIFT Insurance Changes!

I had to get a comment in about the increase of younger women, “Swifties” watching the Superbowl.  Wow!  What a great game, a nail-biter up to the end!  And the half-time show was entertaining!  Of course I am an Usher fan.  We watched the game at Dana Point Yacht Club, here is the sunset view.

Rate and Market Updates

Rates have crept back up near their highs.  The next move down will depend primarily on the CPI figures coming out this week.   If inflation is decreasing, we should see a reduction in the Fed rate sooner than later.  If not, we may be waiting for June before we see any appreciable change.

Regardless, activity is definitely picking up, with many coming off the sidelines when rates started their drop at the end of last year. To quote a local Real Estate professional, “Stop holding your breath waiting for prices to fall.”  They won’t, barring a National or International Disaster.

Baby boomers are not selling their homes and, for the most part, are not moving.  So, get into the market if you aren’t already, any way you can, even if you have to buy an investment property and/or combine forces with a friend or relative.  Don’t wait for your dream home or you may be priced entirely out of the market here in California.

Insurance Woes

In case you have not heard, we have an insurance crisis.  Insurance costs are rising dramatically for homes, cars and more.  A number of carriers have stopped writing insurance on homes in California, or pulled out of our market altogether.  This means many homeowners have had their policies cancelled by their carriers, and find they now have to resort to the “Fair Plan” provided by the State, with an additional “wrap” policy.  These are all expensive! 

Why is this happening, may you ask?   Well, fires, floods, and earthquakes.  Climate change is bringing more frequent and more serious weather events.  The number of weather-related disasters have risen dramatically in the US over the past 20+ years.  Insurance companies are losing money, and they are for-profit enterprises. 

So far, the companies that have exited or stopped writing new policies include The Hartford; State Farm, Allstate, Farmers, Kemper, and USAA.

Auto rates are climbing as well, primarily due to high costs to repair autos. 

What does this all mean?  Well, it has a rather dramatic effect on home affordability if your insurance premium is double or more than initially expected. Lenders require insurance and it is not wise for anyone to go “bare” without insurance, even if you don’t have a loan on your property.

We have to remind our clients to get busy contacting agents to get insurance in order ASAP,  or it can and will slow down closings.

However, if you think it is bad here, take a look at Florida.  There, many homeowners are being forced to sell as they can’t afford the enormous increase of their insurance policiy.  Others are paying off their mortgage and going “bare” so they don’t have to pay giant premiums where policies have doubled or tripled due to hurricanes.

If you need help with insurance, reach out!  We can help!

We are looking forward to Spring!

Karen, Katie and Stephanie

MARKET UPDATE AND REVERSE LOAN INFO

Interest Rates have begun to rise again, after a drop last month. However, we are still better off than in the 1st Q of this year. The economy is improving, slowly but surely! You can still find rates in the 3’s if you are willing to go for an ARM, or a Government loan (FHA or VA) and depending on your loan size, credit scores, loan purpose, etc. etc. Most programs have rates in the low to mid-4’s. Realistically we are still very near the bottom of the rate cycle. Purchase specials for jumbo loans are lower than most conventional loan programs.

I just concluded a rent vs. buy analysis for clients, and determined they were better off, especially on an after-tax basis, to buy vs. trying to find a rental. The rental market is just crazy, and availability is scarce!

Reverse Loans are gaining in market acceptance. Borrowers are finally understanding that they still own the home, can sell it or refinance if they wish. The biggest benefit of these loans is the ability to have a line of credit allowing draws as needed for emergencies or major expenses (a roof, a car, etc.) The unused portion of the line available increases or grows like an investment, so over time there is more credit available. I’ve run these scenarios for clients as well as investment professionals, who can see that in ten years the credit line will nearly double.

This is a very useful retirement planning tool. A client age 63 with a line of credit beginning at $320,000 and home value of $636,000 or higher will have a line of credit available in the amount of $573,000 in ten years, assuming no draws during the first ten years, and a home free and clear. This is essentially a return of over $550,000 on initial costs (investment) of $11,000 in upfront costs (including escrow, title, and Mortgage insurance.) Not bad!

Home Remodeling is on the rise, especially here in the OC. Homeowners have seen tremendous appreciation since the recession, and many are taking advantage of their increased equity to pull cash out for a makeover. Kitchens and bathrooms top the list. Landscape upgrades are another popular item. A recent study shows that 15% of California homeowners plan to remodel in the next year. We recently remodeled our bathrooms--and what a difference! We LOVE them!

Family and Travel News!

Paso Robles is really beautiful, and it reminds us of Napa/Sonoma over 30 years ago. We went for a long weekend in April with dear friends, and had a blast visiting wineries (not too many in one day!!) hiking, picnicking and dining. Our favorites were Daou for a gorgeous setting, but we had extra-special tastings and treatment at Opolo, www.opolo.com Epoch www.epochwines.com and Four Lanterns. www.fourlanternswinery.com

We threw in a drive to the coast to visit a couple of dive bars in Cayucos.

We dined at Artisan (highly rated) but our favorite…after two days of wine tasting…was Fish Gaucho. www.fishgaucho.com They offered great high-end Mexican food, heavy on the seafood. Highly recommended.

Our trip took us along the coastal route through Santa Barbara coming and going, so of course we stopped at Brophy Bros in the SB Harbor on the way up, and at Beachside Bar-Café on the way back, in Isla Vista. Lots of good eating and fine wines!

In June we headed out to Bermuda for the first leg of an 18 day trip. We watched two days of racing for the America’s Cup; went scuba diving one day (too rough after that for diving) and did lots of sunning, swimming and touring. Bermuda is beautiful but extremely expensive. We quickly learned we were better off to pick up dinner “to go” at Mr. Chicken, or order pizza at our lodging (St. George’s Club) than to pay top dollar for mostly mediocre food. We still had a fabulous time! Too bad we lost the Cup to New Zealand in the finals, but we have faith America will be back!

Next leg we flew to Tortola (British Virgin Islands) to pick up our 48 foot Catamaran and set out on our week-long sailing adventure with two other couples. These vessels are basically floating condos with sails, with four bedrooms and private baths/showers. I highly recommend this trip although you might want to hire a captain if you aren’t comfortable sailing on your own. We had a few minor issues with malfunctions (mostly of the mechanical type) but all-in-all it was smooth sailing and/or motoring, depending on the winds and our direction to the next port.

We stopped at different bays every night and moored all but one night. We ventured onto land for dinner all but one evening; danced, listened to music, and generally had a wonderful time. The most exciting moments centered around our dingy rides to shore (entrance and exit can be tricky) but this provided for many laughs and a few unexpected swims. Identities withheld.

We had three days of very good diving and were very happy with the sites and the dive masters. But it was a pain to lug all the scuba equipment around from one locale to the next.
Favorite spots: Marina Caye, Cane Garden Bay, Bitter End and Norman Island. Also the Baths are a must-see.

Finally we flew to San Juan, Puerto Rico for two nights at El Convento, a wonderful hotel in Old Town San Juan. You can’t really go wrong anywhere here in Old Town. Most of the restaurants offer Tapas. The food was amazing—best of our trip—and very reasonable. The Hotel is highly recommended as the place to stay, and also very reasonably priced with outstanding service. We loved the colors, the history, the music, the rain, and the food. I want to return!

NEXT UP:
My daughter and granddaughter are visiting for a few weeks this month and I can’t wait. Baby Kai is almost 10 months, and moving fast. I need to purchase a play yard to keep her under wraps while they are here. Can’t wait!

Steve and I continue to be active in the Dana Point Yacht Club. He's started racing, and I've joined the Race Committee to help with scoring (not an easy task!) We've made so many new friends and enjoy our time there.

I love hearing about your adventures too, so please write me! Keep in touch!