San Antonio Real Estate - Christina Whipple

When it comes to applying for home loans, buyers now have options other than the traditional 15 and 30 year home mortgages with 40, and in some cases, 50 year home loans being offered.

The 30-year fixed-rate mortgage may still be the most common home loan in the country, but 40 year loans are picking up speed, accounting for 5 percent of all new mortgages in the United States, and 50 year loans are not far behind. But are they the most economical options for homeowners? While extending the period of the loan would seem to benefit the borrower, Dr. Harold Hunt of the Real Estate Center at Texas A&M University said that is not necessarily the case.

“The 40-year and 50-year loans have provided minimal affordability relief to homeowners in markets outside Texas,” Hunt said. “A significant number of these borrowers have originated interest-only loans or ‘exotic’ loans that can actually increase loan balances. These loans offer little advantage to Texas borrowers and should be viewed with skepticism by anyone intending to keep a mortgage ten years or less.”

Known as “hybrid ARM” loans, 40 and 50 year loans begin as fixed rate mortgages but are converted to an adjustable rate mortgage (ARM) after a specified term. For most 50 year loans, this happens five to ten years after the loan is made. In theory, this increase is intended to compensate for the lender’s money being tied up for a longer time, assuming the loan matures. In reality, the mortgage is usually refinanced or paid off when the home is sold, well before loan maturity.

Although the amount of interest paid over ten years or less is not appreciably different, the difference can add up with 40 and 50 year loans, making them substantially less effective than a 30 year loan at reducing an outstanding balance. On top of that, Hunt said they do little to lower monthly mortgage payments. “For a $100,000 loan, the largest reduction in monthly payments would be about $33,” he said.

Hunt said 40 year and 50 year loans make even less sense if a borrower intends to retain the mortgage more than ten years. A 30 year loan’s interest rate is locked in over the whole 30 year term while the 40 and 50 year loans must eventually convert to an ARM. “This exposes the borrower to the risk of future payment increases should interest rates rise above the level they were when the loan was originated,” Hunt said. “Considering today’s historically low interest rates, that risk is not insignificant.”


Source: Texas Real Estate Center - The Real Estate Center has been providing solutions through research for 35 years. Funded primarily by Texas real estate licensee fees, the Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public.

Christina Whipple
www.ChristinaWhipple.com

The 2006 real estate market report from the Texas Real Estate Center is now available on my website. The report covers census data, employment and unemployment, major industries, business climate, education, transportation and infrastructure issues, growth patterns and much more. Click on the link below to download this report.

2006 Real Estate Market Report

Some highlights from this report for the San Antonio area are as follows...

Average Home Prices in San AntonioThe median price for a San Antonio residential home in 2005 was $131,100. The required income to qualify for this home is $30,899 while the median family income in San Antonio during 2005 was $50,500. This means that a residential home is still attainable for the average San Antonio family.

Christina Whipple
www.ChristinaWhipple.com

I have some good news to share!

Effective, Monday, July 10, 2006, I joined Keller Williams Realty. Keller Williams Realty is one of the fastest growing real estate companies in North America and has been voted one of the best places to work.

I have had a great 12 year relationship with RE/MAX, but feel this move is right for me, my team, and our clients. With the change of real estate brokerages comes the opportunity to expand the services that I and my team may provide to you, our most valued clients.

Should you have any questions or comments, please don't hesitate to contact me.

Christina Whipple
Alamo Home Team
Keller William Realty

With all the recent debate over what businesses should be allowed on the San Antonio Riverwalk, I thought it might be interesting to review a short history of this San Antonio landmark.

The stream, known to the Payaya Indians as Yanaguana, was variously utilized over the first three centuries by Franciscan missionaries, explorers, soldiers, and even a settlement of Canary Islanders.

Through the late 1800s and early 1900s, San Antonio's increasing population and expanding boundaries experienced an increasing degree of problems brought about by flooding. In fact, if flood control measures had not been taken in the 1920s, later commercial development along the river would have never happened.

Engineers in 1919 struck an ominous chord with a study predicting that heavy flooding of the San Antonio River could damage the city severely. It was a warning that came through with devastating results.

On September 9, 1921, a cloudburst over the Olmos Basin and San Antonio River put 9 feet of water on Houston Street downtown, which resulted in flooding that killed 50 people and caused millions in property damage.

Expedient remedies were called for by many of the frightened residents and businessmen who wanted to ensure that such a tragedy would not reoccur. For three years after the calamity, flood control plans were worked on by city officials and the Army Corps of Engineers, whose plans called for straightening the river in several spots.

By 1926, the commissioners were receptive to the moral story presented to them two years earlier and the final flood control plan was approved. The plan would aid the river bend during periods of heavy rainfall by utilizing a new bypass channel. A floodgate and two dams helped accomplish this goal and the bypass channel was completed in 1929. The major feature of the plan, the building of Olmos Dam, was completed in 1927 north of the downtown area, in Olmos Basin.
In their desire to preserve the natural course of the river and prevent the demolition of historic sites called for in the plans, Miss Emily Edwards and a band of concerned women organized in March 1942 to form the San Antonio Conservation Society.

Since 1962, eight hotels and a major shopping center have been built and currently anchor positions on the River Walk. They opened in the following order: El Tropicano, 1962 (reopening in 1991 as the Holiday inn Riverwalk North); Hilton Palacio del Rio and Hotel La Posada, 1968 (La Posada reopening in 1970 as La Mansion del Rio); Travelodge an the River, 1971: Marriott Riverwalk and the Hyatt Regency San Antonio, 1979; Holiday Inn Riverwalk, 1987; and Marriott Rivercenter and Rivercenter Mall, 1988.

Restaurants of all sizes, shapes and culinary colors abound. More than 50 dining establishments are present along the River Walk. Casa Rio Restaurant was the first, opening in 1946. Every year brings in new prospects. Recently, the Hard Rock Cafe and Planet Hollywood have joined in the success.

Events produced by the Paseo del Rio Association are direct descendants of those envisioned by people who desired to use the waters of the San Antonio River in creative ways. These events periodically lend an additional ambiance to the River Walk.

During the past three years, there has been a global boom in housing prices, sales volume and construction. According to reports in the Wall Street Journal and other media, home prices in Shanghai surged 26 percent last year and 90 percent since 2000. In the past year, prices climbed 19 percent in Hong Kong, 48 percent in Bulgaria and France, 63 percent in Spain and nearly 100 percent in South Africa.

In the United States, the median home price rose nearly 33 percent during the past three years and 13 percent in 2005, according to the Office of Federal Housing Enterprise Oversight (OFHEO). The National Association of Realtors (NAR) reports the number of homes sold increased from 5.6 million in 2002 to an annualized level of nearly 7.1 million in 2005. The number of new single-family dwellings built increased 6.7 percent over the past year, from 1.531 million in 2004 to 1.635 in 2005.

Texas' housing boom reflects an active and growing housing market, but one experiencing a much slower rate of increase than the rest of the country. From 2002 to 2005, the Texas median-priced home increased from $124,500 to an estimated $136,500, a modest 9.6 percent. The average house price grew from $155,600 in 2002 to $174,100 in 2005, an 11.9 percent increase. MLS sales during that period increased from 201,422 to 265,886, a 32 percent increase.

National media have portrayed the rapid appreciation of housing as a price "bubble" that could suddenly and dramatically burst, leaving homeowners and the market reeling. But here in Texas, is a housing bubble fact or fiction? Could the housing market explode like an overinflated balloon? Probably not.

Several factors indicate that while Texas' housing market is doing well by historical standards, it is not experiencing a price bubble. Important indicators include:

*Texas' home prices have appreciated at rates significantly less than the national rate.
*Texas' current rate of home price increase is about equal to the "normal" rate of the past 15 years.
*Across the country and around the globe, lower mortgage interest rates and easy mortgage credit are primary reasons for home price increases.
*The median-price-to-median-family-income ratio in Texas is not disproportionate to the historical norm.
*Residential construction in the state has maintained a reasonable balance between supply and demand, avoiding a shortage or excess supply situation.
*The inventory of houses for sale is only slightly less than "normal," reflecting relative balance between supply and demand in the marketplace.
*The national housing bubble, to the extent it exists, appears to be localized to several states and specific metropolitan areas with extraordinarily high rates of home appreciation.

Markets continually change and adjust to the primary factors that impact them. Some factors become more important at certain times, and other factors may have surprising effects, either good or bad. The economic outlook for the rest of 2006 includes modestly higher interest rates and continued increases in employment and personal income levels. These factors are among the most important to the housing market and housing prices.

If the rate of new home construction continues at the current pace with small-to-modest cost increases, there is no reason to anticipate a housing shortage that would drive prices up. If mortgage interest rates increase, as is generally regarded as probable, sales volume may decline somewhat, leading to more modest price gains.

As the overheated coastal housing markets begin to cool, Texas may see increased investor enthusiasm as focus shifts to Texas where price appreciation has been more moderate.

Source: Texas Real Estate Center