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What? It’s cheaper to buy than rent in the Bay Area

Thu, 20 Sep 2012 17:33:57 +0000

Earlier in the year, home buying was still considered to be the more pricey route to go when compared with renting in most parts of the Bay Area. But the tables seem to have turned recently, as both the buying and rental market have heated up all around the bay the last few months.

Real estate site Trulia recently dug into data on both rental prices and homes for sale across the U.S. in the months of June, July and August and based on their analysis, it’s cheaper to buy than to rent a comparable property everywhere in the U.S., including the bay area.

In the San Francisco metro area, it was 28% cheaper to buy than rent. It was 31% less expensive to be a homeowner in the San Jose metro area and in the Oakland metro area, a homeowner would save 41% over renting.

Courtesy of Trulia.com

Trulia’s report made several assumptions:

Cost of homeownership assumes that the home is sold after 7 years and includes closing costs, maintenance, insurance, property taxes and other costs. Cost of renting includes security deposit and renters insurance. Monthly cost is based on net present value of costs over 7 years. Monthly costs are based on the average across all properties listed in the metro area, including those for sale and those for rent, in summer 2012.

They also assumed that a homebuyer was able to secure a 3.5% mortgage rate, was in the 25% tax bracket and was able to put a down payment of 20%. Any change in these assumptions, such as having a higher mortgage rate, a lower tax bracket and selling sooner could significantly change the outcome. With a mortgage rate of 4.5%, being in the 15% tax rate and only a 3 year window, the tables turn once again and it is 28% cheaper to rent than to buy in the SF metro area.

And while buying may be the way to go in the long run, many are held back by the difficulty in saving for that 20% down payment (especially in the bay area where homes are pricey) and you’re much less flexible in relocating once you’ve got a mortgage.

You can play around with different assumptions on Trulia’s fun interactive infographic here to see what how your particulars work out. Is it better to rent or buy for you?

Article source: http://blog.sfgate.com/ontheblock/2012/09/19/what-its-cheaper-to-buy-than-rent-in-the-bay-area/

With a Little Help From the Parents

Mon, 17 Oct 2011 18:18:44 +0000

Oct. 16 (Source: By Eve Mitchell, Contra Costa Times, Walnut Creek, Calif.) - More parents are helping their adult children buy their first home by taking care of the down payment at a time when home prices are low and financing is tough.Christian Fernandez has a place to call his own, thanks to his parents providing most of the 20 percent down payment and closing costs on the $345,000 two-bedroom condominium in Daly City he moved into four months ago. Without the financial help from his parents, Fernandez could not have bought his condo.

“Getting hold of that down payment just doesn’t come easy. … I had set aside some money myself but they supplemented it greatly,” said the 27-year-old, who works in engineering after graduating last year from San Francisco State with a degree in mechanical engineering.

“We are Filipinos and have taken it upon ourselves the responsibility of putting our kids through college (and helping them buy a home),” said Fernandez’s mother, Cynthia Andaya, 57, of Hercules. “Primarily, this is our inheritance to them.”

Fernandez is not alone. Hard numbers are difficult to come by, but from April to June 2011, 21.5 percent of first-time buyers received a down payment as a gift or borrowed it from a relative, up from 14.3 percent in 2006 in the same time frame, according to the California Association of Realtors. Realtors say most of the help is probably in the form of a gift.

Realtor Orhan Tolu has handled about six transactions, including the one for Fernandez, in the past

five months in which parents covered the down payment.

“The kids have the job and can afford the mortgage payment” but need help with the down payment, said Tolu, a broker with Century 21 Realty Alliance, which has offices in San Mateo and San Francisco. “It’s like an investment in the kid’s future because prices in the Bay Area are eventually going to go up again.”

Parents helping out their children with the down payment is not new, but tougher lending standards and low home prices have resulted in it happening more in the past few years, real estate industry experts say.

“Five years ago, prices were higher but financing was easier. A lot of people could qualify for 100 percent financing,” Tolu said.

“I’d say there is more motivation now. Parents who have been through previous real estate cycles see this as an opportunity. The parents are encouraging the kids to get into the market,” said Kevin Kieffer, a Realtor with the Danville office of Keller Williams Realty.

“Prices are at a range now that makes homeownership much more affordable,” Jon Wood, a Realtor with the Walnut Creek office of J. Rockcliff Realtors. “You can buy a single-family house in Concord for under $200,000.”

Some parents are helping out with the down payment because they can’t find an appropriate investment in today’s volatile economy. “They’re willing to help out their kids. They are looking for a safer investment,” he said.

But before providing the down payment, parents need to take into account that they could get hit with gift taxes if it goes over a certain amount.

They also need to be sure that giving the money away won’t hurt their own retirement plans.

“One of the things you should think about is whether this gift will be subject to gift tax calculations,” said Megan Rouse, a financial planner in Dublin. “It’s great to be generous, but it’s also important to look at your overall financial situation and (know) that it’s extra cash you can afford to give away.”

For tax year 2011, a taxpayer can give up to $13,000 per-year per-person (a married couple can give up to $26,000 a year) and not worry about gift taxes. Anything above the annual cap is subtracted from the lifetime $5 million limit for making tax-free gifts.

If taxpayers think they are going to go over the annual cap, they should first consult a financial planner or certified public accountant to discuss the tax implications, said Rouse.

Parents also need to make it clear that the money is indeed a gift and not a loan when they are helping out a child with a down payment. That can be done by writing a letter to the lender stating that the money is a gift, said Kieffer, the Danville Realtor. Otherwise, the lender will look at the down payment as a loan that has to repaid, which could make it harder for the child to get financing.

Even though home prices are at a low point, “the down payment can be pretty daunting in the Bay Area,” especially if the buyer is seeking a conventional loan that typically requires at least a 20 percent down payment, Kieffer said.

But not all down payment gifts from parents come with such a big price tag. Many parents are providing the 3.5 percent down payment required for Federal Housing Administration loans, said Kieffer.

An FHA down payment lessens the likelihood of running into gift-tax issues, he said.

No matter which route a parent provides a down payment to a child, it’s a “way to help kick start them into homeownership,” Kieffer said.

Contact Eve Mitchell at 925-952-2690.

___

Visit the Contra Costa Times (Walnut Creek, Calif.) at www.contracostatimes.com

Distributed by MCT Information Services

A service of YellowBrix, Inc. Publication date: 2011-10-16

Source: By Eve Mitchell, Contra Costa Times, Walnut Creek, Calif.

Article source: http://www.loansafe.org/with-a-little-help-from-the-parents

With a little help from the parents

Sun, 16 Oct 2011 06:06:54 +0000

More parents are helping their adult children buy their first home by taking care of the down payment at a time when home prices are low and financing is tough.

Christian Fernandez has a place to call his own, thanks to his parents providing most of the 20 percent down payment and closing costs on the $345,000 two-bedroom condominium in Daly City he moved into four months ago. Without the financial help from his parents, Fernandez could not have bought his condo.

“Getting hold of that down payment just doesn’t come easy … I had set aside some money myself but they supplemented it greatly,” said the 27-year-old, who works in the engineering field after graduating last year from San Francisco State University with a degree in mechanical engineering.

Fernandez isn’t alone. Hard numbers are difficult to come by, but between April and June 2011, 21.5 percent of first-time buyers received the down payment as a gift or borrowed it from a relative, up from 14.3 percent in 2006 during the same time frame, according to the California Association of Realtors. Realtors say most help is probably in the form of a gift.

Realtor Orhan Tolu has handled about six transactions, including the one for Fernandez,

in the last five months in which parents covered the down payment.

Parents helping out their children with the down payment is not new, but tougher lending standards and low home prices have resulted in it happening more in the last few years, say real estate industry experts.

“Five years ago, prices were higher but financing was easier. A lot of people could qualify for 100 percent financing,” said Tolu.

“I’d say there is more motivation now. Parents who have been through previous real estate cycles see this as an opportunity. The parents are encouraging the kids to get into the market,” said Kevin Kieffer, a real estate agent with the Danville office of Keller Williams Realty.

But before providing the down payment, parents need to take into account that they could get hit with gift taxes if it goes over a certain amount. They also need to be sure that giving the money away won’t hurt their own retirement plans.

For tax year 2011, a taxpayer can give up to $13,000 per-year per-person (a married couple can give up to $26,000 per-year-per-person) and not worry about gift taxes. Anything above the annual cap is subtracted from the lifetime $5 million limit for making tax-free gifts.

If taxpayers think they are going to go over the annual cap, they should first consult a financial planner or certified public accountant to discuss the tax implications, Rouse said.

Parents also need make it clear that the money is indeed a gift and not a loan when they are helping out a child with a down payment. That can be done by writing a letter to the lender stating that the money is a gift, said Kieffer, the Danville real estate agent. Otherwise, the lender will look at the down payment as a loan that has to repaid, which could make it harder for the child to get financing.

Many parents are providing the 3.5 percent down payment required for Federal Housing Administration loans, Kieffer said. An FHA down payment lessens the likelihood of running into gift-tax issues, he said.

No matter which route a parent provides a down payment to a child, it’s a “way to help kick start them into home ownership,” Kieffer said.

Article source: http://www.mercurynews.com/business/ci_19108672

Terreno Realty Corporation Acquires Building in Elizabeth for $10.4 Million

Mon, 10 Oct 2011 22:47:47 +0000

SAN FRANCISCO, Oct 10, 2011 (BUSINESS WIRE) –
Terreno Realty Corporation

/quotes/zigman/580648/quotes/nls/trno TRNO
+2.64%

acquired an industrial
property located in Elizabeth, New Jersey on October 7, 2011 for a
purchase price of approximately $10.4 million.

The property consists of one multi-tenant industrial building containing
approximately 150,000 square feet. Approximately 20% of the property was
leased back to the seller as part of the purchase and the remaining
approximately 80% was leased to a third party by Terreno after the
property was placed under contract and prior to closing. As a result,
the property is currently 100% leased to two tenants. The estimated
stabilized cap rate of the property is 7.4%.

Estimated stabilized cap rates are calculated as annualized cash basis
net operating income stabilized to market occupancy (generally 95%)
divided by total acquisition cost. Total acquisition cost includes the
initial purchase price, the effects of marking assumed debt to market,
buyer’s due diligence and closing costs, estimated near-term capital
expenditures and leasing costs necessary to achieve stabilization.

Terreno Realty Corporation is an acquirer, owner and operator of
industrial real estate located in six major coastal U.S. markets: Los
Angeles; Northern New Jersey/New York City; San Francisco Bay Area;
Seattle; Miami; and Washington, D.C./Baltimore.

Additional information about Terreno Realty Corporation is available on
the company’s web site at
www.terreno.com .

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the federal securities laws. We caution investors that
forward-looking statements are based on management’s beliefs and on
assumptions made by, and information currently available to, management.
When used, the words “anticipate”, “believe”, “estimate”, “expect”,
“intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will”,
and similar expressions which do not relate solely to historical matters
are intended to identify forward-looking statements. These statements
are subject to risks, uncertainties, and assumptions and are not
guarantees of future performance, which may be affected by known and
unknown risks, trends, uncertainties, and factors that are beyond our
control, including risks related to our ability to meet our estimated
forecasts related to stabilized cap rates and those risk factors
contained in our Annual Report on Form 10-K for the year ended December
31, 2010 and our other public filings. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated, or projected. We expressly disclaim any responsibility to
update our forward-looking statements, whether as a result of new
information, future events, or otherwise.

SOURCE: Terreno Realty Corporation


        Terreno Realty Corporation
        W. Blake Baird, 415-655-4580
        Michael A. Coke, 415-655-4580

/quotes/zigman/580648/quotes/nls/trno

Add TRNO to portfolio

TRNO

Article source: http://www.marketwatch.com/story/terreno-realty-corporation-acquires-building-in-elizabeth-for-104-million-2011-10-10

Terreno Realty Corporation Acquires Building in Savage for $7.5 Million

Mon, 27 Jun 2011 20:05:47 +0000

SAN FRANCISCO, Jun 27, 2011 (BUSINESS WIRE) –
Terreno Realty Corporation

/quotes/zigman/580648/quotes/nls/trno TRNO
+0.12%

acquired an industrial
property located in Savage, Maryland on June 24, 2011 for a purchase
price of approximately $7.5 million.

The property consists of one industrial building containing
approximately 99,000 square feet. The property is currently 100% leased
to one tenant. The estimated stabilized cap rate of the property is 7.3%.

Additional information about Terreno Realty Corporation is available on
the company’s web site at
www.terreno.com .

Forward-Looking Statements

SOURCE: Terreno Realty Corporation


        Terreno Realty Corporation
        W. Blake Baird or Michael A. Coke, 415-655-4580

/quotes/zigman/580648/quotes/nls/trno

Add TRNO to portfolio

TRNO

Article source: http://www.marketwatch.com/story/terreno-realty-corporation-acquires-building-in-savage-for-75-million-2011-06-27?reflink=MW_news_stmp

New Push to Unload Bank-Owned Properties Squeezes Out Investors

Tue, 14 Jun 2011 21:23:51 +0000

Page 1 of 4 | Next Page
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As big banks and Fannie Mae and Freddie Mac [ FMCC 0.373 +0.0145 (+4.04%) ] push foreclosures through the pipeline, the inventory of REO (bank-owned) properties is rising.

That pushes distressed and overall home prices down.

Note in California, median home prices took their steepest dive in May, down 8.2 percent year over year to $280,000, as distressed sales made up more than half the market.

Nobody knows all this better than mortgage giant, government-owned Fannie Mae [ FNMA 0.345 +0.018 (+5.45%) ], which at the end of March had more than 153,000 single family foreclosed properties on its books, worth $14.1 billion.

Fannie acquired 53,549 foreclosed properties in the first quarter, up from just under 46,000 in the previous quarter.

No surprise they are now adding incentives to unload these properties: The expanded incentives offer qualified homebuyers up to 3.5 percent of the final sales price to put towards closing costs.

In addition, selling agents representing the owner-occupant buyer can now receive a $1,200 bonus. The incentive must be requested in the initial offer.

Eligible initial offers must be submitted on or after today, June 14, and must close by Oct. 31, 2011. Investor sales are not eligible for the incentive.

Note, however, that these incentives are only for owner-occupants, not investors.

Page 1 of 4 | Next Page
Show Entire Article

New Push to Unload Bank-Owned Properties Squeezes Out Investors

US Housing Crisis Is Now Worse Than Great Depression

Failure to Raise US Debt Limit Would Harm Markets: Bernanke

Gold to Reach $5,000 Due to Supply Shortage: Report

‘Bumbling’ Economy Result of ‘Meddling’ From Leaders: Ross

More Top Stories

Article source: http://www.cnbc.com/id/43396145?__source=RSS*blog*&par=RSS

Why do we buy if it doesn’t make economic sense?

Sat, 14 May 2011 01:40:45 +0000

Why do we buy if it doesn’t make economic sense?

It’s the age old question, rent or buy? New York Times writer David Leonhardt tackled this timeless issue again in his latest weekly column. As he points out, all sorts of calculators live on the web for anyone to input a few data points to analyze whether it’s better to buy or rent. However, most of these calculators look at it from a purely financial perspective, whether the costs of buying outweigh the costs of renting. Some calculators are more sophisticated, taking into account often overlooked items such as closing costs, property taxes and the amount of interest or appreciation your down payment would have otherwise earned, if it wasn’t used towards a home purchase.

Miami Real Estate Cafe

The never ending debate

He also advises look at rent ratios, where the selling price of a house is divided by the yearly cost to rent an equivalent property. Fifteen is the magic number with rent ratios. Below 15, he advises buying over renting. Rent ratios in most of the Bay Area are still looking “bubbly,” coming in above 30 down in Silicon valley and the East Bay. In San Francisco, the rent ratio is currently at 27, still above 15 but at least closer to its 1986-2000 average of 24. The average rent ratio for the 1990-2000 East Bay and Silicon Valley was 26 and 23, meaning it has gotten more and more expensive to buy, though it’s less expensive now than in 2005 when the housing market was peaking. The rent ratios in 2005 were 47, 43 and 40 for the East Bay, Silicon Valley and San Francisco. So if it doesn’t make economic sense, why do people still keep buying?

Affluent people tend to want to own their houses, even when the dollars don’t make sense, and the Northeast and West Coast are home to much more wealth than a few decades ago.

Yet the fact remains that a lot of New Yorkers and Californians, among others, are paying a hefty premium for the privilege of owning.

A while back, readers commented on this blog that being a homeowner was a way to deal with non performing landlords. How much is that worth economically? Leonhardt says that our area is still in a state of “real estate exuberance,” but that given our current behavior and trends, it may survive.

How do you evaluate the costs of buying vs. renting? Did you buy even if it didn’t make economic sense?

For a full list of rent ratios, click here.

Posted By: Jenny Pisillo (Email) | May 13 2011 at 01:00 PM

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Article source: http://www.sfgate.com/cgi-bin/blogs/ontheblock/detail?entry_id=88931&tsp=1