Dickson Realty’s January 2016 Newsletter HAPPY NEW YEAR! The Federal Reserve raised the federal funds rate on Wednesday, December 16th, for the first time in almost a decade, and the world did not come to an end. The raise of one quarter of a percentage point, according to Piers Cornelius, global investment specialist with J.P. Morgan Private Bank, reflected “a dovish statement saying we are going to monitor the data and raise interest rates very gradually from here. They used the word gradual twice, to make sure everyone got their message”. Some feel that the Fed should have raised rates even before now. The stock market has seen record highs and the bond market has seen record low yields. The national unemployment rate fell to about 5% in November from a post-recession high of 10%. For average Americans hoping for noticeably higher returns on their savings or fearing a sharp increase on credit card, auto loan or mortgage rates, the waiting is likely to continue. Greg McBride, chief financial analyst for financial information website Bankrate.com stated in the Los Angeles Times “It’s much like that first dusting of snow. That’s not what cancels school and messes up traffic. But it’s the signal that winter’s coming”. And speaking of winter . . . here in Tahoe, the world has turned full circle. For those who love to ski, board, tube or just throw a snowball, all the stars have finally aligned. Over the Christmas-New Year’s holidays, there is a chance of greatness for the first time in years. Across the mountain country, the snow totals for mid-December means that every ski area in Northern California will be open as of mid-December. The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter What does the rate increase mean? The Federal Reserve raised rates by .25% on December 16th. This was predicted, but it is still causing fear among new buyers who have never seen a rise in interest rates. This is the first raise in over nine years by the Fed. The biggest takeaway we can share and explain is this does not mean that the mortgage rates will be a quarter points higher. That is not how mortgage rates work. Mortgage rates follow the yields on mortgage-backed securities. These bonds track the yield on the U.S. Treasury. The bond market is still sorting itself out right now and the yields could end up higher or lower but not due to the rate hike by the Fed. The bigger deal is in the details of the Fed statement: “The committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way”. In 2008, the Federal Reserve began buying mortgage-backed securities from loans backed by Government sponsored entities (Fannie Mae, Freddie Mac). In 2013, they stopped using the new money to buy MBS, however, they continued to re-invest money it made into new bonds to the tune of $24-26 billion a month. That accounts almost all new mortgage originations. See next page
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter
At some point, the Fed will have to stop and the private market will hopefully come back in but that has not happened yet and as the details spelled out it will not happen soon. Some people say that as long as the Fed is the “Sugar Daddy” rates won’t move much higher. Also important is the continued popularity of the US Treasury investments around the world, which put downward pressure on Treasury rates, specifically the 10-year bond rate, which is the benchmark for MBS pricing. Both of these two items are much more significant than any small hike in Fed rate. Still most consumers will be freaked out thinking their rates will increase, but hopefully not you …Great time to buy as rates remain low! Please call us to help you with your specific scenario. Katie Rice | 530-582-9991 www.TheRiceTeam.com
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter
Downpayment.car.org can be a valuable tool for homebuyers – whether it’s your first home or not. And it’s always wise to consult a professional lender about your options.
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter
San Francisco, L.A., Boston Top Experts' List of Potential Bubble Markets San Francisco's housing market has grown so unaffordable that some experts say the market is already in a bubble - and it's not the only market they're concerned about. Dec 9, 2015 SEATTLE, Dec. 9, 2015 /PRNewswire/ -- A third of the experts surveyed in the latest Zillow® Home Price Expectations Survey said the San Francisco housing market is in a bubble, and another 20 percent believe the market is at-risk for bubble conditions within the next year. The survey, sponsored quarterly by Zillow and conducted by Pulsenomics LLCi, asked more than 100 panelists about their expectations for the housing market. Of those, 66 answered a question about bubble conditions in 20 local housing markets. The survey responses revealed that some housing experts are concerned about over-valuation in some of the nation's hottest housing markets – and that there is significant disagreement among experts about whether the rapid home-value growth in those markets puts consumers at risk. See next page
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter
"A handful of markets – especially the Bay Area – are very hot right now, and it's possible home values may actually begin to fall somewhat in these places as more residents are priced out amidst rising affordability concerns, especially when interest rates rise," said Zillow Chief Economist Dr. Svenja Gudell. "Whether those local conditions constitute a 'bubble' is up for debate, even among economists. Without 20/20 hindsight, it's difficult to identify bubbles as they're happening, but it is very clear that nationally we are not seeing a return of the conditions that caused the last national bubble. Tighter lending restrictions today mean we aren't seeing buyers get loans they realistically can't pay back, like we did in years past. It's significant that some experts are starting to worry about bubble conditions, but in my opinion, there's no real danger of a severe crash like the one we all remember from the last decade." The bubble fears are coming to the surface even as home values overall are expected to gradually level off over the next several years. The ZHPE panel projects an annual growth rate of 3.9 percent through the end of 2015 – a gradual slowing of the U.S. housing market. Over the next five years, among all 108 panel respondents, the expected average annual home-value appreciation rate is now just over three percent. This scenario would result in a national median home value of more than $215,000 by the end of 2020. Read more…
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter
Make sure your home improvement projects will yield a return on the investment. Ask your agent if you are unsure about the value of a particular project you are considering for your home.
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter 2016 HOME SALES TO BE BEST SINCE 2006 Source: CNBC
New home construction and moderate gains in the existing home market will deliver the necessary one-two punch to push total home sales to the highest levels since 2006, according to the 2016 housing forecast issued today by realtor.com®. • The 2016 housing market is expected to be a picture of moderate but solid growth as acceleration in existing home sales and prices both slow to 3 percent year over year due to higher mortgage rates, continuing tight credit standards, and lower affordability. • The new construction market will see more significant gains in the coming year as new home starts increase 12 percent year over year and new home sales grow 16 percent year over year. • Total sales for existing and new homes will reach 6 million for the first time since 2006, a result of a strong gross domestic product increase of 2.5 percent and continued job creation. • These healthy economic indicators will be tempered by lack of access to credit and rising home prices, which will ultimately limit housing demand and growth. • Chief Economist Jonathan Smoke commented, “Next year's moderate gains in existing prices and sales, versus the accelerated growth we've seen in previous years, indicate that we are entering a normal, but healthy housing market." • Millennials are expected make up the largest demographic of home buyers in 2016, having represented 30 percent of the existing home market. Driven by increasing income, millennials will seek out homes that meet the needs of their growing families. • Providence, Rhode Island, is ranked as the hottest market for 2016, with the San Diego region and Sacramento also in the top 10. Read more…
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter January EVENTS 1 – New Years at Northstar Northstar Village 3-9pm,$65 per person. Ring in the New Year with friends and family at Northstar California and enjoy ice skating, s’more roasting and a special holiday buffet at Tavern 6330’. 1 – Kids Night Out (also on Jan. 16) 5-9pm; Northwoods Clubhouse, Tahoe Donner $20 in advance, required at least one day in advance. Space is limited. An evening of games, dinner, arts and crafts, the Friday Night Movie and even a bedtime story at Northwoods Clubhouse. Parents may enjoy a night out wile the trained staff looks after your little ones. Information: 530-587-9437 1 - First Fridays Historic Downtown Truckee, 5:30 - 8 pm Most of downtown’s unique shops, boutiques, art studios, and eateries will keep their doors open later and offer special promotions, activities, demonstrations, food and beverages, music, and more! Participating shops and restaurants will display First Friday Flags so the public will know where the fun is. Information: www.historictruckee.com
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter 1 – Family Movie Night Northwoods Clubhouse, 11509 Northwoods Blvd., Tahoe Donner 6:30 – 9:30pm Kids and adults, bring a favorite pillow and blanket to the Northwoods Clubhouse, kick back, and enjoy both classic and new movies every Friday night. Movie nights begin at 6:30 p.m. and the films are rated G and PG. To find out what movie will be playing in advance, call Member Services at 530-587-9400 2 – STEAM Exploration Saturdays (weekly) 9am– 12noon; $35 per child – ages 4-7 Prices vary – see website STEAM is Science, Technology, Engineering, the Arts and Mathematics. Science & Art: Bubbles, oil, salt, crystals and watercolor. Discover how creative you can be. Technology & Engineering: make things move with animation, toys and circuits. Have a blast experiencing how math can help your artistic designs. Information: www.kidzonemuseum.org 2 – Snowshoe Through History 11am -12:30pm Ed Z'Berg-Sugar Pine Point State Park, Tahoma, CA Free program, $5 parking fee oin our State Park Interpreter for an easy and fun 90 minute walk along Lake Tahoe’s magical west shore. Discover what attracted Tahoe’s earliest settlers and uncover secrets of the Hellman-Ehrman Estate in Sugar Pine Point State Park Meet near the restrooms in the Day Use side of the park (lake side entrance off Highway 89). Wear warm layered clothing, waterproof hiking boots, and bring your own snowshoes. Snowshoes can be rented at a local sporting goods shop, such as West Shore Sports in Homewood. The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter 7 – Trivia Night (weekly) 6:30 – 8pm; Pizza on the Hill, Northwoods Clubhouse, Tahoe Donner Stop by Pizza on the Hill every Thursday night for a trivia challenge. Answering questions correctly could mean winning free prizes. Trivia night is held every Thursday night, but subject to cancellation for low attendance. Information: 530-587-9400 9- Snowball Launching Contest 1:30-2:30pm; Tahoe Donner Snowplay Area, 12790 Northwoods Blvd.,Truckee Have a good aim? Prove it! Come out to Tahoe Donner Snowplay to compete. Use on of Snowplay's snowball launchers to see how far the snowballs will fly! 15 – Arts for the Schools 7-8pm; Truckee High School Theater, 11725 Donner Pass Rd., Truckee $20 Adult, $10 Senior, $5 Child Live Theater Featuring Anu Yadav Information: www.artsfortheschools.org
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter 16 – Free Hazardous Waste Drop-off Eastern Regional Landfill, 900 Cabin Creek Road (between Truckee and Squaw) Free Call 530-583-7800 for an appointment 17 – Historic Longboard Ski Race Plumas-Eureka State Park, Graeagle, CA 10:30 am Period costumes, music, food, fun! Information: (530) 832-4309 23 – Winterpalooza Tahoe Donner Snowplay, 12790 Northwoods Blvd, Truckee This all-day event includes tube racing, snowman building, relay races, a snowstrider course and more. Information: www.tahoedonner.com 24 – Winter Festival Tahoe Donner Cross Country Ski Area, 15275 Alder Creek Rd., Truckee Join Tahoe Donner Cross Country Ski Area for the first ever Winter Festival. Discounted trail passes at $10 each and $15 rentals will be available, including free lessons, tours and ski equipment demonstrations. Festival-goers will also enjoy live music and delicious BBQ. Information: www.tahoedonner.com The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440
Dickson Realty’s January 2016 Newsletter 30- Snow Ball 5-10:30pm; Nakoma Resort, Clio, CA Beat back the winter blues with great food, live band, dancing, silent auction and more! The best place for frivolity, frolicking and just plain FUN this winter. Proceeds benefit the re-opening of the Johnsville Ski Hill. Be part of this community effort to bring the ski hill back for our area’s children, both young and old. Information: www.nakomaresort.com/event/snow-ball/?instance_id=1405 30 - 15th Annual Spaghetti Dinner and Silent Auction 5 - 8pm; Community Rec Center, 8924 Donner Pass Rd., Truckee 15th Annual Spaghetti Dinner and Silent Auction benefitting Meals on Wheels and the Sierra Senior Services. Information: www.sierraseniors.org
The Dickson Truckee Team 11836 Donner Pass Road | Truckee, CA 96161 | 800.541.4440