Author: msundermier

The first homes in Folsom Ranch, the new development south of Hwy 50, will go on sale this Thursday. This is a momentous occasion for the city of Folsom, as planning for this began nearly 20 years ago.  The city is also presently finalizing its General Plan, the first update since 1988.  Folsom is certainly looking to the future, and as a local REALTOR I’ve been keeping my eye on these story-lines for some time.

Area residents have mixed feelings about Folsom Ranch, as it is a stark indication of urban sprawl and population growth.  The total development, which includes nearly 12,000 new residential units and also devote 30% of the land to open space, will surely change Folsom and the surrounding communities.  But how exactly remains to be seen.

Will traffic become maddeningly congested with 40,000 new residents?  Will more employers flock to the area as a means of recruiting talent in a lower-cost alternative to the Bay Area?  Will home values suffer as builders saturate the market with hundreds of homes for sale?

Again, the impacts are uncertain.  For now, here’s what I can tell you…Taylor Morrison is opening their sales trailer this Thursday to sell their first community in Folsom Ranch, called Azure.  The model homes won’t be built until September, but deposits will be taken and contracts signed immediately.  Pricing will begin in the high 400,000s.

Our team is able to help you purchase and finance these and other new homes built in Folsom Ranch.  If you’d like more information about the floor plans, the community, or the Folsom Ranch development at large, please give me a call.  As a life-long Folsom resident, I’m excited about the changes ahead for our city and feel fortunate to be in a position to help educate my neighbors of our city’s future.

 

For the last 4 months, interest rates have been on the rise.  Beginning with tax reform in December, the markets have anticipated higher inflation, stock prices, and ultimately mortgage rates.  Furthermore, the number of homes for sale in most areas have been increasing as well.  In the Sacramento area, March saw a 21.7% increase in the number of homes for sale compared to the same month a year ago.For the last several years, most market experts have been saying home values will keep rising until interest rates and inventory rise.  Now that the latter has begun, it would make sense that home values may begin to fall, right?

For the last several years, most market experts have been saying home values will keep rising until interest rates and inventory rise.  Now that the latter has begun, it would make sense that home values may begin to fall, right?

Not so fast.  While rising interest rates and inventory are putting downward pressure on home values, there are stronger pressures pushing them up.  The most significant relate to building new homes.

Simply put, California is not building enough new homes (check this article out).  Compared to the peak in 2005 when California builders erected 150,000 new single-family homes, 2017 saw 58,000 new units built.  This is a significant increase compared to prior years, but still not enough to keep up with California population and housing demand.

One reason builders may not be building at the pace necessary is the cost to construct new homes (watch this CNBC video released shortly after the metal tariffs were imposed by the US government in March).  From lumber and metals to labor and regulation, nearly all costs associated with construction have seen significant increases.  These additional costs are anticipated to be passed onto buyers of new homes, which in turn keeps prices higher of resale homes as well.  Other builders may decide to not build at all, or build larger homes rather than starter homes that tend to have thinner margins.

The stats support there is no home-price slow-down in sight.  The average sales price in Sacramento just reached over $400K, a 5%+ increase just since the beginning of the year.  Anticipate home prices continuing their march upward in spite of higher interest rates and inventory.  The march won’t last forever, but there are no signs of it stopping any time soon.

 

I’ve spoken to a number of clients recently who are nervous about the stock market’s near-term future.  It’s been on a rally for nearly 8 years, the second longest “bull run” in history.  With current economic and political uncertainty, many are wondering where to safely invest their money.

 

 

Dow Jones Index over past 100 years

The current bull run has seen the Dow Jones index rise over 250% since early 2009.

Last month I posted about investing in real estate.  Some folks, however, have no interest in owning more real estate.  For those in that camp, may I suggest “Earning By Saving.”  In other words, by paying down debt you can earn a guaranteed rate of return that compounds over time.  After all, a penny saved is a penny earned!

The best way to do this is by refinancing to a shorter term loan, such as a 15-yr fixed mortgage.  Lenders offer lower rates if you select a shorter payback term, so while someone may have obtained a great rate on a 30-year fixed loan a few years ago, today’s 15-yr rates are even better!

Here’s an example: a client obtained a $300,000 30-yr fixed mortgage at 4% back in 2014.  Their loan balance is now down to ~$283,000.  Refinancing to a new 30-yr mortgage doesn’t make any sense, as current rates aren’t much better than their 4% rate.  But, when looking at a 15-yr fixed refinance, the new rate would be 3.25% (APR 3.33%). The monthly payment increases by $570 due to the shorter payoff period, but thousands of dollars are saved each year in interest cost.  Over the 15-yr period, $62,000 will be saved in interest costs and the home will be paid off completely!

If you find yourself in a position where you can invest more money every month but won’t or can’t put it in stocks or real estate, I would strongly encourage you to look into refinancing into a shorter term mortgage.  As Albert Einstein famously said, “compound interest is the strongest force in the universe.”  Its mighty power works when you invest, and works just the same when you pay down debt.

 

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This week marks the 1-year anniversary of the passing of our dear friend, Spencer Rubin.  Many  of my clients know Spencer.  Some of you I  wouldn’t have the privilege of knowing without  him.  In fact, several clients I’m actively working  with right now are relationships I made because of him.

To say Spencer had an impact on my life and business would be an understatement.  Not simply because he introduced me to some of my clients.  Moreover, he taught me how to conduct myself in business; with transparency and authenticity.  He befriended both Lisa Ferro and myself when the three of us began as colleagues 16 years ago; a friendship Spencer helped pave the way to a partnership and ultimately the start of The Blue Waters Group.  Even the very name of our company exudes Spencer’s ethos; he was always drawn to and at his best on the water.

When you lose someone who beautifully wove his way into many parts of your life, it’s hard to compartmentalize the emotions.  We worked, started families, and boated alongside one another, so his absence is felt in many ways.  At the same time, however, his presence is felt ever more.  This week I saw many social media tributes to Spencer from his dearest friends.  Many of them referenced how they are still encouraged by him to live in gratitude, see the beauty, and learn patience (all Spencer colloquiums).  In short, his spirit and his beautiful surviving family lives on as wonderful inspiration.

The most inspiring thing Spencer has taught me since his passing is this: no matter how much your time is cut short here on Earth, if you live right you’ll make an impact far beyond your time.  We don’t necessarily need to leave a legacy; rather a simple lasting imprint on those we leave behind.  An imprint that says I love you, I’m proud of you, and I want only the best for you.  That’s what Spencer did for me, and it will continue to inspire me for many years to come.