Category: Personal Reflection

Barry joined our team in 2018 after working for a larger bank for many years.  He saw the value of working with an independent mortgage brokerage like us, and wanted to care for his clients with our teamwork approach.  Barry embodies all of the principles The Blue Waters Group holds paramount: honesty to all, commitment to clients, and excellence to his craft.

We are fortunate Barry has become a member in our work family, and a representative of The Blue Waters Group in our community.

War. Curves. Drama.

These may sound like buzz words of a summer blockbuster, but they are the central themes of our current financial markets and why mortgage rates are in a free fall.

Trade WAR
Yield CURVES
Political DRAMA

All of these factors (scroll down for the backstory on each) are pushing mortgages rates to historic lows, and giving nearly EVERYONE a reason to consider refinancing. Yesterday I quoted a rate I don’t think I’ve ever been able to offer…2.875% (3.17% APR) on a 10-yr fixed loan. Yes, a fixed-rate mortgage under 3%!!!

I have spoken to many clients in recent weeks, but I haven’t had a chance to connect with everyone. Many of our clients are refinancing for a wide variety of reasons, such as:

Lower interest rates and monthly payments
Cash out to pay off credit cards or student loans
Cash for home improvements
Remove PMI or adjustable rate 2^nd mortgages

If any of these scenarios sound like they may apply to your finances and we have not yet spoken, please reach out to me ASAP. I’ll be working through the weekend to be sure I help my clients take advantage of these rates before they change. My team and I promise to get back to you quickly with no-nonsense advice on your refinance options.

Trade WAR
The escalating tensions between the US and China have the global markets very concerned. If it costs more to trade goods between the world’s two largest economies, then less goods will be traded. This will slow spending, profits, and potentially lead the world into the next global recession. We are watching this story closely, particularly as it affects mortgage rates.

Yield CURVES
Typically, the longer you invest your money, the greater return you should expect on your investment. For example, putting your funds in a 5-yr Certificate of Deposit (CD) will typically have a higher return than a standard savings account. If illustrated on a graph curve, the return on your investment (also called a “yield”) line goes up the more time your money is invested.

This is also generally true when investing in US government bonds (also called “T-Bills”), but there have been a few instances in the last 70 years where this graph becomes INVERTED, meaning a bond buyer actually realizes a higher return from a shorter-term bond. And EVERY time this bond yield curve has become inverted since 1969, the beginning of a financial recession has followed in the months after. On August 14^th, 2019, this yield curve became inverted for the first time since 2007 (a year before the latest recession), and the 30-yr bond yield hit an all-time low. During recessions, mortgage rates tend to be lower, so the recent foreshadowing has pushed mortgage rates lower as well.

Political DRAMA
Our teammate, Chris McGann, recently said that President Trump has more influence on the financial markets than Federal Reserve Chairman Jerome Powell. He has a point; due to Twitter and 24/7 media outlets, the financial markets are aware of the President’s political agenda and personal diatribes on a constant basis. As arguably the world’s most powerful person, the President’s actions, ambitions, and tweets must be considered by the financial markets.

The “Trump Effect” however, may be losing its potency, as the markets seem to be accounting for the fact a tweet rarely becomes legislative policy. Regardless, the unreliability of the signals President Trump provides the markets make things uncertain. This uncertainty is leading to lower mortgage rates.

Bottom line: mortgage rates are low and they may fall lower if these factors continue to plague our financial markets. While this may be unpleasant for your retirement portfolio, it creates tremendous opportunities for refinancing your mortgage.  Call us to help you easily navigate your options.

Spring is finally here! The sunshine and blue skies are a welcomed sight at our household. It also means that we are FINALLY able to get started on the next stage of our backyard landscaping project. We started phase 1 (the demo) last fall, and made quick progress. Demo goes REALLY fast when you get rid of everything! We also encountered plenty of delays, and as a result have had to stare at a lot of dirt—and when it rains mud—for the better part of 6 months!

Scheduling has proven to be the biggest challenge. When our contractors were available, the weather didn’t cooperate. And when the weather was good, our contractors had prior commitments. It felt a little like trying to catch lightening in a bottle. We would try our best to plan ahead, but predicting the weather is 50/50 at best. After all, the weather man seems to be wrong as much as he is right. I went to great lengths trying to control the weather. I know that sounds funny, but I did. I thought if the grounds crew for the San Francisco Giants can keep the infield dry when it rains surely, I can keep my backyard from getting muddy. If I could succeed in keeping the ground dry then maybe, just maybe I’d be able to have the stars align for one Saturday when our contractor was also available. (How did I do? I’m happy to report that I was able to keep the ground dry. But as is often the case when you’re working with a good contractor who is in high demand, they had limited availability.)

Throughout the process, I realize a similarity between my responsibilities as a loan officer and my self-appointed duties as landscape project manager. In the same way that I can’t predict when the weather will be ideal for work on the landscaping project, I don’t know when rates will drop creating the ideal opportunity for our clients to capitalize on a refinance. What is within my control is my ability to keep in touch with our clients to know their needs and goals and stay vigilant to the direction that rates are headed. Much like the weather man’s forecast, I provide an educated forecast of what we anticipate rates to do. But we also stay prepared to reach out to our clients when rates improve unexpected. After all, you never really know when it’s going to be a sunny day!

Many of us have begun to get our tax paperwork in the mail, and are beginning to get into that annual financial mindset of planning for the upcoming year. It probably doesn’t hurt that every third TV ad is H&R Block or Turbo Tax commercial! This annual market forecast is a timely message to my clients and readers who may be wondering if now is a good time to buy or sell.  I’ve always said forecasting is a fancy word for guessing.  No one knows for certain what lies ahead in our local real estate market. Nevertheless, as someone who witnesses the front-lines action in the market, I have the chance to share observed indicators with you.

Perception is Reality
From 2012 to 2017, demand was VERY high, supply was low, and interest rates were low (but rising). Those years were certainly a strong sellers’ market characterized by multiple offer situations and home values increasing 10% and higher year after year. 2018 on the other hand, the market began to shift. The combination of interest rates rising 1% coupled with low inventory has had a twofold effect on both buyers and sellers. Rising rates hurt buyers’ purchase power. Higher rates make it more expensive for sellers too, and many opt to not move further contributing to the low inventory problem. Many buyers anticipate (and hope) the market will run out of steam and have a wait and see mindset. These factors have led to the number of homes sold to decline for 11 straight months. While the rate at which homes are appreciating has slowed, values aren’t declining. In 2018, the Sacramento area saw an appreciation of 6-7% in home values. In 2019, I expect appreciation closer to 3-5%.

Buyers are getting picky (and they should)
According to the California Association of Realtors, the median sales price and median income in Sacramento County last year was $371,000 and $63,000, respectively. It would take the “median buyer” 16 years to save enough for a down payment of 20%. Fortunately for buyers, there are many options to purchase a home with less than the traditional 20% down payment. Many buyers can’t afford 20% down, but they’re able to afford the housing payment. With home prices at all-time highs, buyers are not willing to spend more on a house that is in need of improvements.

The Fixer Upper Effect
Everyone has a favorite home renovation show-I’m personally a fan of Nate and Jeremiah by Design. We watch while updating our Pinterest board with ideas for our dream home. But home renovations aren’t cheap! I know. My wife and I are 2 years and several $1000’s into our own. Like I mentioned above, it’s more difficult than ever to save money for a home purchase. Because of that buyers are no longer willing to pay extra for a house that isn’t turn key. If buyers are going to pay record prices, many want and expect the home to come with higher end finishes. A word of caution to sellers that are considering listing. Price accordingly. Yes inventory is still low, but it’s trending up. Don’t expect to list your home that has floral wallpaper, blue carpet, and avocado colored kitchen counter tops at an unrealistic price simply because you’re the only house for sale. Buyers aren’t willing to overpay for a fixer.

A Balanced Market is Coming
I anticipate sales activity to rebound in 2019; especially in the Sacramento area. Sacramento and the surrounding communities continue to be a popular destination for bay area transplants as well as other buyers looking to relocate. In fact, last year Sacramento was the number one destination for one way U-Haul rentals in the country! Yes, California (Sacramento included) is still in the midst of an unprecedented housing shortage that makes it one of the most expensive places to live in the U.S. However, over the last 2 months rates have fallen .5%, and we anticipate they will remain stable for the foreseeable future. Lower rates combined with increase inventory will help move the market more towards a balanced market. Expect to see home appreciation to slow to 3-5%. In my opinion, this is a win/win for buyers and sellers. Home values continue to go up, but not at a rate that prices out potential buyers.

A few years ago my brother, Andy, climbed Mt. Kilimanjaro, the tallest freestanding mountain in the world.  The trek requires 6 days of climbing to get to the 19,000+ summit and back.  Needless to say, I was eager to hear of this trip upon his return that took him to the top of an African mountain like no other on this planet.  Over a beer and a narrated slide show, Andy shared with me the details of this life-changing adventure.

As I reflect on his stories, I most remember his journey up the mountain rather than his time at the top.  Sure, the pictures of the summit were breath-taking, and the sense of accomplishment I saw in him was inspiring.  But, in life’s adventures it’s often the challenges, not the triumphs, which best define the experience. 

On Andy’s climb, one of his porters broke his leg, so they had to carry on with fewer resources until a replacement could catch up with their team.  On the day before the summit he climbed a cliff called Barranca Wall, a steep 800 foot vertical climb that intimidates many climbers to simply turn back down the mountain.  Andy and his team were among the first that day to tackle it, meaning they had a unique opportunity to be at the summit in solitude.  These challenges they faced and overcame are the pieces from his adventure that I most remember.

As the great philosopher Miley Ray Cyrus says, “It’s The Climb” (listen to it here) *

“I may not know it,
but these are the moments,
that I’m gonna remember most yeah,
just gotta keep going.”

It’s no secret; life is challenging for everyone.  For you, for me, for your Instagram buddies that only show the polished side of their lives…for everyone.   Several of my posts on this blog have been about dealing and struggling with challenges;

Living In Gratitude
Challenges
Hurricanes
Win Some, Learn Some

In some way, all of these posts have also been about embracing challenges.  “There’s always gonna be another mountain”, and “it’s always gonna be an uphill battle.”  We need to learn to embrace challenges, because life is rarely a cake-walk.  We can keep our eye on the summit and relish those moments when we’re at the top, but we need to remember that it’s the climb that defines our journey.  I think Andy would agree.

*The song “The Climb” is provided only for illustrative purposes, and is not meant to be distributed without copyrights.

Interest rates have dropped 1/2 a percent in the last 2 months! This is a huge opportunity for anyone who purchased or refinanced in 2018 as interest rates haven’t been this low since January 2018! Also new for 2019 is that many counties had their loan limits increase. This is an opportunity for anyone who has a 2nd mortgage, line of credit, or other high interest debt to consider consolidating and save money. Having helped many (if not all of you) navigate through past transactions makes the refi process easier for you since as we are already familiar with your needs and know how to best address them.  We always look for opportunities to save our clients’ money, and we may be reaching out to some of you in the coming days to discuss some options we think may be worthwhile. If you have been considering refinancing, please don’t hesitate to give us a call.

Lisa, my business partner, and I have known and worked with one another for over 16 years (check out her bio here).  We’ve always had a very positive working relationship, with a touch of friendly competitiveness.  We share and compare our goals and our results, but regardless of who outperforms the other, we are always rooting for and pushing one another to be our best.

But, she has been absolutely destroying me in one important discipline of our business, and I’m hoping you can help me catch up.

If you look at our business pages on review sites such as Yelp, Facebook, and Google, her clients have been leaving raving testimonials of how Lisa took exceptionally good care of them.  That’s not surprising, as Lisa genuinely cares for her clients and is a knowledgeable expert in our field.  In fact, every single review of Lisa on-line is a 5-star review (atta girl!!!).  But, what is surprising (and a tad humbling for yours truly!) is that Lisa’s clients account for 74% of our company reviews on Yelp despite she and I having roughly equal transaction counts over the years.

Over 100 of my clients have left wonderful reviews of my services, which are posted at MattsMemos.com.  These reviews, however, do not automatically show up on Yelp and other online sites.  I need your help to make your opinions of my services well known.  Doing so will help us continue to earn the confidence of future clients, and help me to save a little face with Lisa.

Please consider taking a few minutes to leave a review of us at Yelp, Facebook, or Google.  OR, visit the testimonials page at MattsMemos.com and copy & paste a previous review you’ve written onto the review sites of your preference.  Its simple; when at the testimonials page click “Ctrl & F5” to search for your first name, and your browser will take you directly to your review. Copy it, then paste it to Yelp, Facebook, or Google.

No need to exaggerate and try to give me 6-Star reviews; let’s simply show Lisa that my client family is as loud & proud as hers!  Thanks for your time.