I Hate To Talk Politics, BUT…

We have all been warned of the three taboo conversation topics: sex, religion, and politics. Touching on such subjects with others often leads to conflict or misunderstanding. Wikipedia even admits on their web site that “its nearly impossible to provide a neutral point of view” on these matters.   And yet, NOT discussing politics in our current climate is nearly impossible as well, even for a guy like me who wants to focus on economics rather than politics.

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All of these “us” vs. “them” antics are exhausting, and dangerous.

 

So here it goes; my bold attempt to lace politics into my Part-Professional, Part-Personal, Rarely-Ever-Political blog.

Political news is everywhere!  Its even prevalent on financial (see below), fashion (peek at GQ’s polarizing Facebook video page) and sports (Google “Ass or Asset”) news sources .

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Check out this screen shot I took last night when visiting www.Money.CNN.com, my preferred source of financial and market news. Every single one of the top 10 headline stories covers some element of President Trump’s administration; they even have a page titled “Trumponomics.”  The unavoidable reality is that our politics are shaping our economics, including mortgage rates.

As I’ve been preparing my Annual Market Forecast post (coming soon!), I’ve realized I must understand our political affairs in order to best counsel my clients about the recent and potential future changes in interest rates. For example, mortgage rates and other financial markets have been incredibly volatile since Election Day due to the foreshadowing of how our world may be different under a Trump Administration. In fact, the term “Trump Effect” has been coined as a reference to the markets being indirectly influenced by President Trump. For example, on good stock market days, you’ll read headlines such as “Dow closes above 20,000 for first time as Trump actions spark rally” and “Trump tax talk lifts Wall Street to record high.” And on down days you’ll see “Will Trump kill the Trump rally?” and “Is Wall Street starting to show Trump regret?”

Like it or not, our economics are closely tied to our politics, and it seems that in the near term market movements will be directly correlated to President Trump’s every move, meeting, tweet, and executive order.

So here is the economic takeaway from this tip-toed political blog post: the more volatility, uncertainty, and controversy surrounding President Trump’s first 100 days in office, then the more likely we will see mortgage rates drop.  Markets disfavor uncertainty, and when it comes money flows to safer investments such as bonds and mortgages. On the other end, the more focused he becomes on pushing his domestic promises to cut taxes, deregulate industry, and increase infrastructure spending, then the more likely we will see mortgage rates rise. If you are in the market to purchase or refinance a home in the coming months, then the inescapable political headlines you encounter every day have more impact for you, as the Trump Effect on mortgage rates will surely be at play in the weeks to come.

Do The Big Brokerages Have Big Advantages?

Last month I posted about how RE/MAX, one of the world’s largest real estate franchises, is beginning to mimic our business model of offering one-stop-shop services with mortgage brokers and real estate agents all under the Re/Max umbrella. Imagine that!?! The little guys like me who offer combined, efficient, and effective services must be doing something right if the big guys are catching on.

How about other features of our services? Do the big brokerages still have other advantages due to volume and brand recognition? For example, some homeowners believe they’ll have a better shot at selling their home faster and for top dollar if they list with a big brokerage since they have huge advertising campaigns and a broader marketing reach. Is that true?

david-v-goliath

Do little guys like me even have a fighting chance in providing superior service and results compared to the Goliaths of our industry?

Let’s look at the stats, shall we! Since 2014, the median days on market for my listings was 9 days and the median sales price to list price percentage was 100%. This means that, on average, I sell your home in a little over a week and for the price for which you list. Additionally, I didn’t have a single canceled or withdrawn home listing. In other words, no one backed out of listing their home with me.

How do these figures compare to the big brokerages? By my account, Folsom’s three largest brokerages are Re/Max Gold, Keller Williams, and Coldwell Banker, accounting for a combined 240+ active agents and 2000+ listings over the last 3 years. Here’s how their figures compare to mine on  closed listings from 1/1/2014 thru 11/4/2016 (from Metrolist):

Brokerage Days on Market Sales Price to List Price Percentage Expired or Withdrawn Listings (as %)
Matt Sundermier 9 100% 0%
Re/Max Gold – Folsom 13 99.49% 24.9%
Keller Williams -Folsom 13 100% 22.9%
Coldwell Banker – Folsom 16 99.73% 20.5%

As you can see, there is not much difference on how fast and for how much we are selling our listings. Big brokers are not performing any better than me in these regards. And check out the far-right column, which represents the percentage of listings that expire or are withdrawn from MLS. At the big brokerages, 20-25% of listings don’t even end up closing escrow. Say what?!? Imagine meeting with an agent in preparations to sell your home and they say, “I have a 75-80% chance to sell your home.” Doesn’t exactly instill confidence, right?!

As a reminder, these numbers represent the total population of agents within these offices, so surely there are agents who have a better track record than that. Frankly, the individual agent makes a bigger impact on your listing and selling experience than the broker and brand they represent. But the big take home lesson is this: the big-brokerage advantage is a myth.

In order to effectively sell your home, you don’t need a brokerage with nation-wide TV commercials and a household brand name. You need an agent that has three primary traits: market knowledge, industry experience, and the ability to articulate both of those to you throughout the home selling process.

The next time you’re in the market to sell your home, don’t limit yourself to just the big-brokerages. As these stats and my track record suggest, there is no distinct advantage to you for going big. In fact, I’d make a VERY strong case it’s probably better you go small!

What other features of mortgage and real estate services that vary from big to small operations may be of interest to you? Let me know and I’d be happy to consider discussing your topic on an upcoming blog post. Until then, thanks as always for reading Matts Memos!

Should You Finance Energy Efficient Upgrades?

Energy efficient upgrades to a home can add value, lower your utility bills, and make you a “greener” citizen of the Earth. There are now a number of finance alternatives that have made these updates more accessible than ever before.

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For example, you can lease solar systems and offset the monthly lease payment with the energy savings produced. You can also borrow money to install energy saving appliances, and have the loan payments added to your property tax bill. With all of these new finance alternatives, it has helped many homeowners who otherwise wouldn’t have been able to install these updates with their own savings.

But are these new finance options truly helping homeowners? We have spoken to a number of clients who weren’t aware of some of the fine print of these finance schemes, specifically how these lease and loan options create a lien on their property that make it difficult or even impossible to refinance their homes.

A trusted colleague told me early in my career that there is no free lunch in lending. In other words, you don’t get to borrow money without strings attached. Typically, that means you are paying interest, and in the case of real estate it also means you put your property up for security against the loan. Mortgages, for example, are recorded against the property and this loan must be paid off prior to selling or allowing another mortgage to be taken out.

Most folks recognize that they are going to pay interest if they borrow money from a solar or utility company, but what does not appear to be commonly understood is that these loans and leases are recorded against the property.

Several times in the last year, we have worked to help a client refinance to a lower interest rate and save money on their mortgage payment. During the underwriting process, we discover an additional lien resulting from a solar, window, HVAC, or other energy efficiency update. This secondary lien must either be paid off or give permission for the mortgage to be refinanced. Many times, the client either doesn’t want to or can’t pay off the loan, and the energy efficiency loan won’t allow the refinance to proceed. The refinance attempt ultimately fails. Ironically, the act to save money through energy efficient updates ends up handcuffing the client to a higher mortgage interest rate loan, thus losing more money to interest than what is being saved in lower utility costs.

Not all loan and lease terms are the same amongst the various options and vendors. And in some cases it probably makes sense to obtain one of these loans and live with the potential down sides.   Simply be sure you know the fine print. Solar and other outfits are pushing these available financing options hard on homeowners, but there are more traditional finance options available that you may want to consider as well. A cash-out refinance, home equity line of credit, home improvement loan, or other form of traditional mortgage financing may make sense as well. As always, we are happy to discuss what options you may have and objectively point out the pros and cons of each.

2016 Real Estate Market Forecast

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Last week marked the beginning of Chinese New Year, the year of the Monkey. Fitting, considering last week’s financial markets around the globe were filled with “monkey business.” It seems everywhere you turn lately there are crazy things happening. The Dow Jones is down several thousand points from recent highs, suggesting we may be entering a “bear” market. Gas prices are as low as they’ve been in nearly 15 years, leading many to think economic growth is slowing. And several central banks around the world are charging negative interest rates (imagine being charged interest to keep your money in the bank!?!).

Despite the monkey business everywhere else, our local real estate market appears to be quite normal. We are seeing similar vital statistics this winter compared to recent years. Sacramento area home prices are up 10.7% over the last year. And low interest rates combined with rising rent prices are keeping demand high for real estate.

But will the world’s monkey business eventually seep into our local markets? Will we remain insulated from the worlds’ woes? Or be dragged down with them?

Bear and Monkey
Will a Bear Market join forces with the Year of the Monkey to sour the local market?

In short, I believe the recent economic turmoil will only fuel our real estate market, not hinder it. We should see the similar dynamics seen in recent years (low inventory, high demand, low interest rates) but I think they’ll be further intensified in 2016! Here are my reasons for a strong year ahead for Sacramento real estate:

 

Money will flow to what’s “real”
With money fleeing the stock market, it has to go somewhere. Fear is abundant in the markets (check out this cool “Fear & Greed” index tool), and money runs to safety when it smells fear. I believe it will find its way to real assets, like precious metals (gold prices are up 10% in just the last month!) and real estate.

Millennials will “get real”
It is widely documented that the millennial generation (those born roughly between the early 1980s and early 2000s) has deferred home ownership more than their predecessors. The reasons vary (they have more school debt, prefer to live in higher-priced urban areas, don’t want to be “tied down” with a mortgage, etc.) but sooner or later they’ll see the light to become homeowners. In Sacramento, the validity for homeownership is becoming quite clear.

Millenials
In recent years, Sacramento has become a magnet for Millennials. This article cites everything from the dining scene to recreation to coffee as reasons why younger folks flock to the River City (excuse the language used in the article). Furthermore, rent prices have been skyrocketing in Sacramento. This article from Sacramento News & Review states we are the third hottest rental market in the country, only behind Portland and San Francisco, with average rent prices climbing 10.6% in a single year. With rents rising and no clear sign of significant new construction on the way (more on this in a moment), many who are renting should be considering home ownership, which will further spur real estate demand and prices upward.

New home construction will continue to lag
New home and apartment construction has not kept up with demand in Sacramento. Developers site high costs and red tape; others are concerned of the over-building that occurred a decade ago and don’t want to repeat history. Nevertheless, only Detroit had fewer new construction starts last year than Sacramento.
Let that last sentence sink in for a minute; the only city with slower new construction activity in the entire county is a city that lost 25% of its population from 2000-2010. Detroit is not building because they don’t need new housing units; 1 in 4 people up and left during the Great Recession! Sacramento, in contrast, GREW 25% in population during the same decade, and until we begin building new housing we will continue to see home prices and rents soar, both in urban and suburban areas.

Mortgages will remain cheap and accessible
With gas below $2 a gallon and other world banks charging negative interest rates, its clear that no one should be concerned with inflation here in the US. Inflation is Public Enemy #1 to fixed interest rates such as mortgages, so with no inflationary threat mortgage rates will remain low.
How low? In a word…ridonkulously low (well, in sort-of a word)! With low rates (30-year fixed rates below 4% and 15-year rates near 3%) and, in turn, low mortgage payments, this will only further instigate millennials and other home renters to become home owners. Furthermore, underwriting guidelines are loosening and new loan products are emerging (more on this next month in a separate post). This makes financing accessible to more home buyers, thus allowing demand to grow ever more.

Rose Colored Glasses
For the second year in a row, my forecast is looking up!

To re-cap, I’m incredibly optimistic for the 2016 real estate market.  Compared to my “rosy” forecast from 2015 (which turned out to be quite accurate, I might add), this year’s is just plain flushed! I expect strong price appreciation (10%+ for Sacramento), coupled with high volume (lots of buying and selling), and fueled by very affordable and available financing. Until new home construction is firing on all cylinders and inflation becomes a concern, the outlook for our local real estate market will remain bright.

As always, thanks for reading Matts Memos!

Timing The Market is Like Timing The Weather

I just returned from a trip to Switzerland with my wife and oldest daughter. The weather was incredible, despite the fact January is typically the coldest and wettest month for the Swiss.  Our good fortune was quite remarkable and I can’t help but compare our timing with the weather to how many folks feel about timing the real estate market.

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The majestic Matterhorn is rarely seen this clearly during winter.  We were very lucky!

 

More and more clients seem to be asking for my prediction on what the upcoming year holds for real estate. The truth is I can’t time the market any more than I can time the weather!

Instead of basing decisions on good fortune from things beyond our control, I’m an advocate for planning and acting based on things we can control. This is true in most walks of life, including real estate. Below are the 3 things I encourage every client to consider before making an important real estate decision.

 

Plan Ahead

Most people don’t wake up and decide they’re going off to the airport to go on vacation because the weather looks good in a faraway city. Rather, a long trip requires planning. How are you going to get there?  What will you do when you get there?

Planning for this trip began in October. We figured out which cities we would visit, how we were going to get to each one, and where we would stay.  Furthermore, we have a “team” of people that we need to consult with prior to traveling (colleagues, grandparents, teachers, etc.), and each one’s input is important in figuring out if and how the trip will come together.

The same is true in real estate. You should not wake up one morning and decide to buy or sell a home on a whim or, even worse, because of what some market “expert” is predicting.  It takes planning, and a team of people to help you sort it out.  Many people take this time of year to do real estate planning so they are ready to act in the spring when market activity picks up.

 

Focus on Factors You Can Control

Mary and I knew January was a sketchy month to travel to Switzerland. February or March would have been better as the temperatures are generally warmer and there likely is a bigger snow pack to enjoy for skiing.  In the end, January was the month where we could pull it off due to our schedule.  In the end, it worked out great because we had Spring-time conditions in the dead of winter!

With real estate, I see many people attempt to decide to buy, sell or refinance based on the right timing in the market. I believe this is a recipe for disappointment.  The market is unpredictable and there is no way to guarantee the market is going to behave in your favor.  Rather, an important real estate decision should be based on questions you can answer: does your family need a larger home?  Are you stable in your career?  Can you afford a home?  Is your health making it difficult to maintain your home?  Do current rates make your monthly payment affordable?

Making a move based on these factors means you are doing what’s best for your timing, not the market’s.

 

Don’t Let The Outcome Be Determined By Factors You CANNOT Control

As much as we enjoyed our fortunate weather, our enjoyment was not going to be impacted by Mother Nature. We packed for cold weather, and had alternative itineraries for gloomy days should they have arisen.  Also, this was a rare opportunity for Mary and I to travel with just our oldest daughter (we have two younger children as well).  This factor alone meant we were going to have a memorable and unique trip to spend quality time with her, regardless of the weather.

When it comes to buying and selling real estate, it is a dangerous proposition to say that your decision will only be a smart one if the market ends up working in your favor. For example, if you are considering selling your home this spring because you are confident home prices are going to fall later this year, then how will you feel if prices keep going up?  Conversely, if you are thinking of buying this year because you’re convinced you’ll be priced out of the market if you keep waiting, then how deflated will you become if prices and/or interest rates fall instead?

The bottom line is this: you and I can’t time the real estate market any better than we can predict the weather. I encourage all of my clients to put less emphasis on what’s going on in the market, and a greater emphasis on what’s going on in YOUR life.  In other words, is buying or selling a right time for YOU?

 

As I said previously, now is a wise time to begin discussing and making plans for a real estate decision later this year. These types of life-changing events don’t formulate over-night. My team and I are here to help you sort out the important and complex decisions ahead.  As always, we value your trust in us to navigate you in your real estate affairs.

Are Californians Crazy?

Jimmy Buffett sarcastically claims in his iconic song “Fruitcakes”, California has it all.  “They’ve got riots, fires and mudslides…” so goes the tune.  Fruitcakes

In addition to these struggles, we also have an extremely high cost of living. Historically, behind only Hawaii, California has the highest median home sales price of any state in the country.  While the median home value in the U.S. is approximately $180,000, the Golden State’s median home price in August was nearly three times that at just under $500,000.  Non-Californians think we’re crazy to spend that much money on a pile of bricks.  Are we?

I guess the answer depends on who you ask.  If you ask me, I seriously believe California does have it all!  I am thankful my roots are deeply planted here, and that my career entails being both an advisor and ambassador for California home ownership.  Nowhere else in the country do you have as many diverse recreational, cultural & culinary experiences just a short drive away than right here in California.

Photo courtesy of my super hot (& photographically talented) first-mate, Mary.
Photo courtesy of my gorgeous (& photographically talented) first-mate, Mary.

I have not left California in over 18 months.  Given my family’s track record of travel, that’s a bit of an anomaly.  But, during this time, I’ve had a wider array of vacations than in any other point in my life.  In just the last year, we have taken road trips to:

Redwood National Forest – Hiking, beach combing, zip lining
South Lake Tahoe – Skiing, snowball fights
Lake Oroville – Tubing, wakeboarding, fishing
Southern California – Disneyland, Malibu beaches
San Francisco – Beach Blanket Babylon, Live Music in Botanical Gardens, sailing
Central Coast – Rugged beauty, abundant wildlife (I saw a Blue Whale!), sea kayaking

California Collage
California has it all!!!

When I put together this picture collage, it was such a wonderful reminder of the diversity of our state.  Does California have its fair share of problems?  Certainly!  “Riots, fires, and mudslides” are probably just the beginning.  But having opportunities to make wonderful memories is not one of them.

Some may consider Californians to be “fruitcakes.”  But, when you learn that CA homes have appreciated more than 50% over the last four years (its true!), perhaps it’s the ones that don’t believe in California homeownership who may be the ones out of their minds.

Stay crazy, Californians!

2015 Real Estate Market Forecast

As usual, I’m a little tardy in posting my annual market forecast.  I assume everyone else’s Januarys are as hectic as mine, so its likely you wouldn’t even read it if I were to send this out at the turn of the New Year.  By more happenstance than design, my annual forecast release in early February has worked out over the years, as more readers view it over any other MattsMemos.com post during the year.  I’m honored you find entertainment, and perhaps a little insight, from this annual tradition.

Forecast
Forecasting is a fancy word for guessing!

2014 Year In Review

Before I get ahead of myself, let us review 2014’s forecast and see how my predictions stacked up to what truly transpired.  In short, I forecasted we would see stabling home prices due to a healthy balance of supply and demand of traditional buyers & sellers.  I can’t help but brag for a moment that this was the exact script for last year’s market.  Sacramento homes appreciated less than 5% (Folsom was less than 2%), and the market maintained between 1.8-2.7 months of inventory (this is a balanced level).  Short sales and REO sales accounted for less than 15% of Sacramento area sales.  All of these signs clearly indicate a return to normalcy for our real estate market.

My accurate aim stops abruptly, however, when you peek at last year’s interest rate forecast.  With The Fed easing and ultimately exiting their campaign of buying mortgages (known as “quantitative easing”), I anticipated 30-year fixed rates would steadily climb through the year and end up around 5%.  In actuality, rates somehow defied logic and plummeted back down well below 4% towards the end of 2014.  There are a number of factors that led to this, but the main cause was the falling price of oil.  When oil costs less, so does everything else as it costs less to produce and transport goods.  With little to no threat of rising costs of goods, interest rates on mortgages tend to slip lower as investors are not worried about inflation.

Graph courtesy of ycharts.com
Graph courtesy of ycharts.com

2015 Market Forecast

There is much “writing on the wall” that makes me very excited for 2015’s real estate market.  Compared to the meager demand of buyers seen in 2014, I anticipate many more first-time & “boomerang” (folks who lost a home to short sale or foreclosure who are now looking to purchase again) home buyers entering the market.  Why?  Rent prices are skyrocketing everywhere, thus making it less financially attractive to rent versus own.  Also, lending guidelines are becoming more favorable for folks with small down payments.  For example, FHA financing (which allows down payments of as little as 3.5%) slashed monthly mortgage insurance rates by more than 35% last month.  When combining this drop with the overall decline in interest rates, homes have instantly become more affordable for most buyers.

With more first-time & boomerang buyers on the scene, entry level home prices will appreciate more rapidly than other segments of the market, but the tepid pace of entry level home sales will have a positive ripple-effect on larger homes as more folks look to move-up.  I boldly predict we will see more homes sold this year in the Sacramento area than we have in over 5 years.

As always, interest rates will be a big wild card.  It always seems an unpredictable global, political, or financial event causes rates to swing in the opposite direction conventional wisdom suggests.  Will 2015 play out the same way?  Perhaps, but given the low cost of oil (which keeps rates low) and the sputtering pace of the stock market (if stock market does poorly then rates tend to fall) I would be incredibly surprised to see rates increase more than ½% from their current marks.  30-year rates are below 4% presently and 15-year rates are inching towards 3%.

All in all, the real estate market looks rosy.  Perhaps that’s due to the shade of my glasses, but the combination of hungry buyers, willing & able traditional sellers, and accommodative interest rates and lending guidelines make it hard to believe 2015 will be a poor year for the market. As always, I’m thrilled to have a front row seat while it plays out, and I’m honored to have your trust to help navigate your real estate affairs.

2014 Real Estate Market Forecast

Its that time again…time for my annual market forecast.  I like to consider March as the turn of the Real Estate year, as many folks begin to think about their real estate affairs this time of year.

Forecasting, to be honest, is just as much about reviewing the past as it is about predicting the future.  How can you know where you’re going if you don’t know where you’ve been?  With that said, its always a scary (albeit entertaining!) exercise for me to review last year’s forecast with what actually took place.

In short, 2013 was a two-faced trip around the sun for the Sacramento real estate market.  From January to June, I couldn’t have been more accurate with my projection of “steady price increases for sellers and challenging times for buyers”.  The market was ON FIRE with average home prices rising 21%, interest rates hitting rock bottom lows, and the number of homes for sale at the lowest point in over a decade.  However, after The Fed meeting on May 22nd that quickly raised interest rates, the real estate market hit the brakes and my forecast accuracy fell off the tracks.  In the second half of the year, Sacramento home prices only increased 4%, and the number of homes for sale (known as “inventory”) nearly doubled. 

 

2013 Home Prices Rallied Fast, then plateaued in July
2013 Home Prices Rallied Fast, then plateaued in July

 

The number of homes for sale rose sharply as the year progressed.
The number of homes for sale rose sharply as the year progressed.

In hindsight, this second-half slow-down was healthy for the real estate market.  Things had become out of balance and the rally unsustainable.  Now looking forward to 2014, the big question will be are we going to see a resurgence in home prices as Spring nears or will it continue on its plodding pace?

My prediction is we’ll see stable 2014 home prices as both inventory and sold homes increase to remain mostly in balance with one another.  Despite the sharp increase in inventory in recent months, its still low at a level not seen since 2005 (see below).  More sellers will look to sell in 2014 as life events dictate homeowners to move.  Similarly, more buyers will look to buy in 2014 as folks re-enter the market after a prior short-sale or foreclosure.

Even though inventory has risen sharply, it is still about as low as we've seen in the last decade.
Even though inventory has risen sharply, it is still about as low as we’ve seen in the last decade.

In short, we should see a traditional market with a healthy balance between traditional buyers and sellers.  Short-sales and REOs will account for fewer than 15% of the market, real estate speculators will gravitate away from California, 30-year fixed rates will hover around 5%, and transactions will be dominated by repeat buyers.  In fact, I couldn’t agree more with Trulia’s Chief Economist who coined 2014 as “The Year of the Repeat Home Buyer.”  The Blue Waters Group is uniquely equipped to help clients buy, sell, and finance all at the same time.  Moving up or down can be an anxious experience, but our clients find having a single, trusted team handling all facets of their multiple transactions makes for a smoother, confident, and successful transaction.

Even a “normal” market requires just as much know-how, expertise, and calm nerves as any other market we’ve seen over the years.  If you or someone you know is considering a real estate transaction this year, I look forward to the opportunity to share my knowledge and experience.

Thinking of Selling a Rental? This is a MUST WATCH VIDEO

Many of our clients in recent years have converted their old home into a rental as they moved up and purchased a new home. With home prices rebounding to pre-2008 levels, these reluctant landlords are now considering selling their rental property. We invited our favorite CPA, Sean Boyd of Boyd & Associates, into our office to offer some tax tips. Trust me, if you are in this position you must watch this video.

 

 As always, The Blue Waters Group strives to give you valuable and timely insight on your mortgage and real estate matters.  If you are considering selling a rental property in the near future, we are here to help you navigate the many variables involved in doing so.

 

Everything Is Cooling Off

I recently went up to Donner Lake for a beautiful fall weekend. When I came back it felt like I brought the cool air back with me.  The autumn air here in Sacramento feels crisp, healthy, refreshing.

Fall is Cooling Everything Off
Fall is Cooling Everything Off

Similarly, the real estate and mortgage markets are cooling off too.  THIS IS GREAT NEWS!  Much like the changing weather, the current market changes are healthy and refreshing too.  After months of sizzling home price increases, we’re beginning to level off.  Interest rates, too, have cooled off and have fallen from their summer highs.  All of this means home buyers, particularly MOVE-UP buyers, have more opportunities to find their next home at a reasonable price.

This past summer we saw an unbelievable real estate rally.  Much like a caged animal, the market sprung from hibernation and jumped with reckless abandon  Sacramento area average home prices spiked 13.8% from April to August!!!  This rally was exciting and, thankfully, unsustainable.  Had we kept on that pace, we simply would have created a market bubble that surely would have popped in the near future.

The number of homes for sale in Sacramento is on the rise
The number of homes for sale in Sacramento is on the rise

The average sales price has leveled off in recent months

 

Instead, we’re seeing prices level off, homes sit longer for sale, and more homes available to purchase.  This is incredibly good news for home buyers.  I had several clients who looked to buy a home earlier this year who opted to sit on the sidelines and wait for the market to calm down.  These clients now look very savvy & patient (you know who you are :-), as the coming months should present them a more reasonable marketplace in which to buy.

Furthermore, the interest rate spike we saw this summer is beginning to reverse.  In May & June, the markets were largely expecting The Fed’s influence on mortgage rates to “taper.,” thus sending rates higher.  Now, the expectation is beginning to change.  With sluggish economic indicators and a political stalemate threatening to bring our country to a halt, uncertainty is high.  As a result, fixed mortgage rates have fallen nearly ½% in the last month.

Again, all of this means home buyers are in a much better position to find the right home without the worry of insane, multiple-offer situations.  If you are a first-time home buyer, there’s no need to panic about being “priced-out” of the market in the near-term. If you are a move-up buyer, this balanced market between buyers and sellers is the perfect environment to buy your new home and sell your old home.

As most clients know, our firm is perfectly suited to help you with all of your home buying, financing AND selling needs.  Many clients find this one-stop-shop form of real estate service incredibly valuable and convenient.  For the rest of the year, if you enlist us to help with all three services (buying & financing a new home as well as selling your old home), we will reduce our listing commission by ½%.  On a $400,000 home that’s a $2000 discount!

Thanks as always for reading Matt’s Memos and your continued support by returning to and referring The Blue Waters Group.