Category: Mortgage

Scam calls are getting out of hand

We can help!

Most days I get over 10 “Scam Likely” calls.  Its getting to the point that I don’t even pick up an unknown number, which is problematic considering much of my livelihood consists of being available to clients by phone!

The number of aggressive solicitors calling to say they want to “help” is out of control!

Enough is enough, and I’m taking action.  I recently signed up my cell phone number to the www.DoNotCall.gov registry, but I know from experience that won’t be enough. There is an additional step I’ve taken, and I encourage you to do the same.

As crazy as this may sound, the credit reporting agencies are legally allowed to sell your contact information to solicitors.  Its common that after I pull a credit report for a client who wants to obtain a mortgage that the client is bombarded by aggressive sales calls from other mortgage companies.  They claim this promotes consumer shopping alternatives, but in reality its borderline harassment!  Thankfully, there is a way to stop it.

Go to www.OptOutPreScreen.com  and select to Opt-Out of being included on these annoying marketing lists.  It takes just a couple of minutes, and doing so reduces the unwanted calls and texts (good for you) and keeps the unscrupulous folks in my industry from having a sleezy way to shortcut their way to customers (good for you and me!).

Are Your Friends GETTING OUT of Real Estate?

Some are getting side hustles; we are becoming experts

I’m not gonna lie; things have been tough in the real estate business.  After a decade of boom times and folks flooding the industry (remember this post asking if most of your friends were also in real estate!?), the number of transactions has decreased dramatically.

Many agents and brokers are getting side-hustles or quitting altogether in the midst of the fastest market downturn in a generation.  Nearly 10,000 Realtors have left the industry every month so far in 2023, and this trend will likely accelerate in the coming months.  Statistics aren’t available for mortgage professionals, but due to higher interest rates the mortgage exodus is probably even worse.

So how are we handling these slower times?  By keeping our hands and minds busy!  In addition to spending a few months relocating and settling into our new office, we are growing our team (more on that next month) & honing our craft to be even more valuable to you!  As I stated back in October, we are ALL IN!

We are taking the opportunity to invest, educate, and grow by becoming further experts in emerging trends in our markets and share our insights with you!  On the Summer Solstice last week, we kicked off our Summer Seminar Series with an Estate Planning class.  These FREE in-person seminars are designed to provide you with valuable details on critical, yet often overlooked, real estate topics. 

This month we are proud to host a seminar on Reverse Mortgages.  As Baby Boomers approach retirement age, many are looking for ways to be financially secure.  A reverse mortgage can be a useful tool that help homeowners aged 62 and better to utilize the equity in their homes for living expenses, health care costs, home improvements and more!  There are many stigmas around these loan programs, some of which are flat out untrue!  Come attend this seminar to learn the good, the bad, and everything in between from industry professionals who specialize in helping senior borrowers make wise financial decisions.

Admission is free but space is limited, so be sure to RSVP here before tickets are gone!  Check out the rest of the summer schedule for our upcoming seminars on Accessory Dwelling Units and First-Time Home Buying.

We thank you for referring and returning to us for all of your mortgage & real estate needs.  Our team remains ready and capable to guide you through this ever-changing market.

Lower Mortgage Rates Are Coming

Why?  Because we are inverted!

The most famous use of that “inverted” phrase naturally comes from my favorite childhood movie, Top Gun. Now, as a grown up who owns a mortgage & real estate brokerage and enjoys studying economics, being inverted has an entirely different meaning that generally precedes recessions and times of lower mortgage rates!

Talk To Me, Goose!

First a quick econ lesson…the yield curve is a graphical representation of the interest rates (or yields) on bonds of different maturities. Typically, longer-term bonds have higher yields compared to shorter-term bonds. This upward sloping yield curve illustrated from June 2013 is the normal or positive yield curve, making it look like the front side of a jump ramp.

Great Balls Of Fire!

However, when the yield curve inverts, it suggests that investors have a pessimistic outlook on the future economic conditions. Check out how different today’s yield curve looks, like the backside landing of that same jump ramp!

An inverted yield curve refers to a situation where the yields on shorter-term bonds are actually higher than the yields on longer-term bonds. This phenomenon is considered significant because it has historically been a reliable indicator of an impending economic recession.

What Were You Doing There?

Communicating! An inverted yield curve is a way of our markets sounding the warning bells. Over the last 50 years, every time the yield curve has gone negative (below the 0% flat line), an economic recession has followed (shown by the vertical gray bands). Presently, the yield curve is in deeper negative territory than the previous 3 cycles, and has been flirting with levels not seen in my lifetime (I’m a young Gen-Xer, for the record). In other words, this inversion is deep, serious, and prolonged. We need to pay attention to it!

I Feel The Need, The Need For…

Lower rates!!! These recessionary periods also tend to lower borrowing costs, especially mortgage rates. In each recession for the last 40 years, we have seen mortgage rates drop during these slower economic times. Could we be heading for a steep decline in mortgage rates???

It’s important to note that while an inverted yield curve has been a reliable indicator in the past, it doesn’t guarantee a recession nor lower mortgage rates will occur. It is merely a signal that suggests increased risks and the need for careful monitoring of economic conditions. Nevertheless, I think this reliable tell-tale sign is clear that lower rates are on their way. Stay tuned for more statistical insight on the state of our market, economy, and interest rates. Thanks as always for reading; you can be my wingman anytime! 😉

Summer Seminar Series

We recognize there’s much more to real estate than buying and selling homes.  We are proud to bring our clients a series of FREE 90-minute seminars this summer that bring clarity to the critical topics of estate planning, reverse mortgages, accessory dwelling units (ADUs), and first-time home-buying.  See below for more details, and be sure to RSVP early as space is limited at each seminar.

Wednesday, June 21st 5:30 PM – Living Trusts & Estate Planning – RSVP NOW

There are only two things in life that are certain; death and taxes!  As our population ages, the largest transfer of wealth ever will take place through inherited real estate, and the tax implications are huge.  Unfortunately, most homeowners are not prepared to easily & efficiently transfer their property to heirs.  Learn the benefits of establishing a living trust so your assets and heirs are cared for after you pass away.  Selling a home through probate can be a costly and frustrating process for your loved ones, so we’ll give you the tips and the contacts for setting up your living trust now! 

Wednesday, July 19th 5:30 PM – Reverse Mortgages – RSVP NOW

As Baby Boomers approach retirement age, many are looking for ways to be financially secure.  A reverse mortgage can be a useful tool that help homeowners aged 62 and better to utilize the equity in their homes for living expenses, health care costs, home improvements and more!  There are many stigmas around these loan programs, some of which are flat out untrue!  Come attend this seminar to learn the good, the bad, and everything in between from industry professionals who specialize in helping senior borrowers make wise financial decisions.

Wednesday, August 16th 5:30 PM – Accessory Dwelling Units – RSVP NOW

It’s now more attractive & easier than ever to build an Accessory Dwelling Unit (ADU) on your property. Our community does not have enough housing units to accommodate our growing population, which is why we’ve experienced record increases in home values and rental rates in recent years. State laws have been recently eased to allow ADUs to be build in nearly every residential neighborhood in Sacramento! Attend the workshop to learn how our city’s planning department is implementing these changes to ADU permits, and how local builders are creating customized & comfortable units that are attractive and appealing to residents.

Wednesday, September 20th 5:30 PM – First-Time Home Buying – RSVP NOW

We love helping our clients purchase their first homes!  Our aim is to educate and empower new home buyers to feel confident in the process and their decisions.  We will discuss down payment assistance loans, improving your credit score, and why its so important to have experts explain and guide you in this life-milestone transaction.  Come learn how our firm helps you to find, finance, and negotiate your first home, and why the upcoming Fall season may be the best time to buy a home! 

May The Fourth Be With You

Our Team Put Together These Parody Videos for your May The Fourth enjoyment

In a galaxy not so far away, The Fed is at war with rates. Will their efforts spark a New Hope for the economy? Or will a recession Strike Back?

For the 10th straight meeting, The Fed has raised the federal funds rate. Have they gone “Kylo Ren” on inflation? We think so! The good news is their aggressive attack on inflation will likely lead to lower mortgage rates later this year.

New Loan Is Indeed A Dream For ALL!

Home Sellers Should Be Particularly Excited

There’s been a big buzz in real estate this week, maybe you’ve heard it from friends, family, or another real estate professional.  But I’m going to give you a fresh take on it that you haven’t heard anywhere else!

Earlier this week, a brand-new state funded loan program became available to first-time home buyers.  Coined the CA Dream For All Loan, its an innovative loan that allows buyers to purchase a home with no money down, no mortgage insurance, and no monthly payment associated with the portion of the loan from California. Our team has become well-versed with the program and are certified to offer it to our first-time home buyer clients.  But you know you should really be most excited about this new loan?  Home Sellers!!

There’s no doubt this program will be a game changer for more Californians to purchase a home.  That’s a great thing given how expensive it is to buy a home here, and we are honored to help as many clients as we can to qualify for it!  But, the program only has funding for approximately 3,000 buyers, and forecasts show the program being depleted in a few short months.  This will create a frenzy for homes below the median price, which in California currently stands at $615,000.  This is already an extremely competitive segment of the market as there aren’t enough homes for sale to match buyer demand.  This Dream for All program will further exaggerate this imbalance, which means there is a tremendous opportunity for folks who have been thinking about selling a home, particularly one typical of a first time home buyer purchase.

If you’ve been thinking about moving up, moving out of state, or selling a rental property, this Spring real estate season could be a golden opportunity for you.  Think about this, for someone moving up, you get to sell your smaller home in an incredibly competitive market, and buy a larger home that is surely struggling to sell more than its lower priced counterparts.  Or someone moving out of the market altogether, this may be a perfect time to cash out before future economic uncertainties soften our real estate market.

Whether you are a buyer looking to qualify for the Dream For All program or a seller looking to cash in on this incoming wave of demand, my team and I are able to help you.  Watch my separate video detailing the Dream For All Loan program, & please reach out to me to see how I can help you find your buying or selling opportunities in this spring season market.

CA Dream For All Loan Example

Our team has become well-versed with the new California Dream For All Loan program and has it available to offer to our first-time home buyer clients.  Lets unpack a common example and see how this program functions.

Assume someone buys a home for $500,000.  They would obtain a traditional 30-year fixed loan at a fair market interest rate for 80% of the purchase price, making the loan $400,000.  Now instead of making a $100,000 down payment, something most first-time home buyers don’t have, they obtain a 2nd mortgage from the state of California for the needed $100,000.  No monthly payments are required and no interest accrues on this $100,000 2nd mortgage.  But it is not a grant; it is not free money.  This 2nd mortgage is a Shared Appreciation Loan, meaning that when the home buyer goes to sell the property they have to pay back the loan in full AND share in the gained equity with the state of California.

Lets see how those numbers work.  Lets assume this $500,000 home appreciates by a modest 5% per year.  After 5 years, the home is now worth $640,000; it has appreciated by $140,000.  Most folks utilizing this program will need to pay back 20% of that appreciation to the state, in this case $28,000 dollars.  So when they sell the home, they will pay $128K to the Dream For All mortgage, the outstanding balance of the 1st mortgage that started at $400,000, leaving them with $142,000 in equity before selling costs.

So, in a nutshell, a borrower who put in nothing for a down payment ends up earning nearly $150,000 in realized equity.  And to do so, they had to pay $28,000 in shared appreciation to borrow a $100,000 loan, which essentially works out to be an annualized interest rate of 6%. 

Here’s another example created by CalHFA worth watching:

Like any loan program, there are qualifying restrictions. Contact my team and I for the full details on how first-time buyers can take advantage of this new loan!

Do You Need a (Real Estate) Savior or Sherpa?

Buying, selling, or refinancing a home in today’s market can be quite an intimidating process to many.  From elevated interest rates to volatile home prices, more and more elements are beyond predictability.  I recently watched other real estate professionals market themselves as real estate saviors, promising the world in order to falsely take the fear out of the process for consumers (& “win the deal” for themselves).  In my opinion, however, nothing is scarier in real estate than an over-promising sales person guaranteeing things they simply have no control over.

As a real estate agent and mortgage broker, I cannot be a savior.  Rather, I see myself as your real estate “Sherpa.”  Sherpas, as you may know, are an ethnic group in Nepal who are famous as highly skilled and capable mountaineering guides in the Himalayas.  Unable to make the trek alone, summit-seeking climbers hire Sherpas to manage and navigate the dangerous trek up Mount Everest.  And while Sherpas make most Everest ascents possible, the chance of reaching the summit is ultimately out of their hands.

Buying, selling, or financing a home can feel like climbing a mountain.  It seems scary, danger exists if you make a wrong turn, and there are plenty of nay-sayers claiming you can’t do it.  To overcome the obstacles, you need a partner who is experienced, resilient, and calm under pressure.  But, be wary of the guide who guarantees you a trip to the summit; who are they to control the weather in such extreme conditions? 

I cannot guarantee you the perfect house at the lowest price with the fastest close.  I cannot guarantee you an underwriter will approve your loan.  And I cannot guarantee your home will sell in 2 days for full asking price.  There are too many variables to a transaction to pretend like I wield the real estate cosmos in my hands.  Again, I am not a savior.  I am, however, your real estate Sherpa, determined to use my experience, skills, and knowledge to help you make the best decisions possible during your next unpredictable real estate expedition.

VIDEO – 6% Rates Mean HOPE Ahead For Market

This 6-6-6 sign is indeed a great omen for buyers!

Back in September, I explained in a video post the troubles ahead for our market as 30-yr mortgage rates hit 7% for the first time in 20 years.  Homes were becoming increasingly unaffordable as high rates and home values squeezed many would-be buyers out of the market.

Thankfully, some balance has been restored as both rates and values have receded, meaning there is now hope ahead for the market.  Today I want to walk you through some points to see how today’s affordability is back in line with historical norms, and why if you are a buyer you should be getting excited for a home purchase in the year ahead. Either click on the video above or read below for the full insight.

First a brief history overview…over this past summer, annual inflation was running at over 8% and consistently higher than market forecasts. There seemed to be no end in sight for price increases everywhere, including rates for mortgages.  As a result, mortgage rates skyrocketed from 5% to nearly 7.5% in 2 months. 

That’s when I did my last post on this topic to sound the alarms about housing becoming increasingly unaffordable.  I compared the present market to the last time rates hit 7% in 2002 and the last time home values peaked in 2005 to show today’s market was less affordable than either of those eras.  This was gauged by the percentage of income going to buying a median priced home by a household earning median income.

I illustrated how either home values would need to fall 21% or rates drop to 4% for the market to come back in balance, and I ultimately forecasted that we would see decreases in both in the months ahead.

That projection has mostly played out, largely thanks to inflation readings falling faster than expected.  Mortgage rates have slid back down to 6% and home values have dropped another 9% since August. 

The US Census Department also recently released an updated estimate for Sacramento household median income, which saw an expected increase due to inflation pressures as well.

When accounting for these market changes, the percentage of income going to a mortgage payment is no longer at record highs.  In other words, we should not expect home values to continue to fall due to affordability issues.  Now, will they still fall anyways?  Perhaps they do still fall a bit further because markets don’t always act logically and predictably.  

But that’s all the more reason if you’re a buyer and have been waiting to purchase to jump back in the market.  These stats show support for current market values, and the short-term projection is for mortgage rates to remain at or below 6%.  Many sellers are panicking as the average listing is on the market for 6 weeks and selling for 6% off their asking prices. 

These 3 sixes are a literal jackpot sign for buyers entering the market.  Thru January we’ve seen signs of the market picking back up and home prices stabilizing, so buyers should feel confident getting out there and ahead of the spring time rush. 

Let my team and I help you get pre-approved for financing, find the right home in your area that meets your budget, and negotiate a deal for you in this buyer’s market.  We’re here to help you from start to finish, so please reach out with any questions and interest you have on buying a home now or in the future.

Matt’s 2023 Real Estate Market Forecast

Expect more sales, lower rates, and bottoming home values

2022 was a rough year for the real estate market.  Interest rates and home values both changed course at the fastest pace on record, causing many potential buyers & sellers to hit the pause button on their transaction efforts.  As we enter a new year, sellers likely have been waiting for the rain to finally end to list their homes, while buyers have been waiting for lower rates and home values before jumping back in the market.  Will the current “bear” real estate market end?  Will a “bull” market return?  Read more as I share my insight on what’s ahead for our market (& read all the way to the end for why they are called bear & bull markets!)

The bear market will come out of hibernation (but don’t expect a bull market to return)

Most regions throughout California have become “bear” markets, meaning home values have fallen consistently and considerably.  Take Folsom, for example, where the average home price fell 25% from May to December.  That’s a sobering statistic for current home owners considering selling, but keep in mind the current values are still higher than they ever have been if you exclude the insane Covid-related boom. These recent declines are largely due to higher interest rates and hesitant home buyers, but also because of SIGNIFICANTLY fewer home sales.  To be precise, the 4th quarter (October-December) was the slowest quarter in over 20 years in Sacramento County, with fewer than 30 homes selling per day in a county comprised of over 600,000 housing units!

Average Folsom home prices over the last 15 months. From the May high of $959,000, the average home price has plummeted to $721,000 (nearly 25%) in only 7 months!

Expect the market to pick back up in 2023 as more sellers put their homes up for sale and buyers eagerly purchase them.  Affordability has improved due to declining home values, thus inspiring first-time home buyers to get back into the market.  After 3+ years of competitive bidding wars and few homes for sale, buyers are now calling the shots in transactions.  The typical listing is selling for 6% less than the asking price, with sellers often paying credits towards closing costs and home repairs.  Many buyers will score great bargains on homes this year, but they shouldn’t expect rapid price appreciation to return to the market just yet.

Interest rates will settle down (but don’t expect record lows to return)

Interest rate declines are also helping affordability.  Yes, you read that right…interest rates are going down!  After peaking at nearly 7.5% in October, 30-yr fixed rates are settling down near 6% in recent days, and likely poised to drop further in the months ahead (more on that in a future post). 

While rates aren’t likely to plummet back to 3%, 30-yr rates in the ~5% range will help to stabilize the real estate market and reduce the sting buyers feel when calculating their monthly payments.

Sacramento home values will bottom out (but don’t expect big price gains to return)

The worst is likely behind us with falling home prices.  After dropping 2-3% per month since May, Sacramento area home values should find a bottom sometime this year.  Rent rates remain high everywhere (1-bedroom apartments are renting for over $2,000/month!), which will help prop up home values as tenants weigh the options between renting and buying.  2023 buyers may risk some short-term losses in equity, but that is a small risk to take for the big rewards of purchasing a home in this strong buyer’s market.  After 6 months of price drops, the average listing is on the market for 6 weeks & selling for 6% off the asking price.  These 6s may be a troubling sign for sellers, but for buyers it’s a proverbial jackpot! Get out in the market and let me help you dictate the terms of your next home purchase!

2023 will feel like an awakening after a dormant second-half of last year.  If you are a seller, you need to make worthwhile preparations to your property to make it stand out above the competition. If you are a buyer, you need to “start your engines” and follow my top 5 tips from my prior post to get ready to decisively act when the right home comes up for sale.  Both sides need to be partnered with an experienced mortgage and real estate broker like me who can navigate you through this changing market.  I look forward to helping more clients in the weeks ahead prepare for their 2023 transactions.

PS – Bull & Bear markets earned their names based on how these animals attack. A bull lowers its head and then surges its horns upwards in an attack, hence why a bull market is known as one that is on the upswing. Bears, however, get high and then attack down with their giant paws. When a financial market (like today’s real estate market) is going down in value, its known as a bear market. Now you know!