Thank goodness the record heat wave throughout California is behind us. This week we have summer breezes to cool us off & blow the smoke away! At the beginning of the summer season, I penned a post that predicted the real estate market normalizing and home values cooling over the summer months. With mere days left in summer, lets look back and see how that prediction fared to what transpired over the last few months.
Buying Pace Slowed
As summer temps were heating up, the pace of home buying was falling dramatically. 30% fewer homes were purchased this June compared to the same time in 2021. Oddly, early summer is normally when we see volume INCREASE as spring-fever purchases begin to close escrow. Clearly the market was going through a change, and this shift continued through the rest of summer. Things appear to have bottomed out, as August saw a small increase compared to July, but we are still at seasonably low levels. You have to go back all the way to 2007 to see a slower summer for Sacramento real estate.
Listings Piled Up
From April 1 to August 31, we saw the number of homes for sale nearly TRIPLE. This wasn’t due to a ton of people deciding to sell all at once, but rather a back-log of homes sitting on the market from a drop in buyer demand. This sharp increase has leveled off, and the ratio between buyers and sellers has returned to a normal, pre-pandemic range.
Home Values Fell
I had predicted that fewer buyers and more sellers would result in falling home prices. Indeed, the greater Sacramento area experienced a drop of nearly 7% in the median home price from Memorial Day to Labor Day. August’s mark of $580K is still the highest ever recorded if you exclude the prior 6 months, so most homeowners are still in very good shape.
Nevertheless, the market is clearly changing and both buyers and sellers need to get accustomed to the new landscape in real estate. Like this week’s summer breeze that has removed the unusually hot temperatures, our cooling real estate values mark an end to the insanity experienced during the pandemic. This shift should make both buyers and sellers feel just fine as things have normalized heading into the autumn & winter seasons.
Feel free to call on our team & me should you need any advice navigating today’s market.
We built our business so we can serve you with nearly all things real estate
Earlier this year, I wrote about how there are now more real estate agents in America than ever before. But The Blue Waters Group is truly one-of-a-kind; not every firm is licensed as both mortgage brokers and real estate agents who can help you with all of this:
1 – Buy a New Home From finding to writing the offer to facilitating inspections, we help buyers purchase their ideal home
2 – Finance a Home Purchase Our pro-active philosophy & decades of experience make the underwriting process easy, painless and predictable
3 – Sell your Home From marketing to pricing research to contract negotiation, we are a full-service Listing Broker
4 – Buy a Vacation Home We can search all of California to help you secure your favorite getaway property
5 – Buy an Investment Property From traditional rentals to AirBnB properties, we help you analyze the purchase as a business & scrutinize the income and expense projections of purchasing an investment
6 – Refinance Your Current Property Our rates are some of the lowest in the industry and our broker model means we have the most options available to meet your finance needs. The best rates & options are not at the big banks; they are with us!
7 – Obtain a Reverse Mortgage We have lenders who specialize in reverse mortgages, and can help homeowners 62 & up navigate this often mis-understood yet incredibly valuable loan program
8 – Obtain a Home Equity Line of Credit We have direct relationships with banks who offer HELOCs, but will also honestly refer you to a bank outside of our network if our terms are not the best available
9 – Write Contracts for Off-Market Home Sales Sometimes you don’t need a full-service agent; we can help with transaction paperwork for a discounted flat fee
Our clients find us most valuable when we help them in multiple ways on a single transaction. For example, if you want to sell your current home and buy & finance a new one, allow us to help you with all of it! Doing so will simplify & streamline the experience for you, and lower your costs through our discounted commission rates.
Beyond helping you through transaction, we are always striving to earn your trust in all things mortgage & real estate. Bottom line, if you or someone you care about has a real estate question, call me. We have the experience, skills, and compassion to help in every way we can.
From relocations to reverse mortgages, we’ve been helping more baby boomers than ever
As the second-largest generation in history, Baby Boomers have spent their entire lives shaping and shifting the marketplace. We have experienced a boomer boom in our business lately, as more folks in this age range (58-76) reach out to us for advice while facing major life changes.
Several recent blog posts such as “Yo Mama Is So Important” & “19 Is Your New Favorite Number” have touched on topics pertaining to this growing trend, and more clients than ever are inquiring about our reverse mortgage services! Specifically, we have helped recent boomer clients:
Move to a new area to be closer to their adult children
Pull cash out to finance a major purchase rather than sell taxable assets
Obtain a reverse mortgage to help with retirement planning
Many of our clients know we are a one-stop-shop to help you buy, sell & finance homes. But some overlook the fact that we also offer REVERSE MORTGAGES. Already this year, our team has completed more reverse mortgages than in all of the previous three years combined!
These loans are growing in popularity amongst baby boomers, and for good reason. A reverse mortgage allows a client 62 & up to retain ownership of their home, provide access to pent-up equity, and have monthly mortgage-payment relief. We are experts in these programs, and can discuss the pros & cons with you or a loved one. I will be posting again soon with more details about how we can help clients looking for a reverse mortgage.
The Blue Waters Group is designed to help homeowners of all ages, but we are perfectly suited to serve the diverse needs of Baby Boomers. As retirement approaches, it is common to reconsider how you spend your time & money.
Some may decide they want a smaller house or move closer to the grandkids. Others want to free up their hard-earned equity through a reverse mortgage. And even those who choose to not change things up still may look to help their kids or grandkids achieve home ownership by steering them to a trusted real estate professional (that’s us! 😊). No matter the need, our firm is suited to serve you, your friends, your family, and your colleagues with ALL home buying, selling & financing needs.
I’m forecasting falling home values, and this summer breeze on the cooling market should make buyers feel fine!
My oh my, a lot can change in a few months. At the beginning of the year, home prices were rising at an unsustainable 4% per month and selling faster than ever before. And then a war broke out! Needless to say, Russia’s war sent shockwaves around the world & we’ve all been impacted by the war’s economic ripple effects (gas prices, food costs, interest rates, etc).
The typical red-hot summer real estate market has changed too. Sellers have watched buyers become more hesitant due to the fastest rise in mortgage rates since the early 80s.
As a result, 30% fewer home sales have occurred this month compared to the same time frame in 2021. This significant decrease in volume will force motivated sellers to drop their prices to attract a buyer, and eventually this momentum should lead to declining home values by summer’s end.
Homes on the market are up; homes actually selling are down. But both are approaching normal, pre-pandemic levels
Some may read those figures and suggest this post’s musical title be changed to “Cruel Summer” or “Summertime Sadness.” But they would be wrong. Rather, this cooling “Summer Breeze” is simply returning the market metrics to pre-pandemic levels. We are approaching 7,000 homes for sale in the Sacramento market, a similar amount we saw in the spring of 2020. This equates to 2 months of housing inventory on the market, again a comparable figure seen before the pandemic.
For some, this market slowdown is wonderful news! A more balanced, normal market will lead to more opportunities for first-time buyers. With younger Millennials now hitting their late 20s/early 30s, there are literally millions of them looking to purchase their first home. This will help soften the fall for home prices, particularly for lower priced homes.
If you have been considering a home purchase, now is the time to get prepared for buying opportunities! You have more options, sellers are more eager, and prices are no longer increasing. Give me a call to discuss ways to best capitalize in today’s market as a home buyer.
My son turns 10 this year. Its incredible to think of how much he’s grown and learned in such a short time. While he still needs lots of attention, love and discipline, he’s a far cry from the helpless newborn of 2012.
THEN…
& NOW!
The same can be said for Blue Waters Mortgage & Real Estate Group, which also turned 10 just this month. We were a bit insane to birth both a baby and a business in the same year! But that’s for another blog post.
Since that exciting “I’ve Started My Own Business!” announcement, The Blue Waters Group has grown from a start-up with 1 part-time employee to a company of 10 experienced, caring professionals. But just like Oliver, we still need help from the folks that care about us…that’s YOU!
THEN…
& NOW!
My son’s teachers often speak to how 10 is an age of transition. You’re old enough to begin grasping the complex world around you, but you still need the help of loved ones to find your way in it. The Blue Waters Group is in a similar phase of transition; we are here to stay, grow & serve our community, but we still need the referrals and repeat business from our cherished clients to do it.
Today’s real estate market is a tough one to navigate, and folks need the help from a trusted, seasoned professional. Please pass along my name to anyone you know who may benefit from our real estate and mortgage services when buying, selling or refinancing. You doing so is vital to our continued growth & success.
Here’s to turning 10! May the next decade be just as fulfilling and exciting as the last!
In today’s hot real estate market, scant sellers are being courted by ravenous buyers. Homes are selling fast, appreciating even faster, and becoming the largest source of net worth for the average home owner.
Every seller is feeling like a one-IN-a-million these days, but real estate agents are simply feeling like one-OF-a-million as more new folks have entered the industry. At the end of 2021, there were 1,559,537 members of the National Association of Realtors (NAR), a new record. Google recently shared that “real estate agent” was the most popular “how to become” search in all of 2021!
As a 20-yr practitioner in this competitive industry, I have seen the ebbs and flows of new agents coincide with the direction of the market. As such, there are more options than ever when choosing a real estate professional in today’s booming market. I’ve previously written about how honoring it is when clients choose to do business with us over the countless other alternatives.
It can be tough to stand out in a crowd, but I have differentiated my practice to be one-of-a-kind. Keep these facets of my business in mind when considering returning to or referring us in the future. I confidently believe we are not simply one OF a million, but rather one IN a million and offer you the highest level of value possible.
One-Stop-Shop – Nearly no other brokerage in the area offers both real estate sales and mortgage broker services from the same small group of professionals. Knowing both sides of the industry allow us to give a unique and holistic perspective to your needs.
Ownership –Operating & owning a small business is no cake-walk, but it does allow me to be nimble when it comes to helping you. When I see an opportunity to change our firm to better serve you, I can swiftly put those changes in place. Its good to be the boss!
Local & Approachable – Running a business in the city I grew up in means I have a reputation to uphold. I treat clients like family (did you read my recent Yo Mama post?) & aim to keep earning your trust like my life depends on it…because it does!
Teamwork – As they say, to truly master a skill, you have to teach it. Leading a team requires I understand the ever-evolving market, showcase an inspiring work ethic, and employ the newest industry tools; all things that translate to also being a better professional for you. And working with our amazing team means you get the talents of all of us!
Earn Accolades and Reviews – This month I was recognized as a Five-Star Professional for the 11th year in a row. Many others also earned this distinction, but I am the only one in the Sacramento region to earn that distinction both as a Mortgage Broker and a Real Estate Agent. More importantly, I’ve been able to earn over 100 raving reviews in recent years that show my commitment to my craft and to my clients.
There is presently a swarm of agents in our field, but we’ve worked very hard to make sure you can still pick us out in the crowd. We will remain diligently prepared to work with you and those you care about, regardless of the market conditions or the trendy fads our industry creates.
Proposition 19, which became law in 2021, can save homeowners aged 55+ thousands of dollars in property taxes on their next move. Why don’t more folks know about this? I’m here to change that!
Generally, Californians who relocate are subject to higher property taxes on their new home. There were exceptions to this, but they limited where someone could move and how expensive of a home they could purchase. As such, many older homeowners over the years have decided to remain in their old homes to avoid tax increases even if their home was too big or no longer where they wanted to reside. In November 2020, voters passed Proposition 19 that opened up property tax reassessment exclusions for nearly all circumstances where someone 55 and over moves within California.
This is a big deal, yet has gone largely unnoticed since it became law nearly a year ago. The CA Association of REALTORS (CAR) put together a YouTube video highlighting the new law’s benefits, and although there are over 6 million CA residents aged over 55, the video has received only 2,000 views.
I’m here to shed light on this new law and the opportunities it creates. Lets consider a likely scenario to point out the potential of Proposition 19…
Consider someone who lives in the same home they bought back in the early 80s where they raised their family. As such, they are now empty nesters & have a low annual property tax bill of $3000. There are a number factors that could instigate a move. Perhaps the home is too big for their needs, or the huge backyard and pool become too much of a hassle to maintain, or they want to move closer to the coast & enjoy cooler temperatures during their golden years. There are many reasons for retirees to relocate.
If they sell their $800,000 tract home & move near the coast to a $1,000,000 cottage on a small lot, then under typical property tax rules their annual bill would soar to well over $10,000. Yikes! Quite a cost increase to bear during retirement. But, thanks to Proposition 19, a simple one-page application would keep their actual tax bill closer to $5,000. Here’s how it works (somewhat simplified for illustrative purposes; click here for a more detailed breakdown from the legal department of CAR):
Existing Tax Bill
+
Difference in old home & new home value
x1%
=
New Tax Bill
( $3,000 )
+
($1,000,000 – $800K = $200K)
x1%
( $2,000 )
=
$5,000
In this hypothetical, but very believable, scenario of an older homeowner moving to different county and to a more expensive home, $5,000 of property tax savings are realized every year that wasn’t possible before Proposition 19!
If you or your parent/grandparent has been considering a move within California to be closer to family, medical care, better weather, or any myriad of reasons, then have them get in touch with me to discuss how Proposition 19 can open new tax-saving opportunities. The savings could be the difference between making the move a high-priced dream and an affordable reality.
Your Mom’s real estate affairs are no joking matter!
Yo Mama is so important…you only want the best people helping her. From doctors to mechanics to financial planners, she deserves the best. That’s why I’m honored to have received many recent referrals to help several client’s moms with one of the most important financial moves of her life.
Asking to help those that mean the most to you is the highest compliment I can receive. I am elated to see this growing referral trend in my practice & I hope you keep my team and me in mind this holiday season if family discussions come up about buying or selling a home in the new year.
“It has been a long time since she’s sold a house so she’s nervous about the process,” Burke told me earlier this year about his mom’s upcoming home sale. “And she’s my mother so I only want the best for her which is why I thought of you.”
This was the beginning of a conversation I had earlier this year with a client. I went on to help Mom sell her home for well more than what she thought possible, which allowed her to best prepare for retirement in the coming years. Just as importantly, I was able to keep the transaction stress-free and simple. After the sale, she said “keeping me informed each step along the way” was what she valued most about my services.
Another family was concerned that Mom’s house was too cluttered & not in good enough condition to sell, but her finances and health prevented any significant repairs to be done. After my initial consult, I advised the family to save their cash and instead move Mom out so I could make due with the home’s current condition. After Mom moved out, we successfully marketed & sold the home for over-asking price in a short period of time. George, her son-in-law, said afterwards “I always knew I would get not just honest but forthcoming information and he didn’t treat us like we knew nothing about real estate even though he was the expert.” And with the home vacant and an overdue cleaning completed, “the photographs were fantastic!”
Over the last 20 years practicing real estate, I’ve learned that every transaction is emotionally “charged,” but often in varying ways. Specifically, last-time home sellers such these parents often approach a sale with fear, uncertainty, and procrastination. Providing them with a trustworthy advisor can diffuse these feelings, and allows them to make good decisions for their future. After helping Doralyn make a complicated move out of the area this summer, she shared “Matt’s guidance…was invaluable. He was on all the details all the time. I have full trust in Matt.”
My simple approach to all of these transactions was the same: treat your mama as if she was my own mama. I promise to be patient, thorough, honest and supportive. Mamas are too important to treat any other way.
Happy Thanksgiving to you all, and Happiest of Birthdays today my own Mama! Love you, Mom!!!
Our country’s election is next week, and it has most of us filled with emotion. The emotions & opinions vary but they, like the stakes, are high. I encourage you to get out (or mail in!) to VOTE!
I have a good friend, Justin Raithel, running for Folsom City Council. If you live in Folsom please strongly consider voting for him. He currently serves as Folsom’s Planning Commission Chair and was recently recognized as Folsom’s Volunteer of the Year by the Chamber of Commerce. Justin would be a great addition to Folsom’s City Council!
Let me help you take a look at Justin’s campaign!
I’ve been looking for ways to support Justin in his campaign, as I want to honor his tremendous courage to run for public office. Justin will likely need to gain 25% of citizen’s votes in order to secure one of the two open City Council seats. While hitting that mark means Justin will win and earn more votes than the other candidates, it also means 75% of voters didn’t believe in him. Ouch, right??!! Even if he wins the election, 3 out of 4 people didn’t vote for him.
When I have a friend take on a risky endeavor, like running for office or starting a band, I often throw my family’s full support behind them. While I’ve never done either, I too know the reality of winning while not having everyone’s support.
As a small business owner in a very competitive industry, I’m always on the “campaign trail.” A big part of my career is tirelessly showing why folks can trust me as their capable REALTOR or mortgage broker over the countless other “candidates” in our marketplace. Thanks to you, we’ve done more business than ever this year, largely through repeat and referral business. I am forever grateful for the confidence so many of you have in my team and me to help you through your real estate endeavors.
Despite crushing every metric we’ve ever set for The Blue Waters Group, I still feel the sting when realizing we don’t get everyone’s “vote” of confidence. Folks choose to do business with other REALTORS, with the big banks out of state and community credit unions down the street. The old adage says there’s plenty of business for everyone, and that’s true! But, as a small business owner, my goals have always looked beyond the bottom line. I constantly strive to be the professional in my hometown that can be trusted by my neighbors, by the parents of my kids’ friends, by the folks who I run into at the grocery store. If I can’t live up to that measure, then the money doesn’t mean much.
I share this with you to remind you how much it means to me when you refer your friends and family and when you come back for your next transaction. Sure, your business helps me to make payroll with my employees and put food on the table with my family. But you’re also fueling the very ethos of what I’m about, which is “earning your trust is far more important than simply getting your business.” Thank you for how you’ve shown your support over the years.
In similar fashion, I’m showing my support for Justin Raithel because he’s earned my trust. He is not running for City Council for the simple sake of winning an election. Justin wants to serve our city because he has the experience, the smarts and the heart to do it better than anyone else. I’d like to think the same could be said for me as your trusted mortgage and real estate professional.
Times are uncertain, so skipping a few mortgage payments sounds nice, right? Not so fast.
In response to the economic turmoil caused by the Covid-19 pandemic, Congress passed an unprecedented 2.2 TRILLION dollar financial aid package for Americans. Known as The CARES Act, it aims at relieving businesses and individuals from economic hardships, including provisions to allow folks to request mortgage payment forbearance for the next several months. Awesome, right??!! Not so fast.
The intentions of this policy were wise, as a mortgage payment is often the single largest monthly expense for households. But, the unforeseen ripple effects of hundreds of billions of dollars in delayed payments has the potential to cripple the entire mortgage industry, put homeowners in perilous financial positions, cause grave damage to the overall economy.
To explain the economics of this issue, I’ll briefly touch on lessons of history, politics, English, and zoology. I know its long, but please take the time to understand the full story and the negative consequences you and society at large may face if pursuing mortgage payment forbearance.
First, A Bit of History
On March 27th, President Trump signed The CARES Act, a package of profound financial aid to Americans. The last time the federal government swooped in to save the economy, it was 2008 and TARP (“Troubled Asset Relief Program”) was passed to primarily bail out large (ie-“too big to fail”) banks in the midst of the “Mortgage Meltdown.” There was much criticism about how big banks were saved but the “little guy” was left out in the cold, so today’s policy makers didn’t want to repeat that same formula. The CARES Act is more focused on small businesses and individuals, and includes direct cash payments as well as the option to request to defer payments for the next 6-12 months without proof of financial hardship. As long as the mortgage is backed by a government entity, the mortgage servicer must honor the request. But, what the mortgage servicer must also honor is the monthly funds owed to the mortgage bond holders. In a nutshell, mortgage companies have to keep paying money out even though money is not coming in. YIKES!
Mortgage servicers will be facing incredible cash crunches and have repeatedly asked policy makers to establish a lifeline allowing mortgage servicers to borrow money from The Federal Reserve Bank to keep money flowing through the system. Without this form of aid, the mortgage industry as we know it could die.
Next, A Little Politics
As of this writing, the most influential politician on this matter insists that government intervention is not yet needed. Mark Calabria, the appointed director of Federal Housing Finance Agency (FHFA) who directs Fannie Mae & Freddie Mac, has a track record of disfavoring the government coming to the rescue in turbulent times. In fact, he’s gone on record to say if he were in charge during the Mortgage Meltdown of 2008 he would have let the very institutions he currently leads fail! Moreover, Mr. Calabria recently estimated “2 million borrowers would seek forbearance requests by May” and suggested if mortgage servicers get in trouble they could always sell their mortgage accounts to the larger mortgage servicers. Mr Calabria is either tragically miscalculating or misinformed on both fronts.
According to the Mortgage Bankers Association, the industry already processed well over 2 million requests by early April, and this number will only increase as our economy struggles to fully bounce back from shutdowns. Furthermore, the two largest mortgage servicers in the country, Wells Fargo & Chase Bank, have established policies in the last week to drastically reduce the amount and types of new mortgage
Mortgage firms may go bankrupt
s they are willing to take on. There is no way the larger mortgage outfits will be a backstop to these new kinds of toxic mortgages with payment forbearance. Since the payment forbearance phenomenon was not created by the free markets, the free markets are not able to be the solution. Government intervention is essential, and at this time support to mortgage companies is only being offered to loans related to VA & FHA, which is a very small minority of the overall mortgage market.
Siri, What Does Forbearance Mean?
Unless you have a Jeopardy-sized vocabulary, forbearance is not a word you use often. Oxford dictionary says its “the action of refraining from exercising a legal right, especially enforcing the payment of a debt.” Simply put, forbearance does not mean forgiveness. Mortgage companies may temporarily refrain from collecting your payments, but they won’t hold back any longer than legally necessary, and likely won’t play nice when that time comes.
Survival Instincts Will Take Over
With inevitable liquidity issues and no sign of an immediate parachute from the federal government, mortgage servicers have impossible decisions ahead of them. Sadly, I believe this will force mortgage servicers to avoid favorable forbearance agreements at all costs. They will only play as nice as necessary to follow the law, but be ruthless otherwise. If you went through a short-sale or loan-modification process during the last housing recession, you know exactly what I’m talking about.
For example, there are no rules that govern when these deferred mortgage payments are re-paid. Even this video from the Consumer Finance Protection Bureau is vague. Potential options your mortgage servicer may offer: 1.) tack the payments on at the end of the loan; 2.) spread the missed payments over a period of time; or 3.) demand the payments be made in a lump sum.
What would you do if you ran out of cash and someone was overdue on a loan due to you? You’d force them to play catch up ASAP, right??!! Its not greed. Its not nasty. Its survival.
Mortgage servicers will do the same thing, forcing a homeowner who skipped payments at, say, $2000/month for 3 months & now pay $8000 in a lump sum in the 4th month. Obviously, most folks who truly need the payment relief in the coming months likely won’t be in a position to make a single catch-up payment, but tragically mortgage servicers are not in a position to float millions of skipped payments over the next few months and then patiently wait for reimbursement at the end of a 30-year loan. They have been backed into a corner, and will use any means necessary to try and survive.
I remain optimistic that policy intervention and clarity will eventually calm this situation down, but until it does every mortgage servicer is in a choke hold.
What Should I Do?
If you have suffered a big economic loss and cannot make your mortgage payment, by all means call your mortgage company and request payment forbearance. Yes, this may mean you are forced into a lump sum payment at some point, but that is tomorrow’s problem. You have bigger problems today; take the payment relief and hope repayment options are more favorable when you’re back on your feet.
If you still have cash, keep making your monthly payments!
BUT, if you are still able to make your mortgage payments, please continue to do so. Consider taking advantage of the delayed tax filing deadline (extended 90 days to July 15th!), but don’t delay making your mortgage payments unless absolutely necessary. Staying out of forbearance will allow you to keep your options open for refinancing if rates slip down (forbearance generally disqualifies you from getting a new mortgage) & will help you avoid a build-up of payments that will likely need to be paid all at once in the future. It is not only in your best interest, but also in the best interest of the mortgage industry and our country at large. If too many borrowers utilize payment forbearance, the mortgage system could face catastrophic failure that would result in a housing crash worse than the Mortgage Meltdown of the late 2000s.
Spread The Word, Not The Virus
Please pass this post along to as many friends and family as possible, and do your part to encourage folks who have been considering mortgage forbearance to know the full story. In the meantime, stay safe, stay inside, and stay sane!
The CARES Act is more focused on small businesses and individuals, and includes direct cash payments as well as the option to request to defer payments for the next 6-12 months without proof of financial hardship. As long as the mortgage is backed by a government entity, the mortgage servicer must honor the request. But, what the mortgage servicer must also honor is the monthly funds owed to the mortgage bond holders. In a nutshell, 
What would you do if you ran out of cash and someone was overdue on a loan due to you? You’d force them to play catch up ASAP, right??!! Its not greed. Its not nasty. Its survival.
ef in the coming months likely won’t be in a position to make a single catch-up payment, but tragically mortgage servicers are not in a position to float millions of skipped payments over the next few months and then patiently wait for reimbursement at the end of a 30-year loan. They have been backed into a corner, and will use any means necessary to try and survive.
Matt Sundermier's Memos on Real Estate & on Life 