Let’s Get Real about Luxury Realtors. Some in the industry tout themselves as Luxury Home Specialists. Have you ever wondered what makes them uniquely qualified to list a home on the Street of Dreams here in Los Cerros in Folsom?
After all, helping clients on multi-million-dollar deals should require more sophistication. Personally, the last few $1M+ deals I was involved with were some of the simpler ones I’ve had in recent memory. From my experience it can be easier to sell a $2M luxury home than a $200K mobile home.
Let me get real with you. It doesn’t take unique qualifications to be a luxury REALTOR; it only takes luxury-looking branding. Agents that promote themselves as luxury specialists do not dominate the luxury market. Here in Los Cerros over the past 5 years, only one agent has listed more than one house for sale in this neighborhood, and she only did 2.
If you are looking to buy or sell what you consider to be a luxury property, don’t get suckered by flashy agents. I hate that I even need to say this, but Selling Sunset and Buying Beverly Hills is not real real estate. Instead, stick with the basics. Interview a few agents. Read online reviews from past clients. Look for experience, effective communication, analytical insight, and above all else, honesty.
I’m walking through the newest Active Adult Community in Folsom called Regency by Toll Brothers. There is a much higher concentration of reverse mortgages here than any other part of Folsom. Which makes sense because a Reverse Mortgage is a loan designed for homeowners at least 62 years old and who want to end monthly mortgage payments by utilizing the equity they’ve saved in their home.
These loans have been around for decades, but there’s a lot of misinformation out there about reverse mortgages so let me clear up the basics. In every instance, a reverse mortgage allows you to keep ownership of your home, remove a mortgage payment from your monthly budget, and the unused equity transfers to your heirs upon death.
As an experienced Mortgage Broker, I offer Reverse Mortgages & thoroughly counsel my clients and their families about the pros and cons of these mortgage programs. As is with every loan product, there always is a cost to borrowing money and we never take a one-size-fits-all approach.
A Reverse mortgage can change someone’s life. End financial stress, retire early, age gracefully, or even buy into a community like this one. Contact me to learn more about the ins and outs of Reverse Mortgages and see if one is right for you or a loved senior in your life.
Lets Get Real! Buying a Brand New Home can seem like the easy option in today’s real estate market. Picking your finishes and having tons of incentives thrown at you by a big builder sounds like quite the treat!
But that’s not what my latest client experienced. He called me last month really anxious because he had lost trust in the nationwide company building his new home. The worst of it was the in-house lender that was supposed to be giving him a great deal in fact wasn’t and clearly were inept at doing their job.
I was able to offer him an interest rate comparable to the builder’s advertised “unbeatable” offer, and more importantly ease my client’s nerves by having someone they trust involved in the process. They are set to close today and move in just in time for the holidays.
Here’s the take-away…even when buying a new home you still need your own real estate and mortgage advocates. Remember, the sales office is employed by the builder, so who do you think they’re looking out for first. I’ll give you a hint…its not you! And these in-house mortgage companies created by the builders are operating as loss leaders to get buyers in the door, which means they are probably not compensating their mortgage consultants very well, which probably means you’re not working with the sharpest knives in the mortgage drawer.
So, if you are thinking of buying a brand new home in the coming year, hit me up before even heading out to their model homes. We’ll discuss what you need to watch out for, and I’ll explain to you why having me involved in the process as either your REALTOR, mortgage broker or both is a huge benefit for you, and how you can have my representation services when buying a new home.
Over the past 15 years, I’ve provided an annual forecast of the mortgage and real estate markets. Generally, I speak to three main characteristics: housing supply, buyer demand, and interest rates.
This year, it’s all about the rates. If 30-yr mortgage rates remain at 7% or higher, housing supply and buyer demand will remain anemic. If they fall below 6%, we will see a flood of both buyers and sellers enter the market. Much of 2023 & 2024 saw rates largely stay within the 6-7% range, which led to generational-low transaction count and record-low affordability levels.
As such, it makes sense to focus my forecast on where interest rates may be heading in 2025.
Who Controls Interest Rates?
Many people are led to believe mortgage rates are controlled by select individuals, such as bank CEOs, The Federal Reserve Board (affectionately known as “The Fed”), or the sitting president (not sure what his affectionate nickname is at the moment). This is not correct!
Mortgage rates are actually controlled by the buyers and sellers of mortgage backed securities. In plainer words, mortgage rates move by investors trading mortgages. There is no man behind the curtain; no key players puppeteering rates, nor a president successfully demanding interest rates “to drop immediately“.
Instead, rates move based on risk & opportunity cost for these free-market investors. Let’s talk briefly about each of these factors.
First off, the biggest risk factor for a mortgage trader is inflation. Inflation eats away at the value of money, so when inflation increases traders don’t want to buy ultra-low rate mortgages. If they buy a mortgage bond with a 3% fixed rate, but inflation is at 4% they are actually losing money.
And opportunity cost is simply a question of can a trader buy an alternative investment with a higher rate of return & lower risk. So, no smart trader would buy a 3% mortgage when there are risk-free money market accounts offering 4% savings rates.
Below are the issues mortgage traders will be focused on in determining how much in mortgages they want to buy and at what interest rates.
Factors in 2025 that will push rates DOWN
Slowing Economy – Many sectors of our global economy have slowed down in recent quarters. Many factors could have contributed to this (political uncertainty, rising cost of goods/services, ), but generally interest rates fall during sluggish economic times. The primary driver of recent Gross Domestic Product (GDP) growth was personal consumption, but I believe personal consumption will slow in 2025 as households are forced to tighten their financial belts. Credit card balances are at record highs and continue to climb (check out my prior post about the alarming levels of household debt).
Lower Inflation – Rising prices on everything took a toll on most of the world in 2022-2023, but things are starting to ease. Inflation rates are now slightly over the historical trend and The Fed’s preferred level of inflation. Don’t expect prices of things to fall, but if they hold at near-constant levels then mortgage rates should decline.
Higher Unemployment – If fewer people are working, it is a sign of a weakening economy. While statistics continue to show 100-200K new jobs being created every month, this could change dramatically in the coming months. The largest employer in the US (the federal government itself) is mandating most employees to return to the office for work and looking to significantly scale back the total number of government employees. This could drastically change the employment picture, and push the unemployment rate up.
Factors in 2025 that will push rates UP
Long-term Tariffs – President Trump is using Executive Orders to impose or threaten tariffs on certain countries and certain products. Tariffs are essentially an added tax on goods that are made in a foreign country. Some people think this added cost will be absorbed by the foreign company who is importing the goods, but this is rarely the case with tariffs. The tariff is typically added to the cost of the item, meaning the end consumer (Americans) will incur these tariff expenses. If tariffs become more of an entrenched part of Trump’s foreign policy rather than a short-term negotiating tactic, it will drive up inflation and interest rates with it.
Smaller Labor Force – Between deportations and baby boomers retiring, the number of available workers could decrease. With fewer workers, employers will need to increase wages to entice people to the workforce. This will fuel the flames of inflation (as it did when we came out of the deepest economic trenches of the pandemic) and push interest rates up higher still.
Growing Government Debt – Our country is in debt more than ever before. Presently, we carry over $30 TRILLION in debt, which is over 120% of our Annual GDP. That percentage is similar to levels seen at the end of World War II. It made sense we were in debt up to our eyeballs after fighting a World War for 4 years, but this is the first time we’ve been at these levels during peacetime! Our government debt is sold to investors via Treasury bonds, and the more we go into debt the more we have to entice them to keep buying our bonds. This enticement is in the form of higher rates of interest earned by the investor (and paid by the borrower). If rates of gov’t bonds increase, then mortgage rates will follow suit as well.
What Will Win The Tug-of-War?
2025 will see these pressures pull against one another, and neither will be a clear-cut winner. I do believe the downward pressures will slightly win out, as some of the upward pressures (tariffs in particular) also tend to slow down an economy, which should lead to lower rates. Overall, if you start hearing the R-word (“recession”) thrown around in 2025, expect 30-year rates to finally dip below 6% by the end of this year.
If mortgage rates do considerably improve, there will be more real estate transactions but not necessarily higher home values. It is expected more homes will come up for sale (both new construction and resale homes), which will keep home values somewhat in check.
If mortgage rates end up increasing above 7%, then we could see home values fall. With affordability already out of reach for so many potential home buyers, worsening conditions will further reduce the already anemic levels of demand currently seen.
Do you have thoughts or insights to share about your local real estate market? Leave them in the comments section below.
Zillow operates as an advertising platform rather than a public information service. Higher search rankings for houses or agents do not imply quality; they reflect the amount spent on advertising. Users should be wary, as top results may simply be influenced by financial investment, much like Google’s advertising model.
Let’s Get Real about Loan Assumptions. With current mortgage rates holding steady at their highest levels in decades, some believe a way to afford their next home purchase is to assume a seller’s existing loan at a much lower interest rate. Sounds like a great life hack, right??!! Why take out a new mortgage at 7% or more when you can assume an old one at 3% or less? While it is true that some loans are assumable, the odds of one being available on a home that you actually like and end up buying are next to zero.
I helped a recent client locate a home in Fair Oaks that was perfect for them. The seller was a veteran; my buyer was a veteran. VA loans are one of the few types of loans out there that are assumable; seemed like a match made in heaven!
But here’s the unfortunate reality…the loan assumption application process is cumbersome and takes time; often 1-2 months. This particular seller wanted a clean, fast sale, so even though the listing promoted the assumable nature of the mortgage, the seller ultimately selected a buyer who could purchase the home without assuming the existing VA loan.
Very few listings will have an assumable loan. And those that do will likely be very popular, and the seller may not be inclined to go through the assumable application process. Sure, I can help you filter home searches based on assumable loans (there’s 14 for sale in all of Sacramento County at the moment & 21 sales in all of 2024), but I wouldn’t recommend hanging all of your homeownership hopes on an assumable loan.
I’ve once again been recognized by Five-Star Professional, a market research firm that recognizes only a handful of practicing professionals as exceptional in their fields. The select honorees will be listed in this weekend’s Sacramento Bee; on newsstands soon!
I am a bit conflicted when sharing news of awards and accolades. It comes across as bragging, especially when we’ve been on a roll as of late (“Best Of” winner in 2 categories in Style Magazine October 2024). But as odd as this sounds, I speak of awards to HELP YOU. Yes, help you to refer me and return to me more confidently.
If you’ve worked with me before, we likely had a great transaction and now have an enduring, trusted relationship. But that trust can be difficult to transfer to someone else who doesn’t know me.
Many of you graciously refer me to your friends and family. Those endorsements may begin with flattering things like,
“I have a great real estate guy! You have to call him!” “Matt is the best mortgage broker around.” “The Blue Waters Group can help you find AND finance your house.”
I know you say these things because new clients often relay your praises that prompted them to contact me. Thank you SO MUCH for continuing to refer me and my firm to those you care about. Our business cannot survive without your referrals.
Back to these recent awards…I believe your endorsement of our services can have an even bigger impact when you share something like,
“I have a great real estate guy! Style Magazine just listed him as The Best Real Estate Team in our area.”
“Matt is awesome! His Five-Star Professional recognitions mean he’s in the top 3% of the industry.”
“As the #1 Real Estate Team & #3 Mortgage Broker in Folsom, The Blue Waters Group can help you buy, sell, and finance!”
Don’t get me wrong; it feels nice to earn all of these awards. But it’s even nicer to share them with you so you can continue to confidently and effectively refer me to your friends, family, and co-workers. Thank you as always for spreading the good word about us.
How will the real estate market change post-election?
It’s been 2 weeks since the presidential election, and things are coming into focus. Cabinet appointments, Republican Congressional control, and local election results have led to an abundance of prognosticators & instigators proclaiming with near-certainty how everything from our global alliances to our drinking water will change.
Some see the end of days approaching, while others foresee brighter days ahead.
Time will tell if any of these professed changes actually come to be.
But will our local real estate market change? Is there any truth to the predictable nature of home buyers and sellers pre and post presidential elections? As always, let’s look at the data to find out!
In recent days, statisticians at both the national and local levels have shared their insights on how elections have historically influenced the real estate market. Both revealed some interesting trends on the surface.
First up, the national numbers. Zillow writer Jordan Teicher shared insightful data last week from the last 25 years that shows the number of transactions tend to decrease from October to November (just before the election) in election years (-3.7% on average) while in non-election years there is a +.6% increase. Furthermore, the change from November to December (just after the election) saw a bigger increase in election years (+2.4%) compared to non-election years (+.9%).
As a result, one could conclude that market activity tends to slow down before and pick up after presidential elections. But keep in mind that these are national statistics, and it’s always a good idea to look at more local numbers when assessing real estate markets. For that, we turn to local appraiser Ryan Lundquist.
Ryan astutely shared on his latest blog post that while Sacramento home prices and mortgage rates have no correlation to election cycles, the number of transactions does appear to be influenced. In most months we see above-average sales in the year after an election.
But, he quickly points out that the trend is only due to outlier sale figures from the market boom year of 2005 & market bust year of 2009. If you exclude those two years from consideration, you lose any statistical trend showing a post-election “pop” in the market.
It’s common to stare at historical data long enough in order to find a favorable story about the future.
It is wise to refrain from doing so.
Many people, including yours truly, are hoping for an increase in market activity in the coming months. Any changes, however, will have nothing to do with the election. Instead, it will depend on buyer affordability.
Elevated mortgage rates and record-high home prices have made home-buying more expensive than ever. Any increase in market activity will require mortgage rates to fall or rent rates to increase where buyers feel better about taking the financial plunge into homeownership.
A few short weeks ago, nearly everyone (including me!) was anticipating mortgage rates to move lower. The media hyped up the forecasts. The Fed fanned the flames of these forecasts. I provided analysis to support the forecasts. But the financial markets often have a way of humbling bold predictors.
In early September, 30-yr fixed mortgage rates were hovering just over 6% and flirting to drop into the 5s. Since then, however, rates have aggressively climbed and are now threatening to return to the 7%+ range. DOH!!! It turns out we all were dead wrong.
I have several clients who would have benefitted from a refinance in September. Those lower rates could have saved them hundreds every month, and the closing costs were reasonably low. But many took the gamble of waiting to see if rates would fall further. Their decision to not take “the bird in the hand” has left them wondering how long it may take for rates to settle back down.
That’s why we shouldn’t rely on crystal ball forecasts from anyone (including me!!!) to make decisions. My recent post titled “When Should You Refinance” reminded that we should let numbers decide for us. While I often provide analysis and predictions about the mortgage and real estate markets, I share with clients that timing the market can be a fool’s errand. Do any long-time followers remember this 2016 video post that spoke to market timing?
A refinance transaction is when I see the most clients attempt to time the market, and it’s the transaction that is hardest to pull it off successfully. I advise clients all of the time that timing a refi is just like gambling. There is more emotion than logic at play, and our feelings of wanting/needing a lower interest rate cloud our judgment.
In short, don’t listen to people or their interest rate forecasts. If you have a higher mortgage rate and would like to refinance, follow these three initial steps:
Determine how much lower you’d like your monthly payment to be. Most folks like to see at least $100/month in savings.
Multiply your desired monthly savings amount by 12. In most cases, this total should be your maximum amount you should pay for refinance closing costs.
Work with me to set a target rate that achieves both your monthly savings amount and closing costs limit AND STICK TO THE TARGET! I will monitor & track mortgage rates constantly and advise you when/if we hit your target.
Mortgage rates should eventually settle back down. Take this opportunity to get a plan prepared to act decisively when the next refinance opportunity presents itself.
We’re overjoyed to announce that Style Magazine recently recognized us as the #1 Real Estate Team and #3 Mortgage Broker in the Folsom/El Dorado Hills area! This dual distinction is a testament to our team’s dedication to delivering exceptional service and expertise in both real estate and financing.
A quick Zillow search shows over 4,000 real estate agents serving the Folsom area. Moreover, hardly any of these agents also offer financing, so earning awards in both categories is truly humbling. We’re grateful for the trust our clients have placed in us, and we’re thrilled that our unique, one-stop-shop approach resonates with our community.
We extend our heartfelt thanks to Style Magazine for this recognition and to our valued clients for their votes. Your support means the world to us!
Discover how our comprehensive real estate and mortgage services can elevate your next transaction. Explore my blog & website to learn more about our team and our award-winning approach to real estate.
Matt Sundermier's Memos on Real Estate & on Life 