For the last 4 months, interest rates have been on the rise.  Beginning with tax reform in December, the markets have anticipated higher inflation, stock prices, and ultimately mortgage rates.  Furthermore, the number of homes for sale in most areas have been increasing as well.  In the Sacramento area, March saw a 21.7% increase in the number of homes for sale compared to the same month a year ago.For the last several years, most market experts have been saying home values will keep rising until interest rates and inventory rise.  Now that the latter has begun, it would make sense that home values may begin to fall, right?

For the last several years, most market experts have been saying home values will keep rising until interest rates and inventory rise.  Now that the latter has begun, it would make sense that home values may begin to fall, right?

Not so fast.  While rising interest rates and inventory are putting downward pressure on home values, there are stronger pressures pushing them up.  The most significant relate to building new homes.


Simply put, California is not building enough new homes (check this article out).  Compared to the peak in 2005 when California builders erected 150,000 new single-family homes, 2017 saw 58,000 new units built.  This is a significant increase compared to prior years, but still not enough to keep up with California population and housing demand.

One reason builders may not be building at the pace necessary is the cost to construct new homes (watch this CNBC video released shortly after the metal tariffs were imposed by the US government in March).  From lumber and metals to labor and regulation, nearly all costs associated with construction have seen significant increases.  These additional costs are anticipated to be passed onto buyers of new homes, which in turn keeps prices higher of resale homes as well.  Other builders may decide to not build at all, or build larger homes rather than starter homes that tend to have thinner margins.

The stats support there is no home-price slow-down in sight.  The average sales price in Sacramento just reached over $400K, a 5%+ increase just since the beginning of the year.  Anticipate home prices continuing their march upward in spite of higher interest rates and inventory.  The march won’t last forever, but there are no signs of it stopping any time soon.

Posted by: msundermier | January 9, 2018

Should You Finance Energy Efficient Upgrades? UPDATED 2018

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.


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.  Furthermore, changing income tax laws impact many of these finance alternatives.  PACE loans, for example, are liens buried into the property’s tax bill, but many California homeowners may find their property taxes not as tax-deductible as in years past.

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.

We have worked to help several clients 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.

Posted by: msundermier | December 19, 2017

Record-Setting Home Prices

Last week I helped sell a home down the street from my own for a price never seen before in our neighborhood’s 24-year history. Obviously, home prices are soaring and certain pockets, like mine, are setting new price records.

CC 414

In fact, most of the country’s regions have fully recovered from the housing crash.  Most of California, including the Sacramento area, still has a bit more ground to cover before getting back to pre-crash levels.  Some communities, such as East Sacramento, have recovered better than others.  This chart shows how current median home prices compare to the previous peaks seen in certain markets.

1218 CC Graph

Don’t see your town?  Want to know how your city has fared?  Complete this quick survey and I’ll send you your community statistics (greater Sacramento area zip codes only).

Tune in to next month’s blog post for my 2018 Market Forecast and which locations may see home prices continuing to soar to new heights.


Posted by: msundermier | October 5, 2017

Want to pay less in Taxes? Let me help!

Business man pointing the text Time for TaxesMost California homeowners received their property tax bill in recent days. Many of us just file it away without looking since most of us have our mortgage company pay the tax bill. If you do this, you may end up paying more for property taxes than you should without even knowing it! Let me explain.


Tax_ManEvery year the county assessor’s office determines the assessed values of properties from which to calculate your property tax bill. California has many state laws, most notably Proposition 13, that skew one’s assessed value. Thus, the assessed value is often lower than true market value. Occasionally, the assessor’s office gets it wrong and assesses your home for MORE than the market value, resulting in you paying more taxes than you should.




time_managementAll counties have an appeals process to reconsider your assessed value, but there is a window of time to file the appeal. Sacramento County, for example, requires the appeal to be received before November 30.

I am offering a free service to my clients to help with the appeals process. If you believe your assessed value is unfairly high (check your tax bill or a link like this one), give me a call or a click and I will research comparable sales to your home to help make a valid argument to the assessor’s office. Doing so could save you hundreds on your tax bill.

Posted by: msundermier | September 11, 2017

ALERT! Equifax Data Breach & What You Can Do

Last week Equifax, one of three U.S. credit reporting agencies, reported hackers stole data files that potentially compromised 143 million consumers.  Let me restate that figure, 143,000,000!!!  That means there is a 57% chance your information was involved in this hack (US Census estimates we have ~250 million adults).

Equifax reports credit activity; they are more than merely a credit card company.  They are involved in nearly every major consumer financial transaction and account in the United States, so if you have any type of credit history (mortgages, credit cards, student loans, etc.) you owe it to your digital identity to take this very seriously.  We are providing some tips and info to our clients so they can take measures to mitigate this potential threat to their identity.

The first step is to determine if you were affected.  Go to Equifax’s ID Protection partner’s (Trusted ID Premier) web site, enter your last name and last 6 digits of your SSN.  It will then conclude if your data was possibly compromised.  I’ve read reports that this look-up tool may not be 100% reliable, so you may want to cautiously assume that your data was a part of the hack.

Next, you can sign up for 12 months of ID Protection that Equifax is offering for free.  It includes credit monitoring, social security number monitoring, identity theft insurance and more.

You can take things one step further and sign up for free credit “freeze” and fraud alert with the 3 credit bureaus.  This makes it harder for new credit accounts to be opened in your name without your authorization. Read’s write up for more details on how to set these up.

Lastly, set a reminder in your calendar to file your taxes early in 2018.  Often data hackers who obtain social security numbers will attempt to file phony-baloney tax returns and attempt to cash refund checks.  Filing early will make subsequent filings from fraudsters submitted to the IRS flagged for suspicious activity.

The Blue Waters Group will help clients in the near future closely review credit reports pulled for transactions to identify any suspicious activity.  We hope this unprecedented industry data breach will not materially impact you, but taking the measures mentioned here will help mitigate the complications that come with identity theft.

Posted by: msundermier | September 5, 2017

A Penny Saved is a Penny Earned!


BULL-BY-THE-NUMBERSI’ve spoken to a number of clients recently who are nervous about the stock market’s near-term future.  It’s been on a rally for nearly 8 years, the second longest “bull run” in history.  With current economic and political uncertainty, many are wondering where to safely invest their money.



Dow Jones Index over past 100 years


The current bull run has seen the Dow Jones index rise over 250% since early 2009.

Last month I posted about investing in real estate.  Some folks, however, have no interest in owning more real estate.  For those in that camp, may I suggest “Earning By Saving.”  In other words, by paying down debt you can earn a guaranteed rate of return that compounds over time.  After all, a penny saved is a penny earned!pennyinpiggybank

The best way to do this is by refinancing to a shorter term loan, such as a 15-yr fixed mortgage.  Lenders offer lower rates if you select a shorter payback term, so while someone may have obtained a great rate on a 30-year fixed loan a few years ago, today’s 15-yr rates are even better!

Here’s an example: a client obtained a $300,000 30-yr fixed mortgage at 4% back in 2014.  Their loan balance is now down to ~$283,000.  Refinancing to a new 30-yr mortgage doesn’t make any sense, as current rates aren’t much better than their 4% rate.  But, when looking at a 15-yr fixed refinance, the new rate would be 3.25% (APR 3.33%). The monthly payment increases by $570 due to the shorter payoff period, but thousands of dollars are saved each year in interest cost.  Over the 15-yr period, $62,000 will be saved in interest costs and the home will be paid off completely!

alberteinsteinIf you find yourself in a position where you can invest more money every month but won’t or can’t put it in stocks or real estate, I would strongly encourage you to look into refinancing into a shorter term mortgage.  As Albert Einstein famously said, “compound interest is the strongest force in the universe.”  Its mighty power works when you invest, and works just the same when you pay down debt.



Posted by: msundermier | August 17, 2017

Its Time to Talk Monopoly, Again!

I’ve previously written about my love for the game of Monopoly.  Ever since I have been old enough to count, its been one of my favorite games.  Whenever my buddies and I played I wanted to be both the banker and the property card-keeper; an ironic foreshadowing of my career as a combined mortgage broker and REALTOR.  As it turns out, I’ve been playing banker and property card-keeper my entire life!

Ollie picLove for Monopoly is hereditary

Property Ladder (2)I was playing Monopoly Jr. with my son this week, and it reminded me of this 2011 blog post.  Back then, I was helping a few brave clients purchase investment properties despite the bleak economic outlook.  Things worked out quite well for that group of investors, as their investments have doubled in value over the last 5 years.

This summer, half of my team’s home buying clients were investors as expectations of Sacramento home prices are high.  Combined with low levels of new home building, a flood of Bay Area money (check this article out) and some of the country’s fastest rising rental rates, Sacramento is an area many investors have honed in on. 

Concept conceptual 3D illustration young man businessman silhouette jump happyClients with the courage to own rental properties over the long-term amass great wealth as home prices rise, particularly in hot spot markets like Sacramento.  My team has become experienced in helping clients make the leap to real estate investor.  From hosting info seminars (remember this one!!??) to illustrating cash-flow analysis to having trustworthy connections with property managers and licensed contractors, we are a valuable resource to those looking to play real-life Monopoly.

As I said earlier, I’ve been doing this my entire life! 

Posted by: msundermier | June 2, 2017

Spencer’s Passing: Still Inspiring Others

SpencerThis week marks the 1-year anniversary of the passing of our dear friend, Spencer Rubin.  Many  of my clients know Spencer.  Some of you I  wouldn’t have the privilege of knowing without  him.  In fact, several clients I’m actively working  with right now are relationships I made because of him.

To say Spencer had an impact on my life and business would be an understatement.  Not simply because he introduced me to some of my clients.  Moreover, he taught me how to conduct myself in business; with transparency and authenticity.  He befriended both Lisa Ferro and myself when the three of us began as colleagues 16 years ago; a friendship Spencer helped pave the way to a partnership and ultimately the start of The Blue Waters Group.  Even the very name of our company exudes Spencer’s ethos; he was always drawn to and at his best on the water.

Matt and Spencer

When you lose someone who beautifully wove his way into many parts of your life, it’s hard to compartmentalize the emotions.  We worked, started families, and boated alongside one another, so his absence is felt in many ways.  At the same time, however, his presence is felt ever more.  This week I saw many social media tributes to Spencer from his dearest friends.  Many of them referenced how they are still encouraged by him to live in gratitude, see the beauty, and learn patience (all Spencer colloquiums).  In short, his spirit and his beautiful surviving family lives on as wonderful inspiration.

The most inspiring thing Spencer has taught me since his passing is this: no matter how much your time is cut short here on Earth, if you live right you’ll make an impact far beyond your time.  We don’t necessarily need to leave a legacy; rather a simple lasting imprint on those we leave behind.  An imprint that says I love you, I’m proud of you, and I want only the best for you.  That’s what Spencer did for me, and it will continue to inspire me for many years to come.Spencer and boat

Posted by: msundermier | May 12, 2017

It’s May. Bring on…EVERYTHING!

May seems to always be the most hectic month of the year.  Weddings, picnics, school parties, swim team, boating…commitments and fun keep us busy all month long, and I’m sure the same is true for you.

The real estate market has a way of hitting its full stride in May as well.  For the last few years, May has signaled the time when many homeowners decide to put their homes on the market.  This year appears to be similar as I’ve already spoken to several clients in the first few days of this month. This is a good sign for the market at large since the single greatest issue we have in our market is too few homes for sale.

At time of this writing, there are only 100 single-family homes for sale in Folsom

May GraphThis is an incredibly low amount, considering we are a town of over 70,000 people and 26,000 housing units (according to the US Census in 2010).  Over the last few years, beginning in May, we start to see this figure increase through the summer months, but since 2014 we have seen the number of homes for sale in the summertime decrease each year.

What will this summer bring?  Unfortunately, much of the same.  Unless I get more calls from clients interested in selling their homes this summer, I expect the number of homes for sale to be similar to last summer.  This means there won’t be enough homes to meet demand, which will push prices up further.  For current homeowners, this is great news.  For those looking to buy their first home, this is truly discouraging.  Perhaps they’ll be too busy with a hectic May schedule to notice right now, but by the end of summer I predict home values in most areas will increase 2% per month through August.  If that pace holds, we may see Folsom home prices eclipse their previous all-time high levels before summer is over.

May Graph 2

Much like May’s relentless calendar, higher home prices are on their way. Some of the cause is inevitable, like wedding invites in May, and some of our own doing, like over-scheduling boating picnics. Either way…Bring. It. On.

Posted by: msundermier | March 14, 2017

2017 Real Estate Market Forecast

c0501a39-6615-4dce-9c0f-3703cc5aa964March marks the beginning of Real Estate season.  As snow melts and flowers bud, current and aspiring home buyers alike are coming out of financial hibernation to assess their real estate affairs.  That’s why I hope this annual market forecast is a timely message to many of my clients and readers.


I’ve always said forecasting is a fancy word for guessing.  No one knows for certain what lies ahead in our local real estate market.  Nevertheless, as someone who witnesses the front-lines action in the market, I have the chance to share observed indicators with you.

These “markers” signify much of the same patterns we’ve seen in the market for the last three years: high demand, low supply, and rising prices.  Frankly, I don’t see these altering course in 2017.  Here’s why:

Without further ado, here are three significant real estate predictors to watch for in 2017.

Welcome to the Party, Millennials!

Millennials are discussed for many reasons, and for good reason!  They are the largest generation by population in our country, so their actions will have profound impact on many industries, including real estate.  Research from Zillow indicates Millennials were the largest generational buying group in 2016, and they are predominantly buying in the suburbs.  This is a big deal, as Millennials have deferred home buying longer than their predecessors.  The conceived factors vary from their high levels of student debt to their emotional scars of witnessing others before them lose homes and wealth during the Great Recession, but the simple fact is Millennials have not been buying homes at typical rates…until now.

Last year, the United States’ Home-ownership rate dipped below 63% for the first time since 1965 a symptom not necessarily of affordability (after all, home-ownership rate hit an all-time high when prices were at all-time highs in 2005) but rather due to a lack of appetite.   With Millennials poised to remain hungry for homes of their own, the demand for housing will persist into 2017 and beyond.

Where are all of the new homes?

In last year’s forecast post, I shared some shocking statistics regarding the relatively low level of new home construction in Sacramento.  Without enough homes to go around for everyone, prices are forced to go up.  New home permits are increasing (up 20% from a year ago), but not at a rate fast enough to meet current buyer demand.  2016 had over 6,000 single-family home permits filed in the Sacramento area, the most seen since the Great Recession but far fewer than the peak of 18,523 in 2004.

Furthermore, there are fewer and fewer homes available to rent.  In the 4th quarter of 2016, the Western region of the United States had a rental vacancy rate of 4.2%, the lowest reading since the Census department began collecting this statistic in the mid-1950s!!!

Until new home construction picks up considerably, there will be upward pressure on the prices (& rents) of the limited number of homes for sale (& rent).

Never Say Never (to new housing highs)

When the real estate market crashed ten years ago, many people said home prices became so inflated that they’d never reach those levels again.  In 2011, the “never again” prophecy seemed accurate.  Sacramento home prices had lost over 50% of their values from the peak seen in 2005.  Beginning in 2012, however, the market rebounded with a vengeance and now has clawed back to price levels seen in 2007, before the Great Recession.  This 5-year rally has market observers wondering if we will break through to new price highs soon.

Some pockets of town have already earned this accolade.  East Sacramento, for example, is experiencing higher home prices now than ever before.  I believe other neighborhoods will follow suit, but not prolifically in 2017.  We may need to wait one more year before breaking new records, but sooner or later the “never say never” prophecy will ring true.

In 95819, the median home price hit a peak of $500k in 2005.
Presently, it’s $525k!

Is This a Bubble Waiting To Pop?

Some view these hot market factors and predict a market bubble forming.  After all, how much longer can a 5-year rally last?  While I agree that a rally can’t last forever, the rare combination of scarce housing options, home-ownership rates at 50-yr lows, and an emerging generation of home buyers leads me to believe the Sacramento housing market is well-insulated from another bubble.  Even with the looming possibility of rising interest rates impinging housing affordability, our real estate market should see steady gains (5-10%) yet again this year.

If you are thinking of buying or selling a home, I’d love the opportunity to serve.  With 15 years of local market experience, I am able to provide honest insight on how to best navigate the current market dynamics to help make your real estate transaction a success.

As always, thank you for reading Matt’s Memos!


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