California Association of Realtors - Market Update!

September 05, 2022 – While some of the latest reports on consumer confidence and housing sentiment might have painted a more positive picture for the housing market conditions in August, recent developments in the lending environment and the financial market suggest that we could see more market uncertainty ahead of us. With interest rates rising sharply in the past couple weeks and the S&P 500 index falling nearly 9% since mid-August, the housing market will likely encounter more headwinds in the fall as the risk of recession looms large while high inflation remains a concern.

Consumer confidence hits 4-month high in August: The Conference Board's monthly snapshot of consumer attitudes rose to 103.2 from July's downwardly revised 95.3. The share of consumers that see jobs as “plentiful” fell, but so too did the share finding jobs as “hard-to-get”. The expectations component shot up almost 10 points to 75.1. While that is an improvement, it still places the measure at a point that is lower than all but three months in the past eight years. Gas prices at 4-month low might have provided some relief to consumers last month, but the decline in stock prices since mid-August could weigh on confidence in the coming month if markets continue to dip.

Housing sentiment improves as prices dip: Consumers’ optimism bounced back last month as rates declined in early August while home prices continued to moderate. Results from the C.A.R.’s latest monthly sentiment survey showed that respondents who believed it was a good time to buy a home rose month-over-month for the third straight month to 19%. As the average 30 year fixed-rate mortgage dipped below 5% in the first week of August, some buyers might have seized a rare opportunity to buy during that time window. Meanwhile, those who believed it was a good time to sell a home continued to decline to 52% and dropped sharply again from last August’s 72%. With interest rates started rising since mid-August, housing sentiment will likely reverse its direction in September. In fact, two-thirds (64%) of the consumer respondents still believed that the overall economic conditions in California would not improve in the next 12 months, and three quarters (75%) believed that interest rates would rise in the next 12 months.

Mortgage rates reach highest level in two months: Since dipping below 5% - a 4-month low - in early August, interest rates have been climbing throughout most of August with the 30-year fixed-rate mortgage (FRM) averaging 5.66% in the latest Freddie-Mac’s weekly survey. A year ago, the 30-year FRM averaged 2.87%. Higher interest rates have hurt buyer demand significantly, with purchase applications declined in eight of the last nine weeks. As sellers continue to recalibrate their pricing to accommodate lower demand, home prices will likely level off further as the market moves into the fall season.

Prices still high, but, we've turned the corner into a NEW MARKET - sellers are MOVIVATED more than ever!

Hi everyone!

Yes, home prices are still high, but we have turned the corner into a new market where Sellers are more MOTIVATED than ever. The sellers who have arrived late to the party or have missed the top of the selling peak, despite this, are listing their homes creating a lot of new inventory in the market and sellers are optimistic to get top dollar.

Despite high interest rates, still rising....this week, and the "fear" of a full-blown recession, yes - people are losing their jobs, expenses are being cut, etc., there are a lot of buyers still determined to buy a new home.

Buyers are going shopping today knowing that there's a lot more inventory on the market, they have more choices, time is on their side, and they have more negotiating power than in market past, they are and should be taking full advantage of this new market. 

Sellers are being told by their agents to take every offer serious and to be willing to make concessions, negotiate, fix items that need fixing and more.  

SELLERS ARE MOTIVATED:

HERE'S YOUR CHECKLIST

1.  Find a motivated seller. Look for the combination of a house with a lot of equity and an owner who wants out fast. This includes owners looking for something smaller, as well as those who are preparing to move out of state.


2.  Determine your price and terms. Before you can begin negotiation, you must know what you have to offer. You must have an idea of the market value of the home, as well as an idea of needed repairs. When you have this information, you can determine the price and terms that make you comfortable.

3.  Meet with the seller. Always allow the seller to name the price first. This tells you how realistic the seller's expectations are. If the price is too high, explain what you can offer and why. If the asking price is very low, don't take advantage of the situation. Make your best offer.

4.  If necessary, offer incentives. Some sellers still will not budge on price. For those people, explain that you will be taking this load off their shoulders. You will take care of repairs and maintenance from now on. In the event that you are paying cash, explain how that speeds up the process. If they still will not move then it is time to walk away.

5.  Wrap up the deal. If the seller agrees to the price, sign a purchase agreement and schedule a date to close. If you cannot agree on a price, leave the seller your card. Ask permission to contact them in the next few weeks for follow up. Either way, your negotiations are complete. You can now move onto the next.

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A NEW TREND IN REAL ESTATE OFFERING A GLIMMER OF HOPE FOR HOMEBUYERS!

A surprising upside for homebuyers

Though homeowners are putting up more “For Sale” signs, the one-two punch of higher home prices and mortgage rates makes purchasing a home nearly impossible for many buyers on a tight budget. As a result, many are dropping out or putting their homebuying plans on hold.

That is good news for home shoppers who have the financial leeway to keep looking, since they might not have to contend with the heated bidding wars of the past few months. Also, while the real estate market is still hot and inventory is technically still short in supply, the sellers that are now just listing know that the market has turned the corner on overpriced homes and huge over ask offers due to high interest rates, therefore, buyers might face more choices as well as less competition.

These trends together should bring more balance to the housing market that is expected to help cool the pace of price growth! If home shoppers can navigate higher housing costs, they should have more options to choose from in the near future and less competition from other aspiring homebuyers.

Even in the face of higher home costs, there are some factors keeping home shoppers highly motivated. One being, RENTS continue to surge by much more than normal, so many potential first-time buyers are looking to escape not only this year's increases but future rent hikes as well. Plus, many homebuyers anticipate that mortgage rates will continue to rise, providing a strong impetus to buy as soon as possible.

So, overall, buyers will need to move fast once they spot a place they like!

Please note: The buyers that are the most prepared to present an offer when ready will most likely be in the best possible position to get their offer accepted!

This includes:

• Research regarding affordability, i.e., budget - a mortgage and payment you can live with!
• You've discussed all of your buying options with a mortgage professional!  
• Fully prequalified which includes credit review, income and proof of funds documents have been reviewed and verified
• Legitimate pre-qualification letter received on company stationary from a Mortgage Professional who's reliable to speak to the Listing Agent if needed!
• Letter to Seller 

If you are ready and want to learn about getting "properly" pre-qualified, Call Lisa right away @ 818.359.4145 to get started today! Email Lisa@trustlendingsolutions.com, visit: trustlendingsolutions.com

LOCAL BROKER MARKETPLACES FOSTER COMPETITION - N.A.R.

Local Broker Marketplaces Foster Competition

Independent, local broker marketplaces create highly competitive markets that are friendly to small businesses and new market entrants.

Multiple Listing Services (MLSs) are independent broker marketplaces that focus exclusively on residential real estate in local real estate markets. Access to inventory and free advertising as well as the practice of the listing broker paying the buyer brokers’ commission incentivizes participation in these local real estate marketplaces and creates the largest, most accessible, and most accurate source of housing information available to consumers. That levels the playing field among brokerages, allowing small brokerages to compete with large ones, and provides for unprecedented competition among brokers, including different service and pricing models 

GET YOUR OFFER ACCEPTED - FIVE MUST-DO TIPS!

You have found your dream home and are ready to make it official. To have the best chance at getting your offer accepted, check out these five must-do tips.

1. Get pre-approved & provide proof with your offer.

If you will be getting a loan for the purchase of your home, talk with a lender to get pre-approved for a mortgage, then include a copy of your pre-approval with your offer. This pre-approval letter shows the seller that you are serious and further down the home-buying process than someone who is not pre-approved. While it is not a loan commitment, it shows that a bank or mortgage company has preliminarily reviewed your credit and believes you will qualify for a loan up to a certain amount (which will be stated in the letter). All of this helps the seller feel more confident in your intent and financial ability to buy their home.

2. Offer more earnest money.

Offering 1%–2% in earnest money is the customary practice today. However, if you want to let a seller know that you are serious, you can offer more money to convey this. Remember, this money is potentially at risk if the deal falls through, so make sure you are confident in the home and that you and your offer. You should also have the contingencies in place to cover you if in case you decide to back out later, so you do not lose all of your money.

3. Discover seller’s motivation to help structure your offer.

Price is not the only factor sellers consider. Sometimes it is important for them to close quickly (For example, they may have a new job in another city). For others, they may need more time before closing (to allow their kids to finish the school year or for construction of their new home to be complete). If you can figure out the seller’s motivation, it can be a tremendous help in structuring your offer. Speak with your agent to see if you can uncover these motivations, then write your offer accordingly.

4. Shorten the due diligence period.

To signify more confidence to the seller, you can shorten the due diligence period when you would do the property inspection. Especially in multiple offer situations, you may want to shorten the inspection period to make your offer stand out. Contracts often allow buyers ways to back out during the inspection period, so a longer period means the more time the seller must wait for the buyer to commit to the purchase. As a result, sellers often choose the offer with the shortest due diligence period because if the buyer does back out, the seller was “off the market” for a shorter amount of time. Completely forgoing the inspection period could be very risky. If you do not do an inspection and find a major defect, you could be left with a hefty bill. Decide how badly you want your offer accepted before deciding to eliminate the inspection contingency.

5. Make the offer as clean as possible.

In short, the simpler your offer, the easier it will be to accept and close. Here “clean” usually means a short financing contingency (loan approval time), appraisal contingency, and due diligence period. Also, this means not including other contingencies like the purchase being contingent of the buyers needing to sell their house or asking for any closing costs to be paid for by the seller. The market is extremely competitive right now, so it may be necessary to take a few risks to get the house you want.

Now that you have covered these five essential tips, here are 3 BONUS tips you may also want to consider.

6. Include an escalation Clause

An escalation clause can be especially useful in a multiple offer situation. With this clause, you state that if another person bids higher than you, then your bid will automatically go up as well. An example of this could be that you will offer $500 more than any other bidder until a certain amount. The risk of this clause is that it shows the seller the maximum amount you are willing to offer for the house, so do not put more than you would want to pay.

7. Submit a letter with your offer

Making an offer on a property can seem intimidating, but you should always remember that the seller is just another human like you. People are more likely to deal with someone they like or can empathize with, so including a letter with an offer may boost your chances of getting accepted. Your letter does not have to be super formal, but it could be a brief note explaining yourself and plans for the home. You can even include a photo of yourself (or your family) to help them put a face to the name. All of this will reassure them that you are the right person with whom to make a deal.

8. Close faster.

Once a seller decides to sell their property, they are counting down the days until it is sold and off their plate. Therefore, another tip to help you stand out would be to offer a sooner closing date. It takes 30-45 days when using a normal bank loan to buy a house, so you should factor this into your decision when considering the expected closing date and when to set it. Trust Lending Solutions also has lenders who can help you close faster than average, giving your offer another edge over others with a longer time to close.

Call LISA @ TrustLendingSolutions.com direct 818-359-4145 for a “ROCK SOLID” prequalification! Important note: When my clients have an offer under consideration, I speak to listing agents all the time to elaborate on the pre-qual letter ensuring they know that your loan was thoroughly reviewed, processed and underwritten to lender guidelines and the loan will be smooth and fast for closing

#Realestate #buyingahome #buyers #sellers #mortgageloans #prequalified #offeraccepted #getprequalified #offeraccepted

Market Minute update from California Association of Realtors

April 25, 2022

New records continue to be set for both home prices and rental rates. While housing demand will eventually slow as interest rates continue to climb and remain elevated, tight supply is the key to higher housing costs in the short term and the long term. With more homes being listed onto the market in the next few months while home building momentum continues to push forward in the second quarter, housing costs will likely ease later this year but may not start leveling off until after the spring home-buying season.

California Median Price Sets a New Record: The statewide median home price surpassed $800k for the first time in six months and recorded a new high of $849,080 in March. California existing single-family home sales increased in their median price by 11.9% from a year ago and began to accelerate again as the market prepared to enter the home-buying season. The month-to-month percent change in median price also soared to the highest level since March 2013 and the 10.1% increase was the first time in nine years that the growth rate reached a double-digit pace. March’s month-to-month increase was also more than twice the long run average of 4.5% recorded between a February and a March in the last 44 years. With the market competitiveness likely to remain heated, the statewide median price could increase further in the next few months during the traditional home buying season.

Rents Continue to Surge: Along with home prices, cost of renting also jumped rapidly at the national level with single-family rent prices up 13.1% year-over-year in February. U.S. rent prices extended its 11th straight month of record-level gains and reached another new high as another double-digit increase was recorded. Supply shortage in available rentals has contributed to the prolonged run-up in price growth, while robust home price increases most likely have played a role in the high rent growth as well. San Diego-Carlsbad had one of the highest year-over-year increase in California at 17.1%, while Los Angeles-Long Beach-Glendale also experienced double-digit growth.

Fewer Buyers Searching for a Home: While sales remained solid in the latest sales and price report, there are signs that imply a market slowdown could be forth coming in the second half of 2022. A quarterly report released by National Association of Home Builders suggests that fewer buyers were trying to find a home to buy in the first quarter of this year. The share of prospective buyers who were actively searching declined to 46% in Q122, back to pre-pandemic levels after reaching a recent peak of 61% in Q221. For those who had not been successful in finding a home, the share who plan to give up their home search until next year or later rose for the third straight quarter to 25% in Q122, after bottoming out at 20% in Q221. Higher mortgage rates and double-digit growth in home prices are slowing down the housing demand momentum and the effect may become evident in a couple of months.

Mortgage Applications Dip as Rates Climb Further: With interest rates remaining on the rise, mortgage applications continued to decline since they started slowing in early February. The Market Composite Index, a measure of mortgage loan application volume, dropped 5% on a week-over-week basis (seasonally adjusted). The decrease was attributed primarily to the fall in refinancing activities, with the corresponding index down 8% from the prior week and was 68% lower than the same week a year ago. Purchase applications also weakened but at a more moderate pace of -3% week-to-week and -14% year-over-year.

Homebuilding Momentum Continues: Building activities was the pleasant surprise this week, as overall housing starts increased 0.3% from the prior month, while building permits also rose solidly on a month-to-month basis. Much of the upward adjustment came from multifamily units, however, as single-family starts actually declined 1.7% in March and permits fell 4.8%. Despite the pullback, single-family construction remained exceptionally strong year-over-year, with starts totaled 1.2 million units this year compared to 1.13 million units in 2021. The strong start in home building in Q122 reflects some easing in supply constraints, as builders may have found workarounds while construction employment continues to improve.

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