Posts Tagged ‘home buyers’

Is the Seller’s Market Winding Down?

Wednesday, June 28th, 2017

As those who watch the real estate market know, here in Southern California it has been a bit crazy over the last year or so. Despite some reports to the contrary it has been a seller’s market, especially here in San Diego County. That means that prices have risen and it has basically been a great time to be a seller. Low inventory and high demand give sellers an advantage.

BUT, there are some signs that the market may be changing. Let’s have a look at how:

1. Buyers getting priced out of the market. Many buyers cannot afford to live in areas in which they were able to afford a short time ago – in some markets just a year or less! With the choice of moving to completely different areas some are deciding to rent in their preferred areas instead, hoping that prices will drop down the road.

2. Interest rates rising. The interest rates have risen a few times and then dropped. The Feds are trying to sustain the market by making home sales more desirable, but buyers still have to deal with the higher prices and, in many cases, multiple offer situations that raise them even higher.

3. Buyers getting frustrated and putting searches on hold (many opting to rent instead). Many buyers are tiring of the raise in prices. I just showed a condo to buyers (second home purchase) that is priced over $100,000 higher than the model match that sold in January – this is crazy!! I have had several buyers tell me they are just going to wait it out, as they do not want to pay “ridiculous” prices for homes.

4. Home sales are slowing down. May was the third straight month for declines in home sales. Sales listings dropped 8.4% over the last 12 months, due to higher prices and fewer options for buyers.

5. Summer selling season won’t last long. The “hot” selling season that is summer won’t last forever, and many buyers with families want to get into a new home before schools start up again in late August/early September. Those who cannot find homes will be forced to rent, which could take them out of the market for likely a full year, possibly longer. Also, many out of area buyers – a larger percentage here in San Diego which come from tourists – may not be able to find anything to purchase due to low inventory, which means they will be going back home empty-handed. Many of these buyers typically become second home or investment buyers and tend to focus on condos and lower priced homes.

It is evident that the market is causing issues among buyers, and the solution is to inundate the market with more listings. But until the sellers feel they can find replacement property many are electing to stay in their homes, creating a vicious cycle that had no clear end. Ironically, this is typically the best time to sell, so those who want to take advantage of the great seller’s market will need to take a risk and have a Plan B (such as renting in the interim).

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Appraisals are Creating Issues…Again

Tuesday, May 16th, 2017

Appraisals are causing problems again for buyers and sellers for the first time in many years. Many appraisals are not coming in at value, despite comparables that support contract prices, leading to problems between buyers and sellers.

Prices have come up quite a bit in many areas in the last few years, San Diego County included. That means that when an agent goes to list a home there are usually comparables to support a higher price. But I keep hearing stories about homes that are not appraising, and it just happened to my buyers as well (even though the offer we wrote and had accepted had comps that supported our price).

So what is a buyer or seller to do if the appraisal does not come in at value?

1. Renegotiate. The first thing to do is to try and renegotiate the contract price. I had a home that appraised $8,000 under contract price (which was completely ridiculous given a smaller home had sold for more just months before). We tried to get the seller to drop the price to the appraised value, or at least meet us in the middle but he would not. He had received multiple offers and there were buyers waiting in the wings who would still move forward with the higher price.

2. Buyer contributes the cash difference. This means that the sales price will remain the same, and the buyer will have to put the difference between it and the appraised value on the table (come up with more money) in order to close. The bank will only lend on the appraised value, but this option allows the buyer to move forward and purchase the home.

3. Challenge the appraisal. This can be done only when there is information that the appraiser did not take into consideration that could alter the evaluation, such as comparable homes that were not reviewed, or maybe a comparable sale that closed immediately after the appraisal was issued which had a higher price, or a sale that closed which was not on the MLS. Or, there may be upgrades to the home of which the appraiser was not made aware. But a challenge needs validation, so the fact that parties do not agree with the appraisal is not a reason for a challenge.

4. Cancel the contract. This is the buyer’s right when an appraisal does not come in at contract value. However, it is important to take into consideration the status of the market – if inventory is low and there is a lot of competition it may be smart to stick with the sale, since getting another contract accepted could be difficult and the buyer could wind up paying even more money for the next opportunity.

In my buyers’ situation they decided to stick with the contract price (after the seller would not negotiate) and pay the cash difference. Since it was only an $8,000 difference this was the smart choice, as they ended up with a beautiful home that likely would have sold for even higher than their contract price had they canceled.

It is important to discuss options with your real estate agent and tax adviser or financial planner if needed. Every situation is different and buyers have to feel comfortable in their decision. But it is tough out there in certain price ranges for buyers right now, and inventory is low, so oftentimes it makes sense to stay the course.

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Home Buyers May Not See All Active Listings Online

Tuesday, April 25th, 2017

If you are a home buyer or plan to buy or sell in the future, and if you are using a third party website online to look at inventory: Beware. Zillow and Trulia, two of the biggest third party consumer property websites in the industry, have recently changed their policies. This means that there are listings that may not ever show up on their sites – bad news for buyers, sellers and real estate agents.

Zillow announced to all agents that effective May 1 agents will no longer be able to manually upload listings to their sites (Zillow and Trulia). Since many MLSs around the country do not have agreements with Zillow to automatically transfer listing data (Sandicor, the San Diego MLS, included), the only way for listings to get on Zillow/Trulia after May 1 will be for each brokerage to have an agreement with the company. With so many brokerages many may not pursue such agreements.

This could hurt buyers worst of all, as those who are not working with real estate agents (who rely on the MLS for property data – the best and original source) may miss out on new listings. In a market with low inventory and multiple offer situations popping up, a buyer could lose out on purchasing homes.

Although this new rule is supposed to roll out on May 1, Zillow seems to not have waited that long. I had a listing that disappeared from the sites last week. I had to apply to my MLS to provide me with a number I can share with Zillow that will allow it to capture my future listings. But the process can take 7-10 business days – just enough time for a buyer to completely lose out on seeing and making an offer on a great home, and there are likely agents who do not realize their listings will or have disappeared.

My advice to buyers it to use only MLS sites – this means having an agent set up a search for you directly from the MLS. You can access that search and do a reverse search, which will allow you to see other listings. If you must use a third party site, I recommend Redfin, as they somehow pull from MLSs, and their data is updated almost instantly. They also provide more accurate value estimates on properties, in my opinion.

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Home Buyers: Purchase Now or Wait Until Prices Drop?

Friday, March 10th, 2017

This seems to be the million dollar question right now as home buyers survey the lack of inventory and multiple offer situations present in many markets. A strong seller’s market and high prices make some buyers nervous. So is it better to buy now or wait?

There are a few very good reasons why now is the time to make that home purchase:

Interest rates are rising – We have already seen this happen and word is they will do so again this year, likely several times. This affects mortgage payments and down payments, so jumping in and securing that lower rate now could be smart. It is also important to note that some lenders are charging a lot more for interest rate lock extensions, so that is something to think about if you have a long escrow period or are pursuing a short sale.

Lack of inventory – Inventory in many markets is still very low – San Diego County included. Many buyers cannot find properties to purchase and when they do there are often multiple offers, especially in the $650,000 and under price range. Cash buyers are out in force as well in many lower range markets, making it even harder for first time home buyers. Being picky is getting more and more difficult – right now is a good time to be preapproved and ready to write an offer once you find a home that meets your criteria. See the home as soon as it comes on the market and submit your best offer right away.

Prices are not dropping as we head into the “busy season” – Lack of inventory is making it difficult as demand outpaces supply. Unless this changes we will not likely see price drops in the busy Spring and Summer months to come. The buyer who decides to wait this period out may find herself down the road with still low inventory and higher interest rates.

Here is an example: A house that currently sells for $766,000 with an interest rate of 4.75% and a 20% down payment would yield a payment of a little over $4000 a month. To get that same payment down the road with a home price drop to $727,000, assuming a higher 5.125% interest rate increase, the buyer would be losing $1585 over 3 years. So even if prices drop 5% and rates increase 3/8th  of a percent, the buyer who purchases with a lower rate now will be ahead in the long run.

Uncertainty – Worry about the future and economy is still prevalent among home buyers. Uncertainty about taxes and home write offs, as well as the expected rise in interest rates, make some buyers hesitate to make big purchases. The real estate market, like any market, is cyclical. If you are buying a home with a long term commitment then it is a great time to do so, before there are more rate hikes.

Before you decide whether it is best for you to purchase now or wait, it is important to discuss your scenario with you accountant or financial adviser, an experienced real estate agent in your area and your mortgage professional. Information is power.

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Still on the Fence? U.S. Home Prices are Still Rising

Tuesday, January 31st, 2017

The new housing report was released yesterday by Case-Shiller, indicating that U.S. home prices are still rising. Of course this is really area dependent, but if you are a potential buyer or seller you might feel worried, and justifiably so. Keep reading for important information and advice.

The report covers major metropolitan cities and states that prices in these areas rose by 5.27% in November – above expectations of economists, and also up from the previous month of 5.1%. What does this mean for buyers and sellers? Let’s take a look at some important considerations.

Local markets: Of course these studies are general and tend to focus on big cities, so it is important that you contact an experienced real estate agent in your local market to see what is going on in the area. But, the thing to take away from this data is that prices are not easing up. Combine that with the next factor…

Inventory is still very low: Again, your local market must be studied to get an accurate glimpse and set expectations (your real estate agent can help with this), but using my local North San Diego market as an example I know that this is painfully true. I have buyers who simply cannot find homes, and multiple offer situations in some categories – like properties under $600,000 – are still the norm. With low inventory and prices staying put or rising, a buyer does not benefit from waiting to purchase, especially considering the next factor…

Springtime is coming: Traditionally the “hot” season for housing, spring and summer are just around the corner. But in my view we are already in the heat of things. Hopefully more inventory will pop up as we head into that “busy” season, but honestly I think the entire last year and especially this Fall and Winter, can be considered busy in housing – at least here in San Diego. Waiting until Spring could put buyers in even more of a quandry, bringing an  increase in the buyer pool: more competition can drive prices up again.

The National Home Price Index also rose by 5.6% annually – up from 5.5% the previous month. High demand is causing these prices to continue on an upward trend. It is important to note, as some doubters or “bubble-talkers” as I call them, may believe, that these trends are NOT similar to those that occurred prior to the last housing crisis in the early 2000s.

How is this market different than that prior to the last crash?

1. Factors driving prices are not the same. Prior to the crash people were driven by speculation and anticipation of growth. Instead, healthy market factors like a strong job market and low mortgage rates are driving this market.

2. Lending is stricter. Lending requirements are not as loose as they were during the time prior to the last housing crash, so not everyone can qualify for a loan.

3. Demand is high but supply is not. Prior to the last market crash, there is a much lower supply of inventory in most areas. It is not so easy to find property to purchase. Many would-be sellers are afraid to sell, as they don’t know where they will move if there is such low supply and so much demand – so it’s a great time to be a seller if you have the time to wait it out on a subsequent purchase.


The moral of all this information is that if you are a potential seller you are in a great position. But if you have to buy after selling you need to have a “plan B” in place – e.g. stay in a furnished month to month apartment or temporarily move in with a relative or friend will put these people in ideal situations to sell and wait for the right home. But buyers have it a bit tougher – the best advice I can give is to BE PREPARED. Get preapproved, start looking at everything in your price range and desired area – even those homes that may not be as upgraded as you like or in the exact neighborhood you wanted. Do your homework and be ready to pounce once you find that “right” home.


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FHA Annual Mortgage Insurance Premiums Reduced

Wednesday, January 11th, 2017

By Elvin J. Wesley, President and Broker of Ranch and Coast Mortgage Group

What a great way to start the week and 2017!!!

Monday morning HUD announced that it had achieved the balance of its statutory operational goals and as a result of that it requires a reduction of the Annual MIP charged. This exciting announcement from HUD yesterday morning that represents a 25 basis points improvement on most FHA Loans (not to interest rate, but to the Annual Mortgage Insurance Premium charged by HUD on FHA loans)

The Revised MIP schedule is effective for Endorsements of Mortgages with a Closing / Disbursement date on or after January 27, 2017. Closing / Disbursement date is defined as the later of the date of the signing of the Mortgage or the Disbursement of the Loan Proceeds as is entered in FHA Connection. Unlike changes in the past the change is effective based on the closing date and not the case number assignment date!
The Revisions applies to all FHA Title II Forward Programs excluding Mortgages insured under the National Housing Act section 247 (Hawaiian Homelands).

Here is a Summary of the changes

What does this mean in regards to $$…payment reduction when a buyer/borrower is purchasing a home?


Old – $550K base loan amount based on 0.85% MIP = $389.58 per month

NEW  – $550K base loan amount based on 0.60% MIP = $275.00 per month

That’s a $114.58 reduction in MIP payment, which means lower overall payment for buyers/borrowers and more BUYING power!


On November 23rd the Federal Housing Finance Agency (FHFA) announced that the maximum conforming loan limits for Fannie Mae and Freddie Mac in 2017 will increase, which of cources has now taken place. This will be the first increase in the baseline loan limit since 2006.  In higher-cost areas, higher loan limits will be in effect as shown below.

This change has already taken place for FHA and VA loans limits as well.

2017 Conforming and High Balance Loan Limits-

SAN DIEGO NEW LIMITS $424,100 Conforming and $612,500 High Balance

LOS ANGELES NEW LIMITS $424,100 Conforming and $636,150 High Balance

ORANGE COUNTY NEW LIMITS $424,100 Conforming and $636,150 High Balance

*See attached spreadsheet for more counties and limits for 2-4 unit properties



Number of Units Maximum base conforming loan limits for properties NOT in Alaska, Hawaii, Guam & U.S. Virgin Islands Maximum base conforming loan limits for properties in Alaska, Hawaii, Guam & U.S. Virgin Islands
  2017 2016 2017 2016
1 $424,100 $417,000 $636,150 $625,500
2 $543,000 $533,850 $814,500 $800,775
3 $656,350 $645,300 $984,525 $967,950
4 $815,650 $801,950 $1,223,475 $1,202,925


High Balance/Super Conforming:


Number of Units Minimum/Maximum Original Loan Amount Properties in Alaska, Hawaii, Guam & U.S. Virgin Islands
  Minimum Maximum Minimum Maximum
1 >$424,100 $636,150 >$636,150 $954,225
2 >$543,000 $814,500 >$814,500 $1,221,750
3 >$656350 $984,525 >$984,525 $1,476,775
4 >$815,650 $1,223,475 >$1,223,475 $1,835,200


Please refer to the full County Loan Limits list attached or just contact Elvin Wesley at Ranch and Coast Mortgage

(CA DRE license: 01316249, NMLS: 234795):

c 760.580.1733

t 760.230.2042

f 760.487.1295

f 866.683.5399 toll free

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Trending San Diego Real Estate News

Monday, January 2nd, 2017

San Diego is definitely a desirable place to live, and as one of the most visited places in the United States it’s no wonder why – we have the best weather, beautiful  beaches, great food and nightlife, culture, incredible places to walk and hike, and so much more. There is nowhere else I’d rather live! sandiego

As we head into the new year here are some of the happening stories highlighting San Diego and the local real estate market.

San Diego Ranked 5th “Hottest” Real Estate Market in U.S. – ranked San Diego as the 5th “hottest” real estate market in the country. This is great news for the local market. The story pointed out that demand has especially grown since the election, likely due to increasing mortgage interest rates, and that the low supply levels heading into the new year will keep prices high – great news for sellers. Median sales time is 53 days in San Diego county, compared to 88 days nationwide.

San Diego Remains Top Destination for Foreign Buyers – We still rank as one of the top places for foreign buyers, especially those from China and Canada. San Diego is up there with Los Angeles, Orange County and San Francisco as the top places to purchase property in California. Speculation that this trend will continue in 2017 as many feel the US economy and the dollar will strengthen.

San Diego Home Sales Could be Protected by State Supreme Court Ruling – I have blogged about “dual agency” many times, and my position has always been that real estate agents should not be able to represent both the buyer and seller in a real estate transaction. The reason for this is that I feel it is virtually impossible to exercise a fiduciary duty to both parties – it can create too many conflicts of interest. The California Supreme Court seems to be coming closer to agreeing with this sentiment.

In November the court ruled that “a listing broker has a fiduciary responsibility to the buyer and the seller when his brokerage firm is representing both, setting a significant precedent for obtaining and sharing information in residential and commercial transactions.” While there are currently disclosures required which allow such situations, this ruling could be paving the way to no longer discontinuing them in the future…stay tuned for more.

If you need any information about property in the San Diego county area please feel free to contact me. Happy New Year!

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2017 San Diego Real Estate Market Predictions

Wednesday, December 21st, 2016

If you are like me you are surprised we are at the end of the year already, but the good news is that the real estate market fared well this year, and will likely continue to do so in 2017. Here are my annual predictions for the market, at least here in San Diego County: index

1.  Home inventory will remain low. Due to a combination of factors – rising interest rates, expenses of moving up and difficulty of finding replacement housing, many potential home sellers will likely choose to remain where they are and not sell. This trend defined the market in 2016 and I believe it will continue. Until Americans see how the new President will affect the market I am betting on this.

2.  Prices will stabilize for the most part. 2016 saw prices still rising slightly in some areas, and higher in others (especially in summer months), but for the most part things seem to be leveling off. I think we will return to “normal” annual price appreciations of 5-7%. Of course this is always area-dependent so check with your local realtor for market statistics and area comparables.

3.  Market times will decrease or remain low for desirable homes. Due to the continuation of lower inventory levels I believe we will see desirable homes sell quickly. But I also think that buyers are very savvy and will not pay crazy high prices either – although in a multiple offer situation you never know.

4.  First time buyers could have a difficult time with competition. As interest rates rise, inventory levels decrease (or remain low) and prices remain high, many first time home buyers may find themselves in challenging situations when looking for homes to purchase. Competition will also factor in, especially in areas where there is an influx of repeat homebuyers who are moving up and are well qualified (with large downpayments). My advice is for those first time buyers to get preapproved and start looking now. Click here to read more on how to “win” that home you want.

5.  Interest rates will rise. This is inevitable and we have already seen the beginning of the end of the lowest interest rates in history. The new administration will also play a role in the interest rate rise as economic goals fluctuate.

The bottom line is that I believe the housing market will do well in the coming year. I do not predict any “bubbles” as some (very few) have done. I think here in San Diego County our market is strong and will continue to be as we head into 2017.

As I always say, if you are thinking of buying or selling in the future you need to do your homework and start early – even a year is not too early. Study the markets, visit homes for sale, get to know inventory, neighborhoods and floorplans. Talk to a mortgage professional and plan ahead. Find a great local real estate agent and let him or her keep you informed so you are ready to go when the time is right. Be prepared and have a wonderful new year!

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Is the Real Estate Market Slowing Down?

Friday, October 7th, 2016

It has been an interesting time lately in the real estate market, and it is difficult to figure out exactly what is going on – is it slowing down, is it still hot…many people are confused. It really depends on your specific area, but there are some interesting things going on in my local markets…let’s take a look. dreamstime_988060

Multiple offers – still?! Yes! There are still some of those crazy multiple offer situations going on out there, and believe it or not they make it look like a seller’s market in the heat of summer. But this is not happening everywhere. It seems – at least in my neck of the woods in North San Diego – to be happening with condos and towhhomes that are very nicely upgraded, in good areas, and priced up to $550,000. Just last week I wrote an offer on a townhome for clients. The offer was super clean, priced over asking price, which was already stretching the appraisal potential, and a quick close in 30 days. We received a multiple counter offer asking us in essence to come up higher, remove the appraisal contingency at the outset, reduce all other contingency periods, and specifying that the sellers would make no repairs. We lost that one (I would never allow a buyer to remove an appraisal contingency unless they insisted, after being fully aware of the consequences).

Buyers are not jumping as high: Yes, this may sound like it contradicts the above paragraph, but it is true in most cases that buyers are not giving into inflated prices any longer. Most buyers (with the exception being the above scenario) are taking longer to find the right home, and then trying to negotiate the price. Much of the real estate news I read follows this position – after a crazy summer with prices inflating many buyers who missed the boat (or even those who intentionally waited out the crazy buyer storm) are finding that they can negotiate prices down and for that matter do not mind waiting until homes have some market time to make offers. This to me indicates the slow approach of a buyers market.

Fewer listings, fewer escrows opened: As is normal after the end of the summer season, listings are not as plentiful. But even after a fewer-than-usual-listings summer the Fall numbers continue to drop. Fewer escrows were opened in the last month compared to summer months. If this continues – fewer active properties, steady demand – it could spur the seller’s market to stick around for a bit…which means we could see prices rise. Interest rates will play a big part in this equation, as of course will jobs – people have to be able to afford homes.

In a nutshell the market is a bit hard to predict right now and doing so requires focusing on the specific community in which you are searching. For those buyers out there who are ready, willing and able to purchase my advice is to not rush into anything (unless you find your absolute “must-have it” dream home – but even then you need to be careful), consult with an experienced real estate agent to make a plan,  stick to your budget and stick to your guns when negotiating price, repairs and other items.

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Growing Housing Inventory Will Affect Buyers and Sellers

Tuesday, June 28th, 2016

Attention home buyers and sellers: home inventory is growing. Over the last few years we have seen decreased inventory in many areas, including here in San Diego County. This has made it tricky for many buyers as supply has not met demand, but has been positive for sellers as the seller market picked up speed. But inventory appears to be growing and there are many extenuating circumstances that make now a good time to sell or buy real estate. 0

Home ownership holding period – Over time most homeowners have tended to occupy their homes on the average for about 6-7 years before selling. But over the last few years this number increased and many sellers were staying in their homes 9-10 years due to economic factors. However, there  has been a trend downward lately due to equity increases and market conditions.

Equity – The last few years have brought equity gains to many homeowners, and low interest rates make it a great time to buy – this combination is positive news for housing. But like any market there will be a correction in time, where equity stops rising as quickly. Here in San Diego County we are starting to see slight slow downs with sales – sales prices are dropping slightly and many homes are sitting on the market longer.

Seller Market – It has been a seller’s market for some time now, due to lack of inventory in many housing markets, combined with a healthy  demand. but with external changes on the rise more sellers will likely consider selling due to strong market conditions and other economic factors that may make them question how long the equity rise will continue. As inventory increases it may turn into a buyer market so long as demand is still prevalent and supply increases.

Economy -  There are several economic factors that may influence a seller or buyer, and moving forward these will likely play a role in decisions to buy or sell. For buyers, low interest rates and international economic conditions that affect our US economy could play into the decision- making process. As markets are cyclical most buyers and sellers know that low rates will not last forever. The looming Presidential election could also factor into housing, as well as international situations like Brexit and terrorism.

The bottom line is that no one has a crystal ball. Many predictions abound and feeding into them can make a buyer or seller crazy. Each individual has to consider their own factors – equity, supply, prices, external and personal economic factors. Talk to your accountant and an experienced real estate professional – but don’t wait too long because the market will change at some point.

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