Posts Tagged ‘Real estate market’
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.
Monday, May 23rd, 2016
If you are a real estate agent or a home buyer you may notice that the market is obviously low on inventory right now. Being that it is the “selling season” of Spring/Summer, and since there are a lot of buyers out there looking at homes, there are many situations involving multiple counter offers and homes selling for well over asking price…all great if you are a seller. However, there are also some fishy things going on out there and it is frustrating to agents and their buyers.
Let’s take a look at what is happening:
1. Homes listed well over comparable value. Many, and I mean a LOT, of homes in North San Diego are being listed over market value – some slightly and some way over. Buyers, who normally would avoid such homes until the price drops, are flocking to them and making offers anyway. No one seems concerned that the home likely will not appraise, and if one buyer walks there are many more who will step right in. This is pricing out first time homeowners and bringing prices up…you may think the latter is good, but it is dangerous because such inflation could create problems for the market – especially when there are many buyers who have incomes that will price them out of neighborhoods they should have been able to afford had prices reflected comparable sold values.
2. Many sellers are taking a long time to respond to offers – even very strong ones. If a buyer makes a very strong offer over asking price, many listing agents are waiting for 4 or 5 days to even respond, during which time they collect more offers. Many then submit multiple counter offers to all bidders asking for the best and highest price. This prices many potential buyers out of the running, and most already submitted an offer slightly over their budget.
3. Sellers are refusing to make repairs or pay for reports. In a seller’s market the seller knows s/he is in the driver’s seat, and many sellers are countering back stating the home is sold as is, and that they will make no repairs and pay for no reports – like termite reports. They want the cleanest offers possible with the least amount of money out of pocket. This means the buyer can get stuck with multiple repairs, termite work, etc. If the buyer is already paying top dollar for the home, s/he has to make sure those things are affordable. No one wants to see a new foreclosure wave hit in a few years.
4. Appraisals are not coming in at contract value – but that is not deterring sales. I have not had problems with appraisals on listings (I don’t market properties in the “insane” price category), but have heard from many agents who have. Even if the home does not appraise at contract value, there are plenty of buyers who are willing to pay the difference in cash if sellers will not negotiate prices down to the appraised value. They feel that is the only way to secure a home purchase in these crazy times. Does this sound like 2003/2004 – “pre-crash” – to anyone else besides me?
5. Overly aggressive listing agents seem to be multiplying, and they are not being cooperative. There are many listing agents who are ruthless and even rude. They don’t care that your buyers love the home and have been looking in that neighborhood for a long time, or that they wrote a very strong offer and submitted it first. To these agents, it’s all about playing the game and finding the highest bidder. Some agents do not return calls and emails, and some violate the Realtor code of ethics – a few may even commit fraud. It is extremely frustrating for buyer’s agents, who are trying to find a home for their well-qualified buyers.
6. Pocket listings and homes listed “off the MLS” are increasing. Many agents are marketing their listings on third party sites like Zillow, and not placing them on the MLS – the cooperative tool used by Realtors to benefit all parties looking in particular areas/price ranges. While it is their right to do so, it makes a problem for buyer’s agents whose clients may see these listings and want to visit them – but when their agent calls the listing agent to make an appointment she is often told that the seller is not paying a commission to buyers’ agents. Imagine you have been helping your buyers for months to find a home and now you cannot show them this one home because the broker will not cooperate with your broker. It puts buyer’s agents – who play an imperative role in protecting buyer’s rights – in a very sticky situation. You may ask why listing agents do this: the answer is so they can find buyers who will work with them, thus saving the seller from paying out a commission to the buyer’s agent. Hopefully the California Supreme Court will soon put an end to double ending sales and this will no longer be a problem.
I am a bit concerned and hope that we are not heading into trouble in the real estate market. I hope that agents keep in mind the spirit of cooperation that is inherent in our business – we all need to work together and be fair. If we do not then buyers and sellers will not be protected from future lawsuits, and many people will be priced out of the housing market – which could cause a domino effect with local economies and eventually the US economy.
Wednesday, December 10th, 2014
It never fails – every year I always think I will have a quiet holiday season and be able to catch up on personal errands and have extra family time. But every November things always start to heat up in my real estate business. Offers on listings tend to increase (often multiple offers), there tend to be a flurry of showings, and buyers step out in force to see properties.
I hear many real estate agents say that the end of the year is accompanied by a slow down in the real estate market, but I have not yet found that to be the case. Those agents who decide to not work as hard or to take a break miss out on the plethora of opportunities at this time of year. But for those who continue to work hard with existing clients, answer their phones and tap into their client base, this time of year can be lucrative.
Busy Time for Sellers
As for sellers, I have written blogs over the years as to why the holiday time is a great time to sell. The main reason is that there is not a lot of competition, so the buyers who are out there searching for homes (and believe me, there are many) don’t have as many options. If you list your home at this time and it is priced and shows well, you may be surprised at the amount of interest you get… and of course there is the potential for multiple offers. If you are a seller, make sure to speak with your agent about the best way to market and stage your home during the holidays, because that will have an impact on its selling potential.
The other reason it is a great time for sellers is because interest rates and inventory are still low. This makes it an optimal time for buyers who may have otherwise decided to wait until Spring.
Finally, it is fair to say that the majority of buyers who are out there looking at this time of year are very serious, not just looky-loo buyers. Many people would rather not focus on purchasing a home during the holidays, so as they say “the early bird gets the worm.”
Busy Time for Buyers
The end of the year/holiday season is a great time for buyers, for many of the same reason outlined above. There is less competition, the listings that are active are usually placed there by serious sellers who need to sell, and right now interest rates are still very low. In my opinion many properties are priced more accurately at this time of year than say in the Spring, when many sellers test out the market to see how high they may be able to list above comparable sold properties.
Buyers, sellers and agents can all benefit during the last quarter and during the holidays if they continue to work extra hard into the New Year. Happy buying and selling, and I hope everyone has a prosperous and happy holiday season!
Friday, March 21st, 2014
You may have read lately that here in Southern California home prices continue to rise. You may also have noticed that there do not seem to be many homes listed for sale. Combine that with the fact that there are definitely buyers out there looking for homes to purchase, interest rates are still historically low, and it’s no wonder some people are concerned.
Spring officially started yesterday, and with it comes the expected home selling season, which usually lasts into mid-summer. This is the time that those who are planning to move start seriously looking at homes, and those planning to sell get ready to do so. There have been new listings in my area, but it feels like a lot less than normal for this time of year. Where are the sellers and why are they not stepping forward to list their homes?
The main reason is that there is low inventory of homes on the market in many areas. Most sellers sell and simultaneously buy another property. If there are no homes on the market for them to consider they will likely hold off on listing their property until that changes, creating a Catch-22 situation. This keeps the cycle going and in turn causes housing prices to rise, as buyers have to compete for the little inventory that is on the market.
Another reason for lower inventory could include lack of sufficient equity in the home to purchase a replacement property (although many homeowners have come out of negative equity situations in the last year or so due to price increases).
Hopefully the sellers WILL soon step up and put their homes on the market. When this happens we will see a few things:
– Lots of interest from buyers
– The possibility of multiple offers
– A likelihood of higher prices as a result of the above
Hopefully more sellers who are not buying replacement properties (such as 2nd homeowners, investors, or those moving out of the area) will step forward soon to give the market some momentum. It is a great time to be a seller right now.
Thursday, August 8th, 2013
For those who are regulars to my blog, I have predicted that home prices will soon stop escalating and will return to a “normal” growth, one that ascends slowly but steadily over time. I predicted we would start to see this by the end of this year, and especially heading into 2014. It appears that it is starting to happen right now, even in light of a new study that says that Americans believe housing prices will continue to rise despite rising interest rates.
Clear Capital predicts that home prices across the country will “experience more moderate and sustainable increases” for the remainder of 2013, as we slowly transition into this “new normal” of slower and more consistent gains moving ahead into 2014 and beyond.
In the short term many areas will likely continue to see price increases through the end of the year, despite the rise in interest rates. This could be due in part to rising inventories in many areas. Another explanation is that the rise in interest rates, along with the commonly held notion that these rates will continue to rise with time, may actually push buyers to make purchases in order to avoid higher rates. Likely, many sellers may see this as an opportune time to unload properties while the market is still rising and before rates climb higher, which will undoubtedly price some buyers out of the market.
As rates rise and inventories increase, we may also see a shift in the market, from a seller’s market (which we currently are experiencing in many areas, especially here in the western states), to a buyer’s market. Heading out of the summer buying season and into the Fall and beyond to the holidays, this is a realistic possibility. Demand will of course also continue to be fueled by the strength of local economies.
Interestingly, a study by Fannie Mae in July, the National Housing Survey, found that despite rising mortgage rates, consumers believe that prices will continue to rise. 53% of those polled thought that prices would rise in the next year. Those expecting prices to drop came to under 6%.
All in all, it is still a very interesting time in the housing market. I stand by my theory that prices may continue to rise through the end of the year, although possibly not as drastically. I believe we will continue to see inventory levels inch up in many areas, and that as we head into 2014 we will see prices stabilize somewhat, although I do believe tight lending standards could effect the state of the market as well (a topic for another blog). From there on out I believe we will see a more “normal” market moving forward, meaning one that grows slowly and consistently over time.
If you are thinking of buying or selling it is important to contact a knowledgeable Realtor and mortgage professional in your area to understand the makeup of your specific area.
Monday, May 14th, 2012
Things are really heating up in the real estate market in San Diego. Encountering multiple offer situations is not uncommon these days, especially with properties that are priced well and are in good condition. So, is it a seller’s market?
To answer the question we need to divide the market into attached and detached homes.
Attached homes: In the attached market many areas of San Diego are officially in the seller’s market territory. What does this mean? It means that sellers are receiving multiple offers, prices are going up, and sellers are able to often drive prices higher and pick their choice of offers. This means that buyers do not have as many opportunities to submit lowball offers, even when they would realistically pay more but want to “feel the waters.”
Of course, long gone are the days of severely inflated prices, but I will take a thorough look at comparable sold properties, and advise my clients to stay as close as they can to those numbers (assuming the properties are similar to the one on which they are placing an offer). Slight increases from the comps are definitely justified, as the market is trending upwards in many developments.
Overbidding is often something a buyer may want to do to secure getting their offer accepted, and as a listing agent I have received multiple offers sufficiently over the asking price. However, as much as I would like my sellers to get the highest price possible for their home, when I doubted that the offered price would survive an appraisal I counseled my sellers to choose not the highest offer, but the one most likely to close (cash offers first, and then loans with very qualified buyers and nice downpayments). So, it is not just about the numbers, but buyers DO have to be aware that if they truly want a certain property they need to present their highest and best offer in today’s attached home market.
Detached homes: Detached homes are still in the buyer’s market category here in San Diego in most areas, but in reality it depends on the area, inventory and price range. In most north county coastal cities, such as Carlsbad, Encinitas and Solana Beach, we have seen prices stabilizing and little change in trending. As more inventory comes onto the market as we head into summer it just may create a trend toward higher prices, but we will have to see how strong demand is at that time.
Personally, I have seen that listings are going very quickly in the detached market. Three recent listings of mine all received offers within days of listing, including multiple offers. So my advice is that it really matters in which area the property is located, and that buyers still want to write offers as strong as possible, unless they know there are no other offers and they feel they have time for negotiations. It is important you work with a skilled buyer’s agent who knows the local market and can negotiate well on your behalf.
The bottom line is that if you are a buyer looking for a detached home, it is still a great time to negotiate. Have your agent do her research on the comparables, and come in with a strong offer…but there is no need to offer an amount sufficiently above comparable solds. If your agent knows there are other offers on the property of course you need to discuss how to present your offer in the best light to give it the highest chance of acceptance.
Happy house hunting, and please let me know if you have any market questions you would like to see answered here.
Photos courtesy of Dreamstime.
Friday, December 2nd, 2011
Happy December everyone! I can’t believe the year is almost at an end (we won’t mention that I am completely unprepared for the holidays either). Here is what has been happening in the real estate market this week.
Foreclosure Moratorium for the Holidays. Some lenders are finding kindness in their heart to put in place foreclosure moratoria over the holidays, like they have done in the last few years. Fannie and Freddie have already announced a temporary moratorium on all foreclosures of single family homes and 2-4 unit properties for the holiday period, and all evictions will be delayed until after the New Year. California groups like Occupy L.A. and Occupy Santa Cruz are also trying to get lenders in their respective counties to place moratoria on foreclosures for the holidays. If you are facing foreclosure you can call your lender to see if they have instituted such a policy.
Fewer American Homowners are Underwater. A new study just published by CoreLogic concludes that the number of Americans whose homes are “underwater” (they owe more on their mortgage(s) than the current value of their homes) has decreased to 1 in 5. It used to be 1 in 4, so this sounds like good news, although there will be more foreclosures to come due to the large amount of negative equity in the housing market.
Reverse mortgages to have new requirements, may make it harder to qualify. Getting a reverse mortgage may soon be more difficult. Reverse loan originators will soon begin looking at the financial status of applicants, to see if they are able to cover the costs of homeowners insurance and property tax. The goal is to prevent future defaults. Reverse mortgages are obtained by borrowers over 62, and allow them to convert the equity in their homes into cash, which is used to live on. The loan is due, with interest, at the time the owners die, move, sell the home, or fail to pay homeowners’ insurance or property taxes.
Home values have declined in most markets; buying cheaper than renting in many places. According to a study by the Wall Street Journal it is cheaper to buy rather than rent a home in 12 major metropolitan markets. Home values also have declined in all but 5 markets. Low mortgage rates and timing make this a great time to buy for many buyers, and prices are predicted to continue to decline, mostly due to distressed sales. To read more on this study click here.
Sunday, October 9th, 2011
A client told me a few days ago that I have one of the hardest jobs, and she doesn’t know how I do it every day. She was referring to the difficult situations I face daily in regards to short sales, short sale lenders, and getting buyers qualified to buy properties. There are some days, I admit, where I want to just turn off my phone and go sit on the beach, ignore all the problems…but I persist.
In realizing that a solution is only as good as the work put forward to obtain it, I have come to the conclusion that there will always be problems, as in any business. Instead of dreading them, or slacking off, or even throwing in the towel, we need to approach each transgression with not only persistence and a plan, but with the best tool of all: laughter.
How does laughter help, you ask? If you have a stressful day or week, go and watch a funny movie. Aside from exercise, laughter is one of the best ways I know to get through anything. My new pastime is finding and making jokes about lenders, especially those I do not favor (like the ones who Chase off short sale buyers, Chase down bad BPOs, or Chase after foreclosure as a preference). See? I feel better already.
Laughter may not solve your problem, but it will definitely give you renewed energy to go out there and keep fighting. I am ready for a day in the trenches tomorrow (I am hoping to Chase a big problem away), so tonight I plan on watching a funny movie. How do YOU deal with problems?
Wednesday, June 1st, 2011
It’s official: we are headed toward a double-dip in the housing market; some areas are there already. The second dip is not as bitter as the first, in fact it may tend to be sweet for many, so rather than feel terrified like we did the first time, this is the time to take a bite and not worry about your figure.
Standard and Poor’s (yes, I note the irony) Case-Shiller index, the nation’s foremost authority on housing market statistics, released their much-anticipated report this week that confirmed what many already assumed: the housing market seems to be headed down. In fact, the report indicates that housing prices have fallen more now than they did during the Great Depression. This depresses many people.
Actually, for those who see good in the bad, beauty in the ugly, this news should be somewhat celebrated. If you are a seller it means it will be a harder time to sell, and you will need to price your home accordingly or you will accrue market time with no offers. BUT, if you do price and market properly the silver lining is that there will be buyers out there, so look at it as a chance to sell your home (it just may not be for the amount you anticipated). If you do not have to sell and do not have much/any equity in your home, you may decide to wait a bit.
If you are a buyer this is really your time. The biggest challenge will be the lenders, of course. But if you have an experienced mortgage broker and you make sure you are prepared before you shop, you will be the proverbial kid in the candy store. Short sales and foreclosures (lender-owned properties) will be your best bet for your dollar, and negotiating power will likely be strong, as distressed properties are not going away any time soon.
The bottom line is this: if you work with a great mortgage person and truly understand the programs out there, as well as the loan amount for which you can qualify, you are off to a great start. Spend time really visiting the properties that fit your needs, and gathering information about neighborhoods, amenities and floorplans. If you play it smart you will likely end up with a home purchased at a great price, which will accrue equity as the market heals. Good luck!
Saturday, May 28th, 2011
More Homeowners Refinancing into Shorter-Term Mortgages. A new study recently revealed that many homeowners are refinancing into shorter term loans. The advantage is that the mortgage will be paid off in a short time, which is appealing to those who face retirement in the next 10-15 years. Some rates are as low as 2.99 or 3%, with 7-10 year terms. The trick of course is that you must have equity in your home to be able to qualify for a refi, and then must be able to afford the higher payments. This trend shows that home ownership is still very much desired, which is a good sign.
Home Insurance Premiums are on the Rise. While home prices are falling across the U.S. those who plan to buy need to be aware that home insurance is on the rise. Some of the largest insurance companies have indicated they have or will be raising rates. This is partly due to the slew of natural disasters our country has experienced recently, such as the hurricanes and tornadoes in the mid-western states, floods in the south, and earthquakes/tsunami in Japan and elsewhere. Different areas will experience different increases, depending on risk factors.
Great Opportunities Abound for Buyers/Investors. Housing prices have dropped slightly and will likely continue to do so, due in part to the large distressed property inventory that will continue to grow for at least a year or two. Mortgage rates are still low and buyers can get a LOT more for their money right now, so it is a great time to take advantage before mortgage rates do rise.
Mortgage Delinquencies Increasing/Foreclosures Down. Although the number of new foreclosures went down in the last quarter, the number of homeowners who are delinquent in paying their mortgages increased slightly. This is an indicator that there will be a new wave of foreclosures and short sales to come, and that prices will continue to decrease until that inventory is cleared out. Great news for buyers, not such great news for sellers (unless they have equity in their homes). Foreclosures comprised 45% of home sales in California in the first quarter.
California is Expanding Foreclosure Investigations. The state of California has been expanding probes into loan servicers and applying pressure. The Attorney General is looking into robo-signing claims in an attempt to enforce restitution and prevent bad lending practices from happening in the future. A mortgage fraud task force has been comprised of 25 individuals will be targeting 3 specific areas: corporate fraud, fraudulent lending practices, and scams aimed at troubled homeowners facing foreclosures. Other states, such as Illinois and New York, are also expanding investigatory procedures.