September 2024 Mortgage and Real Estate Update

Transcription

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Wayne

The other thing too with the lower interest rates, which is great because there's more buyers coming in to purchase We're gonna see homes appreciate because there's such a limited supply.

Pete

Yeah Wayne how you doing?

Wayne

Hey, I'm doing great Pete.

Pete

Good. Good. Thanks for coming back in We're doing our monthly calls and we got Wayne Martin from real estate one been doing real estate for many many years We've been in Reading over 20 years local expert, yes Yeah.

Wayne

Yeah, we've seen a lot of different markets in Reading but you know what I'm really excited to hear about is what is going on with interest rates in Mortgages because that really affects the real estate industry, right? Yeah. Yeah.

And also after that, what about refinances?

Pete

Yeah, we'll get into that for sure So yeah interest rates have been coming down for the last six months interest rates have been coming down pretty good So six months ago, you could see interest rates around seven and a half percent And they got as high as almost eight percent and the last six months inflation has been coming down Yeah, so with inflation coming down the long-term 30-year fixed mortgage has been coming down with inflation Which is very very good news.

That's really good news for two reasons The first one is anyone that's wanting to buy right now and has been waiting for rates to come down Well now is your opportunity to take advantage of those rates. So just to give our audience an idea So we're October 2nd, I believe interest rates right now are in the high fives low sixes Depending on the situation. So like I've been quoting, you know with good credit decent down payment, you know Five point nine nine five point eight seven five right now on a 30-year fixed mortgage.

Wayne

That's really good. Yeah Yeah, it was kind of ugly for a while But now that they've come down My question would be should they really get going on it and look for a purchase right now?

Pete

I mean, I have my own opinion on that Yeah and I you know if they're ready and if they can afford to buy and that's an affordable right payment for them a hundred percent get In as soon as you can we've had multiple conversations about why it makes sense to get in as soon as possible Make sure that payments affordable, right?

Wayne

Yeah, you don't want that house to own you but at the same time you got to get in the game and there's so many Positives to it. Yeah, you know, yeah, you just have to really look at your discretionary spending, right?

Pete

Correct, right, correct. The other thing too with the lower interest rates, which is great because there's more buyers coming in to purchase We're gonna see homes appreciate because yeah such a limited supply Yeah with homes being more affordable with those payments being less you'll see more demand coming in and right now I think that we have a lot of people kind of on the fence because of the elections, right? I think that there's a lot of uncertainty there of what's going to happen with the election and Every four years we go through this right Sadly, yeah Yeah, a lot of people want to make sure that you know, whatever party they're associated with they feel comfortable Going into a large purchase, right?

Wayne

Well, the other thing too is people say yeah, you know, I'm uncertain Not so much about their job, but maybe their earning power or you know, we have a saying Anybody that's in sales basically a confused mind always says no Yeah, so until you have clarity and you're sure you feel safe, then you're not really moving forward But this is the other thing that we've seen if you look at all the charts Appreciation and inflation and all that of homes

Pete

they always tend to pretty much always go up the long-term trend if you're gonna if you're going if you're going to buy this as A primary residence don't buy if you're gonna sell and a year, right? I wouldn't like try to day trade or Year trade year trade your house, right?

But you know, this is the long-term play for you and your family So yeah long-term or the next five to ten fifteen years It's a great move, especially, you know, if you can afford that that payment now to give you an idea, you know First time homebuyer six months ago. You want to buy a three hundred and fifty thousand dollar home Well that payment with tax insurance and everything included as a first-time homebuyer for 350 was about thirty six hundred dollars Thirty seven hundred dollars now that payment is closer to three thousand dollars So it's like five or six hundred dollars less in payment for that three out fifty thousand dollar house So that's huge and that's what everyone's so like six seven months ago.

They're like, what's my payment? What's like thirty five thirty six hundred dollars for this home? Wow, man, we were hoping to get three thousand now It's now here.

Here's your opportunity, right? So that's right go for it.

Wayne

Yeah Yeah, the other thing is do you think people are just still holding back on deciding to purchase homes?

Pete

I think so. I it seems like there's a lot of people that can qualify that still haven't pulled the trigger and It's hard to say all the reasons why I mean, what are you seeing?

Wayne

Well, we've seen in the last month month and a half a little cooling of the market again I think a lot of that has to do with being involved in election cycle other thing people kind of on the fence about Will rates come down if you know, how low will it go? Will it ever go to 3%? Yeah, you know they're trying to look at the past and say oh it's gonna go back there, which is not true It's not truly gonna happen And yeah, some of the information that I've been reading the Fed which is not totally linked to mortgage rates But they kind of follow there's yeah, there's trend in there.

Yeah, they're just going, you know, if inflation has tapered down and The jobs report comes in a little weaker. They don't think they're gonna drop rates. That was the last thing I read just a couple days ago.

Pete

Yeah, so now whether that happens who knows it's it's a very important measure The Feds have two mandates for controlling that short-term rate Hey, the two mandates are keeping our jobs keeping our own high employment number right low inflation Yeah, and low inflation and so inflation and keeping a lot of jobs out there, right? so the inflation has been coming down and the unemployment rate has been going up and so the unemployment rate went up from 3.8. They're meeting before they met this last time It was right around three point seven three point eight and all of them were saying Oh, we don't think it's gonna get past three point nine. Well within a short amount of time It went to four point two.

This is why they came in and said hey Yes, we're gonna lower interest rates because they want to keep that job market going That's why they lower the federal funds rate Not necessarily because inflation because inflation has not yet hit their target their target inflation number has to be under two percent 2% Yeah, they got a balance it. So like that's the thing is they lower the federal funds rate now They got to be concerned about that inflation not going to that 2% target and going to maybe three back up to three or four And that's what long-term interest rates can't half the way I look at it

Wayne

Is as people are gonna start purchasing again and in the simple fact of our local economy Dignity health just started the construction on there. Did they really campus?

Pete

Yeah, really?

Wayne

Yeah That's exciting means opening ceremony was this last week There's just a lot of jobs that are gonna be coming to reading very rapidly and that's gonna put a lot of pressure on the current inventory of Homes that we have people can can sell and so it's gonna drive.

Pete

How many homes do we have right now on the market?

Wayne

Let's take a look at that active listing 624 it's coming down it was seven something right?

Pete

Yeah Yeah, it's 624 is we're down a month ago is in the sevens. Yeah seven hundred range Yeah, so the inventory has been coming down.

Wayne

Well, and you know a few years ago. We'd we'd run, you know, 1500 listings Homes for sale and you know, it's just after the 3% interest rates hit all these people refinanced and they're not Get they're not gonna sell their homes unless they have to that's inventory we need and that's inventory We we need and we also with the car fire. We lost 800 houses But 25% of that so 200 houses were rebuilt.

Yeah, you know, so there's a lot inventory of that 800,000, you know would have also been available for purchasers.

Pete

Yeah, and so it's really put a squeeze on home inventory Refinance and then the fire Yeah, refinance lower rates people keeping that lower rate and less homes that are built like right us because they lost their houses Exactly. Yeah.

Wayne

Yeah, so we don't have that inventory to list Then we've also seen a squeeze with if you live in rural areas fire insurance has played a big role for mortgages Too so our advice to you is to work with a realtor that can help guide you Into areas that are not high fire making sure that you know

Pete

What your insurance will be before you as best you can make the offer

Wayne

I mean, yeah, yeah or before you really lock in on yeah, you know waiving your contingencies Yeah, it's our job to help direct you to insurance providers, you know do recommendations So you can get a good feel for what your payments are gonna be because yeah, you have to figure it bad in

Pete

How does that work Pete figuring insurance in payment? Yeah I mean, let's you know, the insurance goes a part of the monthly payment to homeowners insurance Yeah, and so if you're if you're buying where there's a high fire zone, I call it the California unfair plan But you have to get the California fair play right because no other insurance company will Will go there if you're buying in a zone like that, which a lot of people do want the multiple acre property They want to have more room and more space and that more room and more space comes with a higher fire zone Unfortunately, and so the insurance I think it's getting a little bit better with the quotes that I'm seeing come in But it's still very very expensive for a California fair plan.

It's very expensive.

Wayne

Yes, you know So my word of advice of showing property and negotiating on the real estate side is if you could be in the city or in an Area that has a full-time fire department and correct Has fire equipment everybody's full-time. Yeah, yeah fire hydrants.

Pete

So the closer you are to a fire Station station or a fire hydrant or closer you are to water The lower the cost of the insurance that's less less risk it also depends upon You know, do you back up to a canyon?

Wayne

So even if you're in the safe city or running and you back up to a canyon that can raise your your rates Substantially, yeah, so for sure. I mean we like the green belt in that idea, but from a fire insurance standpoint That's not always the greatest thing, but you just got to shop around.

Pete

Yeah. Yeah, correct Yeah, the other topic that's hot right now is refinances refinance.

Wayne

Should they do it now or later? What's your what?

Pete

It's a big it's a it's a big question. Everyone's asking me right now So everyone that bought in the last couple years they got in the high sixes mid to high sevens Interest rate. So with these lower interest rates and the lower sixes and high fives, you know, the question is hey Pete Should we should we wait before?

And see if rates gonna come down because they're watching CNN or Fox or whatever news channel They're seeing you know interest rates are coming down but the thing is the 30-year fixed mortgage what a lot of people don't understand is the 30-year fixed mortgage since the feds Lowered the federal funds rate interest rates have ticked up Oh, they have not come down since the feds lowered the federal funds rate rates have gone up about an eight to almost a quarter Percent since they actually lowered that federal funds rate.

So the question that someone should ask hey, should I do it now right now? If you can recoup the cost of the refinance within a 12 month period 12 to 18 months My recommendation is to do the refinance and then if rates do come back down You're recouping that cost of the refinance within a 12 month period I say 12 to 18 months if rates do continue to drop we can look at doing that again You want a professional looking at your mortgage for refinancing because there's hundreds and hundreds of online lenders out there a customer came in He's a past client his servicing company showed him. Hey, let's refinance your home and they were charging him 3% It was like fifteen thousand dollars what to charge to get a lower interest rate on his mortgage It was like five point nine nine percent and they were charging fifteen thousand dollars And so these big mortgage companies online definitely have to watch it and have someone in your pocket a mortgage person that you can trust because Me doing that same refinance.

Wayne

It was like three thousand dollars for that same rate or whatever Which you could recapture really fast and we can recapture Yeah Do it again.

Pete

Yeah, and I don't recommend people pay thousands of dollars to refinance No, it doesn't it's you know, you want to make sure you get that recapture quicker, right? And so should you take that refinance now? Well, it depends on the situation, you know If if you can recoup that cost quicker absolutely go for it and then let's watch your mortgage as it comes down well it also would make a Difference like depending upon the type of job you have and your job mobility.

Wayne

You may not want to refinance I know yeah, because you're moving in a year and a half or you know, that's why you need that right cost Yes, small window because life changes.

Pete

Yeah, so this with this customer, you know his his recoup time It was like six or seven years and he was all excited about the low interest rate that he was getting right and what he didn't Realize is his loan amounts increasing by that amount. Yeah, it's taking away their equity, right? So what happens is this guy he was planning on moving in the next couple years Potentially didn't like the heat is a little bit He's an older gentleman and sure I want to move back up to Oregon, you know If he moves, you know, he just wasted a ton of equity right on that home Yeah, and so this is why having someone that you can trust right?

It's gonna give you the right information

Wayne

Yeah, you just need all the options, you know, people are pretty intelligent I've been doing this all my life for 40 years people are pretty intelligent if you help them understand Yeah, really all the moving parts and you understand what their goal is But you got to get all the you got to get all the knowledge information that so you can make a great decision

Pete

Yeah, so what a refinance is for any one that's listening may not know what a refinance is So a refinance is taking getting a new mortgage and paying off an existing mortgage So if rates come down you can get a new loan qualify for a new loan So you have to you know qualify for that new loan sure to pay off the existing loan the current Servicing company whoever has that mortgage isn't gonna just lower interest rates as rates come down, right? Because you got a 30-year fixed mortgage.

Most of these are 30-year fixes So you're getting a new loan and that new loan comes with a cost. Yes So you have to understand that and that new cost what will happen is these other online lenders? They'll build that cost into the loan amount and you won't really pay attention and you're looking at just the payment because the payment is What's most important to people so they're looking at that payment?

Oh, wow, I'm saving $300 a month, but they're not realizing that they're losing the equity in their home, right?

Wayne

They're trading the equity for that correct interest rate.

Pete

Yeah.

Wayne

Yeah, so the moral of the story call Pete Call me.

Pete

I'll be honest. I'll be you know, I turned someone down yesterday You know because it was gonna be like a three-year period before they actually Recoup their cost I said hey, I think you should wait and you know, it doesn't make sense to do it necessarily right now This situation they have a home in Cottonwood and it's a manufacturing A little bit more expensive on on the cost of the of the rate But it bumped that cost up to where I was three-year turnaround time instead of like a 12-month turnaround time And so as I hey, I think you should wait here and she's like, well Yeah My goal is to we want to sell this place and find a different home in a different area and maybe get more property I was like, okay. I mean, yeah, I think it makes sense for you to wait then right, you know, and she's like, yeah I agree.

Wayne

Yeah, can you afford the payment you're in? Yeah, she there's a lot of issues around that But if you know what they are, you can really give you know, good information Somebody can make a informed decision and move forward.

Pete

Yeah are you seeing people wanting to maybe transition from to sell and buy that the people that have been on the fence of maybe upgrading or downgrading because going from 3% to mid fives is a lot easier swing than going from 3% to 7 sure I Haven't seen it yet, but I was looking at a report and they said that mortgage applications were up Right.

Wayne

Yeah, so because mortgage applications are up It means that we're gonna have more buyers moving into the into the marketplace So I anticipate seeing that seeing a push seeing a push in the next month That we're gonna see a lot of people coming into the market.

Pete

So yeah, my thoughts are 2025 is gonna be a killer year for mortgage and in real estate I think we'll have more favorable interest rates will be past the election right past the holidays, right? Because the holiday is gonna slow it down to yeah People are gonna slow down from transferring and I think there's a lot of people that are on the fence have been on the fence For a year a few years on running to upgrade or downgrade into a new home

Wayne

Yeah, I would say if you're on the fence, but you know, you're gonna make a move I would start working with your mortgage person Pete

Pete

Yeah

Wayne

And start putting all the pieces in place because we might you never know you might see a dramatic swing In interest rates drop or you know, just are you find that perfect home? Yeah, you find the perfect home that you love I gotta have it.

Yeah, you know, don't wait and go window shopping without being you know, yeah I understand proved or you know pre-qualified. Yeah, because you can you can miss that perfect house. Yeah, I'm looking forward to 2025 2025 we got the statistics now here for September you're today Looking at August sold there was about 200 houses sold in August and year to date.

Pete

We're about 1,582 houses totally sold for the year for August We were trending 2,400 homes for this to sale, but we're at 1,500 right now year to date. Okay. Yeah, so it's right on track Yeah, it's on track.

Wayne

Yeah, so we also have this other statistic that we look at that really kind of recap So Marcus statistics year to date Shasta County greater Shasta County area for the year is like we said 1,582 we're down 15% of transactions from the year before from the year before We're up 3% more listings than the year before. So there's a little more inventory the average sales price year to date is 403,000 is that down a little no, that's up from last year 1.9 percent Wow Okay from last year and the average days on markets are 87.

Pete

This is interesting so the August for that month August the average sales price was 396,000 and that was up 0.3 percent from the August year before is that correct?

Wayne

Correct?

Pete

Yeah, so then a 3% increase from the August of the average sales price Yeah And so what that means is each month has a different demand for real estate then then another month So but year overall, that's a 3% increase.

Wayne

Yeah, so say just make it easy So 3% on 400,000 is $12,000 appreciation That's you have to work pretty hard to make $12,000 pay taxes and put it in your pocket or if you own a home

Pete

It goes up and not not to mention You also get the amortization along the way the 12 the 12 months because that payment you're paying down that mortgage So you're getting that amortization plus you're getting the appreciation

Wayne

Yeah, they're yeah, you know the real estate keeps plugging along like it always has and yeah, probably always Well, yeah pretty exciting stuff I'm looking for the you know this fall actually a lot of times fall is a big sales time.

Pete

Is it?

Wayne

Yeah.

Pete

Yeah.

Wayne

Yeah you you would think oh, you know, it's gonna really fall off and it doesn't yeah So that's kind of interesting. It's always been interesting to me, but the kids go back to school and You know, it's more stable and yeah, we'll go let's go shopping.

Pete

Yeah.

Wayne

Yeah. Yeah. I gotta get in before Christmas.

Pete

Yeah Yeah, it makes yeah, there's a push before the holidays or whatever. Yeah.

Wayne

Yes, there is. So, well great Thanks, Wayne.

Pete

Yeah, we covered a lot of info. Yeah, we did Yeah If you guys if you guys have questions I want to sell your home buy a home definitely give Wayne Martin a call real estate one You can look him up online Instagram. He'll definitely help you out.

Yeah, some really good advice

Wayne

We can walk through your house if you're thinking about selling making some improvements that would add value or not You know, we're really good at letting you know, yeah, there's not everything you do is gonna raise the value

Pete

It's actually a good that's actually a good point If you're wanting to put some money into the house and you think you may be selling in the next two to three years Call Wayne.

Yeah, give us a call call Wayne because he'll he'll let you know if you'll get that money back out of it Right, and that's it.

Wayne

That's a big big deal. Yeah. Anyway, so give us a call.

Pete

Yeah.

Wayne

Thanks.

Pete

Thank you