If you’re planning to buy or sell a home in 2024

It wasn’t that long ago that we were
talking about 8% mortgage interest rates.

HOWEVER… we’ve gotten an early Christmas present for 2024. Rates are finally back under 7%, allowing buyers and sellers to start making plans for next year. All indications are that we’ll be seeing multiple rate cuts in the months to come.  It’s been 18 months since the Federal Reserve made the 11 rate hikes faster than anyone expected, but that’s now in our rearview mirror.

So let’s talk about what you should do if
you’re planning to buy or sell a home in 2024

Buyers:

• First things first – Call me to discuss a plan and the steps to buying a home or finding a different home that meets your current needs.
  
  
• Second – Get your financial plans in order.  The preapproval process is something you should do before you start looking at homes. This will tell us what payment you’re comfortable with and determine the home we can be searching for. You’ll know when you find the right home, but if you don’t have your loan ready to go, you could miss out so do it now.  If you need a referral for a lender, I have a great mortgage broker who will guide you through the process.  This is the least exciting part of the process but when you’re done, like paying your taxes, you can breathe a sigh of relief and get on with the fun part of finding a home.
  
  
• And finally – Let’s start looking!  I look at homes every day and would love to help you find exactly what you’re looking for.  Why would you want to wait until the spring market comes and there’s more competition!  Let’s start soon so that you can beat the rush.

Check out my BUYER services at WhyBuyWithCarol.com

Sellers:

• Buyers are just waiting for homes like yours to come on the market.  They’re excited about the recent rate cuts and are searching every day to find your home.  Do you need to have somewhere to go??  We can help you coordinate that, too.
  
  
• When the available homes for sale are sparse, you may think it’s not a good time but actually, that’s the time that you’ll get the most for your home AND be able to sell contingent on finding your next home in the process. We do it all the time!  Most sellers, unless you’re moving out of town, need to have a replacement home but can’t without the sale of their current home.  That’s called ‘selling contingent’.  It simply means that the buyer we find has to be willing to give you time to negotiate your purchase.
  
  
• The best time to sell is when there’s less on the market – less homes on the market can mean more buyer interest in your home.  That time is typically in the first quarter of the year AND with interest rates coming down, buyers are more excited than ever at the prospect of owning a home in 2024.  Be one of the smart sellers who doesn’t wait for spring when everyone else sells.  Get ahead of the game and take advantage of the fact there are many buyers on the sidelines just waiting for a home like yours to come on the market.
  
  
• Not sure what your options are?  Call me to discuss a plan and the steps we can take now to get you ready for the market.

Check out my SELLER services at WhyHireCarol.com

Spring Selling Season is going to be a crazy time.  Get ahead of the curve and be settled into your new home before the rest of the buyers and sellers wake up from their long winter’s nap.

Wishing you a happy, healthy and prosperous 2024

  Carol Kellogg, REALTOR®
   Coldwell Banker Realty

   (916) 390-2437
   CarolKellogg.com
   Cal DRE# 01150953

Season's Greetings

 

As someone who likes to be able to give a clear perspective on the real estate market, this year has been a challenge to predict.  As we began 2023 with mortgage interest rates in the mid-6% range, buyers seemed stunned by the quick rise from the 3.2% we enjoyed at the beginning of 2022, only to watch them skyrocket to a staggering mid-7%  Thankfully over the past weeks we’ve experienced an improvement in rates.  Amid these astronomical changes in the cost of money, we also are experiencing a critically low volume of ‘good’ inventory.  I say good because many of the homes today are overpriced and will languish on the market until sellers become realistic with pricing or take them off the market, turning it into a rental.

While the normal days on market have increased, some homes are clearly not priced according to what buyer demand would dictate.  Buyer demand drives the market and ultimately determines what a home is worth.  Again, this is where the challenge comes when we’re floating in uncharted waters with the high cost of money and few good homes to choose from. Buyers are still fighting to be chosen when they see something they want.  Hence why prices continue to remain stable.  Supply and demand will always be the driving force; that’s the easiest way to describe what’s happening.  If you have something that someone wants and it’s priced right, it will sell.  That’s real estate 101.

Now, if in the spring we see rates come back down to the 6% range, which they’re predicted to do, I think we’ll see more sellers jump into the market creating more supply for the buyers that are sitting on the fence – but someone has to jump first.  Sellers who need to purchase that replacement home are hesitant when they’re not seeing anything they like as a viable option to replace what they have; especially if they’re enjoying a 3% mortgage. The fact that rents have gone up significantly over the past decade also contributes to buyers no longer wanting to make their landlord’s house payment.  For those who haven’t paid attention, the average rent for apartments in Sacramento is between $1,650 and $2,100 a month (for an apartment)!   You can pay upwards of $4,000 a month to rent a large home in Sacramento County.

If you climbed under a rock for a few years and came back out today, you’d be shocked at what has changed about our real estate market.  For years we were the best kept secret but no longer is that the case.  From where I sit, it happened very quickly.  A lot of things contributed to the increases but I don’t think we’re turning back; at least not in a significant way AND there are promising signs for the 2024 market! This is almost completely dependent on mortgage rates and increased inventory.


Here are some interesting facts about today’s market:

• 22% of home purchases in the Sacramento region are cash
• 49.5% of home sales closed below the original list price
• Approximately 500,000 people have left California since 2020
• The top choices to relocate to were Texas, Arizona and Florida

While people are leaving California, they’re not leaving the Sacramento region; hence why we’re not seeing an increase in our homes for sale.  Greater Sacramento has been cited as one of the five "most livable" regions in America and the city was cited by TIME magazine years ago as America's Most Diverse City… all things to be proud of and blessed by.

Nationwide the market is challenging.  Regionally we’re down about 25% year over year.  There are a variety of predictions that I’m reading about next year’s market but as has been the case most of this year, we just have to see what happens.  My suggestion is if you see a home you like and you can afford it, call me.  We’ll help you negotiate a sale that works for you.  And, if you need to sell your home, we’d love to be your Realtor of Choice!  No matter what the market is, people always need to buy and sell real estate.

Whatever the case, my Christmas wish is that you’ll think of us when the discussion turns to Real Estate.  Whether you’re just curious, or have an immediate need, we are here to serve YOU and all of your referrals.  It’s because of YOU that we continue to enjoy success in our profession and love what we do.

Holiday time brings a multitude of reasons to reflect on just how fortunate we are.  May the holiday season find you beginning each day with a grateful heart.

Wishing you a Merry Christmas and a very Happy New Year

Be sure to watch for ‘Coffee with Carol” beginning in January every Thursday morning on Facebook and YouTube for a weekly update on our local market and a look into some beautiful homes for sale.

http://bit.ly/Review_CarolKellogg 
P.S. We LOVE Client Reviews

Will 8% interest rates bring down home prices?

For home prices to adjust, we need an imbalance of supply versus demand, and this market is surprisingly balanced, but we may be starting to see that tide turning with mortgage interest rates hitting 8%.  When mortgage rates go up, we lose more homebuyers who aren’t able to qualify or are concerned about their ability to commit to the payment long term. Since the bottom of 2021 when rates were the lowest, over 60% of potential home buyers in America cannot afford to buy a home in our current market. As rates continue to go up, the buyer pool shrinks. Last year was the craziest market we’ve experienced in a long time but we’ve watched the market diminish as rates continue to do the unthinkable.  As we began 2023, rates at 6% appeared to be stable - nothing gangbusters, but now we have to focus on the weekly data more than ever because it’s been 23 years since we’ve experienced 8% rates.  Does that cause a pause in the market? It’s anyone's guess.

The reality is that it’s not just mortgage rates that are the driving force. We just came off of 40% price increases in a very short amount of time. The pandemic started the craziness.  We have to look at the total housing costs that matter and the one variable is price. When we see increases in inventory (homes for sale) and days on market (homes taking longer to sell), it will become clear that demand has fallen because of the market conditions.  Up until very recently, prices continued to make conservative increases every month because of the continued demand; however, the question remains… Will 8% interest rates bring down home prices?  These are uncharted waters.


Will our market continue to see “seasonality changes”

The volatility of rates will have a larger impact than the change in seasons. Buyers who can’t or didn’t buy when rates were lower are watching for rates to come back down. There are so many variables that predictions of ‘what’s to come’ are practically impossible. I watch the data every day because that’s what determines where we’re headed. Economic reports, retail sales, home builder sentiment, mortgage applications, housing starts, jobless claims, canceled sales… is your head spinning yet?


No predictions – Just the facts

For those watching the market, weekly stats will become critical because monthly data is simply too old.  Markets can change on a dime. By the time the monthly statistics are reported, it’s a new day. When mortgage interest rates go from 7% to 8% in such a short time, it tends to send a wave of uncertainty through the market.  Here are the stats for this week in the four-county region… Pended sales are down 22% from the previous week.  Closed sales are down 44%.  Some may say that it’s the time of year, so let’s compare sales this year to last… Pended sales for this same time are 18% fewer and closed sales are 33% fewer than 2022.

I’ve stopped asking “what next” so instead I’ll just be sharing the weekly data of home sales - available homes for sale, pended sales and closed sales numbers. There are still sales happening every week.  No predictions.  No negativity.  Just the FACTS.

FOUR COUNTY REGION - WEEKLY REPORT

SACRAMENTO COUNTY - WEEKLY REPORT

We're here to help you, no matter what the market is doing.

Every day is a gift

So as I sat down to write this month’s blog, I struggled a little deciding what to talk about.  There’s a lot going on in the market now with interest rates approaching 8%.  With high interest rates comes a challenging market for buyers. For sellers who want to make a move into a more appropriate home, their obvious concern is about finding a replacement property with so few homes on the market.  Every situation is different but through it all… we are grateful for every opportunity to help those who do want (or need) to buy and sell.  That’s why I continue to remind myself that every day is a gift!


How’s the market??

Surprisingly, or maybe I shouldn’t be too surprised, home values continue to increase.  Not because we’re in what would be considered a ‘normal market’, but because the supply of homes is so sparse.  People are still needing to purchase housing and don’t seem to be too phased by the cost.  I may be a little tainted because I remember not that long ago when a normal house payment for a first-time buyer was around $2,000; today it’s almost double that, but rents are high so the benefits of homeownership outweigh the cost.

I’m not one who likes to make predictions because those who do, many times are wrong.  I will say that I’m keeping a close (daily) eye on the real estate market. From what I’m seeing right now, I don’t expect interest rates to come down anytime soon.  If anything, they’re expected to take one more tick up before the end of the year - although there’s a lot of people pleading with the Feds to stop.

Here’s a look at this month’s sales activity in the four-county region.  Notice that there are still a lot of sales!!  September closings were 1,438 - down 23% from this same time last year; however if you look at how many homes buyers had to choose from, we have 34% fewer homes on the market than at this same time last year.  The question is this - If we had more homes on the market, would we have more sales??  Maybe our market isn’t struggling because of the cost of money.  Maybe it’s struggling because sellers aren’t selling!!  Just a thought…



Whatever the market conditions are, we’re here to help you and those you know who are thinking or needing to buy and sell real estate.  We consider it a privilege to be of service to you, your friends and family!  As we approach the holiday season, we want to wish you nothing but the best and appreciate all that you do for us.  Don’t forget… Every day is a gift. 

What’s Happening in the Real Estate Market?

What’s Happening in the Real Estate Market?

Not a lot of change in the market when you compare July and August numbers.  Prices are flat but sales continue to happen. Some sellers are experiencing multiple offers when priced right with the current conditions.  Others may sit on the market a little longer, then adjust the price to meet the market.  Either way - homes are selling even with over 7% interest rates.  Are we seeing a flood of cash coming to our region??  No, not like we were during the pandemic, but what we do see are sellers taking their equity and moving to homes that better serve their current needs.  When a seller is putting a significant down payment because their home’s value has increased significantly over the past decade, those interest rates aren’t quite the bitter pill to swallow.  They’re also taking advantage of Proposition 19 which allows them to transfer their current tax base to the new home.

What we’re not seeing is enough new home construction, except in some areas, but not everyone will want to move to the outskirts of town. This is where the resale homes are needed but not coming to market.  Why?  Why would they?  If and when we see 5% mortgage rates, we expect to see a more normal market again but until then… this is the new normal for our real estate market.  Some thought that we’d see a calming of the rates by the end of this year, but that’s not on the horizon. Rates seldom come down as quickly as they go up.


Let’s get technical for a minute – The FED has ‘maybe’ finally gotten what they wanted.  I won’t bore you with the deep dive details but the guru’s are predicting that we’ve reached some key metrics that are satisfying what they (the Federal Reserve who control interest rates) wanted to accomplish. Look for the high interest rates to begin to show signs of cooling. I didn’t say going down, but perhaps not going much higher. Labor markets, bond markets, job numbers, student loan debt payments, inflation… What does this have to do with the real estate market?  The short answer is if you were waiting for rates to come down, you’re going to be waiting awhile. For those who are waiting for prices to come down, you’re also going to be waiting… It's basic supply and demand.  Fortunately, the demand for housing is stable but we continue to have inventory challenges. The variables have to change for us to see pressure on sellers to lower their price.  Until that happens, it will continue to be a seller’s market.

Here’s a snapshot of what inventory levels have done over the past 5 years.  The dark line are monthly closed sales and the light green was the available inventory.  See a problem?  The right side of the graph is today. We simply don’t have enough homes on the market to supply the need.



Until my crystal ball starts working again, I won’t predict how long we’ll be in this type of market but we continue to sell homes. Most people have no intention of selling their home, but some will. When you hear of those people needing a Realtor – we appreciate you thinking of us. We’ve been through many real estate cycles.  This one isn’t as difficult as some we’ve been through.  It’s a little more unpredictable, but definitely not the worst we’ve ever experienced. Just different.

Are you confused by all of the mixed messages?

Are you confused by all of the mixed messages?

You're not alone.

This has been a challenging year for real estate. The housing market has gone through its share of changes in the past three years. While record-level sales and price appreciation was experienced during the pandemic, questions of “crashes” and “busts” were on the radar.

Fast forward to today…

The latter hasn’t come to pass, but challenges are still present. Home values have remained resilient as the market is trying to find a balance in 2023. While economists initially anticipated a slight price decline at the start of the year, experts have revised their forecasts, predicting a 5.5% price growth by year’s end; some areas are even higher.

Favorable as that may seem, rising prices and surging mortgage rates have not favored buyers. Affordability remains an issue in the market as this year’s mortgage rate increases have doubled the mortgage cost. That’s right – doubled.  A home that you would have purchased three years ago as a first-time buyer is now double the payment it was just three years ago for that same home.

The 30-year fixed-rate mortgage averaged 6.973% this week, up from 6.81% last week.  It wasn’t that long ago that we were enjoying mortgage rates in the two’s. This is the primary reason potential home sellers are sitting on the sidelines.  The thought of a mortgage that’s edging close to 7% is daunting and for some, not optional. Some don’t qualify for the home they live in today.

Bottom line.. Mortgage rates are simply too high to expect any ‘normal’ growth in the housing market.  Even though demand, due to the lack of supply, appears to be strong, most would-be buyers are opting to wait until rates come back down.  Is that a good idea while prices continue to climb?  It depends. We currently have 59% fewer homes on the market right now in the four-county region. Simply put – most people aren’t moving because they can’t afford to replace the home they currently live in at today’s interest rates. If rates come back down to 5%, the housing market could get interesting so buying now and refinance later could get you in at a lower sales price.

Where do we go from here?  As the summer months pass and we head into the fall, I don’t anticipate much change in the demand for homes.  Surprisingly we are still seeing multiple offers and over-asking bidding going on.  This is having an effect on prices. Are we at the ceiling of rate hikes?  I wish I could say a resounding yes, but time will tell.  The negative talk about the results of downgrading of the U.S. credit rating may or may not have an affect on the housing market – how’s that for a prediction.  I, too, could be an economist!!

While it’s been a challenging year, we’ve continued to sell homes thanks to YOU and your continued support. Our business is fueled by repeat and referral business from our past clients and friends.  For this we are very grateful.  After 30+ years of selling real estate in our region, one thing remains the same.  We love what we do and appreciate those of you who, when given the opportunity to recommend our services, will gladly share our name with others.
THANK YOU 

Mid-Year Property Reviews

This month I am working on providing MID-YEAR REVIEWS.  An opportunity for me to show you what’s happening in your neighborhood during the first six months of 2023. Even if you’re not one thinking of selling your home, you are still undoubtedly curious about the current value of your home. While this isn’t an actual appraisal, it does give you some idea of what property values are doing in your area.  One should appear on your porch soon.

While doing this research, I’m often surprised at how many homeowners don’t have their home held in a trust, but instead it’s only in their name. A revocable living trust is something that everyone should consider.  Why?  If your home and frankly all of your assets, are not in a trust, the beneficiary will have to go through probate upon your passing. Probate court is time consuming, costly and will make all of your wealth and assets public record. It can also cause family feuds while trying to determine who you would have wanted to receive your assets. This would make dealing with your disbursement much more complicated than if you would take the time to establish a trust now.

Here’s the definition:  A California revocable living trust is a legal document that allows you to transfer ownership of your assets (such as property, investments, and bank accounts) into a trust (a legal document) during your lifetime, and you can change or revoke it at any time as long as you are mentally competent.

Any assets should be held in a trust. It should be set up by a qualified trust attorney who can guide you through the process and provide you with peace of mind.  A well-written revocable trust leaves no questions about how your wealth and assets are to be distributed upon your passing.  It articulates exactly how things are to be distributed according to your wishes.  You can still benefit from your trust, i.e. you are in control of everything held in the trust.  It’s simply the specific instructions as to who gets what and when. If you need a referral for a trust attorney, please let me know.  It’s an important step that many think they’ll do “some day”.  Let’s work on moving that to the top of your to do list.

Speaking of “to do lists”... if you’re working on projects around the house and find yourself needing a referral for a painter, handyman, electrician or some other service provider, don’t forget that I work with these types of business professionals every day.  I’m always happy to share a recommendation with you.  Just ask!

And finally… a word about the real estate market.  I’m starting to sound like a broken record that just keeps playing the same song over and over, but that’s what we’re seeing.  Not enough inventory for would-be buyers and interest rates that are shockingly high compared to a few years ago.  Will this ever change?  Yes, we think so.  It’ll take a downward shift in interest rates, getting closer to 5% to make homeowners want to give up their three and four percent current mortgage rates to make that move; unless of course you’re one who is moving out of California – taking your equity and running for the border – you can call me anytime you’re ready.  It’s a seller’s market 🙂

Oh The Places You Will Go…

Before you get too excited for me, I didn’t move to the Islands.  I did visit Kauai last month and it was a beautiful vacation but I’m back home now and I’m back to selling real estate in our region.  I did want to be sure you know, however, that I GO WHERE YOU GO when it comes to being able to help you, no matter where that may be. Through our relocation network at Coldwell Banker, I am able to interview and help you select a real estate professional worthy of your business. So that being said, the next time a conversation turns to real estate, or if you’re looking at a sale or purchase outside of our area, I hope you’ll give me a call.

Speaking of the real estate market, let’s talk about how things are going locally.  Did you know that there are 53% fewer homes on the market in Sacramento County than we had this same time last year?  Some zip codes are even more drastic.  At a time when we would typically be seeing sufficient supply of homes for sale to satisfy the demand, 2023 is painting a very different picture. As is typically the case, supply vs demand has a way of driving prices up, which we're experiencing. It also causes homes to stay on the market fewer days; another result of this market. And sellers are getting over asking price in many cases. It’s becoming very apparent that most homeowners over the past few years took advantage of the incredibly low interest rates and have no interest in moving. The pandemic has had a lasting effect on many industries and real estate is no exception.

You might think that the 7% interest rates would be causing buyers to take a step back and wait for money to become more affordable but surprisingly, they’re not.  This graph is an example of sales in Orangevale.  What this graph is showing you is that there were 30 sales in the month of May; leaving only 16 homes available for sale at the end of the month.  If this same trajectory were to continue without new inventory, we would be out of homes for sale in Orangevale in two short weeks. That’s a little crazy but that’s the reality of today’s market.  We keep waiting for sellers to take advantage of this fast paced market but so far, most are sitting tight.



Obviously some people will sell their home in this market.  There are factors that cause people to want or need to sell in every market and when they do, it appears there will be a line at the door.

I continue to be grateful as we’ve been blessed over the years to work with people like YOU who keep us busy, no matter what the market conditions are.  If you have questions about your neighborhood or a neighborhood you’re considering making a move to, don’t forget that I'm here for you.  Let’s talk about real estate.  Call me.

2023 in Real Estate... What's happening?

When it comes to predictions, typically real estate markets are pretty easy to have an opinion.  While you can’t always pinpoint the top of the market or the bottom with complete accuracy, you can usually tell what’s around the corner.  However, 2023 may go down as the year of volatility and misinformation. To be honest, this year could go either way.  Let’s take a deeper dive into what’s happening right now.

Because we’re not seeing a large influx of new listings come on the market, homes that are priced right for the condition and location are seeing a flood of activity.  Our last five clients have experienced multiple offers and higher than asking price offers. In April, we saw a pretty significant increase in prices in the four-county region.  While one month doesn’t always create a trend, this isn’t what I would have predicted given the current interest rates buyers are paying.

Speaking of interest rates, the Feds just raised rates for the 10th consecutive time; the largest and fastest climb in rates ever.  This is done to cool inflation but it also could have a negative effect on the looming threat of a recession. And then there’s the third failing bank which is sending a little chill into the room of the banking industry.



With all of this said, you would think that our real estate market would be on the skids, but actually it’s quite active.  Multiple offers are being experienced by over 60% of sellers in today’s local market.  I say “local” because you can never read the national headlines and equate that to what we’re dealing with in the Sacramento region.  It used to be, 30 years ago, that we could see what was happening in the bay area and know that within six months, our market would be doing the same but that isn’t even true anymore.  Our local market is very different from most real estate markets.  Our supply vs. demand remains extremely strong and until we get sufficient housing to fill the demand, it will remain so.

Who are the buyers and sellers in today’s market??  We do expect strong demand from first-time homebuyers over the next several years given the large number of millennials hitting peak first-time homebuyer age, but affordability remains a real challenge in this environment.  Sellers are those who are taking their equity and moving out of California or downsizing – let’s call it ‘right-sizing’ for their current lifestyle.  Perhaps they’re opting to move into a one-story with no pool or maybe into the Del Webb community where you can lock the door and leave for months to travel. It could also be that parents are passing and children are inheriting the homestead that now needs to be sold.  Whatever the case, it’s definitely a time that sellers are cashing in on their equity.

What’s on the horizon is anyone’s guess.  I never would have predicted that with the interest rates the way they are, buyers would be flocking to homes like they are, but they are betting on the ability to refinance into a lower rate once the nation’s economy does slow down and rates are lower. Not a bad idea since prices seem to be on the rise again. The only downturn we saw in prices was the fall of 2022.  This January was actually the lowest we’d seen in awhile but in just 4 short months, they’ve rebounded.  Here’s a graph of the last five years of values in the four-county region.  As you can see, the secret of how great our Sacramento area is to live in is no longer a secret.  While 2022 had a decline in values, we’ve rebounded and are headed back up.

If you or someone you know is in need of a Realtor, I hope you know how much I’d love to be the one you look to for assistance.  No matter what the market is or becomes, I’m here to help guide you through.  Thanks in advance for thinking of me when the conversation turns to real estate.

Fixer-Upper Frenzy: The Pros and Cons of Tackling a Renovation Project

Are you considering buying a fixer-upper? While the idea of transforming a run-down property into a dream home or a profitable investment can be exciting, it's important to weigh the pros and cons before taking the plunge. In this blog post, we'll explore both sides of the fixer-upper equation to help you make an informed decision.

First, let's consider the advantages of buying a fixer-upper. One of the most significant benefits is the potential for increased equity. By purchasing a property below market value and improving it through renovations, you can create instant equity. Additionally, you have more control over the design and renovation process, which allows you to create a personalized space that meets your unique needs and tastes.

On the other hand, there are also some drawbacks to consider. One of the most significant disadvantages is the potential for unexpected costs. When you're renovating a property, there are often unforeseen issues that arise, such as outdated wiring or plumbing problems, which can significantly increase your renovation budget. Additionally, renovating a property requires a significant amount of time and effort, which can be a strain on your schedule and mental well-being.

Another advantage of buying a fixer-upper is the potential for rental income. If you're purchasing the property as an investment, you can renovate the space and rent it out for a profit. This can provide a steady stream of income that can help you pay off your mortgage or save for future investments.

However, there are also some disadvantages to owning a rental property. You'll need to be prepared to deal with tenants and their needs, including repairs and maintenance. Additionally, if you're not familiar with the local rental market, you may have difficulty finding and retaining tenants.

If you're willing to put in the effort and have a clear vision of what you want to achieve, the rewards can be significant. However, it's important to be realistic about your budget and timeline and be prepared to deal with unexpected challenges along the way.

If you're interested in purchasing a fixer-upper as an investment property or know someone who is looking to sell an investment property, please don't hesitate to reach out to me. Let's work together to find the perfect investment opportunity!

Will the Spring Market Boom or Bust

For months the real estate market has felt like it’s been on life support as high prices and rising interest rates continue to sideline would-be home buyers. Sellers had little incentive to list their homes in the first few months of 2023 as home values appeared to be dropping to meet the expectations of the buyers. Buyers were frustrated by the uptick in the cost of money and sellers felt squeezed, unlike what they’d experienced just twelve months ago.

“Purchasing a home is now about 50% more expensive than it was a year ago for those who rely on a mortgage”.  Let that sink in... If you currently have a mortgage at 3% but decided to refinance that same mortgage at today’s rates, the payment would be more than double.




So when we say that mortgage rates have had a negative effect on the market, that’s what we’re talking about. Buyers who are waiting for a bargain price because they think that property values are going down may find that they’ll pay more because of interest rate increases. Even if prices do come down a little, most of those savings will be erased by higher mortgage rates.

Not trying to be Debbie Downer, because that’s so unlike me, but rates have been volatile – going back up over 7% last week. That’s a 20-year high, if you’re keeping track.  I won’t quote a current rate in this blog since they are constantly fluctuating and by the time you read this they would be different, but you might want to check out the Mortgage News Daily site below.

https://www.mortgagenewsdaily.com/mortgage-rates

So if you’re trying to time your move with the rates, I wish you ‘good luck’.  That’s like trying to time the bottom of any market. It’s very difficult to do. What most lenders are offering is a no-cost refinance within the two years after you purchase so that you don’t miss out on the house you really want.  And yet you’ll be able to take advantage of lower interest rates when things do finally settle down.  This is actually a very good marketing strategy - especially since the refinance market for lenders is virtually non-existent.





On a positive note, we’ve had a great first quarter.  Sales have been exceptional and we’re looking forward to 2023 being a really good year.  But I’ve seen these markets before and know how to maneuver through them. I firmly believe that the spring selling season will be busier than what we saw in the rainy months of winter.  Flowers will be blooming – which doesn’t sell houses – but they do help to add some nice curb appeal. Our main constraint right now is the limited availability of homes for sale.  For a variety of reasons, people are not selling their home, whether it be that they don’t have anywhere to go, they’re enjoying an interest rate of 3% or less, or their home is paid for and they don’t want to pack boxes. Who knows?  Traditionally the first quarter of the year is always lacking homes for sale.  It’s just a little more concerning this year because of the feds trying to slow inflation and taking it out on the real estate market.

My prediction is that we’re going to see a good spring and summer selling season. Sellers may  however, see buyers that are asking for repairs and credits – something we got used to not talking about over the pandemic-frenzy years.  One suggestion to avoid some of the escrow surprises are with pre-inspections.  Providing the buyer with a variety of recent inspections on your home and negotiating any would-be issues up front is a proactive way of having a smoother sale.  No home is perfect and the contract is “as is”, but it’s always subject to the buyer’s inspections.  By having the inspections done ahead of time, you can pave the way to a more seamless transaction. Call me, and we can discuss the most common inspections and the pros and cons of doing them ahead of time.





As we approach the spring selling season, if you or someone you know is looking for a hard-working Realtor with decades of experience and a great attitude, I’m available to help answer any questions about the market. And if you're ready, I’ll help make the process an enjoyable one.  Thanks in advance for your referrals!





Be sure to watch for ‘Coffee with Carol’, a livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to.

Send me a friend request and I’ll see you soon!

That Was A Nightmare. This Is Just A Correction.

For much of the past two-and-a-half years, it has been a housing market free-for-all, with bidding wars, multiple offers over list price and homes purchased sight unseen. But all of that is changing as the housing market appears to be making some much needed corrections in 2023. Note that the forecast is for a housing market “correction,” not a housing market “collapse or crash.” It’s also important to note that national statistics and data does not typically reflect the range of housing market conditions locally. Home prices in the U.S. have risen by more than 30% over the past three years. In some local markets, prices have shot up even faster. The run-up in home prices was driven by rock-bottom mortgage rates and pandemic-fueled demand. Now, mortgage rates have risen, (doubled) and the pandemic is easing, which has led to a significant cooling in the housing market and a slowdown in price growth. As demand has stalled and price expectations are being reset, home prices in most local markets are coming down off their pandemic peak of May 2022.

But it is important to note that 2023 is not 2008, when home prices fell by 40% or more in some places due to the perfect storm of loose credit standards, a surge in subprime lending, an oversupply of homes and rising unemployment.  That was a nightmare!  This is just a correction.

But the national figures do not tell the whole story. Housing market conditions in 2023 are poised to be very active in our local market. Sacramento was just named “Best Place to Live in California” by Forbes, indicating that we’re still a good value based on all that we have to offer.  However, that doesn’t necessarily mean that we won’t see a continued cooling of price appreciation and sellers having to make concessions for buyers - something we’d quickly forgotten over the past three years.

What is a prospective homebuyer to make of all the prognostications? First, know that even as the housing market resets in 2023, it is still going to be a challenging environment for buyers. With limited inventory comes a need to move somewhat quickly when you see something you like.  Home shoppers should be prepared with their financing and offer strategy in place so they can make an offer when they find the right home for them.  Second, opportunities for both buyers and sellers will vary tremendously depending on location and price range. It’s going to be important to price your home based on the current market, not based on 2022 sales.  And third, you should not let media headlines tell you whether it is a good time to buy or sell. That big financial decision is 100% personal and needs to be made based on the individual circumstances and needs of each person or family.

Right now what I’m seeing most often are sellers of the age of 55 or older taking advantage of the newly revised Prop.19 which allows you to transfer your current tax base to a more suitable home.  Here’s how it works… If you sell your current home for $600,000 and are paying property taxes based on when you purchased that home (obviously for much less); then you buy a home that suits your current needs for $750,000, the first $600,000 will be based on your current property tax bill and you’ll only pay the increase on the difference of the $150,000.  This change in the law is allowing people to move into that one-story home anywhere in California, or downsize into something smaller and cash in their equity. Maybe you want a bigger home on the golf course, but not that big tax bill.  Call me if you’d like to discuss how that can be done!  You can also google Prop 19 California for the details.

As I’m sure you know, my business is based on working with people who know and trust me.  Your personal referrals mean the world to us!  If there’s anything I can do to answer questions or help anyone you know, it would be my pleasure.  Thanks in advance for thinking of me when the conversation turns to real estate this year.

Be sure to watch for "Coffee with Carol" a livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to. Send me a friend request and I’ll see you soon!

Let's Take A Closer Look at 2022

 

As we close the books on 2022 and turn the page to a new year, there are so many questions about the current, previous and upcoming real estate market that I’m asked every day.  The best way for me to discuss these topics is to pose a few questions and give you my opinion in the form of the answers … a “Q & A” of the real estate market.

What was the biggest surprise in 2022?

Obviously the seven interest rate hikes; the most recent being on December 14th (Merry Christmas).  With the cost of money changing so significantly and so quickly, it sent shockwaves into the market and priced many buyers out of being able to purchase the home they had their eye on.  Thankfully, we are starting to see buyers coming back into the market over the past few months.

Are we experiencing a bubble which will burst in 2023?

No.  This market, while challenging and a little unpredictable, is nothing like the market of 2008-09 when we experienced the mortgage meltdown.  Right now, sellers still have equity that was gained from the pandemic era.  Homes went up 30% during those two years.  Even if we lose equity in the next few years while waiting for the economy to stabilize, homeowners shouldn’t be underwater.  Having a mortgage balance higher than what the home was worth is what caused sellers to walk away from their homes during the meltdown.  We don’t anticipate that happening this time.

Are we going to see prices come down in 2023?

The short answer is “probably”, but much will depend on the job market and ongoing volatility of the interest rates.  We are anticipating an approximate reduction of up to 10% in home values if rates remain around 7% and if we start to see lay-offs. This will significantly affect the market.  It could also cause sellers to need to put their homes on the market if they don’t have enough savings to withstand a jobless period. But, if our economy improves, we will see modest appreciation. It’s still too early to be certain.

Is it a good time to buy or sell real estate?

If you are selling a home and purchasing a different home that better suits your needs, it really doesn’t matter what the market is doing.  You’ll be selling and buying in the same type of market. Sellers right now are having to be patient because it could take 30-45 days to obtain a buyer, unlike last year.  As for the interest rates, you can ask the seller to contribute toward your closing costs to buy-down the rate, and if rates settle down in the months and years to come, you can then refinance into a more comfortable loan.  Real estate is still one of the best long-term investments available.

Why are there so few homes on the market and will that change?

In the first six months of 2023, I’m hopeful that we will have more homes to choose from but unfortunately most people are comfortable where they are. Our local population has grown, but the number of homes in our region hasn’t kept up with that growth.  It may seem like a lot of people are moving out of the area, but it’s really not significant enough to make a difference.  So, if you want to sell, call me.

Are Sellers considering “contingent offers” from Buyers?

Yes, if your home is in escrow.  I know it sounds scary to think of listing your home if you don’t know where you’re going, but it’s almost the only way that we can ensure writing an offer that a seller will consider.  When we list your home and find a buyer, that buyer has to be willing to wait until you find and negotiate your replacement property.  Otherwise, you’re contingent on getting your home on the market and finding a buyer, which can take 30-45 days.  Most sellers are not willing to wait that long; but they might be willing if you’re already in escrow and can move forward with the process right away.  I won’t let you become homeless – I promise 🙂 Let’s talk options!

If you have friends and family moving outside of the area, can we help them?

Absolutely!!  We go where you go if it’s within the four-county region. In certain circumstances, we’ll even go into the bay area.  If it’s outside of our area or even outside the state, we can help you find a great Realtor that will work hard for you.  

If a move is in your 2023 plans, let us know how we can be of service!

Happy New Year!!

Be sure to watch for "Coffee With Carol" in the mornings on Facebook