November 2016 Market Report

November was a doozy of a month! From an election that’ll go down in history, to the stock market getting a little boost, to the fed finally pulling the trigger on rate increases, the state of home buying and selling has become a bit unpredictable…unless you have expert info at your fingertips!

hows-the-market-1

November was a doozy of a month! From an election that’ll go down in history, to the stock market getting a little boost, to the fed finally pulling the trigger on rate increases, the state of home buying and selling has become a bit unpredictable…unless you have expert info at your fingertips!

Take, for example, increases to interest rates. This is scary, no? Sure, no one wants to buy when rates are high and rate increases mean rates are now high, right? NOPE! Here’s a little history lesson to put things in perspective.

Rates started being tracked by the government in 1971 and the average mortgage interest rate for that year was 7.5%. Rates hovered around there for a decade or so, but thanks to the mid-70’s oil crisis and other economic factors, inflation went NUTS in the early 80’s. In a mad dash to minimize the damage, the fed went crazy and jacked rates up higher than we have ever seen in history. This led to mortgage rates as high as 18% (and higher in Canada) during the entire decade of the 8o’s!

When the decade turned, rates were much more manageable at around 10%, so people got pretty comfortable again. The market bounced back, credit was getting cheap, and those baby boomers who survived the financial misery of the previous few years, found themselves ready to buy buy buy again. And buy they did. The next 15 years BOOMED! I mean really boomed. Thanks to rising wages, falling unemployment, and cheap rates everyone and their uncle could suddenly afford to buy houses, cars, fancy toys, vacations, etc. The 90’s saw interest rates of around 7.5%-9%. Darn cheap, comparatively speaking.

Then the bankers went and got too greedy. Remember that fuzzy term “mortgage back securities”? Well, I’m not going into that here, but just know that it stood for greedy investment bankers ruining it for everybody. The next thing we know…wham bam, thank you ma’am…another recession. THE GREAT RECESSION! Housing values plummeted, huge corporate entities failed, got bailed out, failed, got bailed out, failed again. People who refinanced their homes to pay off all those cars, vacations, and toys that were so easy to buy due to cheap credit suddenly found themselves underwater on their mortgages and totally insolvent. Foreclosures happened. Bankruptcies happened. Jobs started disappearing as business folded. Unemployment was sky high with no view of the ground floor.

The fed had NO CHOICE! No choice, I tell you. They dropped rates so low, so fast, lenders may as well have been paying dividends on credit instead of receiving interest. The exact opposite of the action taken in the 80’s. This was imperative in order to stimulate the economy and get things back on track for healing the nation. And there you have it. Credit was basically free as the millennials came of age. An entire generation has never even seen mortgage rates over 3.5%, but that is not normal, people. NOT NORMAL!

So, you tell me? Is 4.175% really too high for a 30 year fixed mortgage??? I think not.

It’s still a great time to buy and an even better time to sell. Don’t even think twice about it. No one is being gouged by rates at the moment, I promise.

Cheers, my friends.

Erica

 

Day 28: How’s the Market?

Seller’s market or not, there are a ton of awesome houses out there and I know I can find the right one for you.

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Real estate professionals are often asked the question “how’s the market?” In our current economy, the answer is a resounding it depends. As of the date of this post, in the Fresno/Clovis area, there are approximately 1,500 single family homes for sale. On average, a house listed for sale in our county will sell in 40 days.¹ The answer to “how’s the market” is that it depends entirely upon whether you are a buyer or a seller.

What that means in everyday language is that we are currently in a Seller’s Market. Houses are staying on the market fewer days and commanding a higher asking price to boot. This is awesome for anyone selling a house. It is highly likely that a seller would receive multiple offers and possibly even one for higher than the asking price. For buyers, on the other hand, writing an offer that will be accepted can be tricky. As a buyer in a fast moving market, where most sellers will receive competing offers, it is super important to keep in mind a few helpful hints.

If you heed these rules, you can score the house of your dreams…even in a seller’s market!

  • Shop during the week. Open houses are typically held on the weekends. This is also when most offers are made. If you can be flexible with your time and tour houses during the week, you may be able to get an offer in the seller’s hands before anyone else even sees the house.
  • Have a loan pre-approval letter from a local mortgage lender ready to submit with your offer. A seller will usually be more likely to accept an offer if they know you can easily and quickly remove the loan contingency. Working with a local lender means your loan representative can be highly responsive to requests for documentation and will be available in the same time zone.
  • Hand over a higher than normal deposit along with your offer. It shows you have considerable skin in the game and you’ll have to pony up the cash in escrow anyway. Writing a bigger check up front is like dangling a big juicy carrot in the seller’s face.
  • Don’t ask for any extras. It can be tempting to write up an offer that is loaded with wish list items. A portion of the closing costs, repairs-repairs-repairs, that 80″ flat screen tv you saw hanging above the mantle… Forget it. Be prepared to do the repair work on your own and pay for every penny of your closing costs. If a seller has two full price offers to consider, you better believe he will select the one that asks for the least amount of extra items and work.
  • Don’t lowball your offer. Look at houses in your comfortable price range and pay what they are asking. This isn’t the time to shop $30k over your loan pre-approval and submit a lowball offer with fingers crossed. It’s a bad strategy right now. In fact, it could be prudent to shop slightly below your maximum price and offer high!
  • Use a Realtor. Let a professional do the negotiating for you. Things are moving fast right now and your Realtor will be able to submit paperwork in the proper timelines and effectively communicate with the other parties on your behalf. You won’t gain anything but stress by going it alone. We are here to help, so please let us.

Now let’s get down to business and find your dream home! Seller’s market or not, there are tons of awesome houses out there and I know I can find the right one for you.

 

coventry-collage
Coventry Ave

 

“Beautifully maintained 2 story home on a spacious cul de sac lot. One bedroom with a bathroom is isolated downstairs. Loft area as a great bonus room. Spacious kitchen with a breakfast bar and eating area, opens to the family room, with a fireplace. Separate living room, formal dining room. Covered patio, shed, mature landscaping. 3 car garage with storage, shed. Unobstructed mountain views. Too many amenities to mention. Must see to appreciate!”

The house I visited for this post is in Clovis near Barstow and Temperance. It is a larger home with 4 bedrooms, 3 bathrooms, loft, formal dining room, and a nice sized backyard. This was an open house, so even though it is still occupied by the owners, I had the opportunity to look around and take some pictures. You’ll see the occupant’s furniture and personal belongings in here, but try to picture it with your own sofa and bedroom set instead. Then let me know if you want to make this gorgeous house your next home.

Cheers!

Erica

¹Source: http://www.realtor.com/local/Fresno_CA