RATES
Interest rates are up across the board, and they aren’t
coming down anytime soon. This has the
effect of eroding affordability for many prospective buyers, but it certainly
has not slowed down the market…yet. Inflation has taken off and there is no end
in sight, given current events. So, the
days of rates in the 2’s, 3’s and 4's are gone. Frankly we are looking at a return
to a more “normal” rate environment.
In the past when rates were higher, many opted for ARM
loans. These are Adjustable Rate
Mortgages. Typically the start rates are
lower vs. a 30 year fixed loan, since they adjust to market level over an index at some point in the future. However, currently the yield curve is pretty
flat, and some think we will see an inverted yield curve which is not a good sign…and
is a precursor of a recession, the elephant in the room. An inverted yield curve means that investors
see more risk in the short term vs. longer term.
HOME PRICES
Contrary to what many of those standing on the sidelines hope,
we are not going to see a drop in home values.
We may see a slowdown in appreciation rates (over 19% countrywide last
year) but there is no reason to believe homes will drop in value. Stall out a bit, maybe. The problem is the short supply of new
housing. Builders stopped building homes
over the decade following the great recession caused by the Mortgage Meltdown,
and we do not have enough housing supply.
This, coupled with low inventory of existing homes for sale creates
demand far greater than supply, the perfect storm for increased home prices. Remember, real estate is the best hedge
against inflation and a great long-term investment. And coastal California real
estate is always in demand.
BUYERS TODAY
We have a number of fully ACE* approved purchase clients out
making offers right and left. In this market it is not unusual for buyers to
make three to five offers before one is accepted. We always will call the listing agent to
assure them of our client’s qualifications, and strategize with our client’s
agent regarding contingency periods, whether we should waive contingencies,
etc.
* With our ACE approval, our clients have gone through
complete underwriting of income, credit and assets. They just need to find a property!
REFINANCE?
Most homeowners have a tremendous amount of equity to play
with, whether to pull out cash for upgrades or remodeling, adding a new
pool, or to buy another home. Sometimes
we recommend a refinance of the existing first mortgage, but depending on the interest
rate of their primary mortgage, a HELOC may be the better avenue. Much depends on how much cash is desired.
DID YOU KNOW?
When I bought my first home in 1984, the average rate
was 13.88% So, no complaining!
FUN STUFF
I am taking a series of Hip Hop classes offered through Casa
Romantica, the historical property located on the bluff above the San Clemente
pier. They offer various arts and music events open to the public. What a blast!
Steve and I will be scuba diving in Cozumel in June. Coz is a Caribbean island off the coast of
Cancun, Mexico. We have been there
before a few times (like more than four) and are looking forward to some great diving
and relaxation.
Life is Good!
And don’t hesitate to call us with any questions you may have.
