Welcome To 2024! There is a lot of information floating around out there that is either in conflict from one day to the next, wishful thinking, or just plain wrong information. We are here to inform you of what is happening in the real estate market today, and provide real up to date information.
Recession? Nope! Employment is too strong, and unemployment is
still relatively low. This is going to
provide what economists call a “soft landing” for the country, unless we have
an unforeseen catastrophe. If we do enter recession, it will be very mild.
Wave of Foreclosures?
No way! Homeowners have far
too much equity to go into foreclosure.
Should a homeowner lose their job, and be unable to pay their mortgage (although
there are still lots of jobs out there) they can sell and retain their equity before
they might go into a foreclosure situation.
It's Too Hard to Qualify?
Although rates are higher
than most of 2023, they have begun to come down. At the same time there are more programs to
make it easier for self-employed borrowers to qualify without providing tax
returns. Minimum down payments have been
reduced for some loan programs, and there are many DPA (Down Payment Assistance)
programs out there. It has been a
full-document environment for so long, there is nothing more difficult about
today’s lending environment. Both FHA
and conventional programs are pretty liberal when it comes to debt-to-income
ratios. And, gift funds are always
allowed to help with down payment.
Real Estate Crash?
No Way! Since the major “Meltdown” of 2008 – 2010 many things in the
lending industry have changed. Foremost
of these is that virtually all homeowners who bought after the Meltdown
qualified for real on paper for their loan.
And, today they have an absolute TON of equity in their home. The last and biggest crash in 2008 was
precipitated by an enormous number of “liar loans” where there was no income
documentation required. Those loans were
packaged and sold to pension funds all over the world as “AAA” paper
mortgages. When they began to fail, the
domino effect took over. It was
devasting for many people both in and out of the RE industry. It absolutely can’t happen again with the
safeguards now in place.
Home Prices will Drop? Prices have to come down,
right? Not in most areas of
California. We are uniquely
insulated from major price fluctuations due to location, location, location...especially
the closer to the Coast you are. Most in
the industry believe that as soon as rates begin to normalize into the low 6’s
and 5’s, all the prospective buyers sitting on the sidelines will come out in
droves, creating a frenzy of buying and bidding wars.
You Should Wait for rates to come down! This is one of our favorites. The Cost
of Waiting is enormous as you miss out on property appreciation and
equity buildup through amortization (principal paydown). Homeowners build wealth through real estate
ownership. If you wait for five years on an $850K purchase you lose $275K. YES. $275,000. The interest rate is not as important as the
price of the home. Regarding prices, see
above.
We hope all this helps you to see through the barrage of
non-information coming your way. We look
forward to a productive 2024 for all!
Happy New Year from The Card Team!
Karen, Katie, Stephanie
