American Pacific Mortgage

American Pacific Mortgage

Monday, January 8, 2024


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