Rain, Rain, and....Rates!

Happy New Year!  2022 was a humdinger!!!   The start of 2023 has brought a lot of cold weather and rain here in California.  We need the rain and snow, so we can’t complain too much.  We need to sit back and enjoy sweater weather.

RATE AND HOUSING OUTLOOK

Interest rates have remained relatively flat for the month of December and show no signs of coming down…yet!  Most “experts” are banking on a drop by the end of this year.  Home prices are on a downward trend with the median home price in both Orange and Los Angeles counties dropping a bit.  Orange County is down to $960,000 and La County is down to $865,000.

Many buyers are either using a permanent “rate buydown” paid by either buyer or seller, or a 2-1 buydown paid by the seller.  This has the effect of reducing the rate and payment to a more affordable level.  Most homes are not receiving multiple offers, so the buyer is in the driver’s seat today.

BUY/FI Program

We offer a program where any client who closes a purchase before April 30^th can refinance that loan with us – at a lower rate, as anticipated by next year, with NO LENDER FEES.  We will waive all lender fees so long as the refinance is completed by end of 2024.  This provides a great motivation to buy now, and refinance later to lower your interest rate.  Less competition + lower prices = good timing to buy now, and refinance later.

HOMEBOT

This is a cool service providing a monthly digest including a lot of information about your home value and neighborhood.  It will also note opportunities to sell or refinance.  Our clients love it, and if you aren’t receiving it yet you can click here to sign up: Home Owners

For prospective buyers, it is also a useful tool for watching market activity and values in a specific area.  Potential buyers should click here to sign up: Home Buyers

HELOCS

Home Equity Lines of Credit are very popular currently for homeowners who want to pull cash out of their home for home improvements or revolving debt payoff, but don’t want to touch their low interest rate mortgage.  We have some competitive programs to offer to our clients.

WE LOVE REFERRALS

We work hard for our clients and do our utmost to provide clear information and choices, and great communication.  We truly care about our clients and always try to provide the best experience for their home loan. Please think of us when you hear of a friend or relative who could use our help.  We love referrals.

THAT WAS FAST! Summer is officially over

No more white shoes, white pants or dresses, right?  Although we think that idea is a bit out of date today, at the Yacht Club white pants are not de rigueur after Labor Day.  Acting as the “Officers of the Deck” this week, we were asked to dress in formal yacht club attire which includes white or blue shirts, grey or khaki pants and navy jackets emblazoned with the Club Bullion.

Now, down to business:

Housing Market Correction

The experts are all weighing in on the likelihood of a “correction” to the housing market. Will prices come down?  There is a good deal of downward pressure on prices.  We may see a swing closer to a buyers’ market in the near future.  But remember, inventory is still extremely low.  No “crash” is in sight.  All the factors make it highly unlikely.

Rates

Up, down and sideways. Last week they hit an average of 6% which is the highest since 2008. However, a graph of average interest rates over the last 50 years in the US shows we are still quite near the low end.  It has been the sudden doubling of rates over the last 18 months that has buyers pushing the pause button.  Affordability has decreased with the rate rise.  Loan applications are down significantly which also means there is less competition out there for willing buyers.

Refinance activity particularly has slowed significantly, and is providing only 30% of current total loan volume.

Conforming Loan Limit Increases

The conforming loan limit, which includes both Fannie Mae and Freddie Mac loans, will rise effective January 1st but many lenders, including APM are already accepting rate locks for conforming loans up to a $715,000 loan amount. The actual new limit could be higher, but most agree that $715K is a safe bet.  What does this mean for borrowers?  Conforming loans are easier to qualify for!  Good news all the way around

Down Payment Assistance

No cash for a down payment?  No problem.  We have programs to assist new homebuyers with as little as $500 cash. With a combination of down payment assistance through various programs, coupled with seller credits to offset closing costs, there is almost no cash required to get into a home.  Of course there are income qualification requirements. 

Don't hesitate to reach out to us with questions!  Enjoy the transition to fall, we can't wait to cool off a bit.

The Season of Weddings, Vacations and Home Sales!

 Sales Activity and Interest Rates

Home sales activity has slowed down with the sudden uptick in rates combined with general market volatility.  In the past, the summer months represented the lion’s share of home sales.  However, this has changed in the past five years or so.  Today there is no real “sales season” as home sales remain fairly consistent year-round—at least here in California.

The recent rise in mortgage rates has stalled out, with rates ranging from the mid 4’s well into the 5’s.  The rate chosen by a borrower depends on many factors to include FICO score, loan term, (a 5- or 10-yr ARM vs. a 30 year fixed) loan program, (FHA, VA, Conforming or Jumbo)  loan purpose (purchase vs. refinance) and primary residence vs. second home or investment property. 

Some market analysts believe that rates may come down a bit.  Did you know the historical “normal rate” is 6.25%?

On home prices, we still have no reason to believe that values will fall.  There is simply too much demand and not enough inventory.  Flatten out a bit, possibly.

Family Fun

I was able to spend the Memorial weekend with my grandchildren, while my partner (and daughter) Katie and her husband were in Napa and Sonoma with friends.  The kids had a great time at the Long Beach Aquarium and were able to find and identify the Hawaii state fish, the Humuhumunukunukuapa’a.  And yes, they know how to pronounce it! 

After lunch at Bubba Gumps’ we ventured to the Los Alamitos Yacht Club to watch my grandson Theo in a sailboat race.  After two days of racing, he came in 2^nd overall!  A great achievement!

While Theo was racing, Steve was also in a race Saturday overnight from Cabrillo Yacht Club in San Pedro around Catalina Island and back to Dana Point.  His boat, Chaos Theory won first place in its class!

We are off for some scuba diving in Mexico.  I was certified only sixteen years ago but Steve was certified in 1970.  Wow!  No dive computers back then, you dove by the Navy Dive tables and had to hand calculate your dive times/depth using the charts. Actually although computers were coming into regular use when I was certified, we still learned with the tables.  Now we use dive computers that do all the calculations for us.  😊

Happy Summer!  Please call us with any questions you may have.

Karen