Those Darn Mortgage Rates ~ What Rate Is Going To Motivate You?

You won’t find anyone who’s going to argue that mortgage rates have had a big impact on housing affordability over the past couple of years. Heck yeah, they sure have! But there is some hope on the horizon. Rates have actually started to come down. You should know this already though. Recently they hit the lowest point we’ve seen in 2024, according to Freddie Mac (see graph below):

And if you’re thinking about buying a home, that may leave you wondering: how much lower are they going to go? Here’s some information that can help you know what to expect.

Expert Projections for Mortgage Rates

Experts say the overall downward trend should continue as long as inflation and the economy keeps cooling. But as new reports come out on those key indicators, there’s going to be some volatility here and there. Oh goody, more volatility.

What you need to remember is it’s not wise to let those blips distract you from the larger trend. Rates are still down roughly a full percentage point from the recent peak compared to May. That is HUGE.

And the general consensus is that rates in the low 6s are possible in the months ahead, it just depends on what happens with the economy and what the Federal Reserve decides to do moving forward. They have changed their plan several times already, but hey, who's counting?!?

Most experts are already starting to revise their 2024 mortgage rate forecasts to be more optimistic that lower rates are ahead. For example, Realtor.com says:

“Mortgage rates have been revised slightly lower as signals from the economy suggest that it will be appropriate for the Fed to begin to cut its Federal Funds rate in 2024. Our yearly mortgage rate average forecast is down to 6.7%, and we revised our year-end forecast to 6.3% from 6.5%.”

Know Your Number for Mortgage Rates

So, what does this mean for you and your plans to move? If you’ve been holding out, just waiting for rates to come down, know that it’s already happening. You're gonna have to decide, based on the expert projections and your own budget, when you’ll be willing to jump back in. As Sam Khater, Chief Economist at Freddie Mac, says:

“The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move.”

As a next step, ask yourself this: what number do I want to see rates hit before I’m ready to move? Do you have a realistic number in mind?

Maybe it’s 6.25%. Maybe it’s 6.0%. Or maybe it’s once they hit 5.99%. The exact percentage where you feel comfortable kicking off your search again is personal. Once you have that number in mind, you don’t need to follow rates yourself and wait for it to become a reality.

Instead, you need to connect with a local lender. They’ll help you stay up to date on what’s happening and have a conversation about when to make your move. And once rates hit your target, they’ll be the first to let you know.

Swear, final words here:

If you’ve put your moving plans on hold because of higher than wished for interest rates rates, think about the number you want to see rates hit that would make you re-enter the market. Think about it hard, be ready to jump when they get there!

Need Lender Referrals? We've got several that we know and trust. Just ask.

What Do Sandwiches Have to Do With Real Estate?

Are you a part of the Sandwich Generation? According to Realtor.com, that’s a name for the roughly one in six Americans who take care of their children and their parents or grandparents at the same time.

If that sounds familiar to you, juggling all the responsibilities involved certainly must have its challenges. But it turns out there’s one pretty significant benefit: it can actually make it a bit easier for you to buy a home.

How Can It Help You Buy a Home?

Realtor.com asked members of the Sandwich Generation if they agree or disagree that taking care of children and parents at the same time is helping them afford a home. A third of respondents said their situation made it easier to buy.

Here are a few ways their caretaking situation might be helping those 33% buy a home:

Sharing Expenses: If you live in a multi-generational household, you can pool your resources and split the costs. Your parents might contribute to the mortgage or help with other bills. This can make a big difference, especially in today’s housing market. It may help you afford a larger home than you could on your own.

Built-In Childcare: Having grandparents in the home could also save you money on childcare. They can help watch your kids while you’re at work, which means you can save on daycare costs too.

Beyond just the financial reasons, buying a multi-generational home has other advantages. The Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) highlights some of the most popular, including:

Easier To Care for Aging Parents: It’s more convenient to take care of someone when you live with them. Also, your elderly parents may very well be happier and healthier, thanks to more social interaction and a feeling of connectedness.

Spending More Time Together: Once you live together, you get to spend more time and create even more lasting memories with your loved ones.

The Mortgage Reports sums it up this way:

“Buying a house with your parents can be a great way to ease caregiving, support young children, or simply bring loved ones closer together. And considering the steep rise in home prices over the last few years, it can make homeownership a lot more affordable.”

How a Real Estate Agent Can Help

If you’re in the Sandwich Generation and thinking about buying a multi-generational home, working with a local real estate agent is essential. Finding a home that works for so many people can be tricky. An agent will use their expertise to help you find one that meets the needs of, and has enough space for, everyone who’s going to live there.

Bottom Line

Being a part of the Sandwich Generation comes with its challenges – but it also might come with one truly great perk. If you’re looking to buy a home, your caregiving situation can actually make it a bit easier for you to afford a home. To learn more, give us a holler! We've got people sandwiching all over the place!

Sellers And Home Inspections

One of the real estate news info emails I subscribe to talked about doing work on a home prior to putting it on the market. The most important takeaway from that is ..... ASK YOUR REALTOR what is worth doing before listing.

We generally have to suggest a lot of staging. Including decluttering, moving furniture, landscape touches, cleaning, cleaning, and more cleaning.

But, a wise Seller hopefully also knows, and informs their agent, what systems in their home may need some attention. And, their agent will let them know if they should consider doing any repairs or service to those systems prior to going on market.

Some Highlights from the newsletter article:

"If you’re thinking about selling your house, it’s important to know what the home inspection is and what inspectors look for.

As supply is so obviously growing which will allow buyers  to regain some negotiation power, you may find you want to do some select repairs with a good return on investment before listing to get ahead of things a buyer may ask you to fix.

To decide what's worth tackling, you need expert advice. Reach out to a local real estate agent so you know what to prioritize."

It's definitely a touchy situation when we suggest what you should and shouldn't do. It's your call on what you do. But, depending upon the market, it can blow up an escrow if the home inspection finds a lot of items that could have been cleared up prior to listing. Hard choice to make, and, yes, it's hard for us to suggest. 

But, I truly believe the market is changing. And, the more negotiating power a buyer has, the more things a Seller is going to need to correct. Before going on market, or to keep the escrow together and get to the finish line.

Santa Clarita Home Sales Activity - August 8, 2024

Man, it's been soooo hot in SCV!!!

And, on to the home sales info as noted in the title above! As you know, I include all neighborhoods from Acton to the East, Stevenson Ranch to the West, Newhall the South, and Castaic North. We sell them all and outside of SCV of course as well.

Currently we have:

15 in the Coming Soon category / 552 Active for Sale 

331 In Escrow / 241 Sold in the Last 30 Days

But, check this out .... 

Well, if you can read the tiny print that is. If not, it's the price changes on listings in the last 24 hours. 16 did price changes, all but 3 were price adjusted (the latest lingo for a reduction) down. Yes, down.

So, times are a changing for sure. Will they likely move over to a buyers market? Price reductions, increase in inventory (we currently have 2 months of inventory), and now a 1/2 point average home loan interest rate reduction? 

We shall see. I'm expecting a more balanced market for sure as the interest rates go down. Well, we were supposed to see a rate reduction several times this year, finally got one. But, as inventory climbs, and getting home insurance continues to be a California problem, Sellers need to be really aware that just throwing up a sign is not going to necessarily be getting a home sold quickly nor for the price they want.

And, now, with the upcoming implementation of the NAR settlement? Oy, it's going to be a poop show for a bit. And, a lot of unscrupulous agents will mess it up for the good ones. So, stick with us, the SMART and HONEST ones. We'll take care of you, the way the rules read.

California Association of Realtors ~ Sharing the 'Market Minute'

Posted via my California Association of Realtors:

I've put a few things in italics that I think are worthy of italicizing 

July 29, 2024 – The economy expanded at a faster pace than expected in Q2, but the latest growth rate could be the highest we will see in the next few quarters. There are signs in recent months that suggest consumers are increasingly tapped out and could pull back further in coming months. An economic slowdown, however, is not necessarily bad news for the housing market. Mortgage rates, in fact, started this week at six-month lows, as the market has become more convinced that the Fed’s rate cuts will begin in September. Home sales should begin to bounce back and improve more consistently in Q3 and Q4.

US economy surprises with strong growth pace in second quarter: After dropping to the slowest growth pace in Q1 2024 since mid-2022, the U.S. economy bounced back with a stronger-than expected growth rate in the Q2 as consumer spending expanded at a faster clip and business investment continued to rise. Real growth domestic product (GDP) – a measure of economic output – increased at an annualized rate of 2.8% in Q2 2024, well above the 1.4% growth rate recorded in Q1 and exceeded the 2.0% expected by economists. Consumer spending remained the major driving force for the increase, with personal consumption expenditures rising 2.3% on an annualized basis. Business fixed investment also helped fuel the overall economic growth, as intellectual property spending increased 4.5% and equipment surged 11.6%. An increase in households’ income and an improvement in business leaders’ optimism on the economy, in general, were the contributing factors for the solid gain in the overall economic activity.  

June retail sales come in flat but avoid a decline expected by economists: While consumers spending stalled in June, the latest reading was actually better than the 0.3% decline expected by economists. Retail sales last month were unchanged from the prior month but increased 2.3% year-over-year. Softness in gas prices and the auto sector was the primary factor for the decline, but weaknesses in new home sales, building materials and home furnishing also contributed to the drop in retail spending. Retail businesses that are tied to the housing sector have been struggling but could see some improvement in coming months if rates begin to slow more consistently. Recent uptakes in revolving credit, however, suggest that households may have begun to exhaust their borrowing capacity and consumer spending could slow further in the third quarter if the jobs market continues to moderate.

New home sales hit 7-month low: Sales of newly constructed homes in the U.S. unexpected dropped for the second consecutive month in June by 0.6% month-over-month and 7.4% year-over-year to 617,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. Sales of new single-family homes in June came in well below the consensus expectation of 640,000 and reached the largest level since November 2023. In recent months, new home sales lost their momentum built up earlier this year, as more existing homes became available and mortgage rates failed to come down more consistently in June. On the supply side, the number of for-sale properties climbed again for the third straight month with new home inventory rising to 476,000 units in June, an increase of 0.8% from the prior month and 11.2% from the same month in 2023. New home inventories rose to 9.3 months and continued to apply some downward pressure on new home prices as the median price slipped 0.1% from a year ago to $417,300.

Homes purchased by international buyers dropped to lowest level since 2009: Between April 2023 to March 2024, international buyers bought $42 billion worth of residential properties in the U.S., a decline of 21.2% from the same time from in the prior year, according to a new report from the National Association of Realtors®. The 54,300 existing homes sold to foreign buyers was a dip of 36% from the year before, and it was the lowest level recorded since NAR started tracking in 2009. Higher costs of borrowing, coupled with a strong U.S. dollar, made U.S. homes more expensive to foreign buyers and resulted in a pullback in the desire to home purchases in the states from international buyers. The median existing home sales price of $475,000 recorded in the latest report increased 19.8% from the prior year and was the highest ever recorded by NAR. Canada led all countries of origin in the share of international buyer purchases of total existing homes in the U.S. at 13%, followed by China (11%) and Mexico (11%). Florida remained the top destination for foreign buyers for the 16th consecutive year, accounting for 20% of all international purchases. Texas (13%) came in second and California (11%) came in third.

Profit margins for home sellers mostly unchanged: Returns on U.S. home sales remained steady in Q2 2024, with the profit margin of typical home sales increasing slightly by one percentage point to 55.8% from Q1 2024 but remaining down by one percentage point from Q2 2023, according to ATTOM. While the raw profits in dollar term went up to $130,000, the properties’ return did not move much because median values have been rising consistently at about the same percentage between the time when properties were purchased and the time when properties were sold. Profit margins were up for Q1 2024 to Q2 2024 in 94 of the 160 metropolitan statistical areas (MSA) around the U.S. but were down annually in 100 of those metros.

You may need to read it twice as it's a lot of info. 

But, I felt it was worth sharing in it's entirety.