Real Estate and Mortgage Market Update | So Cal Edition

Real Estate and Mortgage Market Update | So Cal Edition

  • By Teresa Tims
  • December 7, 2018

Real Estate and Mortgage Market Update | So Cal Edition

Hey guys, I wanted to give you a 2019 Real Estate and Mortgage Market Update. So Cal Edition. To let you know what’s going on in our local So Cal Market. I want you to  have an idea, if you’re looking to Sell a Home or do a “Move Up” Purchase or refinance what to do.

What’s Really Going on?

Regardless of what you’re hearing or what other people may tell you, our market HAS and is softening. I wouldn’t say we’re headed for a “crash”, but we’re definitely headed the other direction. I’m thinking that we peaked around Summertime. I saw some stuff happening around March, but wasn’t quite sure if it was just, you know, the calm before the storm, I just wasn’t really sure exactly what was happening.

Then we had the rates move up, I want to say like April and then again May/June, and then again in the Summertime.  What happened is with those interest rates going up so high and prices already being at the limit that they’re at, it really kind of pushed … It pushed us  into an area where it’s just not affordable. And affordability is pretty much the crux to whether or not people can buy, right? Can they afford it? So it just kind of became un-affordable even though there are a lot of people out there that can still, you know, afford to buy, it just may not make sense. And it may make more sense for them to rent.

So we moving forward right now. I’m recommending the following as part of my 2019 Real Estate and Mortgage Market Update | So Cal Edition

Cash out Refi. or Home Equity Line of Credit (Heloc)

Do it now while prices are near the highest levels since 2007.  

If you have something to sell, you need to sell it.

If you plan on selling real estate in the next year or two, don’t wait for a year or two, you should sell it right now. We are headed down. A lot of the experts are predicting a 5% to 10% decrease next year.

Sell a Home and Move up Purchase, Do it now.  

Great time to exchange.  BUT you have to price the home you are selling right out of the gate!  We work with Only the best Agents, let us help you execute this plan Flawlessly.  

If you are going to buy a home, do so with caution or wait a little bit.

We are now entering a Buyers Market.  Buyers you are now in control. The home you are buying should not put you into debt nor be significantly higher than if you were to rent the home.  A careful evaluation should be done and input from a real estate and mortgage professional that are honest about what’s best for you should be looked at.  (It’s rare a Real Estate Professional tell you NOT to buy or NOT to sell but at TDR Mortgage we feel it’s important to Properly advise all of our clients.)  

However you shouldn’t be afraid to Buy a home if it makes sense!!!! EVER!  

Will there be a Repeat of 2008?

In 2008, we got the rug pulled out from our feet so to speak. But it’s gonna be a little bit different this time around. You know, so many people have 30-year fixed, they’re regular loans that people qualified for. A lot of people paid cash. There’s a lot of people that own their homes outright this time around. So it’s gonna be a little bit different.  

Right now the most concerning factors and indicators are super obvious are

  1. Days on Market – 180 days in a lot of areas or more is A LOT
  2. When you look on the MLS most of the arrows are pointing down indication “Price Reductions”
  3. Inventory up over 50% in ALL Areas.  OC it’s up 51% from January and Riverside / San Bernardino it’s up 63%
  4. Rates!!!!!! Rates are going up and expected to continue this upward path decreasing affordability

Our economy on the macro level, you know, it’s doing so well and there’s a lot of things happening with this new administration that is bringing more prosperity.  Jobs, Higher Wages, tax cuts, trade etc. On the micro level, there’s still a lot of people that are struggling. The mortgage industry has been hit really hard, and it’s consolidating. And there’s just such a balance of power or shift in power right now. I mean, think of like Amazon, you know, what’s happening. So a lot of these retail stores are closing up. And so while there are jobs being created, we are experiencing job loss in some areas and in some markets and niches.

Looking Ahead in 2019

I don’t have a crystal ball, I really don’t,  I still subscribe to that old adage where people ask, “Oh, is it good to buy?”  Well, does the rent match the mortgage payment?  Are you gonna go broke? Don’t spend all your money and be house poor and not afford to be able to go out and do fun things but you have this house that you own. Maybe that’s not such a good idea.

So moving forward, purchases are on a case-by-case basis. They should be evaluated closely. Whether or not it’s a good thing. And there are a lot of stuff that I’m doing right now. I’ve got three purchases right now and all of them make sense. So it’s not to say, “No, don’t buy”, or, “No, don’t sell.”  I am excited for the Prices to come down and be more affordable.  I am thinking about all the “Fence Sitters” being able to GET OFF, lol.  

Keep That House if You Can

In terms of selling, I’ve always been a big proponent of you need to hold onto that house. So if there’s any way that you can hold onto that house, that’s practical DO IT.  It would be A nice little nest egg for you. So if you need any help evaluating any of those scenarios, I’m always here to lend an ear and help you run through it to see whether or not it makes sense. People call me all the time when they just want a kind of idea of what to do.

Evaluating the Cash Out Refinance VS the HELOC

The cash-out refi versus the home equity, I can help do a run-through comparison with you on that as well. Half of the time it makes sense to get a home equity, and half the time it makes sense to do a complete cash-out refi.

Interest rates where are they headed?

So the rates have gone up. Y’all know. They’ve been going up. Rates are projected to continue to go higher with  another 2-3 hikes next year as well. And, you know they were already high.   When they say “Oh, it’s not that high,” but it is. Back in the 90’s when the rates were in the 7’s, Houses were like $150,000. Well, now, you know, houses are like … In our Inland Empire area, 350k is cheap. 350 to 600,000 is the norm, OC and LA more like 550k on the cheap to 800k.  So, you know, having rates in the high 5’s, low 6’s is painful. And when those go even higher, it’s gonna be harder for people to afford homes.

Timing The Market

There’s a guy that I follow. His name is Bruce Norris. He’s so respected, which is why i have followed him.  He and many others.  Data Guys they are the best, LOL Especially since that stuff while interesting to look at and interpret is crazy boring to put together.

Everything goes up, and then it goes down. And when it does, when we do start to head significantly down again the economy starts to suffer and we will  experience broader job loss, then what happens? Well, the government’s gonna step in and help stimulate the economy by lowering the rates. (Bruce Norris is predicting this but none of my other Data guys are).  

So I am kind of thinking like 12 to 18 months is gonna be around the time when we could bottom out again. Remember in 2008, it like. It happened in 2007 when our market crashed.  We basically crashed another year later, like, all the way crashed. And then the best buying opportunities were at the very end of 2008-2009. It was still good in ’10-’11 and ’12 right?

It was still really, really good, but the best opportunities were right after we bottomed out. (Good luck getting your offer accepted though, anybody remember how hard that was.)  If you want to get prepared for that opportunity to come up again, it would be a good time to start getting your credit in order. And even think about getting cash …   An equity line.   Get an equity line now so that you can access cash in the future if you need to.  

So anyway, that’s me giving it to you on the straight. And like I always have ever since we’ve worked together. If you need anything or have any questions, I want you to feel free to reach out to me. I would love to be able to help you and your family. If you could pass my name along to your friends and family as well, I sure would appreciate that. Thank you for reading my 2019 Real Estate and Mortgage Market Update | So Cal Edition

About Author: Teresa Tims

Teresa Tims is President of TDR Mortgage in Charming Downtown Upland CA. She prides herself in offering quality home loan products, competitive pricing and knowledgeable assistance when helping her clients select a home loan. Teresa is a life-long resident of the Inland Empire. Read More