Good morning in the spirit of a Happy New Year;
Residential Lending
Time to prepare for tomorrow, today. Call us. Call now.
Let’s respond to Main Stream Media’s love of negativity and why now it’s time to prepare to buy. This discussion focuses on residential owner occupied property, yet the math and concepts apply to both investment properties, and often for commercial properties, as well.
Thoughts of buying this year? Let’s do a quick call to help you decide. It will bring to bear that lenders continuing to be challenging and the importance of starting early. First in line, is key.
Important Points:
1) Interest rates: Fed’s cut, but 30-year loan rates rises to 7 %.
Slowing of future rate cuts by the Federal Reserve, strengthened of the dollar, as interest rates hedging upwards. I do expect rates to ease, but the market awaits new policy changes from DC. Key: Rate dips have been fairly short lived. Early preparation and readiness is critical!
Best advice: Use this time to prepare. Call now, for our first conversation.
2) Economy:
A) Economic Activity: A bit tricky, as 3 different Fed’s indicators show 4th Q GDP ranging from 1.9 % to 3.1 %. Good news: Numbers are all positive !
B) Employment: As discussed, we are waiting for post Christmas filings for unemployment. In particular is the recent news about layoffs, typical for year-end restructuring and layoffs. Regardless, the timing of most layoffs, are driven by business factors like economic downturns, restructuring, or budget cuts.
3) Residential Real Estate: The bet: Prices keep goin up.
Housing for 2025? Here’s the back story. Over 1 M SFR’s completed in both 2022 and 2023. Year 2024 looks similar. Now for 2025, “permits” show the potential for 500,000 multi-family units and about 1 M homes. Good numbers! The worry: Actual “starts” are a different story. Multi-family is off 27 %, down to 300,000 annualized, while single-family is off 10 %. Single family still holding for 1M annualized homes to be delivered. Why a problem? Demand. We are creating new households, at about 1.9 M pace annually. A continued supply vs demand problem.
4) Commercial Real Estate: Due diligence and detailed planning continues to be critical. It’s why we specialize on retail centers for finance and re-financing. Being specialized matters. Our developed expertise enables us facilitate most any type of commercial financing you need. Call!
5) Inflation Perspective: Continues stubbornly stable, unsure of latest political promises.
Good News:
Our good news is really good. New construction of “Accessory Dwelling Units” in CA, contributed about 19% of the total new homes built in 2022. It has increased to 25 % in 2023.
Misdirection by MSM: Recent CNBC headlines show a 12.1 % year-over-year increase in housing supply. Yet this is the same housing supply of 2022. Kicker: Actual Housing supply is down over 30 % – when compared to pre-pandemic.
Further, MSM also stated, “days-on-market” reaching 60 days. Yet many Realtors in the same interview, stated that while true, the 60 days is for units over-priced, un-livable, or poorly staged. For properly priced and marketed properties, they are going into contract within days. Buyers are not listening. Thus it is important to find a great Realtor – buying OR selling. It makes a difference. If you don’t have one, let us know.
One more MSM delight: This one regards credit cards. Yes it is true, defaults are at their highest in 4 Years. However, the bulk of the defaults are with the lowest 1/3 income earners. Often times, I have the pleasure to speak with them and provide some coaching & counsel to develop a new path to success. However, for the other 2/3, credit card debt is not a restrictive issue. Matter of fact, these are the people able to buy and sell property. For most homeowners, this is just another headline to be ignored.
My Perspective:
“The time of maximum pessimism is the best time to buy, and the time of
maximum optimism is the best time to sell.” – Sir John Templeton
With this, it is helpful to understand when rates are higher, there is more pessimism and thus less competition. Templeton suggests this is a good time to find a better deal on property.
To further support our buy now perspective is this, when interest rates begin going down, there will is expected to be a rapid increase in demand. The National Association of Realtors estimates that for every 1% drop in rates, there are five million more eligible buyers. Though not all will buy, it will tighten available inventory and put upward pressures on home prices. Balance this demand number with the fact we move about 5.6 M homes a year. My 35 years as a real estate professional, confirms Sir Templeton.
BIG QUESTION: Buy Now or Wait for Lower Rates
In California, with a limited number of homes for sale and too few “new” home construction projects, one can anticipate continued property appreciation when growing demand exceeds available supply. This raises the question: If one finds their dream home – Buy now or wait for lower rates?
If this is your dilemma, let’s talk before you lose the home and location you desire. We are able to do – for you – 1) a detailed analysis of building a mortgage option custom fit for your family finances and 2) the tools to take full benefit of lower mortgage rates tomorrow. Call today and we can take the first step in analyzing the cost of waiting vs buying what you want, now. Few in the mortgage world are able to provide you this critical analysis. Few will take this extra step – because we care about your better tomorrow.
Call Today or set a time for our first conversation, thru my updated website. Take control !
More Good News
We have great lending partners. They respect our work and attention to detail. This is good news for you, as they trust our approach and loan packages. In response, we carefully strive to maintain the quality of their depository relationships. This is called team chemistry and is what makes our lending relationship, a winner. Join our winning team, today
You have heard me say:
It starts with a first conversation.
Let’s talk. Preparing for your tomorrow, today.
With all the financial talk, the most important part is those we have around us. Be well and be safe! Most important: Enjoy your family and friends, with thankfulness and gratitude.
