California Real Estate BlogRecently posted or modified blog posts in the category - Buying a Homehttps://www.californiahousehunt.com/blog/Copyright CaliforniaHouseHunt.com2024-03-05T17:29:15-07:00tag:californiahousehunt.com,2012-09-20:33285Why We Aren't Headed for a Housing CrashWhy We Aren't Headed for a Housing Crash
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If you’re holding out hope that the housing market is going to crash and bring <a href="https://www.simplifyingthemarket.com/en/2024/02/15/dont-let-the-latest-home-price-headlines-confuse-you/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">home prices</a> back down, here’s a look at what the data shows. And spoiler alert: that’s not in the cards. Instead, experts say <a href="https://www.simplifyingthemarket.com/en/2024/02/22/expert-home-price-forecasts-for-2024-revised-up/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">home prices</a> are going to keep going up.
Today’s market is very different than it was before the housing crash in 2008. Here’s why.
It’s Harder To Get a Loan Now – and That’s Actually a Good Thing
It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one.
Things are different today. Homebuyers face increasingly higher standards from mortgage companies. The graph below uses <a href="https://www.mba.org/news-and-research/newsroom/news/2024/02/09/mortgage-credit-availability-increased-in-january" rel="noopener noreferrer" target="_blank">data</a> from the Mortgage Bankers Association (MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is:
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240228/20240229-Lending-Regulations-Are-Steady.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240228/20240229-Lending-Regulations-Are-Steady.png" alt="a graph showing a line going up" /></a>
The peak in the graph shows that, back then, lending standards weren’t as strict as they are now. That means lending institutions took on much greater risk in both the person and the mortgage products offered around the crash. That led to mass defaults and a flood of <a href="https://www.simplifyingthemarket.com/en/2024/01/31/foreclosure-activity-is-still-lower-than-the-norm/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">foreclosures</a> coming onto the market.
There Are Far Fewer Homes for Sale Today, so Prices Won’t Crash
Because there were too many homes for sale during the housing crisis (many of which were short sales and <a href="https://www.simplifyingthemarket.com/en/2024/02/02/theres-no-foreclosure-wave-in-sight-infographic/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">foreclosures</a>), that caused home prices to fall dramatically. But today, there’s an inventory shortage – not a surplus.
The graph below uses data from the <a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales" rel="noopener noreferrer" target="_blank">National Association of Realtors</a> (NAR) and the <a href="https://fred.stlouisfed.org/series/HOSSUPUSM673N" rel="noopener noreferrer" target="_blank">Federal Reserve</a> to show how the months’ supply of homes available now (shown in blue) compares to the crash (shown in red):
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240228/20240229-Housing-Supply-Is-Lower-Than-Before.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240228/20240229-Housing-Supply-Is-Lower-Than-Before.png" alt="a graph of a number of people" /></a>
Today, unsold inventory sits at just a <a href="https://cdn.nar.realtor/sites/default/files/documents/ehs-01-2024-overview-2024-02-22.pdf" rel="noopener noreferrer" target="_blank">3.0-months’</a> supply. That’s compared to the peak of 10.4 month’s supply back in 2008. That means there’s nowhere near enough inventory on the market for home prices to come crashing down like they did back then.
People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s
Back in the lead up to the housing crash, many homeowners were borrowing against the equity in their homes to finance new cars, boats, and vacations. So, when prices started to fall, as inventory rose too high, many of those homeowners found themselves underwater.
But today, homeowners are a lot more cautious. Even though prices have skyrocketed in the past few years, homeowners aren’t tapping into their equity the way they did back then.
Black Knight <a href="https://www.blackknightinc.com/wp-content/uploads/2024/02/ICE_MM_FEB2024_Report.pdf" rel="noopener noreferrer" target="_blank">reports</a> that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has actually reached an all-time high:
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240228/20240229Tappable-Equity-at-an-All-Time-High.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240228/20240229Tappable-Equity-at-an-All-Time-High.png" alt="a graph of a growing graph" /></a>
That means, as a whole, homeowners have more equity available than ever before. And that’s great. Homeowners are in a much stronger position today than in the early 2000s. That same report from Black Knight goes on to <a href="https://www.blackknightinc.com/wp-content/uploads/2024/02/ICE_MM_FEB2024_Report.pdf" rel="noopener noreferrer" target="_blank">explain</a>:
“Only 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.”
And since homeowners are on more solid footing today, they’ll have options to avoid foreclosure. That limits the number of distressed properties coming onto the market. And without a flood of inventory, prices won’t come tumbling down.
Bottom Line
While you may be hoping for something that brings prices down, that’s not what the data tells us is going to happen. The most current research clearly shows that today’s market is nothing like it was last time.2024-03-05T17:28:11-07:002024-03-05T17:29:15-07:00Eric Kabbaratag:californiahousehunt.com,2012-09-20:32900What’s Really Happening with Mortgage Rates?What’s Really Happening with Mortgage Rates?
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Are you feeling a bit unsure about what’s really happening with <a href="https://www.simplifyingthemarket.com/en/2024/01/18/3-key-factors-affecting-home-affordability/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">mortgage rates</a>? That might be because you’ve heard someone say they’re coming down. But then you read somewhere else that they’re up again. And that may leave you scratching your head and wondering what’s true.
The simplest answer is: that what you read or hear will vary based on the time frame they’re looking at. Here’s some information that can help clear up the confusion.
Mortgage Rates Are Volatile by Nature
<a href="https://www.simplifyingthemarket.com/en/2024/01/08/what-lower-mortgage-rates-mean-for-your-purchasing-power/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">Mortgage rates</a> don’t move in a straight line. There are too <a href="https://www.simplifyingthemarket.com/en/2024/01/30/2-of-the-factors-that-impact-mortgage-rates/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">many factors</a> at play for that to happen. Instead, rates bounce around because they’re impacted by things like economic conditions, decisions from the Federal Reserve, and so much more. That means they might be up one day and down the next depending on what’s going on in the economy and the world as a whole.
Take a look at the graph below. It uses <a href="https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed" rel="noopener noreferrer" target="_blank">data</a> from Mortgage News Daily to show the ebbs and flows in the 30-year fixed mortgage rate since last October:
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240209/20240212-30-year-fixed-mortgage-rate.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240209/20240212-30-year-fixed-mortgage-rate.png" /></a>
If you look at the graph, you’ll see a lot of peaks and valleys – some bigger than others. And when you use data like this to explain what’s happening, the story can be different based on which two points in the graph you’re comparing.
For example, if you’re only looking at the beginning of this month through now, you may think mortgage rates are on the way back up. But, if you look at the latest data point and compare it to the peak in October, rates have <a href="https://www.simplifyingthemarket.com/en/2024/01/26/why-its-more-affordable-to-buy-a-home-this-year-infographic/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">trended down</a>. So, what’s the right way to look at it?
The Big Picture
Mortgage rates are always going to bounce around. It’s just how they work. So, you shouldn’t focus too much on the small, daily changes. Instead, to really understand the overall trend, zoom out and look at the big picture.
When you look at the highest point (October) compared to where rates are now, you can see they’ve <a href="https://www.simplifyingthemarket.com/en/2023/12/20/why-mortgage-rates-could-continue-to-decline/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">come down</a> compared to last year. And if you’re looking to buy a home, this is big news. Don’t let the little blips distract you. The experts agree, overall, that the larger downward trend could <a href="https://www.simplifyingthemarket.com/en/2023/12/20/why-mortgage-rates-could-continue-to-decline/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">continue this year</a>.
Bottom Line
Let’s connect if you have any questions about what you’re reading or hearing about the housing market.2024-02-14T11:44:04-07:002024-02-14T11:46:59-07:00Eric Kabbaratag:californiahousehunt.com,2012-09-20:32821Why Having Your Own Agent Matters When Buying a New Construction HomeWhy Having Your Own Agent Matters When Buying a New Construction Home
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Finding the right home is one of the biggest <a href="https://www.simplifyingthemarket.com/en/2023/09/29/explaining-todays-low-housing-supply-infographic/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">challenges</a> for potential <a href="https://www.simplifyingthemarket.com/en/2024/01/01/3-keys-to-hitting-your-homeownership-goals-in-2024/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">buyers</a> today. Right now, the supply of homes for sale is still low. But there is a bright spot. <a href="https://www.simplifyingthemarket.com/en/2024/01/16/why-you-may-want-to-seriously-consider-a-newly-built-home/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">Newly built homes</a> make up a larger percent of the total homes available for sale than normal. That’s why, if you’re craving more options, it makes sense to see if a newly built home is right for you.
But it’s important to remember the process of working with a builder is different than buying from a homeowner. And, while builders typically have sales agents on-site, having your <a href="https://www.simplifyingthemarket.com/en/2023/10/30/a-real-estate-agent-helps-take-the-fear-out-of-the-market/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">own agent</a> helps make sure you have proper representation throughout your <a href="https://www.simplifyingthemarket.com/en/2023/12/08/your-homebuying-adventure-infographic/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">homebuying journey</a>. As Realtor.com <a href="https://www.realtor.com/guides/guide-to-buying-new-construction-home/steps-to-buying-a-new-construction-house/" rel="noopener noreferrer" target="_blank">says</a>:
“Keep in mind that the on-site agent you meet at a new-construction office works for the builder. So, as the homebuyer, it’s a smart idea to bring in your own agent, as well, to help you negotiate and stay protected in the transaction.”
Here’s how having your own agent is key when you build or <a href="https://www.simplifyingthemarket.com/en/2024/01/05/achieving-your-homebuying-dreams-in-2024-infographic/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">buy</a> a new construction home.
Agents Know the Local Area and Market
It’s important to consider how the neighborhood and surrounding area may evolve before making your home purchase. Your agent is well-versed in the upcoming communities and developments that could influence your decision. One way a real estate agent can help is by reviewing the builder's site plan. For example, you’ll want to know if there are any plans to construct a highway or add a drainage ditch behind your prospective backyard.
Knowledge of Construction Quality and Builder Reputation
An agent also has expertise in the construction quality and reputation of different builders. They can give you insights into each one's track record, customer satisfaction, and construction practices. Armed with this information, you can choose a builder known for consistently delivering top-notch homes.
Assistance with Customization and Upgrades
The most obvious benefit of opting for new home construction is the opportunity to customize your home. Your agent will guide you through that process and share advice on the upgrades that are most likely to add long-term value to your home. Their expertise helps make sure you focus your budget on areas that will give you the greatest return on your investment later.
Understanding Builder Negotiations and Contracts
When it comes to working with builders, having a skilled negotiator on your side can make all the difference. Builder contracts can be complex. Your agent can help you navigate these contracts to make sure you fully understand the terms and conditions. Plus, agents are skilled negotiators who can advocate for you, potentially securing better deals, upgrades, or incentives throughout the process. As Realtor.com <a href="https://www.realtor.com/guides/guide-to-buying-new-construction-home/steps-to-buying-a-new-construction-house/" rel="noopener noreferrer" target="_blank">says</a>:
“A good buyer’s agent will be able to review any contracts before you sign on the dotted line, ensuring you aren’t unwittingly agreeing to terms that only benefit the builder.”
Bottom Line
If you are interested in <a href="https://www.simplifyingthemarket.com/en/2024/01/19/key-terms-every-homebuyer-should-learn-infographic/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">buying</a> or building a new construction home, having a trusted agent by your side can make a big difference. If you'd like to start that conversation, let’s connect.2024-02-10T22:42:13-07:002024-02-10T22:57:13-07:00Eric Kabbaratag:californiahousehunt.com,2012-09-20:32819There’s No Foreclosure Wave in SightThere’s No Foreclosure Wave in Sight [INFOGRAPHIC]
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240201/20240202-Why-Its-More-Affordable-To-Buy-A-Home-This-Year-MEM.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240201/20240202-Why-Its-More-Affordable-To-Buy-A-Home-This-Year-MEM.png" /></a>
Some Highlights
Headlines saying <a href="https://www.simplifyingthemarket.com/en/2024/01/31/foreclosure-activity-is-still-lower-than-the-norm/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">foreclosures</a> are rising might make you feel uneasy. But the truth is, there’s no need to worry.
If you look at the <a href="https://www.attomdata.com/news/market-trends/foreclosures/attom-2023-year-end-u-s-foreclosure-market-report/" rel="noopener noreferrer" target="_blank">latest numbers</a>, they’re still below <a href="https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/" rel="noopener noreferrer" target="_blank">pre-pandemic norms</a> and way below what happened during the crash.
If you're worried about a flood of foreclosures, the data shows a foreclosure crisis is not where the <a href="https://www.simplifyingthemarket.com/en/2023/11/29/why-the-economy-wont-tank-the-housing-market/?a=1000022255-e88fded6e2e85bac452c45dc12f08718" rel="noopener noreferrer" target="_blank">market is today</a> and is not <a href="https://www.corelogic.com/intelligence/loan-performance-insights-january-2024/" rel="noopener noreferrer" target="_blank">where it’s headed</a>.
2024-02-10T21:45:09-07:002024-02-10T21:50:31-07:00Eric Kabbaratag:californiahousehunt.com,2012-09-20:32817Winning Plays for Buying a Home in Today’s MarketWinning Plays for Buying a Home in Today’s Market [INFOGRAPHIC]
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240208/Winning-Plays-for-Buying-a-Home-in-Todays-Market-MEM.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240208/Winning-Plays-for-Buying-a-Home-in-Todays-Market-MEM.png" /></a>
Some Highlights
In today's housing market, you can still come out on top if you have the right team and plan.
To win when buying a home, you need to build your team, make strategic plays, consider what’s in and out of bounds, and stand out from the crowd.
Let’s connect today to make your winning move.
2024-02-10T21:01:42-07:002024-02-10T21:17:44-07:00Eric Kabbaratag:californiahousehunt.com,2012-09-20:7242Will Increasing Mortgage Rates Impact Home Prices?<img src="https://assets.site-static.com/userfiles/1729/image/Blog-_Mortgage_rates.png" alt="Will Increasing Mortgage Rates Impact Home Prices? " title="Will Increasing Mortgage Rates Impact Home Prices? " height="410" width="750" />
There has been some discussion recently on home prices in relation to mortgage rates. Some believe if there is a rapid rise of mortgage rates, home prices should decrease. Logically it makes the most sense for the price of the house to drop when interest rates are rising, but this is not always the case.
This theory of home prices decreasing is typically discussed by future home buyers. As a buyer you would like to think if you are paying higher rates on your mortgage, you should be able to see a decrease in cost somewhere else. Unfortunately, these rates are rising because the economy is in better shape. As the economy succeeds, incomes rise, rates go up, as well as the price of the home.
A recent study by the John Burns Real Estate Consulting found mortgage rates have very little impact on the cost of the home. The housing market and price increases are affected by things like job growth in the area and rising wages. Coincidentally, these same factors are causing the rise in the mortgage rates since people can afford to take out more.
Bottom Line
As the economy progresses and strengthens, mortgage rates and home prices will fluctuate. It is a misconception as rates increase, home prices will decrease. Advances in the economy have shown that rates and home prices are more likely to increase together.2019-11-20T13:29:00-07:002019-12-04T12:55:32-07:00Eric Kabbaratag:californiahousehunt.com,2012-09-20:7243Common Things to Look Out for Before Buying Your Dream Home<img src="https://assets.site-static.com/userfiles/1729/image/Blog-Things_to_look_out_for_2.png" alt="Common Things to Look Out for Before Buying Your Dream Home" title="Common Things to Look Out for Before Buying Your Dream Home" height="410" width="750" />
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage rates are increasing. If you are looking to purchase a home but want to stay within a budget, it may be in your best interest to move quickly. It is forecasted for these trends to continue in an upward motion, causing home values to continue to increase.
3. What About Current Mortgage Rates?
The ticket price is not the only thing you should be concerned with when purchasing a home. Mortgage rates are always changing and can have a huge impact on your monthly payments. Current trends show mortgage rates are rising. This is something to consider if you are debating the right time to purchase a home, since the rates may be even higher down the road.
Bottom Line
You and your family are the only ones who can determine the right time to purchase your dream home. It is important to decide exactly why you want a new home for your family and decide on a budget that will be comfortable moving forward. This budget may affect the amount of time you have to search for a home, since home prices and mortgage rates are increasing. 2019-11-20T13:29:00-07:002019-12-04T12:46:19-07:00Eric Kabbaratag:californiahousehunt.com,2012-09-20:7245Is Getting a Home Mortgage Still Too Difficult?<img src="https://assets.site-static.com/userfiles/1729/image/Blog-_Mortgage_approval.png" alt="Is Getting a Home Mortgage Still Too Difficult?" title="Is Getting a Home Mortgage Still Too Difficult?" height="410" width="750" />
Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
What Has Happened to the Number of Mortgages?
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage.
The Effect on the Economy
The housing market is recovering at a slower pace than it should since less potential homebuyers are being offered loans. While the market is still recovering with positive trends, fewer buyers can create a strain on other economic factors like home goods or construction jobs. Bottom Line
After the housing market boom and bust, mortgage lenders became stricter in their lending standards. It is not impossible to get a mortgage loan, but it can still be difficult for potential home buyers. Stay on top of your credit and make sure you and anyone else who is applying are in a good financial position so you can be approved for a loan. It is important to research different companies and their requirements to ensure success in getting a mortgage.2019-11-20T13:29:00-07:002019-12-04T12:44:19-07:00Eric Kabbara