Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices

Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.

Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:

“For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move.

Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home.

Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.”

The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:

“While there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price—lower demand decreases price and lower supply increases price.

They went on to reveal that the Freddie Mac National House Price Index is…

“…unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%.


Bottom Line

Whether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense.

Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR

20 Tips for Preparing Your House for Sale This Spring

Highlights:

When listing your house for sale your top goal will be to get the home sold for the best price possible!

There are many small projects that you can do to ensure this happens!

Your real estate agent will have a list of specific suggestions for getting your house ready for market and is a great resource for finding local contractors who can help!

Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR

Buyer Demand Still Outpacing the Supply of Homes for Sale

The price of any item is determined by the supply of that item, as well as market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”



The darker the blue, the stronger the demand for homes in that area. Only four states had a ‘stable’ demand level.

Seller Supply

The index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, 25 states reported ‘weak’ seller traffic, 21 states reported ‘stable’ seller traffic, 3 states and Washington D.C. reported ‘strong’ seller traffic, and only 1 state reported ‘very strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.


Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!

Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR

Be Thankful You Don’t Have to Pay Your Parents’ Interest Rate!

Interest rates hovered around 4% for the majority of 2017, which gave many buyers relief from rising home prices and helped with affordability. In the first quarter of 2018, rates have increased from 3.95% up to 4.45% and experts predict that rates will increase even more by the end of the year.

The rate you secure greatly impacts your monthly mortgage payment and the amount you will ultimately pay for your home. Don’t let the prediction that rates will increase stop you from purchasing your dream home this year.
Let’s take a look at a historical view of interest rates over the last 45 years.



Bottom Line
Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

SanDiego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR

5 Reasons Why to Sell This Spring!

Here are five reasons listing your home for sale this spring makes sense.

1. Demand Is Strong

The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase…and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home. 

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory has declined year over year for the last 32 months and is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.

Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.

The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the average time it took to close a loan was 45 days.

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own!

Prices are projected to appreciate by 4.8% over the next year according to CoreLogic.If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

5. It’s Time to Move on With Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR

10 Deadly Mistakes Home Buyers Can Make

Mistake NO. 1

Choosing a Real Estate Agent who is not committed to forming a strong business relationship with you. Or, hiring a "part-time" agent who only works on the weekends.

HERE’S HOW TO AVOID IT

Making a connection with the right real estate agent is crucial. Choose a professional who is dedicated to serving your needs – before, during and after the sale. Don't leave the largest financial decision you may ever make to chance.

Mistake NO. 2

Presenting an offer on a home without being pre-approved.This will set a buyer up for failure! Press Here to Learn More

HERE’S HOW to AVOID IT

Pre-approval will make your life easier – take the time to talk with a bank or mortgage representative or two so you can compare and feel comfortable. Their specific questions with regard to income, debt and other factors will help you determine the right business model for your investments. It is one of the most important steps in developing a strategy for creating wealth.

Mistake NO. 3

Not knowing the total costs involved.

HERE’S HOW to AVOID IT

Early in the investment process, ask your real estate agent or mortgage representative for an estimate of closing costs. Title insurance and lawyer fees should be considered. Pre-pay responsibilities such as homeowner’s association fees and insurance must also be taken into account. Remember to examine your settlement statement prior to closing.

Mistake NO. 4

Limiting your search to ads or the internet.

HERE’S HOW to AVOID IT

Many homes listed in magazines or on the internet have already been sold. Your best course of action is to contact a real estate agent. They have up-to-date information that is unavailable to the general public, and they are the best source to help you find the home you want.

Mistake NO. 5

Thinking there is only one type of investment strategy out there.

HERE’S HOW to AVOID IT

Buying a home is a process of elimination, not selection. New properties arrive on the market daily, so be open to all possibilities. Ask your real estate agent for a comparative market analysis.

Mistake NO. 6

Not considering long-term needs.

HERE’S HOW to AVOID IT

It is important to think ahead. Will your home suit your needs 3-5 years from now? How about 5-10 years?

Mistake NO. 7

Not following through on Due Diligence.

HERE’S HOW to AVOID IT

Make a list of any concerns you have relating to issues such as crime rates, schools, power lines, neighbors, environmental conditions, and resale value. Ask the important questions before you make an offer on a home. Be diligent so that you can have confidence in your purchase. You will find my "Market Insider Members Only" by Pressing Here

Mistake NO. 8

Not having a home inspection.

HERE’S HOW to AVOID IT

Trying to save money today can end up costing you tomorrow. A qualified home inspector will detect issues that many buyers can overlook. Agents are not home inspectors. Learn the difference by Pressing Here

Mistake NO. 9

Not examining insurance issues.

HERE’S HOW to AVOID IT

Purchase adequate insurance, including buyer’s Title Insurance. Advice from an insurance agent can provide you with answers to any concern you many have.

Mistake NO. 10

Not purchasing a home protection plan.

HERE’S HOW to AVOID IT

This is essentially a mini insurance policy that usually lasts one year from the date of sale. It usually covers basic repairs you may encounter and can be purchased for a nominal fee. Talk to your real estate agent to help you find the protection plan you need.

So, now that you're aware of these mistakes, contact me to get you started on the right track to maximize your time and help you find the right home! Contact:
Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR

Dreaming of a Luxury Home? Now’s the Time!

If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! Recently, the Institute for Luxury Home Marketingreleased its Luxury Market Report which showed that in today’s premium home market, buyers are in control.

The inventory of homes for sale in the luxury market far exceeds the number of people searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer or can be found at a discount.

Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call their house their new home.

The sale of your starter or trade-up house will help you come up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.

But not all who are buying luxury properties have a home to sell first.

A recent Bloomberg article gave some insight into what many millennials are choosing to do:

“A new generation of affluent homebuyers powered by a surge in inherited wealth is driving the luxury-home market, demanding larger spaces and fancier finishes, according to a report heralding ‘the rise of the new aristocracy.’”

Bottom Line

The best time to sell anything is when demand is high, and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now’s the time to list your house for sale and make your dreams come true.

Looking to Buy, Sell, or Invest? Contact:

David Demangos - Keller Williams Realty
Cell: 858.232.8410 | Realtor® BRE# 01905183
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
Certified Luxury Marketing Specialist | CLHMS Million Dollar Guild Agent
Green Specialist | Certified International Property Specialist
2016 & 2017 Recognition of Excellence Award Winner SDAR