1. Mortgage standards are nothing like they were back then.
2. Prices aren’t soaring out of control.
3. We don’t have a surplus of homes on the market. We have a shortage.
2. Prices aren’t soaring out of control.
3. We don’t have a surplus of homes on the market. We have a shortage.
For years I've talked about why it makes financial sense to buy a home, rather than rent one, but more often than not, we’re drawn to the emotional reasons for homeownership.
It doesn't matter if the living space is tiny or huge, whether the home is on the modest type, or one with a lot of wow factors, the feeling of a home means different things to different people. Sometimes it’s a certain pleasant aroma in the air, or the feeling one gets when relaxing in the patio, comfortable and pleasant connections to our own homes are typically more important to us than the financial ones. Here are some of the reasons why.
1. Owning your own home is something you've achieved and is worth celebrating
You’ve probably worked very hard to achieve your dream of homeownership, and it doesn't matter whether it’s your first home or your tenth, congrats to you! You’ve earned it.
2. There’s no place like home
Besides not having a landlord who might ask you to leave one day, you'll own your own place for as long as you like. Security and peace of mind is important to most of us. Owning your own home also offers safety and a comfortable place where you can simply relax and kick-back after a long day. Sometimes, that’s just what people need to feel recharge their batteries and feel truly content.
3. You can find more space to meet whatever needs you have
Whether you want more room in your home for your changing lifestyle, (maybe you're working from home, need space for the kids' virtual school, or you need a spot to work out), or you just would rather have a larger outdoor space for keeping your distance while entertaining in these pandemic times, you can invest in a location that truly works for your changing needs.
4. YOU decide what upgrades and other changes you want
So you want to copy one of those ideas you saw on Pinterest? Well, go for it - remember there's no landlord here, so no need to ask anyone for permission. Thinking of getting a four-legged member of the family? Well, again, there's no permission needed and you certainly won't be paying any pet deposit! of paying an additional pet deposit for your apartment building? You can do a lot more when you own a home, compared to when you're somebody's tenant.
Buying a home for the first time? There are programs for you! Maybe you'll be selling your home and moving up, or downsizing. Relocating to Irvine? Whatever the new chapter in your life is going to read like, now is a great time to think about all the things that turn a home into a HAPPY home.
If you’re like most people, you’ve probably heard that getting pre-approved for a mortgage loan is the first step in the homebuying process. But do you know why this is so important?
It’s so easy to fall in love with a home that is outside your budget when you start looking for a property to buy. That home then becomes the benchmark, and you compare other homes to that one.
You’ll agree that it makes sense know your price range, before you start house-hunting. Then you’ll be comfortable with your monthly payments and there is less chance of any surprises later. You can get a pre-approval letter from the mortgage department at your bank, or perhaps you already know and trust a mortgage loan consultant. If not, ask me to put you in contact with a really smart mortgage consultant who has helped many of my buyer clients.
According to a recent survey from realtor.com a lot of buyers are making the mistake of NOT getting pre-approved at the start of the homebuying process:
“Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months, only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are missing this crucial piece of paperwork.”
The pre-approval letter shows sellers that you’re a qualified buyer, and the letter must accompany your offer to buy an Irvine home.
Right now, the Irvine housing market is hot, with inventory being arguably the biggest challenge for today’s buyers. There are a lot more active homebuyers than there are sellers, therefore things are in the sellers’ favor.
With limited inventory nationwide, homes are getting an average of 2.9 offers for sellers who negotiate, causing bidding wars.
Danielle Hale, Chief Economist for realtor.com notes:
“For ‘a buyer in a competitive market, it’s typically essential to have pre-approval done in order to submit an offer, so getting it done before you even look at homes is a smart move that will enable a buyer to move fast to put an offer in on the right home.’”
In addition, today’s housing market is also changing from moment to moment. Interest rates are the lowest ever seen.
Banks and other lenders are tightening-up their requirements so don’t delay beginning the pre-approval process – the lender may well be asking for documents you hadn’t thought of. They’ll be looking at your loan application and credit report, as well as info about your debt, work history, down payment and even your residential history.
In a competitive market with low inventory like the Irvine housing market, a pre-approval letter is a game-changing piece of the homebuying process. If you’re getting ready to buy, let’s connect before you start searching for a home.
The health crisis we face as a country has led businesses all over the nation to reduce or discontinue their services altogether. This pause in the economy has greatly impacted the workforce and as a result, many people have been laid off or furloughed. Naturally, that would lead many to believe we might see a rush of foreclosures like we saw in 2008. The market today, however, is very different from 2008.
The concern of more foreclosures based on those that are out of work is one that we need to understand fully. There are two reasons we won't see a rush of foreclosures this fall: forbearance extension options and strong homeowner equity.
1. Forbearance Extension
Forbearance, according to the Consumer Financial Protection Bureau (CFPB), is when your mortgage lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage. This is an option for those who need immediate relief. In today's economy, the CFPB has given homeowners a way to extend their forbearance, which will greatly assist those families who need it at this critical time.
Quite a few homeowners opted to pause their mortgage payments but of course they'll have to pay back that amount later. Many banks are saying that they want the paused payments to be repaid in one lump sum but are offering other repayment options.
Under the CARES Act, the CFPB notes:
"If you experience financial hardship due to the coronavirus pandemic, you have a right to request and obtain a forbearance for up to 180 days. You also have the right to request and obtain an extension for up to another 180 days (for a total of up to 360 days)."
2. Strong Homeowner Equity
Equity is also working in favor of today's homeowners. This savings is another reason why we won't see substantial foreclosures in the near future. Today's homeowners who are in forbearance actually have more equity in their homes than what the market experienced in 2008.
The Mortgage Monitor report from Black Knight indicates that of all active forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes (See graph below):
"The high level of equity provides options for homeowners, policymakers, mortgage investors and servicers in helping to avoid downstream foreclosure activity and default-related losses."
So while many think that we may see a rush of foreclosures this fall, the facts just don't add up in this case. Today's real estate market is very different from 2008 when we saw many homeowners walk away from their homes when they owed more than their homes were worth. Not many of that happened in Irvine but there were certainly some cases, and many short sales. This time, equity is stronger and plans are in place to help those affected weather the storm.
With a low supply and strong demand, the Irvine real estate market has not been this hot since 2013. This is the situation in Irvine now:
Thankfully my Irvine listings aren't taking long to sell.
Have you been thinking about becoming a property investor, and wondering why you should buy a rental? Here are some signs to look for if you are on the fence about investing in a rental.
“If you don’t own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.” John Paulson.
Low Interest Rates
When mortgage rates drop, it is much easier to find a property that will make you income. Mortgage rates just fell below 3% for the first time ever! The best place to figure out what kind of interest rate you will get for an investment property is with a mortgage lender. Check with your bank or ask me who a lot of my buyer clients use to get excellent service and great rates.
A heads-up for you that lenders charge more for “non-owner occupied” transactions than for one where the buyer will actually live in the home.
Let’s discuss how the process of buying an income-producing home is started, and I’ll send you properties to view virtually initially, (3D virtual tours, floor plans, viewing info and photos online and property walk-through videos), and then when you think you’ve seen one you may want to buy, I’ll arrange an actual tour of the property.
Check in with me to see how much your current home is worth! Some investment properties require a high down payment, but low-interest rates, refinancing and knowing your home value can make a difference. For example, if you need to borrow 10%, many homes in good markets can appreciate 10% of their value in just a year, depending on the condition and the location.
Chat with a lender to see if you can qualify, and check in with your current mortgage company to discuss your plan.
Scarcity of Units
You probably know that Irvine rental homes are in high demand. This is because Irvine is growing and the demand for a space to rent is higher than the available properties, unless renters want to live in one of the Irvine Apartment Communities. Therefore now is the best time to find an Irvine property to buy for rental purposes.
Do you know if the rate of return in Irvine is growing? Let’s talk. It’s important to know that if you’re thinking of investing in an Irvine property. There is potential to make significant gains over time.
Ultimately, talking to professionals can help you decide if now is the right time to invest in Irvine rental properties!
Whether it's an initial home wish-list analysis as a buyer or a listing appointment as a seller, we can get the process started remotely and we can create a plan together.
I’ve become even more innovative since March, (when the stay-at-home orders were issued), using newer technology that allows buyers to virtually look at homes, meet with mortgage lenders and consult with me throughout the buying or selling process.
I’ve always had 3D Virtual Tours in my marketing arsenal and now they’re used more often, by more agents, what with the ban on Open Houses and everyone’s concerns about Covid-19.
Experience the 3D Virtual Tour of this Irvine home and while you’re there, try out the “Dolls House View” and look at the “Floor Plan” by pressing the button on the bottom left.
“But what if I want to virtually look at a listing which isn’t one of yours Debbie?”, you might ask. Well hopefully the listing agent would have invested the money in providing a 3D Virtual Tour, but if not, I’ll do a Walkthrough Video Tour of the property for you. I can either do these live via Video Chat or I can upload it to YouTube for your exclusive viewing.
While of course buyers still prefer to physically see and walk through a home, virtual home tours and accurate listing information top the list of tech specs buyers find most helpful in today’s process.
According to Google Trends, which scores search-terms online, searches for real estate increased from 68 points the week of March 15th to 92 points last week. So it seems to me that more potential homebuyers are looking for homes virtually.
Today's everyday reality is quite different compared with less than three months ago. I know that most people have been working remotely, and engaging with friends and business associates virtually.
I’m thankful that Video Conferencing is so simple and user-friendly these days. My initial consultations are held via Zoom or Facetime, and I’ve found that most people welcome not having to tidy-up and have me physically in their homes at this first “meeting”. I’m also thankful to still be in a position to help families make important moves.
Document Signing is usually being done digitally for all offer, counter-offer and disclosures paperwork, and more, right from a computer or smart phone. If my buyer or seller clients aren’t comfortable to sign electronically, they can physically sign the paperwork. In these cases, I courier the documents to them, or drop them off at their front door.
I think that most people already know that Spending Money can be done from the comfort of their homes too. Buyers can pay for an inspection or appraisal digitally, and both buyers and sellers can wire money into escrow from home, if their bank offers it, and most do. In case you’re wondering “Why Sellers?”, they would sometimes need to wire money into escrow, for example to pay for Irvine Home Owner Association documents.
So as you can see, if you need to move today, technology can help make it happen safely.
Let's touch base today to discuss your situation, so you don't have to put your real estate plans on hold. Yes, let’s do it via Zoom!
Currently, COVID-19 is not having a significant impact on the housing market, yet its effects will eventually be felt in the real estate trenches.
The Coronavirus and Housing: Despite all the news swirling about the Coronavirus, the Orange County real estate market is still rocketing forward with an Expected Market Time of 48 days. At first, news of the Coronavirus seemed like a distant crisis on the other side of the world. Then, at the end of January, the first case on U.S. soil was announced. It was not until the end of February when top federal health officials warned that the virus would spread in the United States.
Since then, everyone has been confronted with a deluge of information and misinformation. Many mistakenly ran to purchase N95 face masks and now they are nowhere to be found. Others are stockpiling water, toilet paper, canned goods and everyday essentials. The response has been similar to Y2k when the banking system and world economy was supposed to crash due to a computer glitch in ringing in the year 2000, which never materialized.
The Coronavirus is beginning to interrupt daily life. There are no more samples at Costco. After the kids’ soccer matches, the handshake has been replaced with a fist bump. Parishioners are no longer holding hands or offering a hand in peace. Starbucks no longer allows reusable cups. There are signs in the grocery store limiting the number of certain items.
As the virus began to spread out of control not only in China, but South Korea, Italy and Iran, Wall Street and financial markets around the world panicked and moved their money out of stocks and into long term bonds, United States treasuries. When that occurs, long term mortgage interest rates fall.
So, how will the Coronavirus outbreak affect housing? There is no absolute, 100% certain answer. Instead, it all boils down how long this crisis will last and how large of an impact it will have on United States soil and the rest of the world. In China, the number of new cases is dwindling, a glimpse of hope that this too will end. Currently, the data does not indicate any change in the local housing market. The supply of homes to purchase in Orange County is at its lowest level for a start to March since 2013, and demand (last 30-days of pending sales) is at its highest level since 2016. With not enough supply and strong demand, the Expected Market Time (the time between pounding in the FOR-SALE sign and opening escrow) is at 48 days, a HOT Seller’s Market and its lowest level since 2013.
As a direct result from the COVID-19 outbreak, mortgage rates have dropped to a record low and will most likely drop even further. There is a chance that they break below 3% and into the 2’s. This inevitably will provoke many more to purchase, juicing demand. For a $750,000 mortgage, today’s 3.25% rate amounts to a $492 per month savings compared to March 2019’s 4.4% rate. That’s a savings of $5,904 per year. If rates drop to 3%, it’s a $594 per months savings, or $7,128 per year. And, at 2.75%, it’s a savings of $694 per month, or $8,328 per year. In doing the math, it is easy to see how lower rates will stimulate demand. The impact on affordability is astounding.
Housing demand has skyrocketed due to historically low rates that are not going anywhere anytime soon.
The Impact of Low Rates: A buyer’s purchasing power has dramatically improved thanks to ultra-low mortgage rates.
Attending an air show for the first time is quite an experience, especially when fighter jets take off and rocket across the sky. The blast from the engines is deafening, the orange glow from the afterburners is visible from the ground, and the powerful vibrations can be felt coursing through a spectator’s body. It is the specially designed jet fuel that allows these aircraft to soar through the air. Housing has “specially designed jet fuel,” also known as ultra-low mortgage rates, that is allowing the market to soar in 2020. These historically low rates are not going to budge much from the mid-3’s. And, the recent news of the coronavirus has driven mortgage rates lower over the past month. The Orange County housing market is extremely hot, and as the year unfolds the heat continues to crank higher and higher.
This hot market can also be seen in Irvine where the Total Inventory of Properties available for sale as of February was 587, up 17.6% from 499 last month and down -18.5% from 720 in February of last year. February 2020 Inventory was at a mid range compared to February of 2019 and 2018. The Selling Price vs Listing Price reveals the average amount that Sellers are agreeing to come down from their list price. The lower the ratio is below 100% the more of a Buyer's market exists, a ratio at or above 100% indicates more of a Seller's market. The February 2020 Selling Price vs List Price of 97.3% was up from 96.3% last month and up from 96.6% in February of last year. Check out the latest homes to hit the Irvine market here.
The slower markets of 2018 and the first half of 2019 now seem like a distant mirage to most buyers. For a minute, buyers looked as if they were finally going to get a turn, but that all disappeared. In 2020 housing is sizzling hot again. To understand where this heightened demand and buyer’s exuberance is coming from it is necessary to consider where interest rates have historically been and their impact on affordability. The chart below highlights how higher interest rates limit the price of a home that a buyer can afford. In 1980, the average mortgage rate was 13.75%. For a desired monthly payment of $3,000 per month with 20% down, a buyer back then was looking at a $338,750 home. Rates continued to drop decade after decade. In 2000, the 8% mortgage allowed a buyer to look at purchasing a $511,250 home. It increased to a $602,500 home just prior to the Great Recession. Flash forward to today’s 3.5% mortgage rate and that buyer desiring a $3,000 per month payment is now looking at an $835,000 home.