Happy Monday, Friends! 

I was on the road this weekend and I needed to pump gas. When I looked up, the prices were a little over $6.50! That’s ABSURD!! I mean when prices were just starting to go up I thought $4.00 was pricey but obviously things have gotten worse! That’s kind of what’s happening with interest rates. Last time I wrote to you, interest rates had reached 5%; since then interest rates have fluctuated, reached and slightly surpassed 6%! 

So what is happening to home prices and sales ? Well, higher prices were not a problem when rates were in the 2’s and 3’s; at that time buyer demand was through the roof! However, today’s mortgage has jumped significantly and is affecting buyers. As a result, the demand for Los Angeles County Housing is not as demanding as it was even six months ago and competition has significantly reduced. Many potential home buyers no longer qualify to purchase a home, or their purchasing power has greatly diminished. A payment on a $1 million home with 10% down at the start of the year was $3,917 with a 3.25%. Today, it is $4,970 at 5.25%, a $1,053 increase in monthly payment. Meaning the pre approval amount was also affected because now a buyer who is looking to spend $4,000/month had a budget of $1,021,111 at the start of January. Today, that same buyer is now considering homes at $804,444 to maintain a $4,000 monthly payment. That buyer’s purchasing power plunged by nearly $217,000.

The Bottom Line is that the quick rise in mortgage rates has substantially cooled off the housing market.  There are fewer showings, fewer multiple offers, and homes are taking longer to sell. Most importantly, buyers may no longer need to give an arm and a leg. Attention sellers, carefully pricing, not overpricing,  is now fundamental for a successful sale in this shifting market. 

So what does a shifting market mean? Well, today’s market is now stabilizing. It is settling. No it will not crash. To better understand the market we measure the number of

days from when a property goes active to pending/in escrow. This is called the Expected Market Time, which is currently 45 days. This is still a Hot Seller’s Market because it’s less than 60 days. Last year the Expected Market Time was 33 days which is why things were just barely lasting a weekend before being swept away. To get a better idea of the past, the 3-year average prior to COVID was at 62 days, substantially slower than today and it was still a Slight Seller’s Market which is between 60 and 90 days. But even with 45 days, we are still not near the 90-120 days that brings the market to what it’s known as a Balanced Market. For reference, 120-150 days means it's a Slight Buyers Market and a 150+ days is referred to as a Deep Buyer’s Market, where buyers call the shots and sellers have almost no leverage in terms or price.

Wondering what to do next? Ultimately it depends on your current circumstance. If you have a good stable job, have a cushion of savings, and are paying a high rental amount then buying a home may make sense. I would recommend you explore your options. A lot of the information that we hear out there and even from this market update, refers to the high interest rates that are coming from conventional or FHA loans… but have you explored the ARM Programs? 

Well, this loan program is making a lot of sense to some of my clients because the interest rates are still  in the mid 3%. I say it is worth the chat with your lender. I think they’ll be able to better explain this loan program so please let me know if you need me to assist with connecting you with an awesome lender. Together, the lender and I will be in partnership to work for your best interest. For any questions do not hesitate to reach out. At any time you can call or text me at my cell phone number which is (510) 927-6588. I wish you an awesome start to the week and as always, I am here to help with all of your real estate needs.

Hi friend, hope you are off to a prosperous year! 

For the housing market, 2022 had an unbelievable start. In Los Angeles, the year started off with an active inventory of 7,339 homes, the lowest it’s been for the past ten years. 2021 finished the year with 4,989 homes, 38% lower than 2020’s which was 8,096. The 5-year average for the end of December prior to COVID was 9,770, which is nearly double from how we finished last year. Numbers don't lie. Clearly there has been a supply shortage problem. What I’ve learned is that the shortage in inventory are due to the following: 

1. Staying at home caused people to want more living and outdoor space. This is driving them to home ownership! Especially because rents continue to increase and with the low mortgage rates, a monthly rental was equivalent to a mortgage. 

2. The fear of bringing strangers into a potential seller’s home affected inventory. Only those who really wanted to sell sold. The short inventory and the  fact that prices have significantly increased results in sellers double thinking, will they get less for their buck now on their replacement home?  

3. Historically low mortgage rates have driven millennials & first time home buyers to the soaring market. 

So what’s going to happen? Well, interest rates are rising and it seems like the climb in rates may settle things in. From late last year, interest rates have increased by about .750% on almost every loan product. How can this affect a pre-approval? So let’s say you were pre-approved for $1,000,000.00 before then, there is a good chance that today you only qualify for $920,000.00 - $930,000.00. That’s how ¾ of a point can affect a pre-approval. It also impacts your monthly mortgage, here are a couple examples: 

• For a $550,000.00 condo/townhome with 5% down including Principal, Interest, Taxes, PMI Insurance and an HOA of $300.00: 

2021 estimated monthly payment =$3,278.19 

V.S.

2022 new rate estimated monthly payment= $3,495.09

• For a $750,000.00 single family residence with 10% down including Principal, Interest, Taxes and PMI Insurance:

2021 estimated monthly payment =$3,858.95 

V.S.

2022 new rate payment = $4,089.16 

Although the lower side of interest rates seems to be in the rear view mirror, they are still at historic lows! The average 30-year fixed rate mortgage as of earlier this week is 3.45%. So what's my advice? Well, if you can buy right now, do it. The interest rates will continue to rise and home values are also forecast to increase at least a good 10% this year. When will things settle? Hopefully next year. With the help of the interest rate rising, an increase in completed new constructed communities, and hopefully with COVID fading away things will start to settle. Just remember, they’ll settle, not crash because inflation has hit and the cost of living has basically doubled. 

Thinking of buying or selling? Call me. I am here to be of service and guidance. My number one priority is to work for your best interest. Know that I am always here to help. Wishing you a breakthrough year! 

With Care, 

Linda Mendoza 

Happy New Year!

May this 2022 Be Full of Success and prosperity to you & your loved ones!

My team and I had an incredible year and we are so grateful for our clients, friends, and family for their continued support.

Is your goal for this year to sell or purchase a property?

If so, let me know! I am here to help you achieve that!

APRIL´S MARKET UPDATE

@HelloBeautifulHomes

By: Linda Mendoza

March 26th, 2021 

Happy Spring my Friends! 

We are a quarter into the year and so far it's been looking brighter than last. While I haven't received the vaccine I am patiently waiting and overall I am proud of myself that my household hasn't had a positive covid test. 

If you ask me how the market is, I´d say the Real Estate world is still nuts and on fire. This seller's market is seriously crazy... but my instinct does tell me that something different is on its way. I feel it... but I quite don't see it yet. 

I was in a zoom meeting with my colleagues this morning and they feel the same way. Things are still flying off the shelves just like when toilet paper was a thing. 10-15 offers on the table, things going 30-50k above asking price, and sellers requesting for us to give them an arm and a leg for an accepted offer is still a thing but I feel like competition has weeded out the weak, and only the thick skin buyers are standing. 

Experts compare today's market to that of 2013. The difference between 2013 and 2021 is that the supply of available homes to purchase today is even lower than it was in 2013 and demand is a bit higher due to even lower mortgage rates. Housing started this year with the lowest level of homes since tracking started in 2004; 7,683 homes, 4% less inventory than 2013. Mortgage rates reached a record low during the first week of January, 2021 at 2.65%. Since then, the inventory has decreased an additional 4%, dropping to 7,357 which has caused a serious problem with supply and demand. The Expected Market Time (time between pounding in the FOR-SALE sign and opening escrow) dropped from 53 days to start the year. A Hot Seller’s Market is below 60-days, well today it is at 33 days! At 33 days, Los Angeles County housing is nothing short of absurd.

But what's the hazy thing we quite can't see yet? 

I have a few theories that´s bringing a new market trend to the horizon. 

1. Interest rates are rising and people got tired of losing bidding wars.  

2. People are getting vaccinated so sellers will now be more motivated to let strangers in their home. 

We can talk about how rates keep going up or we can talk about the things we can control.  Oh, so you want to talk about things that we can control? Good, because interest rates will piss you off if we talk about what ½ point increase can do to your pre-approval amount. 

Of course the whole quarantine time at home has made many realize it's time for a new home but I think math is the best way to explain why buying now is the best bet. So I was speaking with a couple looking for a home in the Santa Clarita Valley yesterday and they were looking up to $750,000.00 and they have 5% down. Their credit is perfect and their income is solid too.  They are currently living in Tarzana but their oldest child is about to go to kindergarten next year so they wanted to move to Santa Clarita! Their rent is $3,195 on a little house and the landlord wants to raise it to $3,500.00?   

These crazy rent increases have been going on longer than the pandemic. I was talking to my lender and basically if they buy this house today, they will have a payment of approximately $4,239.00 including taxes and insurance. They would put down about $37,500.00 and they would need about $10,000.00 for closing costs. In the first year they would put $13,967.00 towards their principal. The most important part is that eventually they could remove that PMI and drop that payment by about $200.00. So if the property goes up by just 3% annually on average they would make about $22,500.00 on that property and that money would be tax free assuming they live there for 2+ years. The crazy part is that literally if this person would have bought 1 or 2 years ago, equity on that property grew not just 3%, but closer to 20-25%!!! 

We are now pretty confident that if the pandemic did not affect the housing market, nothing in the near future is forecasted to do so. Even with the increase in interest, this example puts the payment in perspective and it makes the world a different place for those that are tired of renting. The vaccine is bringing hope in folks and removing fear from those who have thought of selling but were too scared to do so. And while it is a work in progress, I am confident the more vaccines that reach people's arms, the more movement the economy will generate which will set the market to a more balanced one. However, if you are thinking of selling and want top dollar for your home, this is still the best time! We will still end up with multiple offers on the table the same day your listing hits the MLS!  

So as I wrap things up, know that it's always an honor to be of guidance and service. Feel free to share this information with your friends and loved ones. I am just a phone call, email or text away so don't hesitate to reach out anytime. It is always so nice to hear from you! 

Linda Mendoza 

CalBRE #02014425  

HomeSmart Evergreen Realty 

[email protected]

(510)927-6588