Stop Saying “Crash”, Will You???

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We should all know by now that the media thrives on negativity.  I think the same is true of real estate news.  Here’s why.  Every time interest rates jump, we get the word “crash” shoved in our face.  What the media SHOULD be saying is that the market is CHANGING.

Let me say again that “Real Estate is Local!”  This means that your end of the subdivision may have a different valuation that the homes on the OTHER end.  It’s all about location.  Other factors come into play as well, like: Do you have a pig pen beside your house which will tank the value of your neighbors houses?  Or, is your house painted neon orange? That will kill your house value and that of the entire street!  But you get the idea.  Now back to the point.

Yes, interests rates are going up and yes all other prices have risen as well.  Yes, life is harder financially.   Yes, some buyers will be out of the market because of interest rates going up. But this is not a crash. It is this:

First, a section of buyers will be pushed out of the market unless lenders get creative.  Buyers won’t have huge sums of money to put into the purchase up front.  There are ways around that issue and the ‘requirement’ for large sums is already changing.  Already we are seeing 100% financing coming back into favor.  Eight months ago an offer with 100% financing would not have made it to consideration.  No way.  But now, yep, that type of financing is back, going back to normal; NOT crashing.

Second, if the first line of buyers falls out, then the second line steps up.  These will be buyers who still won’t have big sums of discretionary money but will be able to make the larger payments caused by higher rates.  This is a change in the buyer demographic, NOT a crash.

Price ranges of purchased homes will change.  Around here, there aren’t many homes with a 2 or 3 in the first number.  In fact, most often the first-time-buyer price starts with a 4.  They’re selling, but not to folks who don’t have some savings or excellent credit, or both.  In my area, median home price has gone UP.  This is NOT a crash; it is a change.

Next, parents stepping up to help kids buy a first home are stepping back.  Why? Because their investment/retirement nest egg has shrunk due to a falling stock market.  Does this take the kids out of the market?  Not necessarily, but it will surely change the buyers’ target price point.  Change, NOT crash.

Some home LIST PRICES are ‘reduced’.  I see that every day when I look at my market.  That’s because agents are used to pricing in a RISING market, which is one of the factors to price a home to sell.  The market isn’t rising, GENERALLY speaking, so prices can’t just be pushed up in the expectation that the value will rise by the time of offer.  A good agent knows that you look at many factors to price a home and you can’t just use the plug-and-chug market analysis online.  There are MANY factors to consider in pricing. Today, pricing is a real challenge in a market in what I call ‘flux’.  But expecting to price high is no longer a given.  That is a change, NOT a crash.

Next, more people will elect not to sell because…where are they going to go?  This is a huge factor in my market, but a good agent can find you a place.  A GOOD agent.  But this factor is also a change; it is NOT a crash.  And by the way, fewer sellers listing homes increases the dearth of homes to sell, making it harder for buyers to find a home.  These folks STILL need a place to live.  And, builders will benefit from ‘existing home sellers’ electing to sit tight.

And by the way,  a GOOD agent will help clients figure out how to stay put if that benefits the client, by helping them to decide on home improvements or hiring help for lawn care.  Particularly for what I lovingly call my ‘super seniors’, this is key.  I love my super seniors and THEIR wellbeing is of utmost importance to me.   That was a rabbit trail, folks.

Back on track:  Interest rates that fueled a blazing hot and in my opinion, unbalanced market, were NOT normal.  What we are seeing now is a return to normal.  It is unfortunate that the steep rise in loan payments keeps some people out of their ‘comfort zone’ with respect to living conditions, but this is still not a crash.  And if clients have to buy a less than ‘standard’ home for themselves, they can always bring the home up to their standards over time. Not a crash, folks.  A change.

I wish with all my heart that our so-called ‘news’ was actually true, but it is not. If you don’t know that by now, you’ve been living under a rock.  Take a deep breath, calm down and adjust your sails. That’s what we are ALL doing, in all areas of life, not just real estate.  And remember this:  A home you buy and bring up to better standards will be worth more when you sell.  A silver lining, folks.  

And can I just say this again?  PA-LEASE look at houses online that you think you would buy so you have a clue what the market in your destination looks like.  Don’t tell us agents that you want an acre, three stories, granite and stainless on a cup-de-sac for 180 thousand.  Please don’t.  That is a fairy tale.

I’m Brenda; I’m a GOOD agent an I would love to talk with you.  You can find me at Coldwell Banker Advantage in Wake Forest NC, online, or call me.  Or text.  Or email.  But you won’t find me on Facebook. That’s a hint.

 

 

Interest Rates on the Rise, BUT…

It should come as no surprise that interest rates are on the rise.  This means that a house payment you could afford six months ago might be out of your range now.  It’s still a great time to buy a home, though, because rates are still at record lows.  I’ve had some conversations lately that made me remember that the interest rate when I bought my first home was around 17%.  I know.

My professional advice is to visit your preferred lender IN PERSON, and have a conversation about the different kinds of loans out there, and get several estimates, based on increasing rates.  Understand that there are MANY different types of loans, including, yes, adjustable rate ones.  My first mortgage was an adjustable rate loan, but my rate was frozen for four years, and could only adjust upward one percent per adjustment period afterward.  Good.  At that time rates were SURE to go down anyway, but before the adjustment, I refinanced to a conventional loan with a fixed rate.  And just so you know, there were a plethora of adjustable rate choices at that time.  I’ve used a balloon loan too.  Low fixed rate up front for a period, after which the entire amount comes due.  But you just FINANCE that amount, and the risk, of course, is what the rates will be at that time.  In my cases, they always went down, which was a calculate risk on my part.

If you’re not comfortable with risk, then these adjustable rates or balloon loans are not for you.  But the point is that there are other ways to calculate your payment than just a straight, 30 year, conventional loan.  So take a couple of hours and visit a loan officer.  You’ll be amazed at what’s out there.

Adjustable rate mortgages got a bad reputation in the aftermath of the real estate market crash…which should be called the Wall Street Greed crash…because lenders were writing loans that never should have seen the light of day and would land somebody in jail today.  Note that they did that, often, at the behest of Wall Street brokers who needed sub-prime loans to fill tranches blah blah blah.   HOWEVER…not all adjustables are bad.  If you are responsible and do your homework, an adjustable rate mortgage can be a way to beat the rising rates for the short term.  But you will need to be in a good financial position to refinance when the time comes.

Bottom line is this:  In our market here in the Triangle, every seller expects a loan approval letter (some a pre qualification letter) to accompany your offer to purchase, otherwise your offer might be rejected immediately.  So you’ve had to have at least one conversation with a lender in order to get that.  Make it a meaningful conversation, a deep dive into your options…all of them…so that you get the most bang for your hard earned bucks.  In other words, don’t let rising rates put you out your dream of buying a home.  There are GOOD ways for responsible buyers to nab a low rate.

The Latest Crazy Market Paradigm

Hi everyone!  Hope this post finds you well and I hope you’re planning on either buying or selling your home AND calling me first.  It’s a huge market out there and with an interest rate hike looming, it’s likely to get bigger, faster, busier. Crazier is probably a better word.

We’ve talked about how you can’t even get the offer on the table for consideration before the home goes under contract and now homes are selling BEFORE they hit the market.  Multiple offers have become the norm and it is a STRONG seller market.  Home prices are rising and builders are busy again.  Good to see.  But there’s something new and again, we need to be careful about this.

Sellers are demanding shorter due diligence periods in a market where getting immediate inspection services…for home, septic, well, HVAC, pests, roof…is impossible.  In some cases there’s a two week lead time to get someone out to inspect, and some sellers are asking for a three week due diligence period.  Impossible.  What this does is put undue pressure on buyers who are already incredibly busy getting loan approval and meeting all of their obligations as buyers.  Ultimately, it’s not good for the seller either; they end up with days to get repairs done, rather than weeks, so the stress boomerangs right back on them.

It’s hard to get through the due diligence period, followed by an even more difficult repair negotiation.  Let’s not be stupid about this.  Nobody’s losing anything if the home is under contract with a financially strong buyer and the home is well maintained.  Relax and give the buyers a chance to do their due diligence!  Agents, remember when you agree to this short due diligence period, you could very well be asking for an extension and your buyer might have to fork over more due diligence money.  The seller has a right to ask for it.

Why Work So Hard?

Well, here’s another great reason.  This is a letter of reference from one of my first time buyer couples:

As first time home buyers, we were nervous about finding our first home and establishing a relationship with our agent. Brenda was referred to us by a mutual friend who admired her professionalism and wonderful spirit. Brenda left a wonderful impression after our first meeting. She LOVES first time buyers and helped us to understand the process, was patient and detail oriented when showing us each home, and offered support during each step. She understands the market and takes pride in her work, something that you will see after your first meeting with Brenda. She has a heart of gold and we thank her for making our first purchase special.

-Cameron