There is no doubt that we are within a strange real estate market here in the Santa Clarita Valley. In fact, the change to the current housing market has been recent.
During the past three weeks, it has seemed that home buyer activity has slowed down, starting with mid to the last part of July 2019.
The strange thing is that all the signs within the real estate channels point to "growth and confidence". The ultra-low interest rate on home loans, the great 30 year fixed mortgages, and sale-able inventory.
Some of the things that point to the demise of any real estate market would be shakey unemployment, an overabundance of housing inventory on the market for sale, and "peculiar" lending practices which give the ability for someone to overstretch themselves outside of a "regulated" borrower maximum.
We don't any of those factors within the Santa Clarita Valley Cities. I know, I work here and am constantly watching the real estate and housing markets on a moment by moment basis, it's my job!
Keep an eye on the new home builders, which have not seemed to slow down any of their construction or efforts in selling new homes within the Santa Clarita Valley.
When you are ready, I'll be here as your Santa Clarita home Expert. Be safe - and enjoy the real estate and housing market radio show.
Transcript of Housing Radio Santa Clarita episode 2019-227
Connor Macivor: 00:00 Good day, everybody, counter macgyver housing, radio.com if you go to that website and it gives you some kind of a funky notice, basically saying the redirect might be dangerous, don't worry about it because I've just basically forwarded that to our new website, Santa Clarita, home experts.com Santa Clarita, home experts.com I put all of our real estate radio shows there so you can see them and enjoy past episodes and on with the show. Here we are mid-August 2019 I have caught her macgyver local agent headquartered in the Santa Clarita Valley serving greater Los Angeles areas. Have a wonderful team in place. When you do call, you call me directly whenever you look us up online and find anything related to our online systems, parasite, Emma wood.com and all of those sorts of websites, the ones that we owe that we operate regarding real estate. You're going to encounter me and I'll get you set up very simply, whatever.
Connor Macivor: 01:03 You're ready to go out there and look at real estate. It'll be with me or potentially a team member depending on your needs. Maybe you want to stay working with me and then you got it. We'll be together all the way through, so on and so forth. So it's very, very simple. So I don't have that. We just take people and pass them off. It's about fit. What's the best fit for you as far as your schedule goes? Because most people can't be in two places at once. That goes for me. Let's talk about the Santa Clarita real estate market. Everybody out there is very a wandering, I wouldn't say, everybody, 90% of the people though that we hear from, they're talking about the real estate market. They're talking about a recession, they're talking about what's going on, and I will tell you it's as if the buyers have all just gone away.
Connor Macivor: 01:49 We do see real estate listings and if you go out on a weekend, you can see the listings that are being held open. There's a bunch, and that's because agents are out there trying to get more buyers. Now people say, well, open houses don't they work really well to sell real estate? No. Statistically, less than 1% and I've seen up to 7% of homes actually sell during open houses, but that same residence would have also sold with the propagation on the multiple listing service. So looking at it as far as open houses, are they worth it? Well, that's up to you to decide. I will tell you though that agents use open houses in order to spread the word about themselves. Here they are, being proactive gives them a chance to meet somebody, gives them some basically free advertising that people will come out meets said agent.
Connor Macivor: 02:48 Maybe they say, well gee, you know I like this Connor cat. I'm going to go ahead and work with him. And then Connor now has a new client in the form of real estate buyer. On the other side of it, there are people that come into open houses that happened to be neighbors of those properties that are listed as open. Maybe they live up the street or across the way and they'd come and see, you know what? I liked this Conor guy want to listen to my house with them. Now throw this out real quick before we get into the real estate cycle, what's going on in some cases that's definitely a conflict of interest. You need to have that discussion with your agent. What if one of my neighbors comes to you and wants you to list their house? What will you do? Because it could create competition with me.
Connor Macivor: 03:40 Tried to sell my house through you. Now you have two of my neighbors houses listed and let's say my neighbors had more equity or don't need to get as much out of their residences. Maybe they're relocating to a cheaper area and I'm just trying to upsize here cause I got two more kids on the way. So on and so forth. Right. That's when you need to have that discussion with your agent actually before when you're signing those contracts, what would you do if somebody, one of my neighbors came you and said, Hey Jack, I want to sell my house. I know you have the one down the street listed and that's Uhura but I want you to also sell mine and I see there's this priced at six 50 you know, to be frank with you, I think a good price for mine would be five 99 and uh, that's what I'm able to actually take.
Connor Macivor: 04:37 If you sell my house now all of a sudden you have to ask yourself a question what, which house is going to sell first course, the five 99 one all things being equal is going to sell before the one that's six 50 again, have that conversation up front, looking at everything online, looking at all the different channels and also the news syndication sites out there. We do see that the interest rates are very, very low. Three and a half, 3.65 we had some clients locked at 3.65 this week. Buyers out there that are looking for real estate, they're fantastic deals. Right now. The lending process has slowed down where it is taking a little bit longer to close properties in escrow. That's because of the originations, those are those new loads that are being written on properties. Not a refinance of an old loan, but brand new loan on a new purchase.
Connor Macivor: 05:36 They're taking second fiddle, second place to the refinances that are going on in large numbers, so hence it's taking longer to actually close a real estate listing in escrow. So if you are a seller, expect a few days extension if you're a buyer out there. Also if a buyer out there, this market also expects a little bit more time. Now I've been a big advocate for a very long time of them having a different, different priority marker for refinances versus originations c refinancing for lenders. A lot easier than origination and it's a lot simpler of a process and they can do a lot more of those verses origination cause origination. There's a lot more required so they put the refineries up above the origination loans and I think it should be the other way around. I think origination should always get priority and refi should take second fiddle.
Connor Macivor: 06:39 That's what I think. I think it would help the market out quite a bit. But again, I'm not the king of the world at this particular point, but hopefully next week that'll happen. Now talking about FHA loans, those of you out there that are looking to purchase residential real estate, you can purchase real estate if you're not a veteran with as little as three and a half percent down. What's happened that's known as an FHA loan. Now that's actually working great, but then you, if you are a person that's not qualified enough or able to purchase within the single-family housing sector, maybe you're qualified up to three 50 and in Valencia, California, that's going to get you a condominium or maybe some kind of an attached townhome that's going to require it being Faj certified. Well, you just basically struck gold because now they've changed the rules and regulations to get these complexes FHA approved again and they've streamlined that process.
Connor Macivor: 07:42 So what we've seen is that's news breaking today. We've actually seen it where it's going to be easier for people to get these complexes, FHA certified if they're not, and they look at all sorts of stuff. They look at the uh, the minutes from the meetings with the Hoa. They look at how solvent they are, what kind of money they have on hand. They also look at the owner-occupancy rates and there are certain ratios that have to exist for that before these complexes are FHA certified. Most of them, they've benefited, she certified to the past. They just happened to have lost that certification to be able to have people buy them with those FHA loans. Just for the simple fact that after the fall of the last cycle when they lost that certification because those hos were truly in a solvent where they were unable to fight off, you know, a feather lawsuit and they would have ended up losing everything.
Connor Macivor: 08:46 Now they're not that way anymore. Now they're back. They're very strong. Real estate market's very healthy. It's very strong as well. We have the foreclosure numbers that are then 1% so the market's great. We have people calling us and say, well, you know, we're renting currently. What do you think? And my suggestion to everyone that asks us what we think about the real estate market and what we think people should do. Ultimately, if you're getting a mortgage on a home where you can afford that payment with the salary that you're making currently and you have a secure job, you're going to be good forever. Even if the market collapses because you still have your ride off and you're still able to make a make your mortgage payment. What got people in trouble the last cycle and we had the same high prices are high-level prices where we are today.
Connor Macivor: 09:39 Historically we're right at that point if not a little above where we were in the peak of the last cycle during the market collapse, but today those differences are lenders aren't playing any games. They have to have real verification of employment, nothing fake. There are a lot of entities watching these lending practices and in addition, the appraisers have management companies also watching them, making sure that they're doing the right thing and they have several levels of review for the appraiser. On the other hand, for the buyers out there, they're being having all their information verified and as far as the adjustable-rate mortgages or mortgages that are being written that require hard prepay or have these interest rates increased quite a bit or they're limited in scope, we don't see any of that being done currently. 30 year fixed is that loan out there that I think people really appreciate and I know I do, I don't recommend adjustable-rate mortgages.
Connor Macivor: 10:54 I know that people are going to argue with me all day long. For some people that are a great fit and I agree. If you're on the fast track of wanting to only live in a house for two or three years, a lot of people say, well, if you can get an adjustable-rate mortgage at a very low-interest rate for a minimum amount of time and then you're going to refine that adjustable-rate mortgage and get a regular 30 year fixed in three or four years, you have to ask yourself what kind of value or are you going to need on that residence in order to refinance? And I would say you're going to need at least a value 20% better than what you paid for that property and how much you financed. You're going to need at least that. What if the market corrects itself and doesn't correct to that particular level and corrects lower.
Connor Macivor: 11:50 Now all of a sudden when it comes to refinancing of an adjustable-rate mortgage, you can't. So that's the problem. 30 year fixed is what I like. 30 years fixed is what I recommend and if you can't, maybe you should wait someday to consider real estate. It's an awesome investment. Longterm. We do see some that have purchased residences that we've represented first phase, the second phase, the third phase at new housing, and then two, three years later after holding on with it, you know they've done well. They've done $50,000 deals, $100,000 deals, maybe 150 after four, five years after purchasing new housing. And again, the bottom of the market was the end of 2011 the beginning of 2012 here we are 2019 and right now probably wouldn't be that time to roll those dice and buy a new house in order to flip it and two or three years.
Connor Macivor: 12:52 Right now we do have high prices as far as high levels. I do see that there is quite a bit of room to go even higher. We do have very low-interest rates, so money's cheap. Not easy, but it's cheap and by not easy, I mean they require a lot of information from you as a real estate buyer, so don't feel, don't take it personally. It's just part of that process. I've caught a macgyver. When you're ready to talk about the process, we do that in person. We also do it via zoom online. So if you are somebody that wants to buy real estate and you want to sit through my crash course, I'm more than happy to give that to you. Case by case, one on one basis where we'll just sit down, you sit at your phone or your computer and we have the conversation.
Connor Macivor: 13:40 I explained to you all the nuances of buying real estate. I've caught her macgyver. When you're ready, let me know. We always start with the loan and lending parameters out there. We talk about good questions to ask a real estate lender to ensure you're getting your best deal and we talk about all aspects of real estate, what would be the best fit, and then we also talk about things that you're probably not prepared to ask those types of questions about because this might be your first time or you might not do real estate as part of your life every single day. As we do so, we then develop goals together and a lot of times those goals that we develop with our clients are totally different than they had in mind because they didn't know the market. They didn't understand what was going on in real estate, and they weren't looking at it as we might look at it as kind of more of a real estate investment because ultimately if you could hold on to every piece of real estate you ever buy, hold onto that one. Buy another one. Use it as leverage. Buy Another one, uses leverage, do it again. You're sitting pretty at the end of 2030 years, I've caught her MCI ever. Let's talk housing, radio.com Santa Clarita home experts. Be Safe. We'll talk to you soon.