Before I get into the issue of a market correction coming to the Santa Clarita real estate market, let me cover the particulars of... me. :)
Connor MacIvor, Honorably ret. LAPD, Realtor since 1998 and ready to serve.
I have the longest-running Santa Clarita real estate radio show and podcast where I talk about the Santa Clarita housing market and how to keep safe when buying or selling real estate.
My approach is one of being straightforward. I don't like games and know the best ways to take advantage of all markets in real estate, buying new, selling resale, and investing in homes and real estate.
The best way to approach anything real estate-related is by acquiring knowledge. That is how I treat my clients. I give them the verifiable information pertaining to their real estate goals and we move from there.
Once we have a clear endpoint, I can give them all of the information they will need to get there safely while being protected.
In the last Foreclosure Market in the Santa Clarita Valley, we worked with Citi Bank and handled the sales of its foreclosure assets. (real estate owned - REO - properties)
That market was caused by guidelines within the lending world that allowed purchasing of homes with very little verification of ability to pay the mortgage.
Today, the approval process for a home loan is a totally different animal than it was back pre 2007.
So much information is required, and throughout the process of buying a home so much information is required to be updated.
Credit inquiries can and are conducted from pre escrow all the way up to the funding of the home loan.
The appraiser's functions and processes have had a restructuring since 2007 as well. The appraisal reports they produce are double and triple checked by others involved in the process and neutral parties as well.
The real estate market from a lending perspective is very tight today. While money is cheap, low-interest rates, getting qualified for a home loan is not what it used to be.
That being said, homes are being sold.
In the Santa Clarita Valley, during the past 30 days, we have had 359 residences sell. These sales consisted of Single Family Homes, Condos, and town-homes in the cities of Castaic, Canyon Country, Newhall, Saugus, Stevenson Ranch, and Valencia.
Today, March 26, 2021, we have 190 residences for sale, the above criteria apply. However, about 25 of those are what are called "coming soon" real estate listings. This means they are being marketed for sale but they are not yet allowing showings.
At least showings in the general sense. Some may be able to be shown if I ask nicely. I do my best for my clients when it comes to accessing real estate listings.
That leaves me to the question that I posed in the title of this post, "Is a Market correction for Santa Clarita real estate on its way?"
We have interest rates in the 2% - 3 %s. That is so low, it could be considered FREE money.
The Santa Clarita market, in general, is more than 10% higher than the last cycle correction, foreclosure market, back in 2007 that carried us through the end of 2011 when the real estate prices bottomed out, then started increasing to where we are today.
I read a lot of "real estate agents" newsletters. For some reason, I'm on their drip campaigns. Which is okay, I do take a minute to read through what they are sending, and the biggest item that is front and center is that "There is no market correction coming to Santa Clarita real estate, so buy and sell now!!!"
You are reading that as I am I bet. Self Serving comes to mind.
Here are the facts:
We have had a plague of low real estate inventory in the Santa Clarita Valley during the past 4+ years.
The interest rates on real estate have never been lower, creating a refinance market where all those who were contemplated selling refinanced their home loans to absurdly low interest rates.
COVID-19 arrived during the 1st quarter of 2020, last year, and put a halt on real estate activities for a time.
COVID-19 was a reason why mortgage companies started with the forbearance option for mortgage holders, and there are a lot that partook of this program. That means some mortgage holders are not paying their mortgages and have not been since mid-2020.
That program was scheduled to end in June of 2021, now they have extended it to September 2021.
If the financing arm of real estate is sound. And if the real estate market has high levels of equity. And if we have low levels of real estate inventory and a high buyer drive where properties are selling within days. Where can a correction come regarding the Santa Clarita real estate market?
Two places: If a ton of sellers decide, "now is the time to sell" and flood the Santa Clarita real estate market with listings, which overrun the buyer drive, creating a buyer's market, homes will reduce in value.
Second Place: What will happen with all the home mortgages in forbearance?
Will the banks just have those mortgage holders resume their payments when September comes?
How many of those people are still without employment and having a hard time making ends meet even without a mortgage payment?
To see how these may play out we have to wait.
I know this, the market is at an all-time high in Santa Clarita Valley.
Homes are selling for more than comparable values because home buyers are willing to inject their own funds to exceed the appraised value of the home they are buying.
Those "new prices" are those being recorded pertaining to the Santa Clarita real estate values.
We will have to wait to see if a market correction is coming. I know that buyers are having a hard time buying real estate with the high level of competition they are facing.
Home sellers are enjoying the seller's market and having their homes sell for higher than asking and appraised value.
Santa Clarita real estate agents are seeing some of the same 'games' that existed in the last foreclosure market with regard to homes being listed for sale.
Keys go missing so no others can view the homes, super high offers relying on the appraised value to negotiate to a lower purchase price, etc...
My first step in real estate representation is a meeting. Meeting with my buyers or sellers and discussing the market, the trends, and the traps to watch out for.
I'm Connor MacIvor and I endorse this message :) - Be well and call me when you are ready to have your real estate won.