During our latest real estate update I spoke about the local housing market from the point of additional inventory. That inventory is creating havoc amongst real estate sellers. Meaning, they are concerned that their homes are not going to sell for the prices that had established with their real estate agents when entering the real estate and housing market.
Here is it happened, and it happened almost all in one night.
Let's establish that one night in real estate is equal to about 15 weeks. Then we can all concur the increase in inventory was like a thief in the night. The type of thief that would bring stuff and not take stuff away.
Now that you have seen the True Connor, I will continue.
During those 15ish weeks, we observed a 25-30% increase in available real estate listings for sale in the Santa Clarita Valley cities. This included additional real estate listings for sale in the cities of Castaic, Canyon Country, Newhall, Saugus, Stevenson Ranch, Valencia, Acton, and Agua Dulce. This started to concern the real estate sellers who were on the market at those times.
It also caused those sellers to take a deep breath and to evaluate their current pricing strategy. I will tell you that it happened in an overnight manner. Sellers are not watching the market super closely and as is the case with other non-market absorbed realtors.
I look at the current real estate and housing inventory on a daily basis. I noticed this market trend in the Santa Clarita Valley cities, starting to spread to other cities in the Southern California areas where we list and sell real estate.
Then it picked up, like when you see someone start shooting and other's join in. That is bad, but there is a name for that. It's Called contagious fire.
That is exactly what happened, on a smaller scale in a particular Santa Clarita Neighborhood. There was one active listing. The other people inside of that community started to want to take action and get their homes listed for sale, as they had been delaying doing so.
In the next 48 hours, there were 5 additional real estate listings in a Townhome community in Valencia CA. In the blink of an eye there were 6 total active real estate listings and what do you think happened to those prices - they became much more competitive. There were people, sellers with more equity, that were starting to reduce their prices below where the other home sellers were able or willing to go.
You can take that small snapshot and see that the Santa Clarita Valley market is attempting to get to a place of being "normal". Home sellers don't appreciate that because, and I don't blame them, they really enjoyed having their homes on the market only over a weekend then multiple offers were received.
They were able to, if they hired a savvy and top negotiating real estate agent, to counter all of those offers and get more for their home than they expected in the first place. With terms that were in the seller's best interest.
The reason for this was not that there were more home buyers in that market, the reason was that of having less than 400 units for sale in the Santa Clarita Valley Cities. These active listing numbers are being spoken about considering the Santa Clarita Cities being tabulated - Acton, Agua Dulce, Castaic, Canyon Country, Newhall, Saugus, Stevenson Ranch, and Valencia. Today our housing and active real estate numbers are 703 as of 9/26/2018 at 1039hrs.
Over time the additional inventory has created a more competitive real estate and housing market where the home sellers should be educated as to what their competition is and what they will need to do to their home to stay competitive.
Before the current state of the local Santa Clarita housing market, we observed very little needing to be done to a seller's home to be competitive. There was hardly anyone they were in competition with. A good cleaning, decluttering and depersonalizing was what was needed and those homes sold in days with multiple offers if they were in the sweet spot of 3-4 bedrooms, 1100-2100 square feet and between 450k and 600k.
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The state of the Santa Clarita Market
Did I say "normal"? The Santa Clarita real estate market is in a state of flux and on it's way to becoming "normal" That is because there is a little-known thing that the veterans of real estate remember, that is called Absorption Rate.
The time it would take to sell off all of the current real estate listings in the Santa Clarita Valley if no more were added to the saleable real estate inventory.
A normal market is 6 months of standing inventory as it relates to Absorption Rate. If no real estate listings entered the market and if it took 6 months to liquidate every single real estate listings with the current buyer drive - that would indicate a typical real estate market in the SCV cities.
I will tell you that type of real estate market has been a while from happening. I have seen that we have had a super duper foreclosure market, just before that in 2004 - 2007 we had a great seller's market. Then was the time that people were panicking and walking away from their mortgages. Some did so because it made sense to them and they viewed it to be a good financial decision. Some walked away due to personal events in their lives that caused them to have to do so.
Events like death, divorce, and disease. The 3 D's are horrible, I'm sure you can agree.
Then other's had employment issues and could not afford their mortgages.
One of the largest subprime banks fell in March of 2007, which was the New Century Bank. After that, the real estate market collapsed like a house of cards. We need to remember the malfunctions of that market so it won't happen again, at least the factors that could have been viewed as being in the 'peoples' control.
We observed folks being approved for mortgages that were much higher than their individual comfort levels regarding payment.
Some were investing a lot of financing with very little down or in a lot of cases using 100% financing. This included two loans. One for 80% and the other for 20%. The 20% loan was quite a bit higher in the interest rate. Some of those 20% loans had balloon payments required and went a maximum time frame of 5 years, like a car payment, with early pay off penality and adjustable interest rates. Talk about stacking the deck - that is a bad loan no matter how you slice it.
One of the other items that were out of control had to do with the "affordability" complex. There were many attempting to sell someone by bringing up future ability to make payments. If the payments increased then you will be making more at that time, they were saying things like that. What a person qualifies for versus what a person can afford, at that time, were two different things.
Today, it's much closer to being the same. However, you will want to know what your payment will be versus what you qualify for. Maybe you are not comfortable with the payment you qualify for. Maybe you are looking to finance less real estate. This is important to pay attention to - heck when I was growing up we were too poor to pay attention :)
Santa Clarita's real estate future developments
Interest Rates. They are currently hovering around 4.75% - depending on your personal credit profile and the type of loan you are going to be approved for.
There are a lot of different factors and today with the low-interest rates, we see that people are going to real estate lenders without questioning what they are charging.
It's a consumer's right to question. That is why we live where we do. You should question your Realtor if they are charging you a fee. You should challenge your real estate lender because you are for sure paying their fee's. They are also the one dialing in your interest rate and the terms of your loan/mortgage. Question away and I'll be glad to give you the right questions to ask a home loan lender, or bank, or mortgage broker, or credit union, or any direct lender.
I cover the right questions in my crash course on real estate - call me and we will get yours scheduled when you are ready.
Interest rates are due to be discussed and will probably go up after today, Wednesday, September 26, 2018. The FED is meeting today and the central bank is rumored to be going to raise the interest rates .25%. Not a huge jump but moving us to 5%.
That move is going to do one of two things. It's either going to cause the local housing market to further slow down, even more than occurs as we get closer to the holidays. Or - it will cause the Santa Clarita housing and real estate market to move at a faster pace. More sellers having to "move up" who are unable to financially retain the homes they own and rent them out, needing to sell and buy - to some it may be the "writing on the wall" they have been waiting for.
On the home buying end, there are quite a few home buyers that are waiting until we get into next year to purchase. I have literally 300+ home buyers who are in my network that have expressed this sentiment.
A .25% increase in interest rates may slow them down further or may cause them to start wanting to buy a home faster.
I always keep my clients posted as to the status of the current Santa Clarita housing market. I will be there for you as well.
I did put up some statistical graphs on a Santa Clarita real estate market article I wrote this week. Our Market Mondays was a hit and had a lot of views. You read the Santa Clarita real estate market article here.
Wanting to buy a Santa Clarita Home
Where do you start. The best place to start is with me. Let's talk and let me arm you with the best questions to ask all involved parties, including yourself. Should you be buying a home? Maybe a condo or townhome is a better fit? What costs are associated with buying real estate? What should you be looking at in a home besides it's condition? Where would be the best city or neighborhood to purchase a home and why? How much should you be paying a lender to obtain a home loan? What about the local lenders, are they better or is your Credit Union your better option?
What should you offer on a home you really like? What should you offer on an overpriced home? What types of financing is going to be best for you?
What about taxes and mello roos? Can you write off your property taxes? What about a Home Owners association - should you look for real estate without one? Are Home Owners association fees a write off on your taxes?
How do you by a foreclosure? Where are the distressed homes located? Can you buy a home with ZERO down payment?
There are so many questions that need to be asked and these that I just wrote are only the tip of the iceberg.
Most people go into a real estate transaction blind. They are not made aware by the service provider they selected.
We do real estate representaiton differently. We do real estate from a protect and serve standard of care. I want to ensure our real estate clients are well informed by me in person, throughout the entire home buying process, before - during - and after. I do so by articles about the Santa Clarita real estate market such as these. I also keep our clients updated on our local Santa Clarita real estate housing radio show.
When you are ready, reach out to me. Make sure you see our top producing real estate website at SCVnest.com and search for all hoems and real estate on my platform. I will make sure any of your personal and private information is protected from anyone else getting their hands on it. You will only be dealing with me and me alone.
When you are ready, just reach out and I'll take care of you like family. Family I like :)
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