December 16, 2020
By Saeed Ghaffari
Crystal Ball Anyone?
We don’t have a crystal ball but we like to pretend as if we do!
Mortgage rates are not going anywhere, neither down nor up, at least not in a near future, well depending on how you define the near future. Assuming the swings in interest rates in either direction be an eighth to quarte of a percent (.125% to .25%), the change in the interest payment for an 1/8 change in interest on $100,000 mortgage is $6.65. Even if it is double that amount, it will be $13.30.
For a loan amount of $500,000 that change would amount to $65 change in payment either up or down.
In So Cal, $65 doesn’t even cover a fancy dinner for two. Knowing it takes about $8000 a month income to qualify for a $500k mortgage, $65 is a just a drop in the bucket for most people. From that perspective, I would say we don’t expect much of a change in interest rates.
Looking at it from a different perspective, every penny counts, we should spend our money wisely and not give it away to the mortgage lenders if we don’t have to. That said, if you have not taken advantage of the historically low rate, it’s time to do it now. Although the rates may not be going anywhere, our crystal ball tells me the lending guidelines may get tighter in the coming months and years. I leave it up to the readers to speculate why.
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Something big is happening in the U.S. housing market—here’s where 27 leading research firms think it’ll take home prices in 2023
Something big is happening in the U.S. housing market—here’s where 27 leading research firms think it’ll take home prices in 2023 Do you like this Article ? Sign up HERE for your FREE M&M Account to receive more Real Estate related information and news and THIS...
California Buyers Still Can’t Afford Homes
The issue for California residential real estate remains the same. Poor affordability means that despite latent demand, buyers can’t afford the prices of homes in the Golden State. For that reason, many have left to find much cheaper homes in other states. Unemployment will likely be on the rise along with lower business profitability (tech sector continues to lay off workers) which means fewer buyers are likely for 3 to 6 months.
The stronger consumer optimism is running against sticky inflation and a likelihood the FED can’t lower interest rates. But will that discourage buyers in California? Demand is always intense in CA. No other place offers what California has, and buyers today do seem to put lifestyle at the top of their list.
The luxury housing market, like most other real estate sectors, is adjusting to a slowdown. Affordability and home size are every bit as much on wealthy buyers’ minds as other consumers. “The reality is we are coming out of one of the best real estate markets in history,” Gary Gold, a luxury property specialist with Coldwell Banker Realty in Beverly Hills, Calif., notes in the latest Coldwell Banker Global Luxury Trends Report. “But that level of demand and price appreciation wasn’t sustainable.”
Nearly 90% of respondents to the Coldwell Banker survey say they believe the real estate market will be better than or the same as 2022 for property investment. The following emerging trends were noted in the report.