Homes Prices on the Rise in San Diego - June 2023
The housing market here in San Diego continues to rebound as we head full steam into the spring and summer selling season. But you're probably still hearing doom and gloom in the headline news, so let's get after what is really happening with home prices here in San Diego and what this means for you if you're getting ready to buy or sell a home. Hey everyone, home prices continue to rebound here in San Diego, and we're covering exactly how much they've gone up and what that means for you if you're either looking to buy or sell a home in the coming months. Now, this is probably completely different from what you may be hearing in the mainstream news. You're probably hearing that the housing market is crashing as home prices are in an absolute free fall. Well, there are a couple of reasons for this. Basically, the news is always looking at data that is always lagging a couple of months behind, and they're strictly comparing it to what home prices were one year ago. Now, I track home prices every single month and actively sell homes here in San Diego, so I have firsthand knowledge of what's actually happening in negotiations with buyers and sellers. So let's get after what is really happening with home prices and if we are in a buyer's market or a seller's market. My name is Curtis Chism with the Chism team, brokered by eXp Realty, and if you're looking to make a move, all you got to do is just give me a call, text, or email, and let's chat. Or if you know someone looking to buy, just pass this video onto them and have them give me a call. Now, we all know that mortgage rates are certainly the main driver of the housing market, and rates have shot up over the past year. And this happened not only because the Fed was hiking interest rates but also because of how high inflation was. Now, mortgage rates are directly tied to inflation. When inflation was at nine percent a year ago, mortgage rates had to catch up to that number. Now it's actually a relief that mortgage rates only ever got as high as six percent and didn't actually hit nine percent. Now, that would have completely crushed the housing market. Now, rates have stabilized around the high six percent mark, and inflation fell again this past month to four percent, and it looks like it's going to continue to fall over the coming months. Mortgage rates should continue to fall as inflation falls as well. Now, since mortgage rates have stabilized, the buyer market has really come to grips with current mortgage rates, and buyer activity has picked up. It did cool a little bit there for a bit with the national debt ceiling debate going on, but it appears to have picked up once again. Now, if mortgage rates do fall in line with falling inflation, I'd expect buyer activity to really start picking up, and with that, home prices will continue to rise. At this point, those stabilized mortgage rates are reflected in our housing prices here in San Diego. So let's get after home prices here in San Diego. Housing prices rose slightly to $955,000, up from $952,000, and we actually saw it bottom out several months ago back in January at a low of $850,000. So you can see right now that the news is reporting declining prices because they're comparing it to a year ago, but home prices already bottomed out and have been on their way back up for four straight months, already regaining $105,000 from the low. We're still off $45,000 from the peak back in April 2022. However, something that's really interesting to take a look at is how prices have changed over the past few years. If you purchased a home in May 2022, the median price was $990,000, meaning right now, you're underwater four percent or about $40,000 on that sales price. But that doesn't really matter to you because you're probably not planning to sell anytime soon. If you bought two years ago in 2021, then prices were $865,000, so you're actually up $90,000 or ten percent. And if you bought just three years ago in May 2020, prices were $662,000, so you're up $43,000. Inventory has risen again, so we're just under 3,000 homes, giving us just under two months of inventory available. And days on Market has fallen to 24 days on market, and that's showing that the time frame to sell a home is actually closer to the big boom we had back in 2020. Now, I've been seeing buyer demand really pick up over the past couple of months, and we're seeing bidding wars on homes priced and marketed well. So if a home is overpriced, it's still taking a long time to sell. And the other data point I like to take a look at is the final sales to list price percentage. This tells us how much above or below the list price that homes, on average, sold for. If, on average, the final sales price is 98% of the original list price, it's considered a balanced market. Anything over indicates a seller's market, and below indicates a buyer's market. Here in San Diego, we're now at 101.3% final sales to list price, and each month, that has been climbing, giving us another indicator that we've swung back into what I would call a balanced-plus market, meaning it's definitely favoring sellers, but there still are a lot of homes that favor a buyer. So what does that mean for you if you're thinking about buying a home? Well, if you are thinking about buying and you've been trying to time the bottom of the market, as you just saw, we already saw the bottom four months ago, and prices are definitely on the way back up. Now, fortunately, things are pretty stable. We're not seeing insane bidding wars overall, but for some homes, you may be the only bidder on it, and others, you might be up against several other offers. It really comes down to the individual home that you're looking at buying and then coming up with a specific strategy to secure that home. Now, that may involve going in with a very clean, full-price, or over-ask price offer, or it may be coming in asking for credits to cover your closing costs and asking for repair work to be done. And that's how I can help you navigate the buying process, help you analyze each home that you're looking at, and come up with a specific strategy needed to negotiate to help you buy your home. So just give me a call, text, or email, and we'll get started. Now, if you are planning to sell a home, you really need to take a look at your home and come up with the right strategy to successfully market and sell your home. Just like for buyers, every home is unique, and it has its own strengths and weaknesses. Sometimes a home needs a lot of repairs, remodeling, and upgrades prior to hitting the market, like paint, carpet, landscaping, roofing work, and other times it just needs to be decluttered and really clean. As we head into what I would call a balanced-plus market, you may need to plan to do some repairs that come up on the buyer's inspections or plan on giving them credits to help the home buyer buy down their interest rate to actually secure your home. And that's why it's just more important than ever that you give me a call so we can put together a customized plan to sell your home on the best terms that you're looking for. We'll make sure we don't overprice the home, causing it to sit for months. Instead, we'll price it with my proven strategy to generate tons of traffic online, which will turn into more showings, more offers, and then, hopefully, a video more, and that'll give you the leverage you need to get the price and terms that you want. If you are wanting to get an idea of what your home may sell for in today's market and what it should be stat, just contact me, and I'll run a no-obligation home value for you. Well, that's a complete overview of the housing market here in San Diego. Leave me a comment, shoot me an email back, and let me know what you thought.
Read MoreTop 8 Ways to Buy and Sell a House at the Same Time in San Diego
Are you trying to buy a home, but you need to sell your home first? While we're covering eight different ways to buy and sell a home at the same time, hey everyone, this is Curtis Chism with the Chism team brokered by eXp Realty. And if you're looking to buy a home but you need to sell your home first, we're going to cover eight ways to make this happen for you. Just give me a call so we can chat about which options make the most sense for you. The first and most common thing people think of is to make a contingent offer on the sale of your current home. The way that this works is you make an offer on the home you want to buy, but you're saying you won't actually buy the home unless you can sell your current home first. This honestly only really works if we're in a buyer's market and sellers are willing to accept this. In the market that we're in now, this generally just isn't working, so we need to move on to some better options. The second option is to sell your home first and then negotiate a rent-back with a buyer of your home for a period of potentially up to two months. This gives you added flexibility and time to sell your home, search for and close on a new home. Now, you might get some of that rent back for free, or you might have to pay for some or all of that rent back. It'll just really depend on what we can negotiate with that buyer. The third option is to stay in a short-term rental after you sell your first home and before closing on your next home. This gives you anywhere from a few days to several months to go ahead and buy your new home. With either a rent back or a short-term rental option, you can actually find a new home while you're selling your existing home and get an escrow on it, and then close on the new home shortly after you sell your first home. You just need to wait to close until your current home has sold. This allows you to sell your home, unlock that equity, and then close on your new home. The downside is you need to move all your belongings into storage for that period of time that you're in that short-term rental. This method brings us to the fourth option, which uses a similar strategy to finding your new home, getting a new contract on that while under contract to sell your existing home, and that is a double close. So basically, you simply close escrow on the same day for both the home you're selling and buying. With the right title or Escrow Company, you can do this. However, everything has to go perfectly with both escrows to make this happen. And that brings us to a few other options that do carry some extra costs and paperwork but can make the whole process a little bit easier and less stressful. The first of these is to obtain a bridge loan. So, the bridge loan is where you get a second mortgage for most of your needed down payment to go purchase that new home. Then you sell your existing home, and then you refinance all of that into one mortgage. This allows you to buy a new home, move into the new home, and then work on selling your original home. Now, the complication here, of course, is you're paying two mortgages at one time. It's oftentimes difficult for folks to qualify for two mortgages at once, and there are certainly some costs associated with this. The second option using financing to make the move easier is to pull out a home equity line of credit or a HELOC on your existing home. If you have sufficient equity, you can use that equity to put a down payment on your new replacement home. However, again, you're going to have to qualify for two mortgages at the same time. The next option, which I find often is the best for a lot of folks, is a home trading program that I have access to. And that allows you to buy before you sell. So what happens is you qualify for the program through this home trading partner that we work with. So what they do is they unlock your equity in your existing home so that you can buy a new home. And then you go and purchase your replacement home first and then turn around and sell your existing home. So you don't have to carry two mortgages at one time, and you can even get a rent-back window. We can even couple it with a cash offer program to turn you from a finance purchaser into a cash offer buyer. That makes your offer extremely competitive, and you can get into your home quickly with fairly low fees. And finally, an eighth way is to actually not sell your home at all. So what you can do is buy a second home and rent out your existing home. You can count 75 percent of the rental income towards your income, helping you qualify for your second mortgage. So you can start building additional wealth through real estate. So if any of these options sound like a good option for you, just reach out to me so we can figure out what makes the most sense for you. And I look forward to helping you purchase your next Dream Home. Thank you.
Read MoreHigher Mortgage Rates for Great Credit Homebuyers in San Diego - Is it TRUE?
"Have you heard about the fee changes the government is making that may be causing people with higher credit scores to pay more to help people with low credit scores? In this video, we're going to dive in to find out if this is really true and break down what it all really means for you when you're buying a home. So, the story here is that Fannie Mae and Freddie Mac changed the fees that they charge on loans that, on the surface, appear to make people with higher credit scores pay more in fees to offset costs for people with lower credit scores. Basically, the perception is people with higher credit scores and higher down payments are now getting penalized in order to help people with lower credit scores and lower down payments buy homes. This has led people to think that if you have a lower credit score, you'll pay less in overall fees, and there were even people suggesting that you should purposely damage and lower your credit score to pay less in fees. So let's just say upfront, please do not do that because that's just not true, and damaging your credit score will definitely cost you. Now, this policy change really has caused a lot of confusion since conflicting messages have been presented by different groups for the reason behind these moves. First, we've got Fannie Mae and Freddie Mac stating categorically the reason for the changes is not at all to encourage purchases of homes by lower credit borrowers or to penalize higher credit borrowers. But then we've got industry groups like The National Association of Realtors coming out saying that this is the reason, and they're encouraging the government to scrap these fee increases. So let me try to clear up this confusion for you. Well, first, who exactly is Fannie Mae and Freddie Mac, and why are they charging fees on loans? No, they're not your great aunt or uncle that you've never heard of. They are the government-run corporations responsible for ensuring the majority of mortgages made in America. By ensuring, it means that they step in to help pay back the companies actually lending the money for home purchases if that home buyer defaults on the loan. Now they have to maintain a certain amount of money in their accounts to maintain what's called liquidity, to make sure that if people do default, they have the funds to pay out the money. Now, in order to maintain those cash reserves, they charge certain fees on home loans. So why did they actually make this change? Well, essentially, in 2008, after the last market crash, Fannie Mae and Freddie Mac were taken into conservatorship, and they called this combined entity the Enterprises. They have to charge fees on loans in order to provide a form of insurance to ensure the taxpayers that now own Fannie Mae and Freddie Mac in case of default of these higher risk borrowers. Over the past couple of years, Fannie Mae and Freddie Mac did a huge risk assessment and realized the existing fee structure didn't accurately reflect the risk profile for each borrower. So basically, what they are saying is that the fee structure that they had implemented after the 2008 crisis was simply outdated, and it wasn't actually working quite well enough to maintain the needed liquidity in the system. They had to restructure the fees according to each individual class of borrower's risk based on credit score, down payment, debt-to-income ratios, and income levels, in order to provide liquidity to Fannie Mae and Freddie Mac and to make sure the taxpayers didn't end up on the hook again for another potential crash. So, they have been undergoing an overhaul to adjust fees and have been making these adjustments on different loan types for about the past two years, for loans like second homes, high-balance loans, and cash-out refinances. Now, this was basically the final stage in that risk rebalancing. On the surface, it does appear that they are passing the risk of the lower credit borrowers onto higher credit borrowers, but it appears that may have simply just been an unintended consequence of the risk rebalancing. It appears simply that overall, the higher credit score borrowers simply weren't being charged enough in the first place in accordance with the risk profile. So they had to rebalance risk to maintain overall stability and liquidity of the system to help prevent a catastrophe like what happened in the 2008 housing crisis. Now, here's the gist of this: You're still going to be far better off to put at least a 20 percent down payment and have a higher credit score. Now, when you look at the table here, your overall fees are going to be much lower if you have a higher credit score and a 20 percent down payment than if you have a lower credit score and a lower down payment. By putting 20 percent down, you'll avoid having to pay mortgage insurance, which is typically going to be hundreds of dollars per month to your mortgage payment. So, whatever you do, please don't damage your credit score to avoid paying higher fees. Now, are you paying a higher fee if you have a higher credit score? Well, maybe, but it just depends on where you fall on the fee schedule and how much you'll actually be paying. So, here's what you need to do if you're looking at buying a home: just reach out to me, and I'll put you in touch with a great local lender that I work with who can help you get a great rate on a loan no matter what your credit score happens to be."
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