Are we entering a housing bubble in San Diego?
While the media and other news outlets thrive on fear-based tactics, we don’t see a housing bubble in San Diego based on current and historical market data. Basic supply and demand principles (extremely low housing inventory) coupled with declining interest rate market in jumbo loans would forecast a strong Seller’s market as we move into 2023 and 2024.
What happens to the housing market in a Recession?
Based on data from S&P Case-Shiller, there has been only one instance of a declining housing market during a Recession since 1970. During the recession from 2006-2008 the housing market decline was purely driven by the excess housing inventory in the United States that was created by the sub-prime markets. Based on historical data and the today’s extremely low inventory, the housing market will continue to stay strong through the next recession.
I would like to purchase a new home, but I need to sell my current home first.
Good news….AmeriHome has a solution. A customer can purchase their dream home without having to obtain an expensive bridge loan or go through the painful process of a contingent home sale. At AmeriHome, we do not include the housing payment (Principal, Interest, Taxes, Insurance, HOA) of the departure residence in the debt-to-income ratios if it is the intent of the customer to sell that home once they close on the new home. No other lender offers this program which often-times enables the client to purchase a new home prior to selling their existing home.
What tactics are you seeing in the market today to reduce interest rates?
Today, we are seeing a lot more “rate buy-downs” and it’s a great option. In some cases, Sellers are offering anywhere from a 1 to 2 Basis Points in Seller’s Credits that can be applied toward a rate buy-down as part of the listing, and in other situations we are seeing Buyers requesting the credit during the negotiation phase. There are two main types of rate buy-downs being utilized today…Permanent and Temporary. There are pros and cons to both options, and in general are great solutions to discuss with your team.
If I buy a home today, am I stuck with my current interest rate?
There was a popular saying in 2022 that said, “Marry the house, and date the rate” and is still applicable today. Institutional investors that purchase these mortgage-backed securities know that everyone buying a home today is going to refinance in the next 12 to 36 months so mortgage lenders are forced to add a premium just to sell these loans to those investors. If the investors know that rates are going to decline, you should understand that as well and realize it’s a great time to purchase because Sellers are more willing to negotiate unlike what happened in 2021 when homes were selling well over market value. Lastly, a homeowner can always refinance to a lower rate after purchasing the home if they meet the standard benefit-to-borrower requirements.