April 05, 2023

Do You Still Have to Pay Your Mortgage If the Bank Fails?

https://bit.ly/AbitanoHomeValuation Do You Still Have to Pay Your Mortgage If the Bank Fails? Consider, out of the roughly 62% of U.S. homes that have a mortgage, some 92% of them have home loan rates at or below 5%, according to CoreLogic. And 57% of those homes have mortgages with rates at or below 3.5% Automotive industry heading into issues Financial Intelligence NAR.Realtor Stats

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40 days on market report, but we have a little bit more stuff. Three things you need to know about what's going on in the real estate industry and how that affects you as a homeowner, home buyer, or just a person in here in Santa Clara County. All right, real quick, let's go into a few things.

Some new numbers popped up. Let me bring that to you.

There it is. That was easy. New streaming software, still learn. Learning it. All right. Medium home value has dropped down to 360 3 from the very, very high of four 16. This is US wide, right? Our medium price here in San Jose is on average, 1.392. Crazy. De sell over time is about 24. And this is, where is that?

That's Santa Clara County, I believe. And then Santa Clara Co. Santa Clara County. Absorption rate means that it's how long, if we stop putting new listings on the market today, we would run out of listings in 1.9 months. Two. We've been having this problem before, and I've been telling people this for the very, very longest time.

Consider, out of the roughly 62% of U.S. homes that have a mortgage, some 92% of them have home loan rates at or below 5%, according to CoreLogic. And 57% of those homes have mortgages with rates at or below 3.5%

I don't know why that says 12.4. That's wrong. Don't look at that. We've been having inventory issues for a very long time and it's not going away. I don't know. Do I have those numbers? That's this right here, right? This is Santa. This is Sacramento area. Sacramento region from Ryan Lundquist, Ryan Sacramento Appraiser.

He gave me the muse to get you this information right here, which I'll shrink down so you can see it. This was as of last week. We are down about 50%, 60% of where we need to be. Maybe 70%. So we have a, huge issue with inventory. Houses are still, if they're not priced right based on condition, location of marketing condition, they're still going to sit on market.

We have 90 houses in Santa Clara County, or No, of the entire area. Of all the 10 different counties as well as here. 40 days of multiple counties, 174 units, 174, single family home. Less than $2 million still on market because they're overpriced. People aren't willing to listen or go there. They have other options.

Buyers have the options right now. If it's priced correctly, it will go quickly. I think, yes. Last week I told you that there was a, statistic. 40% of the houses are going. Going into contract before they even get on market. Let's take a look at let's see, just San Jose. Just San Jose. Where is it?

Last seven days criteria sold last seven days. Let's take a look.

How many of them sold within. Before they ever got on market, three of 'em out of the 60. That's just San Jose, just single family homes. If I did that Santa Clara countywide, I wonder what that would look like. Clara,

the 185 homes sold Santa Clara County.

Okay, that's on 185 homes. 12 of them sold before they ever got on mark off market. So you asked me, are homes selling? Yes, homes are selling, but they have to be priced correctly. They have to be priced. Abso pricing is. The most important thing right now, if you have an overpriced, it's just going to sit on market and I don't care what it would look like last April.

Prices have come down because rates have gone up. Affordability is an issue, right? We're not even seeing REOs or bank owns come into Proc into the market before we go into the San Jose numbers, which are always exciting. I wanted to go over this thing. What happens if your bank goes bankrupt? What happens if your bank goes out of business and you have a mortgage tied to them?

Nothing's going to matter because that legal paper in there was says something to the effect of, if we fail, some other company will service your loan. You still have to loan, right? What happens if you're in process and you're buying a house? And your bank fails, the one that you've chosen, then you have to let the seller know, Hey, seller, the bank we were using just went bankrupt.

Do You Still Have to Pay Your Mortgage If the Bank Fails?

We're going to have to do this and change banks to find a loan. We just need to let you know. So I need another couple days to figure this out, and we'll give you a timeline once we figure things. If the seller says, no, I want to go somewhere else, let them go. They're, going to be pricks and whatever.

What if you haven't closed a mortgage yet? That's what, so what happens with this is the problem. Our money and we talked about it on, Ryan Lundquist feed yesterday is the cost of money was free for so long or almost free for so long. That homeowners right now that have the 62% of the homes right now that have a loan on them, they're under 3% and you can't afford to, actually, it would be stupid for them to.

So they're being forced into becoming landlords. And I'll, it's funny, there might be like a little industry, a little sub-industry saying, Hey, we'll help you manage your property. And it might be like something where it used to be a cottage industry where we had property managers do that. But I think we're going to see corporations come in and start managing like large corporations, managing tons of equity based.

Single family homes or homeowners with less Inc. Or less, where am I going with this? Homeowners with 3% or less mortgage rates. You're going to see them capitalize on going with corporations that manage property, and I think you're going to see that I mentioned this multiple, times over the last few years.

Automotive industry heading into issues

Some of the tipping points that we have. Let me see if I can find it real quick. I know what I want to find it. One of the tipping points. Huh? Tipping point. Malcolm Gladwell, tipping point. One of the tipping points is automotive. I keep seeing this pop up over and over again on newsfeeds, on TikTok, on YouTube, shorts, on YouTube.

It's becoming an issue. How many people do you know are paying over a thousand dollars a month for their. That's not normal, especially right now where, what is it? 60% of the people make less than a hundred thousand dollars a year. It's just not affordable to do that. Plus pay three or $4,000 a month for rent or mortgage or what have you or more, and still have a living.

There are news reports saying that.

California, 18% of residents pay over a thousand dollars a month. Here are the APRs, the new interest rates. These are the recent interest rates. This isn't going away, guys. This is going to be one of the tipping points. This is well as healthcare. All right? Let's see. Don't forget financial intelligence.

Financial Intelligence

We have somebody coming up next week. I don't know if it's going to be our healthcare guru or our commercial banker, but we're, going to spend 15, 20 minutes on the video with them and talk to them about what they do and how you can take advantage of their knowledge, right? San Jose inventory is shrinking.

Consider. We have very low in inventory. Guys. If, you know anybody that needs to get their house sold, this is the time to do it. Prices are stabilizing. You're not going to see April, 2022 pricing, but you're going to have multiple buyers. There's a lot of people coming into the market. Remember where that number that I showed you?

Where is it? That's Santa Clara. Let's see how many homes sold over list price

out of a hundred eighty five, one hundred. Li sold for over list price. Now that one's not a whole lot, but still it counts, right? That's part of the statistic in San Jose.

Why did that go to zero? Oh, because I have that number wrong. I'm sure.

Let's see. Oh, that's why Sole price last year it was right here. See, this is what happens when you rush guys. Don't rush. Makes you look foolish. There we go.

Month on month or week on week from last year, we shrunk $150,000, but on the average, San Jose shrunk, $200,000, which actually has gotten better because this last week was a an outlier than the week before and the week before that. So last year list price, the sales price was one 17. Now we're seeing where is it?

96% on the average, although a hundred percent. 80, what was it? A hundred out of 185 homes in Santa Clara. These numbers here are San Jose. So for over list price, same thing here, 35 out. Out of the 60 homes it sold, which is almost 60% sold for overdose price, that's an important number to know because on average, if the house is priced right, sellers are smart, they listen to their agents, they're just going to sell quickly and quickly.

Days on market, still up, but coming down because again downward pressure of supply, upward pressure of demand, prices are going to start increasing a little bit, but I don't think they're, we're going to see April, 2022 again now for a while. We had this last week we had 78 pendings, which is a far cry better than what we saw.

Let me move this over here. Let me get rid of my.

There. Remember last early in the beginning of the month, we were, or the beginning of the year, we were seeing 30, 20, 25. Last year we saw 21, right? We're getting back to absolute normal. Now, this price decrease, 20% of the homes that are listed right now have seen a decrease. That's 52% of, or 52 of the 250.

Let me move my head again. And T f T back on market 19. Cancellations were 17. Those numbers are all dropping. So we're at average here. These are the numbers you wanna look at. These are just week on week. This is year to date, just so you know. So on average, we have 250 homes per sale over the. At any given time.

Over last, since the beginning of the year, transactions are down 50% year over year.

We're down year over year, $200,000 in value that could come back up, right? List last year, list price was 116 on average. Now we're 20% down, which is 96. So what does all this mean?

All this means is we're coming back into a normalized market. It doesn't mean we're crashing. We have so many homes, so many people still trying to buy houses. We understand affordability is an issue. We understand that if you're buying a car for a thousand dollars or $1,500 a month, your priority isn't to buy a house, right?

Unless you are making $500,000 a year and you can. And, a lot of people out here can, afford that. I have friends from high school that I talked to on Facebook and I send out all these things and there was this one where we had a floor plan and here in Santa Clara County, San Jose specifically, I could tell you that this floor plan would cost probably 2 million to build.

It's a beautiful house, maybe two and a half. And the land, unfortunately, It would be like an older house and you'd have to buy it for one or $2 million and then demo it, and then that would be it. So you're looking at four or $5 million all in once you buy a house. If you want to build it up here in San Jose and out other parts of the country, it's not going to be like that.

It's going to be a lot. And yes, you're going to spend maybe a million, and a half, maybe 1.2, depending on where you are, cost of labor, et cetera. But at for the most part, it's not cheap to build anymore.

Still the values are in rebuilt or. Resell homes, right? You're not going to get the same value in a brand new home because you're, giving something up, you're giving up control when, because most of 'em are in HOAs or some sort of an hoa. And you have smaller land and you are basically buying a McMansion or you're cl so clustered together that you know your, you can see what your neighbor's eating for dinner.

Older homes, you have more land. Yes, they're a little bit older, but you can fix them up and there's some still, some value in that. So that's it. All right, Wednesday, April 5th, a Vito with Abitano. We'll see you out there.

Vito Scarnecchia

Realtor®, Broker, Veteran, Dad

DRE#: 01407676

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