San Jose Snapshot | By the numbers | #rewtf of the week 🦅 🌎 ⚓️ Hector Ramirez talks about the hot market
San Jose Snapshot | By the numbers | #rewtf of the week 🦅 🌎 ⚓️
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Hey, welcome back. Today is Wednesday, June 7th, and again, we have the opportunity and grace of Hector Ramirez to join us. And thank you again for hanging out with us. Hector, you and I just spent the last 20 minutes chatting about what's going on and what we're going to talk about. And I am just so, charged up about what's going on in this market is crazy, right?
Really an interesting time. I, know it maybe sound like a broken record, right? We keep talking about it, but it just is especially for some of us that live, breathe, just. Every day. This is kind of part of our life. And it's so important to really understand what's happening and be able to speak to our clients and, be able to guide them along the path without looking to buy or sell.
But just so, many things happening right now that it is just it's my kind of mind boggling sometimes. Yeah. Yeah. The intention of these videos aren't to talk sell us. Obviously it is to sell us, but really it is to, give somebody else another point of view from. People that have been in the market for a long time have been in this industry for a really long time.
And you've done this for a super long time and I live and breathe it, like you said too I, was going to say, I dream it, but the more we talk about it, the more we talk about it from an educational standpoint, I think we can help more people. And that's, really what the purpose of these videos is and I appreciate you coming on and, hanging out with us.
Yeah, always fun. Yeah. We started talking, I'm going to get over here real quick. We started, what did we start talking about? We started talking about the market and lack of inventory. Yeah. Just really home appreciation. Right? Home appreciation data just came out. And so that really just spawned is this.
A crazy conversation about inventory and all the data around that. And then, you know how the market in a census turned this, year, right? And then, look at this. This comes from the good people at MBS Highway where they compare all the data on home appreciation, right?
And we can see that, by the way, home mbs, their projection of appreciation for the year was about five to 6%, somewhere in that range. And what they do here is they, show us this is across the country based on all the different companies, if you will, that, that, that measure data.
W. How home appreciation looks this year. And we can see that in January we were negative basically, or flat, right? And that was carried on from, what we saw last year, right? We, talked about this, right? Since June of last year, we saw homes start, the home price starting to soften up, right?
So we saw that instead of going far above asking. We saw that number starting to get very close to asking and then some months go dip below the asking price. And this is across the table, not necessarily one particular city or county. And that carried on into January of this year.
And then by February we started to see, and I, and again, I think this, speaks to what I was talking about even last week with you, right? Like where, rates have normalized, right? People have come to terms with that, hey, you know what rates aren't they, almost hit 8% last year.
They've been hovering in that five, 6% range, and we've come to terms that, hey, that's the new norm, and we saw definitely on the Mor mortgage application side, an influx of, people wanting to get reapproved or, or, just get approved and, step into the market.
And we've been seeing this over the last even month. Everywhere, in Northern California. We've had multiple offers, and situations. It's been absolutely red hot. Yep. And going back to this chart really is just showing how much paper, how much homes are appreciate appreciating on a month.
Month-to-month basis, right? And so we see it in, in February. The average appreciation of about about two tenths of a percent. We see it again in March. Now April figures are coming out and they're they're, moving in that upward trajectory, right? And obviously inventory is extremely tight.
And when you have an influx of buyers and very few homes, what happens, right? People will get more aggressive which, will continue to increase the value of homes, right? So if you're a homeowner, this is great, right? If you're a seller, Good news, right? If you're a buyer, it's very similar to what we've been experiencing for the last couple years.
I think we missed the boat. If you haven't bought a house yet, I think you missed the boat. I think granted tomorrow the MO economy might crash or whatever, but if we see the trends continuing the way we are median sales are back up and this, so the great thing about this chart is it shows a backwards view of the last, what, 60 to 120 days.
So this is a snapshot. 60 to a hundred days behind us. And these are from multiple points of, experts showing.
Sorry, I lost you there for half a second. Yeah, you went mute. Did I mute? Am I still mute? No, you're good now. Okay. So if you look at the Fred data, which is the It's, the St. Louis Federal Reserve, right? That they're, they report monthly on what's going on, and it's the same data, but from their point of view.
And they're seeing back in June, last year, April was really when we peaked out in our market. Hello? Is that your dog? No. June, we peaked out at 413,000 median across the nation. That originally was four 16, so they adjusted it. And they're going back and adjusting these numbers as they need to.
because as, time comes by, they get more and more data and there's over 220 mult metropolitan areas and multiple more markets that they have to collect data from. So it's, not automatic, it's just still a human based thing. This thing right here, right now, in April we're saying 3 88, which is, That's the increase that you're seeing on this slide that we're talking about, right?
Yep. It's right in along line with appreciation rates. It's right in line with so many other statistics that we measure on the LE lending side, there's a lot mortgage applications. All along. And, again it's, just speaks to that, right? Did we miss our boat? Not necessarily right?
It, definitely depends on each buyer's. Situation, but in terms of price and the lowest price. Absolutely. And that's the thing that we talk about and I learned personally as a home buyer many, years ago. It's like you can't ever time a market because you never know that you hit rock bottom until what?
So you're going back up again, right? So it's and, data always follows, right? We're, it's always in the rear view mirror, right? So you'll never know when the bottom of the market is. And this is what we've been telling people for the last couple years. You'll never know when the market hits rock bottom.
And I think we've missed that part. But you know what? Now's the time to buy. It's always when it. What makes financial sense for you? Whether you're, buying, you have a new baby, you have to get a new house, or you want to finally buy a house? Don't wait because,
hang on a second. We lost Hector again. Keep losing you, man. What's wrong with your me man? What's going on? I, yeah, you know you're offense. You're offending me. I'm going to cancel you something. I said I think it's your internet because you're kinda wobbly. But if you think about it, I have people that have waited eight years for the rock, the market to hit rock bottom.
And I haven't heard hiding a hair from him. And you wait and you put money away, and you save. And you save. And every day you save a dollar, you're seeing that same house that you could have bought eight years ago go up 5% every year, five to 10%, right? And if it was, a million dollars eight years ago, guess what?
It's now worth $1.5 million. So that equity could have been in your pocket instead of. Somebody else's pocket. Absolutely. I keep looking at this market and go, God, how much more can it go? And it just, it's going to continue to go. I don't think it's going to stop. And I know affordability is a, an issue, but at the same time, there's other products out there that can help get you into houses that aren't as toxic as those pick a pay loans that we had back in 2008, 2009.
Yeah, the majority of those loans are, far behind us. We're we, still, because the market is so tough there's still very good loan products out there, right? There's still when you look at even a first time home buyer like. Program, right? Like very low down payment, right?
Low to no down payment, right? If the market wasn't so strong, investors wouldn't offer those programs, right? Fannie wouldn't. Fannie and FHA wouldn't back those type of programs, right? So it speaks to the. To the message that, hey, the market is so really strong. You have the ability to get very good loan products.
But yeah, we the, days of having very, risky loans was zero down. And you're not even covering the interest on a loan are far behind us. I think we learned our lesson from, oh eight. Yeah. It was dangerous when I sold houses to the people then, and I looked at that, I'm like, are you sure that's what you want to do?
Yeah, It's fine. Everything, it will work out fine. I totally understand. I'm like I, that sounds pretty risky. I don't, I don't is there something else that you can buy? Is there another kind of loan? No, this is great. This, works out perfect. And in their head, the buyer's head, they're like, oh, I don't have to pay interest.
I don't have to pay down principle. I don't have to pay down. I can do a minimum payment just like a credit card. And that's where people got into trouble. Yeah. We were just misinformed. Yeah. And that's a lot of what we do today, right? Is. Is education, right? We talk about different the market, we talk about different products, and it's, for that reason, right?
It's, to give consumers very good advice and information, right? Now, at the end of the day in today's market, there's really is no right and wrong with products. It's really right about what's best for you. And that's why we do talk about so much stuff from inventory to the economy to loan programs.
It's really to just give some good information so that consumers can make the best decision. Exactly. And that's what this more, that chart is about really you think about this, is why I'm saying you missed the. The bottom of the market, but now is the time to buy. Because what happens if it go, if the medium price above if for Santa Clara County goes above $2 million, you're missing out again.
And that's my argument is don't miss out. Don't put it off until ever till, later. Because if you're waiting for the market to crash, Part there that you're moving around. What? What's the height there? Is that like May, June of 22? Is that It was the here on the median price for Santa Clara County?
Our peak, we peaked at April 22. April. Okay. Yeah, that makes sense. Yeah, and if you look at the median sales price here, it was June. So it took a little bit longer for the rest of the market to, to contract, which is normal. Yeah. And look what we're showing you on these slides here. This is 60 to 90 days back, 120 days back.
This is still about the same thing. And th these numbers here, these numbers that you're seeing, this is this last week, but these numbers are really 30 days behind. They're 30 days behind because it takes 30 days to close on a house. Everything we look at it in, real estate is at least 30 days behind.
And the most important thing for us to ha do is have Hector talk about how many loan applications are out there and what the current market's and he, mentioned it before. You mentioned it before, loan apps are up, you're still fighting. You're, having 20, 30 offers on every house.
You're competing. That's today. Yeah it's, nuts right now because it's a, gosh, a perfect storm but, in a bad sense because we are. We, had a, we have a ton of activity, right? Again, we have a lot of motivated buyers out, right? This has been picking up gradually every month this year, right?
Since January and then over the last couple weeks, With some of the news it's, affected interest rates, mortgage interest rates. And so we had an increase in rates over the last couple weeks. And our, average conventional loan right now is around 7%, maybe a little bit higher today.
And so you've got You've got a ton of offers and, offers going well over asking, right? At the same time, from when our, most of our consumers were approved, the interest rates have gone up. And one thing that I heard yesterday was realtor speaking of here in the Bay Area in the East Bay, that a lot of deals are falling out, right?
Because hey that, cons the buyers out there, they get finally get into contract. And then they go back with their lender, they revisit numbers and they realize that if they do qualify, that their payment's higher. Because rates have gone up right? A quarter, half percent, maybe. Maybe more in certain cases.
And so it's, extremely difficult right now, the media hasn't really cut up. We're right in this lull where we have, rates are up yet. Competition's way up too. And normally those are inverse, right? Normally those are inverse, right? When rates go up, we see prices start to soften, right as you showed us, right?
Since April, our prices start to soften. We were at or below asking, we were getting a ton of seller credit. Then that started to turn a little bit, a couple months ago since February. At the same time, our rates had subsided a little bit, right? We had they had normalized, people had come to terms with, okay, interest rates were in the five, 6%, little bit higher.
I'll live with that. And then now over the last few weeks, really since about little after May 10th we saw raise and rates and so here we are, like right in the middle, right? And it's so really challenging right now for, a lot of buyers. And you'll, we will hear about what things we're talking about today.
We will hear it in the news and the media over the next week or two, right as it really hits, hits. It's that. And I'll tell you straight up, if you're, if you are a, buyer and you're struggling to get into a house right now your, big, your best bet is to find houses that have been on market for a lot longer than six or seven days, because those are still being competed against.
You're still seeing it's, like league Soccer, right? We remember little League Soccer where the ball, everybody starts off playing position. Let me get this outta here.
Everybody starts off playing position, right runs, spread out reds and blues, and then the ball gets kicked over to this corner and everybody plays over here. That's, how real estate is. And then the ball gets kicked over here and it's the new shiny object. And in my marketing side, that's what I am.
I'm the cat that chases the shiny red dot all over the wall. But when I talk to people and buyers about buying homes, don't go after the house that has been on market less than seven days. If you're, if you have you have, you're struggling with payment, you're struggling with down payment, you're struggling with.
The value or what have you. Let's look at houses that are, have been on market a little bit longer. They're not going to be perfect. They're not going to be your forever home, but you're still going to be able to jump into the market and over the next five to 10 years, you can improve that house. That's what I did with this house.
I bought it for six 90 and it was an original everything. Nothing, about the house had ever been taken care of. Had 25,000, $30,000 worth of termite damage. It had panel, it had single pane windows. I've been here for 20 years and every year I dump a little bit of money into it and make it just a little bit better.
And that's really how you can improve on your generational wealth on your wealth, right? Absolutely. You can take a look at these hos and houses. I think that's not quite as desirable for everyone else, but you look past that and understand that over time you'll slowly improve and upgrade the house and.
Tie that in with, the fact that homes continue to gain value every month as we showed on our previous chart. And then next thing you know, you're sitting on a whole bunch of equity. Yeah. Look, you can buy these houses. That's a condo. Sorry. Typically I, look at just single family houses.
But you and I spoke about. How many houses are active in Santa Clara County right now? Now, before it was 1144 or whatever, we have this thing called members only, and I, took those off because the numbers there really don't help out because if you take those off, let's see if I can take that off real quick.
There 1148, right? There's a whole lot more. But if you look at the results, see that little cross right there? It means it's on market, but you can't show it. So I don't it's coming soon. So they're, trying to catch the market o off We can't see the chart right now. Oh, I'm sorry. Thanks for telling me that five minutes ago.
No, I just, there. So the little red thing here says that they're members only, which means it's coming soon. That's their little tricky thing, but when there's a red Cross on it, it means that we can't show it. So they're, marketing the house, but they're not allowed to market the house. So it's, I don't know, it's bullshit.
MLS allows you to basically put it on mls pre prior to actually hitting the market. So well look at this bad boy. 53 million. Yeah. Look at that. Who wants to buy that? And no, I will take you there today. You just have to get qualified through.
Let's see this one on Fillmore. Oh, you know what? This is crap. This isn't even, this is a rendering. Of a house on Fillmore. I sold a house. Is that a new build then? Yeah. No it's, a standard house right there, but they're trying to sell it for more money than what it's worth, because they have an architectural drawing on it.
So is it land though or is it a tear? No it's, a full on teardown. It's, like a teardown, right? It's just an older house. There's nothing wrong with the house. Oh, I guess it is land. Huh? So they probably have the architectural plans to Maybe it burnt down. Yeah. Yeah. Huh. Okay. Whatever. What are they selling that piece for then?
$1,200, 1.2 million, 1.3 million for the opportunity to build a house on it. You're kidding. I love it. Nowhere else. I'm just trying to find a house real quick that makes sense for us to look at. Like Morgan Hill on market over a year, five bedroom. Let's take a look at this guy. That's only $9 million.
Look at that. It's gorgeous. Yeah, it's a nice little too stately for me.
Try to find something decent in San Jose, and this is a duplex, so yeah. You can do this house hack this sucker. Yeah. 1.4. It's a single family, but looks like it has an a d U on it. Oh, nice. And original. Oh.
The the seller took pictures here. I love it. Yeah. So is that a duplex or is that zoned? Is that a single family? I think it's a, it is a single family with an A D U. Got it. I don't know why they had two separates on there, but that's the way things go sometimes. It had two addresses. Yeah. It's interesting.
I, you can tell on that one. It's just, it's priced too high. Yeah. Oh, look at that one. There's a fixer. Oh, I think I've seen that off of Santa Teresa. Yeah. I'm trying to find something that's af. Semi affordable. There's a townhouse ranch. Oh, Manor, $139 days, 131 days on market.
Palo Alto, downtown Palo Alto, 1.4 million. What's the HOA on that one? Nine Hun? No. Oh, it's a 55 plus too.
Who? What? That's gotta be a mistake. That's gotta be a mistake. Yeah. 5,400. I was expecting it to be high, but not that high. That's red. Ridiculous. You can go to villages for a lot better. Yeah, and those are about a thousand or more per month. Y Yeah. But if you're, if you want to be completely socialized and keep active and Oh, they're great.
Play golf and there's so many clubs. I was just talking about it with my buddy Wayne today at the gym. They have pickleball and there's a waiting list to get on the pickleball club. You're great. I've sold, I've financed several of those and my clients love them. And, they're at they're at that age.
And it's perfect for them. Yeah.
Let's see, Almaden Road Townhouse.
I don't see the H hoa if it's a townhouse. That looks like a home though. Yeah. Huh? So anyway, going back to this whole thing, the market out there, those that are sitting, it looks like they're just very high priced. They're overpriced. The main reason why houses don't sell is because of price based on the location, condition, and the market conditions.
What, two years ago, before April happened we knew the market was going to slow down January, February. We were confirmed in March and April. We saw it peak before that, back in 2021. You can write any number out there. Houses were selling off the you had 30, 40 offers on every aisle you listed, right?
Today you have to be a little more crafty. You have to actually earn your, living and, be careful about what you're selling it at, because more and more houses will sell on market or, will. Will sell over if you have it priced right. If it's priced based on the condition. Like my, listing on Phyllis, we listed it $288,000 over the lowest list price house in that set in that area based on square footage.
Our house was 50 square feet bigger, but the condition was ex the same. So we had it listed way lot higher, and they were concerned. They were like, oh, we'll take whatever offer we can get. We'll even go one point 1.8 or 1.6 if, it comes in. I'm like, I don't think you have to worry about that.
And the first Saturday open house, we had a hundred, 131 people come through, sets of people come through, and we had 19 offers and we got it. 2.551. It was the final sales price. So from 1 8 88 to 2.55, it's 35% over and seven days on market was glorious. That's incredible. Yeah. But if you have your house listed over or whatever, or you do something wonky, like what we're seeing, like you have a spare lot and you think it's worth 1.3 million and it's on market for a year, don't blame the agent when it doesn't sell. Basically, don't blame the agent when it sells. When it doesn't sell because it's it's, the price, right? You set the, sellers set the list price. The buyers determine the final price, and if the buyers aren't buying, there's something wrong with the house.
Period. Okay. Let's talk about what else do you wanna talk about?
It's on me. It's on me. I know we've been talking for 26 minutes, actually we've been talking a lot longer. Yeah, that's pretty much it for on my end, I can tell you that. We do this thing called home buy.
Good little sales pitch, right home bot. If you're wondering what your value of your house is, jump in there and I will, that's an avm or an automated valuation, just like realtor, just whatever, Zillow. But when you sign onto that, I'll send you a more accurate. Human. Human. That's a really nice tool that you share with your clients.
Yeah, it gives to them monthly newsletters, monthly or weekly newsletters, depend on how you have it set up. That really gives very good information about their property, their home value, the community. And it also even gets into Appreciation, equity and appreciation, right? To show whether you have it'll give you some very good kind of ideas if you do have equity with your equity, what you can do, right?
Whether it's capital improvements something that you want to do to your house, it's going to increase the value and make it better to live in. Or whether you want to leverage some of the equity in your home to maybe make another. Purchase. And really, nice tool. I know when you turned me onto that, was like, oh, that is going to be really awesome.
And the thing is, people contact me about this all the time and we go in and talk about, and it's nothing's perfect, right? You I, can give you a very, detailed picture of where the market is. This gives you a detailed market but it's a little wider of a breath. The difference is, I do it myself versus an AI does it or a home bot.
The home bot does it. The algorithm does it. You don't know what the value of the house says until you put it on market and it really doesn't matter. That's true. But with Hector, you can actually take this and, Sorry you, can actually take that idea and learn how to leverage what equity you have and maybe buy another house, or another duplex or fourplex or a small apartment block, or you can take it and invest in it into a REIT or what have you.
And that's, I think that's, the most important thing of this, is it opens your eyes to what the potential is with the money that you have. Yeah, that's a great tool. I even share it with buyers or your prospective buyers because it can be used to understand values and the trends behind them.
And then it also gives good community information. If you're looking in a certain area it will give you some background on some of the nice some of the stuff that's happening in that community. So it's, it is actually a really great tool. Yeah. And. One that we share with most of our clients or prospective buyers.
And the cool thing too is you could take it and it's funny, this is an article that I was going to bring on earlier. If you didn't show up and I was going to talk about what house hacking is, right? You can buy a house. You now you have to qualify for your house, right? You have to qualify with the income if it's just a house.
But if you buy a duplex, Or a fourplex. You can you can rent out the other units and use that income towards your qualification with the house. If you bought a single family house and say it was a four bedroom in your single, you can you can buy a house. You have to qualify for it with your income and your down payment, but then you can rent out the other rooms and then.
Use that income to pay for your mortgage. Wanna talk about that a second? Sure. I think this has become really popular, especially with the millennials. But it's I, think it's one of the best things you can do, best things you can do right today, right?
For instance, you can put as low as three and a half percent down. On a multi-unit, two to four, two to four unit property, three and a half percent down. So you can buy a million dollar fourplex, you can put $35,000 down and. We obviously you have to buy it as your owner occupied, right? So you're going to live in one unit and then just as you, mentioned, what we do as lenders is we take the rents on the other units and we're able to use those as your own income, right?
So it helps you qualify for more than you normally would, right? If you were buy versus if you were buying a single family. And it's I think it's one of the best place, best ways to break into real estate. If you can, if you're comfortable living in that type of environment and a duplex or fourplex at least for, the first year.
It is the very best way to break through in a real estate and make a really great investment. At least it's a cushion, right? It's, one option that, so a lot of people that I've been talking to lately we're, talking about how house hacking or buying a fourplex and, getting into it and, you do it once a year.
Think about it, you think about you buy a house once a year or fourplex once a year, and then you. Live in it for a year, and then next thing you know, you can rent out your unit and buy another fourplex. And you just keep building 'em all that way. Absolutely. And after five, 10 years, you have a huge amount of equity built into it, and you sell all the houses and you have a huge down payment for a nice house that you want.
Sure, yeah. Or you just leverage you, you borrow from one or multiple properties to buy your next one. Yep. Dude, I gotta cut this short. My stager isn't, can't get into the house that I'm listening down to Morgan Hill, so I gotta go race down to do it. Gotta run. Hey man, thanks a lot for your time.
I always appreciate coming on and talking, shop with you. It's always a blast having you. We'll see you next week and everybody thanks for watching. I'm Beto SK with aba and this is. Hector Ramirez, your mortgage expert. Talk to you guys next time. We'll see you out there, care.
Bye-bye.
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