Mortgage Rates Remain Flat | Is it time for a Contraction?
Mortgage Rates this week
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What you get for $2MM in Santa Clara County
AIDA: Attract, Interest, Desire, Action
What you get for $1MM in SILICON VALLEY
Inventory And Supply Charts
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Introduction: Mortgage Rates Overview
Mortgage rates remain flat. That's what this whole article is about right here. It's from Realty Times.
Freddie Mac today released results of its primary mortgage market survey showing 30 30-year fixed-rate mortgage,
FRM average 6.76.
Freddie Mac today released results of its primary mortgage market survey showing 30 30-year fixed-rate mortgage,
FRM average 6.76.
Current Market Conditions
You probably noticed that the house next door that's for sale has been on the market for quite some time, right?
People are fatigued at 7%. We're just not going to have a ton of buyers at 7%. It's normal, right?
News facts 30-year FRM 7.76. The 15-year is 5.89, and the PMM is. Primary mortgage,
blah, blah, blah, focuses on conventional conforming, fully amortizing home purchase loans for
borrowers who put 20% down and have excellent credit.
News facts 30-year FRM 7.76. The 15-year is 5.89, and the PMM is. Primary mortgage,
blah, blah, blah, focuses on conventional conforming, fully amortizing home purchase loans for
borrowers who put 20% down and have excellent credit.
Why Your House Isn't Selling
Now, your house isn't selling. Why is that? Typically, it's overpriced, or the condition or the location isn't
commanding the price that you think your house is worth. Simply said, in certain areas, we're in a
contraction. We have a surplus of inventory. I wouldn't say it's a huge glut, but we're also holding onto
pricing that is not attracting buyers. I have three houses on this street that are for sale, and they haven't sold.
Now my listing across the street's only a week old, right?
commanding the price that you think your house is worth. Simply said, in certain areas, we're in a
contraction. We have a surplus of inventory. I wouldn't say it's a huge glut, but we're also holding onto
pricing that is not attracting buyers. I have three houses on this street that are for sale, and they haven't sold.
Now my listing across the street's only a week old, right?
We have a pretty busy weekend for open houses. I've had one showing since then, and that's showing that
the market is a little dry. As a buyer, you're not just looking at that block or that same model.
the market is a little dry. As a buyer, you're not just looking at that block or that same model.
It's the same model, the same floor plan. You're looking at that house right now versus the house in 9 5 1 2
oh or 9 5 1 1 9 or 9 5, 1 3 6. You're looking at 30, 40 different houses right now and honing down to five to
10 houses to look at for the house condition. Price and location match what you are looking for.
oh or 9 5 1 1 9 or 9 5, 1 3 6. You're looking at 30, 40 different houses right now and honing down to five to
10 houses to look at for the house condition. Price and location match what you are looking for.
You're gonna move on to the other one of 30 houses to look at, period.
Strategies for Sellers
It's a housing strategy. It's a pricing strategy. Right now, with the price being so high, the mortgage rates being
so high, and I say high because they've remained pretty high over the last couple of years. Since 2022,
we've seen an increase in interest rates.
so high, and I say high because they've remained pretty high over the last couple of years. Since 2022,
we've seen an increase in interest rates.
Once you see this number go to six and a half, 6%, you will see buyers enter the market.
We'll see more buyers enter the market. Now, a $2 million house, which is the average price, it's the median
price. In Santa Clara County, you need $400,000 down, and if you have good credit, you're looking at 6%
interest rate with 1% down.
We'll see more buyers enter the market. Now, a $2 million house, which is the average price, it's the median
price. In Santa Clara County, you need $400,000 down, and if you have good credit, you're looking at 6%
interest rate with 1% down.
That looks like it's 2% fees and points, Three-quarters of a percent, right? You can buy it down to that.
If you're a seller and you're smart, you're gonna say, let's take that offer and work with it. Let's give 'em
some points on the loan. It's not $2 million.
If you're a seller and you're smart, you're gonna say, let's take that offer and work with it. Let's give 'em
some points on the loan. It's not $2 million.
It's really 1.8, so it's $18,000 times two. That's money you're losing every day if your house doesn't sell.
You can credit the buyer with points towards lowering the rate. You can do that. That means you're paying
under 5% or under 6% for that buyer.
You can credit the buyer with points towards lowering the rate. You can do that. That means you're paying
under 5% or under 6% for that buyer.
That's gonna go a whole lot of way to get that house sold. If you lower the price, that's one thing, but if you
ask for concessions, that's another way to get buyers to enter the market, right? We just have to work with
the right buyer to find that.
ask for concessions, that's another way to get buyers to enter the market, right? We just have to work with
the right buyer to find that.
Upcoming Fed Testimony and Market Impact
June 15th, and in that timeframe, June 16th, the Fed is going to testify again and talk about lowering rates,
And we're hoping that it's going to be half a percent, but more than likely it'll be a quarter percent, which
means that we're still gonna be stuck at picky buyers, larger inventory, and contracting prices.
And we're hoping that it's going to be half a percent, but more than likely it'll be a quarter percent, which
means that we're still gonna be stuck at picky buyers, larger inventory, and contracting prices.
Which might be part of what we need for an economy, but as a seller it sucks.
Preparing Your House for Sale
Right now, I have a house coming up. I just got this listing today. This week I've been working on it, and I
brought in my contractors, still waiting for pricing.g have a new company that will take your house and update
It is as much as you want or need.
brought in my contractors, still waiting for pricing.g have a new company that will take your house and update
It is as much as you want or need.
If it's simple repairs to complete remodel, we can get it more attractive for you, and you don't have to pay
them until you close escrow. So if you borrow 30,000 or 2 million, they hold it and charge you a little bit more.
They're a business; that's what they do.
them until you close escrow. So if you borrow 30,000 or 2 million, they hold it and charge you a little bit more.
They're a business; that's what they do.
And they're a general contractor, and they bring in their contractor, and they fix your house.
This house that I'm working on needs new floors, new paint, a new fence, and new landscaping. And still,
it's not brand new. We're not flipping this to be a brand new house. We're not putting in a new kitchen and
new bathrooms, et cetera.
This house that I'm working on needs new floors, new paint, a new fence, and new landscaping. And still,
it's not brand new. We're not flipping this to be a brand new house. We're not putting in a new kitchen and
new bathrooms, et cetera.
We're just fixing it up, and we're looking at $30,000 or so to fix it up. Because it costs money to make
money, right? It just does. I have another house where we didn't put a diamond in it. We moved furniture
around, and that's it, and it's just sitting there. So what do buyers want?
money, right? It just does. I have another house where we didn't put a diamond in it. We moved furniture
around, and that's it, and it's just sitting there. So what do buyers want?
I'm willing to put some sweat equity into it. Or do you want the family that's coming in and doesn't want to
do anything? They just wanna move in, not have to fix anything, not have to repair anything. So it depends
on where you are. And with that, you have to set up your pricing expectations.
do anything? They just wanna move in, not have to fix anything, not have to repair anything. So it depends
on where you are. And with that, you have to set up your pricing expectations.
Real Estate Listings Analysis
So this is what you get for $2 million. This is a sample of 60 houses that are priced around the $2 million
range. Los Paso, Los Soritos, and 9 5 1 2 oh. This is not my listing. $2 million, three bedroom, two bath,
1300 square feet, built in 1975, it's been on the market for 38 days. Look at it. Here you go.
range. Los Paso, Los Soritos, and 9 5 1 2 oh. This is not my listing. $2 million, three bedroom, two bath,
1300 square feet, built in 1975, it's been on the market for 38 days. Look at it. Here you go.
That's where it is in Almaden Valley. And let's take a quick look at the pictures.
Standard ranch house, kind of updated, nice looking. Looks like they have newer floors. I like the wood floors.
See, I'm engineered wood or real wood. Talked to the guy yesterday from this company. He was like, Oh,
we have to do LVP. I'm like, eh, not a big LVP guy.
See, I'm engineered wood or real wood. Talked to the guy yesterday from this company. He was like, Oh,
we have to do LVP. I'm like, eh, not a big LVP guy.
This is a little old looking, I gotta tell you. Dark wood, unless it's a huge house, is going to make the house
look small. So just be careful about that. My house is huge for the area. It's not a multimillion-dollar house,
but it's a huge house, and I can get away with putting dark wood in. This is a smaller house. This is 1,375 square
feet. It's small. I would've gone with a lighter wood floor and lighter wood cabinets. But that's the look and
feel that they have, and they updated it and have a nice little gas barbecue area. I would've liked a pergola.
The difference between a pergola and a gazebo is enclosed or can be closed.
look small. So just be careful about that. My house is huge for the area. It's not a multimillion-dollar house,
but it's a huge house, and I can get away with putting dark wood in. This is a smaller house. This is 1,375 square
feet. It's small. I would've gone with a lighter wood floor and lighter wood cabinets. But that's the look and
feel that they have, and they updated it and have a nice little gas barbecue area. I would've liked a pergola.
The difference between a pergola and a gazebo is enclosed or can be closed.
You can have shutters or walls or windows, and a pergola is completely open air, so a large side yard, which
is nice. This is just like my house. You have one side yard, and then the other side is your neighbor's wall,
and that's also your property line.
is nice. This is just like my house. You have one side yard, and then the other side is your neighbor's wall,
and that's also your property line.
It's called a zero lot line. I like that because you have a bigger side yard. You can do storage, you can do
a playground. I had a playground cemented down so my kids could run around on their little scooters when they
were young. So it's a nice house, and it's priced probably a little high if it's on the market, 38 days.
a playground. I had a playground cemented down so my kids could run around on their little scooters when they
were young. So it's a nice house, and it's priced probably a little high if it's on the market, 38 days.
Has there been a price correction? Yeah, this one started at 2.1 and now it's down to two. So there you go.
What do you get for a million dollars? This is 9, 5 1 2, 3. On Belden Drive, a million dollars, three bedroom,
two bath, 1800 square feet. Get a whole lot more value for a home in Blossom Valley versus Almaden by a
million bucks.
What do you get for a million dollars? This is 9, 5 1 2, 3. On Belden Drive, a million dollars, three bedroom,
two bath, 1800 square feet. Get a whole lot more value for a home in Blossom Valley versus Almaden by a
million bucks.
And it is right here. So it's on the north side of 85and it's been on the market for six days. I think this one's priced
just right. Thank you for doing a floor plan.
just right. Thank you for doing a floor plan.
I have to update my floor plan on my listing there. They're smart, they're gonna have a lot of people flocking
to that house and decide yes or no, and then you'll have a majority of those people say, yes, let's try to put
An offer on this one, even though it needs a backyard, even though you know the paint is dated or personalized.
to that house and decide yes or no, and then you'll have a majority of those people say, yes, let's try to put
An offer on this one, even though it needs a backyard, even though you know the paint is dated or personalized.
This one's gonna sell pretty quick. It's six days on the market. I think you'll see this thing going into contract in the
next couple of days. So there you go. That's what you get for a million dollars. It's crazy to think a million dollars
here versus a million dollars in St. Louis, it's completely different, right?
next couple of days. So there you go. That's what you get for a million dollars. It's crazy to think a million dollars
here versus a million dollars in St. Louis, it's completely different, right?
This in St. Louis would probably be 150 to $200,000, and in Austin, it probably would be like three, 400,000,
maybe 500,000. Prices have increased.
maybe 500,000. Prices have increased.
Conclusion and Final Thoughts
Prices are contracting there, too, right? So bottom line is that's where we are. Our pricing, our interest rate
fatigue, the fact that buyers are being picky.
fatigue, the fact that buyers are being picky.
We're seeing the market slow down considerably, but we're not in a recession yet, or we're not seeing
massive contraction yet. We're still seeing houses sell on average for 7% over list price. In Santa Clara
County, we're still seeing 6%? What does that mean to you? Price it, right?
Don't get greedy, attract buyers. Don't think that your list price is going to say anything about what the final
price is. Your job is to trust the agent and bring in offers, and get it sold quickly. Bring in the pool of buyers
that you have today, right now, when you have listing control of the tempo.
massive contraction yet. We're still seeing houses sell on average for 7% over list price. In Santa Clara
County, we're still seeing 6%? What does that mean to you? Price it, right?
Don't get greedy, attract buyers. Don't think that your list price is going to say anything about what the final
price is. Your job is to trust the agent and bring in offers, and get it sold quickly. Bring in the pool of buyers
that you have today, right now, when you have listing control of the tempo.
Hope you have a great weekend. I'm Vito with Abano. Thanks for watching. We'll see you out there.
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- Real Estate Broker, Veteran, Dad
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