Mortgage Rates’ Fast Rise Hobbled Housing Market. 🦅 🌎 ⚓️

 

 



NAR Chief Economist Lawrence Yun Says Mortgage Rates’ Fast Rise Hobbled

7 Essentials for Landscape Curb Appeal Housing Market

REO of the Week 

Apple Homes for sale  

Mountain View home of the week 

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Introduction and Current Economic Overview
Mr. and Mrs. America, all the ships at sea. There's a lot of finger-pointing going on right now. It has a lot to do with what's going on with the real estate market and the economy on the whole, right? And yes, the economy has been poised for a recession. We've been in a recession.

The car market, the automotive market, has been hurting for a bit. I hear about a lot of LA layoffs, so the tech market's hurting. I know the memory market's hurting right now. It's all cyclical so you can't pin it down to just one thing. 

Impact of Interest Rates on the Housing Market

And as I stated, the rise in interest rates hurt the housing market. But it was actually a good thing because we were getting so out of control. People were doing whatever they could to buy a house in the frenzy.

The Frenzy of the 2021 Housing Market

That was the 2021 housing market. It was a firestorm. It was melting everything around it. People were putting $400,000 over list price as is. You can live in my new house for three more months over whatever we agreed to. Here's my firstborn baby. It's crazy, right?

It was true. It was crazy. And we wrote it and what we could do is what we could do. 

Costs and Challenges in a Hot Market

It hurt the buyers, it helped the sellers. But if you're moving from one place to another, it hurts you as well. You're still paying a premium on everything. You're paying more for closing costs.

You're paying more for selling costs. You're paying more for property taxes. You're paying more all the way around. And I've spoken about this slide right here, right? If you sell in a hot market, yeah, you get a higher price. Sales price, but you also have a higher selling cost. If you're buying a larger house, you have more competition.

You still have to pay a premium. There's always the fear of the appraisal gap, no loan or appraisal contingency. I just released the loan and appraisal contingency after. 10 days, in a house I'm buying. We actually had that in there four years ago.

That was unheard of. if you did that, your offer was not going to get accepted. No repairs as there are higher closing costs, higher property taxes. And granted, this was before the NAR lawsuit, so we had to negotiate with our agent, fees, or commissions. 


Benefits of Buying in a Cooler Market
Yeah, it might be a little bit lower, but you also have lower selling costs, and you can buy a larger home, and that means you have less competition. That means you don't have to pay $400,000 over list price. If you're smart, you can lower that price as well. But you can also ask for contingencies and concessions. You can have your appraisal and your loan and your property, and the need to sell your house contingencies in place, so you're protected as a buyer. So it makes a lot more sense right now to buy it. Yes, it's more expensive to buy it, but if you didn't buy four years ago, you didn't step up to the plate.

Then, if you step up to the plate now, it'll be a lot easier. There's a lot less competition. the cent of the mortgage rate has really hurt the real estate market. We're still expecting an increase of 6% in 2025 and 11% in 2026.

I think that's the numbers. I think that's actual numbers, 'cause last year was pretty dismal when it comes to the housing market. You explained to the audience. Your past clients are all happy, but for new home buyers, their monthly payment obligation has increased. It's not killing the housing market, it's bringing it back to normal.

For too long, we've had a seller's market, and the sellers have high expectations, thinking their house is worth so much more money because that's what their same house down the street sold for six months ago.

Things are changing now, right? We're seeing a little bit of contraction, a little bit of buyer hesitation, and buyers are being picky., I always tell you, this is what you should do. Take care of the curb appeal, paint your house, make it look pretty, make it look like you're the buyer's ready to move in. If you come in and show this house at a premium price and it needs new everything, the buyers are gonna go I can buy this house for $1.8 million.

And I have to put in a new kitchen, new floors, or I can just move into this house for 1.7. Buyers don't just look at the comps that we provide, right? When we give you comps, it's. The exact same bedroom count, or maybe one or two more, depending on whether it's a larger house or a smaller house.

And then a 10% variance in the square footage and a one-mile radius of that house. So it's a very myopic, very focused, centralist look at what your house is really selling for. But what we don't do is look at the entire market. Based on that price range and that bedroom count, I call that the 500-foot view.

So, I always go out and show you what's out there, so you have realistic expectations, even though these two houses sold for more. Maybe they had brand-new kitchens or something new. Roof or brand new paint everywhere, they're willing to pay for the fires, are willing to pay for that.

So maybe I should readjust my pricing expectation. Just be careful with that, right? 



Distressed House of the Week: Monroe

Alright, so distressed house of the week. This is Monroe, and I think I've spoken about it before. It's a bedroom, two and a half baths. This is nine 30 Monroe. This is an older house. This is 120 year 120-year-old house, still selling for $1.8 million. And it's right downtown Santa Clara. This is why I am here? 40 days on market? Oh, let's just go here. Let's take a quick look inside. And there you go. It's old. If you're watching this a couple of days ago, I sent out a.

Tell me what kind of roof line this is. It's very unique, so everything's been updated over the last 120 years, but this looks like it was updated back in the nineties. Can't really tell. So it's an older house. It looks like it's in pretty good shape, but it's a bank-owned property, meaning you're buying this as is.

They won't agree to repairs. You can conduct your inspections, which we always recommend, but there you go. Okay. 40 days on market. I wanted to pop this off real quick. Just go random. Let's take a look at this house. This is a five-bedroom, three-bath, 2300 square feet, listed at $22.3 million.

Been on the market for almost 60 days. Almost two months. And they have to lower the price. Why? Because they're not attracting the market. This is right here, right in our area, right? This is La Colleena Park. I live right here. This house has been on the market for 60 days.

It's hurting the market. Maybe they updated it. Did the brow box brownie photos, but I'm not a fan of 'em.

And everything looks like it's updated. Nice. Pretty looking, but. 2.3 for a house that's a corner lot on Madison, which is close to Santa Teresa, 2.3. That's high expectations right there. I think that's just overreaching. Oh, this is the ADU. So you have an ADU as well, which means how many bedrooms? Five bedrooms. So it's standardly, it's three bedrooms and then the other. See, you didn't put an ADU in there, huh? Okay. Anyway, there you go. Something to look at. If you're interested in that, let me know because it has an ADU.



You could put your kids in there or what have you. If you want to pay $2 million for that house is the Cupertino House of the week. It's a townhouse for $1.2 million, it's 1986. Two bedroom, two bath, 1,393 square feet. The good news is it's right by Apple, so you can actually walk across the street and get to your job.

You can walk to work if you want to. We could take a quick look at the pictures. The funny thing is, why did they put the living room as the first picture? I'll tell you, and there's a little hint right there. Dunno if you can see it, but we'll go all the way down and that's why we call that fugly.

The HOA is so outta control that they don't wanna update the house, get rid of that, and put new siding on. That's ugly. Nobody likes that. And it's a one-car garage. So that's what you get. 1986, townhouse mindset. That's what you get. Originally, it was listed at 1.3. Now it's down to 1.2.

How many days on market? 42. Realistic price expectations, guys, right? Our market is slowing down. It's slowing down. We're in the summer,

March, April were a good couple of months. Now we're seeing people go, you know what I have graduation. My kids are graduating today. They're doing the little walk across the stage thing. So have my aunt and my mom here. And we're doing all that stuff. But it's just the last thing I'm thinking about is moving, right?
Except for the fact that I have to go to a meeting at 11 o'clock. So here's something about curb appeal. Long if you decide to keep a on, it's, it constantly needs attention, right? You need to aerate it, you need to manicure it. You need to. Make sure there's pest control. Yes. You have to spray for pests, right?

And you have to mulch and prune. When you go dormant, you have to drop some mulch on it so that the microbiomes absorb the mulch and make the lawn healthier. It's a constant process. You can't just put grass out there and mow it once a week. So understand that a lawn is high maintenance product and I have grass in the front and I have grass in the back, but if I had my druthers, I would put low maintenance ground cover on it to make sure I don't have to deal with anything and would water it once in a while.
There are a ton of different types of plants that you can use, but People expect lawns. It's a weird thing, but it's true. 

Market Analysis and Trends
40 days on market report. We're climbing a little bit in the 40 days on market, but we're staying pretty stable in the 90 days on market. So after 40 days, we're seeing consumption happen a little bit more.
People are taking my advice and saying, yeah, I'm just gonna wait until. I see a house that's a little bit more desperate to sell, which means it's decreased their price, or they're trying to find the right buyer, So take my advice when you buy a house that's been on market for a bit, because they're looking a little bit desperate, right?
Even if they have adjusted the price, a nd it's been on the market. 40, 50, 60 days means the price Needs to come down, and a buyer can come in there and negotiate that down a little bit. And BankOne was pretty nominal. Nothing is jumping here. So this was a spike. I have to go back and fix that.
And then, the red one, the green, and the yellow. So nothing's spiking up for that. For San Jose. We're looking at a slight decrease, seeing inventory tick up, which was great. Since January, we're seeing that, and this is absolutely what we need, but we need to get past the 800-unit mark for it to come closer to a balanced market.

I almost say that we're in a balanced market right now because buyers are being picky. Buyers are negotiating. Buyers are getting concessions. 44% of the buyers across the sample of houses that they were looking at received concessions.

We need to be about 1800 to be a balanced market in Santa Clara County, but we're leveling off right now. So we're not where we need to be, but because the market's taking longer to sell. I think we're seeing it become more of a balanced market. Maybe 1500 is the balance market that we're looking for. It's not a seller's market, not a buyer's market, but there you go. That's it for now. To all the seniors at Santa Teresa High School. Congratulations, you made it through four years of Santa Teresa High School.

Can say it was real. Can say it was fun. Can't say it was real fun. I used that when I was in high school. I'm Vito with Abano. We'll see you out there. 


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Vito Scarnecchia

Real Estate Broker, Veteran, Dad

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408-479-2427

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