Americans Adapt to 6% - The New Normal
Share of Mortgages With Rates Above 6% Climbs to 10-Year High as Americans Adapt to New Normal
Mortgage Rates this week
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What you get for $2MM Santa Clara County
AIDA: Attract, Interest, Desire, Action
What you get for $1MM in SILICON VALLEY
Inventory And Supply Charts
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Share of Mortgages With Rates Above 6% Climbs to 10-Year High as Americans
Yep. Here we go. A lot of stuff is going on. It's raining. I'm not a big fan of the rain, but I know we need it, and it kind of feels good to cool down. Last week we saw a 95. Day here in the Bay Area, and it was just nasty.
Current Mortgage Rates and Trends
Share of mortgages with rates above 6 claims 10 10-year high. As Americans adapt to the new normal, we'll talk about the rates here in a minute. Over half of mortgage homeowners have a rate below 4%.
That's down from nearly ttwo-thirdsin 2022. That means people are adjusting. They're saying, I love my 2%, but I need to move because I have more kids. My kids are outta the house. This was not my forever home. I got a great deal on this other house. And it just makes sense. People are, people are still moving.
It's gonna be a long time. So 80% of the US mortgage homeowners have a rate below 6%, down from 92. In the second quarter of 2022, below three, only 20% of homeowners have a rate below 3%. The house I'm paying for in Henderson for my parents is 8%.
It's not great, but it was an investment loan, yada, just the way it is. And I have great credit. It is just what it is. It's a credit loan. DSCR, I'm stuck in it for two years, so I know that I have like certain amount of money that I have to spend on it. Great. Not everybody has that great loan, right? Those people who are stuck at 2% or 3%. They're probably not gonna move for a long time, and if they did, they would probably buy something else and keep that, because when you do dollar cost averaging, it just makes sense for them to keep it.
I don't know. Not everybody's gonna be in that same predicament, but just so you know, I think 6% is gonna be the new normal. But I think the happy spot for buyers is five to five and a half percent. eEverybodywould live at 4%, but it's not gonna happen. So don't get too hyper-focused on 2% or 3% for a very long Time.
Maybe if the market crashes and we can bring it down to four to start something. I don't know. But that could absolutely happen. All right.
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This episode is brought to you by the home inspection checklist. If you've not downloaded it, do it now. It's huge. Help for you to get your house ready, go through every nook and cranny as it walks you through it, from curb appeal to cracked windows, to floors, to appliances, everything.
It kind of helps you walk through it, and it's a nice principal piece for you. So you know every day I talk to you about statistics.
Real-Time vs. Historical Statistics
I know it's not super exciting, but here's the thing. The statistics I'm giving you is real time, right? Like I know this, this is like one month type of thing, but every day I tell you what's going on in the different angles of real time information about what's going on in that industry, in our industry, only to keep you educated.
And part of my frustration is the California, this is Santa Clara County, but the California Association. And the National Association gives you statistics, but They're months behind. Even if you looked at the Thursday, the US Fred, we're back to July. This is July numbers. ' cause it takes so long for them to accumulate that data.
I don't think it's that necessary. So when I give you a top down look, you're looking at statistics from. A couple months to last month and then when I give you my dailies, it's real time. So that's why I really wanted to show you these charts right here. It helps you understand what's going on, but this is almost ancient history because it doesn't help you with today's numbers.
It's a look back from a month ago, two months. This is August, right, and this is August as well. July, August. 6%, 6.27, were crawling back up. Our lowest was 6.26.
Understanding Mortgage Points
Looks like anyway, if you buy a point, meaning you can ask for a seller credit.
To buy down a point. You can ask, you can put Billy up point to knock down the rates a little bit. So you, get stuck with it and then you gotta look at the cost versus how long it's gonna take you to pay it back. You're at 6% today at 0.75. What if you did two points? Can you do two points? Is there a lender that allows you to do two points to get you down to five and a half?
How close to five point half percent? What does five and a half percent look like for me? And how much money am I going to save from a 6% quote, 6.27% quote down to a five and a half percent quote? How much money is that going to save me every month? those are questions you have to ask your lender.
When you go to buy a house with me, these are the questions you and I and the lender will have saying, where are we with this? How does this look? What does this look like? Give me a spreadsheet or a diagram of cost analysis so that we can break it down and you can make a better decision.
Is this a good time for you to buy, first of all? Should we go spend time looking at houses and what price range of, how much it's gonna cost to close, how much is it gonna cost you every month? Those are important pieces of information that you need to do before you start that journey to buy a house, and you don't do it every day. I do it every day. I buy houses, not every day, but I buy houses and I sell houses, I'm selling a duplex right now and it's taking forever because it's on Arkansas time. It's just, it is what it is. All right.
What you get for $2MM Santa Clara County
House Listings and Market Analysis
Laura Drive. This is what, is this what you get for $2 million in Santa Clara County?
This is Laura Drive. 9 5, 1 2 4. And we'll take a quick look at the map. So that's Cambrian area, 2 million bucks, and it's a little three bedroom, two bath, 1,480 square feet built in 1959 Lo Drive. Again, not my listing. Take a look inside. The reason why I want you to look at this is because I picked two homes, one at 2,000,001 at 1 million.
So you can see the actual difference. So you see the can lighting, those look like puck lights. this is a standard three, two for most of this area.
No, no floor plan, but yeah. So you have your bedrooms over here, your kitchen garage, and then a family room, And then the, living room, let's take a look at the kitchen. so semi updated
tile floor, which, looks a little dated. I don't like the checkered pattern thing. Bathrooms are nicely updated, which is nice. The floor is, see, I love this floor. I love the old two inch slot floor that's refinished. You know, there's no reason for you to go out and spend 10, 15, $20 a foot on plank engineered wood unless it just makes sense for you to do that.
What you get for $1MM in SILICON VALLEY
Two inch oak, I think is, beautiful. It shows the value of the home, the richness of the home, and. I'm a fan of it, especially for homes like this, right? We're not talking about $25 million houses We're talking about standard ranch homes. Again, this is a ranch home This is in 9 5 1 1 8, which is right off of Brandham. This is a million dollar home, so it's not too far apart from the other one. But let's take a quick look inside. This one actually, three, two and a half smaller, three 1100 square feet.
This is ESA Drive, not my listing. It's a new listing, right At a million bucks. Three and one half bath. That's the problem. Okay. Yeah. And if you looked at this one, that's, Where is that? That's Blossom Hill. So the other one's right here. So it's, it's across a major intersection, right? Brandon and Jarvis.
Jarvis is right there. So, yep. Let's take a quick look inside and see what it looks like. Wow. That's not the way I would tell the story. I wouldn't put this in the second page. I probably wouldn't highlight the driveway because that driveway needs to be redone and it's vacant. It's not staged up. They have puck lighting.
They have a new kitchen. They save some money with the little shelves here, which I don't know. I mean, it opens it up. I get it. And they really went cheap on the ba. This is a flip and you can tell because this stove is the cheapest stove you can get because it has the controls on the back instead of the front, and it has this big, huge eight inch, 10 inch thing in the back.
If you're gonna do a flip,
Oh, this one's not gonna sell. Look at this. You're right next to a power. I, saw the power lines here. That's just gargantuan and ugly, right? I'm not gonna buy that house. At least they did the floor plan. Thank you for doing the floor plan. Love that they put the little toilets and everything in there.
And when you look at these numbers, you look at the measurements. These are just estimates, right? A computer's doing it from an iPhone and figuring out the dimensions and kind of figuring it out. If you add everything up, I've had engineers come up to me and say, Hey, I added up all the different square footage and each individual room and it doesn't add up.
I go, it is 'cause it's an estimate. It's just a. A perfunctory estimate. It's not an exact measurement, right? And size and dimensions are approximate, so just keep that in mind. Go back to that and yeah, there you go.
Market Slowdown and Future Predictions
And then nothing's really happening other than inventories staying on market a little bit longer.
I know you can't see with this chart. Let's see if I can open this up. You can't see everything. But what I'm noticing that the numbers are getting a little bit larger. The months of inventory are getting a tad bit larger, not just in the, in the, counties, but in the cities as well.
Like Gilroy went 2.3 to four. Milita went from 0.9 to 1.4. Mountain View, where they have $4 million houses, 0.6 to 1.1, and this is from August to September. So I think if you're gonna put your house on the market right now, price is a huge part of it right now.
Like San Jose went from 1.3 to 1.5, but that's a huge average because we're such a high volume city compared to Palo Alto and Santa Clara went from 0.5 to 1.3, so everything slowed down. I definitely see that the market is slowing down a little bit, but we're also past the second part of our selling season, right?
This isn't going to happen. And all of a sudden, magically we have a market again, this isn't 2008. This isn't 2020 When we had COVID, when we went down to two and a half percent and everybody got fire sale houses, you had to pay $400,000 over asking. This is a good time to think about getting into the next house because when rates come down October, November.
It's a good probability that more buyers will enter the market, just so you know. But sellers are being sticky.
Conclusion and Sign-Off
So that's it for now. Hope you have a nice, dreary, wet weather weekend. Stay dry. Stay warm. I'm Vito. Thanks for watching. We'll see you out there.
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🔴 Video Living in San Jose in the No. 4 spot. in US https://youtu.be/hxw5k739OKU?t=521
Vito Scarnecchia
Real Estate Broker, Veteran, Dad
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408-705-6817
Vitos@abitano.com
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