Let’s get right to it, shall we? I had the pleasure this past week of attending an incredibly informative seminar on the California Economic and Market Update hosted by the Central Valley Association of Realtors (CVAR). Our keynote speaker was Jordan Levine, VP and Chief Economist of The California Association of Realtors (CAR). The overall message throughout the seminar was “This is NOT 2008.”
We all remember what happened during 2008 don’t we? Home values decreased in the Central Valley by 60%. Homeowners were moving out of their homes in the middle of the night thinking the “foreclosure police” were coming. We all learned a new phrase “short sale” whereby you had to sell your home for much less than what you owed on your mortgage. You also learned a new acronym, “REO” which means Real Estate Owned property. Banks were obtaining foreclosed homes and needed to sell them.
As a Realtor that learned very quickly how to navigate the short sale market, I got up every day feeling like I was auctioning cattle while negotiating pennies on the dollar for my sellers. Many days I felt like I was working for free, but quickly realized I was getting a free education. While it may have taken a year for me to sell a home, I was able to learn my short sale trade in the trenches and on the streets. I am grateful today to have put many short sale sellers back in homes.
According to Mr. Levine, the above outcome is not anticipated presently in 2023 and heading into 2024. Even though we are seeing bank failures, a challenging economy, inflation being 3 times what the FEDS want, and interest rates hovering at 6%, we still can’t rely on scary news.
We do, however, need to be patient and use caution. We are seeing some positive outcomes. For sellers we are seeing an all-time high amount of home equity. Unlike 2008, 99% of all homeowners have an interest rate of no greater than 5% and have been on time making their house payment. For buyers, they are slowly getting used to the fact that they may have a 6% interest rate when purchasing a home. Once again, my lender peers share, “Marry the house, Date the rate.” I have said this statement multiple times over the past few articles and I will continue to remind you.
Another confirmation that this is NOT 2008. Presently we have a 3-month supply of homes which shows that sales are tight. In 2008, we had an 18-month supply of homes.
I always look for positives to share. We presently have a shifting market that can truly benefit buyers. A year ago, when we had multiple offers, sellers were not as open to entertaining VA and/or FHA offers because sellers were getting multiple offers and lots of cash over asking with conventional loans. Buyers need to consider building their wealth through real estate and there is no better time than the present. Wishing you good health always.
• Donna A. Baker is the Broker-Owner of At Home Real Estate Group in Tracy, selling real estate for 23 years. Her memberships include National Association of Realtors, California Association of Realtors, Certified Residential Specialists, Central Valley Association of Realtors, Accredited Buyer’s Representative, Certified Distressed Property Expert®, and Short Sales and Foreclosure Resource.
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