May and June Murrieta and Temecula Valley Real Estate Housing Report

Our local housing market continues to show signs of recovery in May and June.  Inventory remains tight.  We have over 35% fewer homes on the market than this time last year.  However, homes are selling strong and prices have been climbing.  Let’s get into the numbers of homes sold for under $1,200,000 in Murrieta, Temecula, and Menifee.

In Murrieta, we had a total of 121 homes sold in May versus April’s 98 homes. That is an increase of 23.5%.  May’s median sales price increased to $688,000, an improvement of $65,000 or over 10% of April’s $639,500.  That is quite a leap and likely does not accurately represent the overall market.  Let’s take a look at Temecula.

In Temecula, we had a total of 98 homes sold in May versus April’s 83 homes, an increase of 18%.  The median sales price increased from $679,000 to $704,500, an increase of $25,000 or 3.75%.  While that jump in price is impressive, it seems more typical of the general market as we have hit the selling season.  Let’s look at Menifee for a third data point.

In Menifee we have a different story.  May had a total of 136 units sold versus 138 in April, a decrease of 1.1%.  The median selling price was $557,640 in May versus $564,495 in April, a decrease of $6855, or 1.21%.  Menifee had more sales, more consistency, and better market balance in terms of buyers to sellers due to being priced $130k-150k lower.

In spite of high interest rates, values are rising in our local market because there are so few homes available. While May buyers remain price-sensitive, they paid an average of over $5000+ over asking for homes in Murrieta and Temecula.  In April, they paid $5000-$8000 under asking.  Home prices in Menifee reflect adequate inventory levels and are slightly leaning toward a buyer’s market.  Also, May is often the top or in top three months annually for real estate prices.

Until we have more Murrieta and Temecula homes on the market, we will continue to see increasing prices.  Homes are selling faster, but we still have an “affordability crisis” that will keep prices from getting too crazy.  Right now, a $650,000 home purchase with 20% down ($130,000) and a 7% interest rate with taxes and insurance (PITI) is $4,327 per month.  That is just not affordable for many families.  Let’s see what next month brings and if this trend continues.  In the meantime, Happy 32nd Birthday and stay shiny Murrieta!

Sincerely,

Stefan West
aka Mr. Murrieta.

Here is my annual Christmas postcard and client letter to all my Murrieta Neighbors!

I keep forgetting to get these posted after I mail my clients!!!  This is for the end of September :).

I hope this month’s client letter finds you and your family doing well, staying safe, and managing this very strange time in our lives.  Hopefully, you aren’t going crazy with mask aversion, political conspiracies, or kids being home all the time and still not doing their homework and chores! 

As if we don’t have enough on our plate, the state has literally burst into flames!  Now, I am taking allergy pills for bad air quality because god forbid I sneeze while grocery shopping or showing a home!  Pretty sure someone at Albertsons almost drew their CCW (concealed carry weapon) down on me because I forgot an allergy pill that day!  With all these fires, I wish all my firefighter clients, friends, and their supporting families my most sincere gratitude for what they are doing for us and all they are going through right now.

Surprisingly, amid all these issues, real estate continues to sell very well.  In fact, we remain short on inventory and I need to get more listings on the market – hint, hint.  The last three homes I’ve sold are all making new neighborhood highs.  It took some fast talking and a lot of research but the appraisals all came in at value.  In one case, I sold a home that was just purchased in April 2020.  I put it into escrow four months after they bought it and we sold it for 52k more than they purchased it for.  The market moved 11% for them in four months which is just crazy.  As you can imagine, I have very happy sellers!

While our real estate market is solid, it does seem to be slowing since school started.  Homes are still moving fast but I am not seeing the 5-10+ offers situation like before.  That likely has to do with the higher home prices and shifting consumer focus as we move closer to the election.  When potentially big changes are in the air, people tend to hunker down.  However, buyers still outnumber sellers quite a bit.

Two important issues affecting our current market are loan refinances (slow banks) and home insurance.  It is an awesome time to refinance but be patient as some banks are taking 60+ days now.  Make sure you tackle all document requests ASAP.  It helps immensely since the banks with the best rates are completely overwhelmed.  Regarding home insurance, there have been a lot of companies abruptly cancelling policies.  I have a great insurance broker named Tommy.  He has personally saved me money and already helped several of my clients and friends do the same.  Let me know if you need help and I will get you hooked up.

That’s all I have for this month!  Please stay safe and give me a call for any real estate questions.  In the meantime, enjoy the NFL, the NBA, and the start of fall, my favorite season all year!

Sincerely,

Stefan West
Stefan West, aka Mr. Murrieta. 

The world we live in continues to be a very strange place.  So many things are happening at once, it is mind boggling.  We have the pandemic, working from home, over 40 million unemployed, businesses closing, divisive politics, China, and an election on tap.  Just weeks ago we hoped that “normal” was coming into focus, but now we are sliding backwards in terms of COVID-19, school plans, and workplace restrictions. 

As you can imagine, I get a lot of questions about where things are going and we aren’t just talking real estate.  If you have followed my client letters, you know I spend a lot of time analyzing the macroeconomic and political environments.  It’s fun reading, really.  I like to go from a helicopter view down to ground level and think how it affects my clients, the localized real estate market, and our national economy.

Given the recent doom and gloom, you may be surprised to hear that our real estate market is explosive and has been since May.  This is firmly a seller’s market and prices are increasing.  This market is very similar to what we saw in 2004-2007, which I can say because I was there and have the T-shirt to prove it.  Active listings are getting multiple offers over asking within hours of showing the home.  Buyer competition is fierce.  I just had one buyer offer $20k over asking without blinking on a house that had 18 offers in two days.  Yep, it’s like that.  And surprisingly, most appraisals are coming in to support these valuations.

The reasons why we have an exploding market are very clear.  We have ultra-low interest rates (30 year under 3%), a very limited supply of homes, and a growing work-at-home contingent that has new buyers coming to our valley in droves.  Why would you pay almost $3000 for a condo in Orange County when you could have a home with a pool out here?   I haven’t seen so many first-time home buyers in years. 

In my May client letter, I predicted that our market would do a dramatic shift into a seller’s market and push up pricing.  However, this current market has exceeded my expectations and I do not see it slowing down any time soon.  Even the 55+ market is on a tear.  As of today, The Colony in Murrieta has 2 active listings and 18 homes in escrow!  That’s just nuts and it means that I need more listings!  So if you know someone who is considering selling, please send them my way and let me get them the maximum possible! 

Is this all a real estate bubble?  Maybe, but with low, fixed interest rates it is not like 2008.  Anyone locking in a home at these low rates will prosper significantly over time because rental rates are incredibly high and getting higher.  For the next few months I anticipate a leveling off of this hot seller’s market and maybe a little more equilibrium in October.  Unemployment, COVID, and the election are the things to watch.  As always, please contact me if you or someone you know has any real estate needs.  My business is based on wonderful referrals from you and they are much appreciated!

Sincerely,

Stefan West
Stefan West, aka Mr. Murrieta. 

Wow, has the world changed!  As I drive around Murrieta, talk to people, and see my family at home every day, I have these constant surreal moments.  Not only are we all home but businesses and events around the world are shut down, leaving us immersed in a painful 24-hour news cycle and a rabid Facebook/TikTok environment.  Obviously, there are terrible losses and my heartfelt prayers go out to all who have suffered this illness, lost a loved one, or are enduring financial hardship.  I wish you and your family the very best during this challenging time.

Given these circumstances, I have held off mailing my monthly postcards and client letters.  It just didn’t feel right to do anything else.  After doing real estate for 17 years, I am in touch with many families and industry friends locally and around the country.  Despite all the bad news, I have seen so many fantastic, wonderful things going on so I thought I would reach out, say hi, and share a little.

For instance, I have an amazing client making masks for FREE and delivering them at her own expense.  One of my agents is also making masks for her church and helping so many people.  I give mad props to Teresa, Adam, Andrea and their families.  I have also seen families walking, cooking, and doing home projects together.  My wife Jen has destroyed (diligently cleaned out and organized) our closets, cabinets, and garage.  Then she kicked me (no more kickboxing for her) until I got it all donated and out of the house. I am sure you have similar stories and some great family moments as well. 

Also, I think our kids are learning a rare lesson in all this. I remember growing up being told to get under my desk in the event of nuclear war – what the heck was the rationale for that?!  However, it made me realize the world is a big place and crazy things can happen.  Our kids are seeing this first hand and I believe they will be more grounded because of it.  I am also trying to teach my kids the importance of supporting local businesses.  Each week, we pick up a special family meal from a local Murrieta or Temecula restaurant.  I highly suggest trying it out if you haven’t yet.  We have some great places to eat in town!

In the meantime, don’t worry too much about real estate.  It is still humming at a reduced rate but all the fundamentals are there.  We started this year super busy and that will likely continue once it is safe.  I will say that showing homes while wearing a mask and gloves and lathering on sanitizer is one of those surreal moments I mentioned earlier.  A few months from now, I will be like, “Do I know you? What, I sold you a house?  Hmmm, wait - put a mask on…oh yeah now I see it!”  If you do need real estate info or need to plan, give me a call at 760-415-1000.

In the meantime, stay safe Murrieta.  We are all in this together.

Sincerely,

Stefan West
Stefan West, aka Mr. Murrieta.

As we stride into 2020, there is a battle of perspectives raging among the realms of real estate, economics, politics, fiscal policy, and consumer confidence.  Rarely have I seen consumer sentiment so divided.

If someone is optimistic, they are heavily invested in Apple, Tesla, or the stock market as a whole. They believe the economy is good and will only get better.  If they are pessimistic, they believe we are in the midst of a housing and stock market bubble that will soon burst in some capacity.  They feel that being conservative is the right course, especially given that we are in an election year.  

In terms of politics, we have a trade war that may be calming down, impeachment proceedings that are heating up, and gritty foreign policy in the Middle East, making even the calmest of consumers nervous. Economically, our manufacturing base is declining but unemployment levels are fantastically low.  In terms of fiscal policy, interest rates are the lowest they’ve been in years and appear to be headed even lower.  

But how low can interest rates go and are perpetually low rates a good thing?  In real estate, we have a shortage of homes with strong buyer demand.  However, home prices are really high, and even with these low rates, buyers are getting maxed out.  All this creates a mixed bag of consumer confidence.  While confidence is high right now, many people are simultaneously wondering when the other shoe will drop.

So what does all this mean for our local real estate market?  I am so glad you asked! What would be the point of studying this stuff every day if I didn’t share my thoughts? J Ultimately, our actual market results are determined by the fundamentals so I always go back to basics.  Low interest rates and a short supply of homes means prices will be rising through July.  We will see peak pricing in May and early June.  I anticipate interest rates staying low throughout the summer for both economic and political reasons.

Economic forecasts estimate a 2.5% appreciation in 2020 but I just can’t see it being that low given the current conditions.  Our local community is in HIGH demand.  Murrieta was recently ranked the third safest city in America by 24/7 Wallstreet.  We are consistently in the top 50 safest cities - usually the top 15 - so I will not be surprised to see a 6-8% increase going into summer and then a reduction of 2-3% in prices from August until year-end. A great community has value and with these interest rates, Murrieta’s real estate values will shine in 2020!

If you or a family member has real estate plans for 2020, please give me a call so we can game plan early.  I will always give you my best recommendation built around YOUR goals. 

Sincerely,

Stefan West
Stefan West, aka Mr. Murrieta. 

What a summer!  I know the heat is still here and summer doesn’t officially end until September 23rd, but with kids back in school and the NFL on tap, I declare fall is here!  Oh, back to my wonderful and glorious routine.  Geez, when I hear it out loud I feel old, pedestrian, and boring.  Thank goodness I have the exciting and every-changing world of real estate to kick a little pep in my step.

While I have been blessed with great clients and an extremely busy summer, I know that local real estate sales are actually down 4% this year and getting slower.  However, the average sales price of local homes is up 5.3%.  So we have declining sales but rising prices through June.  If we follow the footsteps from the last couple of years, we will see local home prices decline between 4-8% until February or March 2020. 

The wildcard (outside of politics) is that we currently have the lowest interest rates in almost four years.  That is keeping home prices higher even amid diminishing sales.  If interest rates were still in the 4.5%-5% range, I think home prices would have slid already.  I do not anticipate an increase in rates due to economic fears (see below) and trade war tensions, so hopefully prices slide less than in previous years.

On top of slow home sales, economic forecasts have pounded a steady drum that 2020 will be a recessionary year.  Just type that in Google and you will be overwhelmed by the amount of articles, analysis, opinion, and trepidation.  When enough people are convinced that something will happen, it usually does, but to what extent is unknown.  The lone exception to this theory seems to be the zombie apocalypse people swear is coming.  Ideally, people should ease up on debt and sock away more savings.

While Southern California is down 9.1% in declining sales, our area only went down only 4%.  Our community remains in higher demand than LA, Orange County, and San Diego.  Who wouldn’t love to live at the beach?  However, people are priced out and we offer a great value alternative.  Home builders are feeling the pinch as they want top dollar AND have super high special assessments.  If you are home shopping go for a lower tax, older home with upgrades that you don’t pay for out of pocket.  If you must have a new home, go with an agent from the beginning and negotiate, negotiate, negotiate!

If you have an interest rate that is over 4.25% on a VA or FHA loan, you should consider a super easy streamline refinance.  Outside of that, now is a good time to enjoy your home, watch some football and maximize savings.  Our market remains among the strongest in SoCal, so you are in the right place!

Sincerely,

Stefan West
Stefan West, aka Mr. Murrieta

Mr. Murrieta is out of the office and Mr. Maui is in full effect.  I am writing this client letter from my first ever trip to Hawaii on the stunning island of Maui.  As my vacation winds down and I kick the sand off my toes, I find myself missing Murrieta and my real estate clients.  We have a great community in Murrieta and our surrounding cities.  While Hawaii has been an amazing experience, I am eager to jump back in to our real estate market, which is currently hotter than the beautiful sands of Kannapali beach.

In June, our market was jumpstarted by exceptionally low interest rates.  After last summer we saw a retraction in real estate and prices continued a slow drop until around late February of this year.  This slower start to the 2019 real estate market combined with aggressive political pressure on the Fed caused rates to drop incredibly low, which is great news for you.  I just had a couple of buyers get 3.875% on a conventional 30 year loan and 3.25% on FHA and VA loans.  Those are the lowest rates since late 2016.

If you purchased in the last 3 years with a VA or an FHA loan with any kind of PMI, I strongly suggest you explore the benefits of refinancing or streamlining.  It won’t be right for everyone, but you could potentially save $200-$400 per month.  This is a rare second opportunity to get some of the lowest rates ever seen.  I don’t do loans but I can give you the names of some of the best in the business if interested.

These amazing rates are turning the heat up on our market.  While I am not seeing the frenzy of constant multiple offer situations, my listings are selling very quickly.  The fastest moving homes are in the $430,000 to $485,000 range and entry level homes.  There are also a lot of active move-up buyers, people who are trading in their smaller homes for larger, higher quality properties.  That segment has been exploding since the new conforming loan limit increased to $484,350 earlier this year.  I expect this trend to continue all summer and anticipate a very solid real estate year if rates stay reasonably close to current levels.

Along with stunning sand beaches, warm waters, and Mai Tai’s, Hawaii has given me the opportunity to reflect on how thankful I am for the wonderful clients I have had over the last 17 years.  I truly appreciate the trust you place in me.  Just today I had clients from three and five years ago contact me to buy and sell homes, and they were willing to wait until I get back in town to start the process.  That means the world to me and my family.  Thank you very much for all referrals of family members and friends over the years!

Sincerely,

Stefan West
Stefan West, aka Mr. Murrieta. 

Economically speaking, May was a roller coaster of a month.  With the US in a trade war with China, the stock market flailing, and interest rates decreasing, the real estate market doesn’t know which way to go.  Personally, I blame the Democrats and Republicans. Also, let’s blame Zillow, Redfin, Open Door, and home builders, too, just for good measure!

Due to the trade war and the stock market pullback, rates are the lowest they have been all year.  This is great news for real estate as it creates more affordable loans and brings new buyers into the market. However, the current political situation is causing significant uncertainty.  The lack of consumer confidence triggers a “wait and see” attitude, especially with first time home buyers or buyers burned in the 2008 financial meltdown.  When we should be sprinting in a hot market, we are often jogging or walking.

Adding to the market confusion are Zillow, Redfin, and Open Door.  All three have been buying and flipping local homes.  Recently, a client of mine was offered $451,500 on a $475,000 listing.  After Zillow’s fees the actual offer was $409,000.  A far below market sales price like that has a huge impact for neighbors trying to refinance or sell their homes.  Here’s another example.  Redfin just flipped a home in West Murrieta and sold it for $460,000.  My team just sold the exact model across the street for $527,000.  These large variations in sales prices are confusing and frustrating to a buyer who may love a home but also doesn’t want to feel like they overpaid.  It also impacts appraisers who are just doing their best to accurately determine what a home is worth.  Unlike these companies, crushing home values is NOT what I aim for. 

Home builders are also adding to the uncertainty and instability by using gimmicky programs to intentionally separate clients from their agents.  This ensures that they control the transaction to maximize their profit.  If you are even remotely considering buying a new home, please call me first!  Home builder incentive programs sound GREAT but usually result in you paying a full 6% commission to sell your home at an aggressive price, which nets you less and lowers local property values. They promise incentives that are often worth thousands less than you could get by allowing the Mr. Murrieta Team to represent you.  I assure you, while home builders may talk a good game, it is not your interests that they are serving.

Stefan West

What an absolutely stunning April day!  It’s a sunny 67 degrees and I am hosting back-to-back open houses today for two of my new listings.  After only two hours, I have already received one full price offer for my first listing and a second one is moments away.  I also just received an offer for my second listing, and that open house hasn’t even started yet!  It doesn’t get much better than that in the real estate business.

Now, why am I telling you this?  Is it because I want to brag and rock Facebook while using words like amazing, awesome, and #hashtag something?  No, while lots of agents do that, it has never been my bag.  My boys would totally call me ancient for saying “not my bag” BTW.  When I write Facebook posts or client letters, I want them to provide useful information or market my clients’ properties, not feed my ego.

The reason I am sharing this news with you is because hosting open houses is a great way to learn about the marketplace by actually talking to active buyers and sellers.  Sure I can quote Zillow or Redfin projections (often wrong), but nothing beats actual feet on the ground.  The activity I have seen shows that we are shifting into high gear and moving toward more of a buyer’s market, especially for the larger homes. 

Inventory is climbing and although I am receiving offers on upgraded and turnkey properties, open houses have not been particularly busy.  While fewer people are attending, the buyers who show up are focused, qualified, and ready to buy. They are just VERY picky and go after only the most well-presented properties.  Areas such as Wildomar, Menifee, and Winchester are also seeing more interest as buyers expand their search radius in hopes of getting a bit more for their money. 

Along with increasing sales prices, we are starting to see property appraisal values coming in short.  I have two wonderful couples who have been recently impacted by appraisals coming in significantly under the agreed upon sales price.  Although I fought the appraisals with in-depth rebuttals, the appraisers wouldn’t budge.  While buyers are willing to pay more for the best homes, they can’t get loans with low appraisal values, leading to a great deal of frustration for buyers, sellers, and agents alike. 

Overall, the market is moving quickly with the Fed keeping rates low.  I expect this to continue through early summer, making now a great time to sell.  Let last year be a cautionary tale.  In 2018, interest rates climbed over the summer and once school let out, a significant amount of listings came on the market.  Then with not enough qualified buyers, home prices sank until things picked up again in March of this year. 

 That’s it for this month. Thanks for all your support and referrals.  Please enjoy the wonderful weather!

Sincerely,

Stefan West
Stefan West, aka Mr. Murrieta.