Stefan West, aka Mr. Murrieta.
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.
Stefan West, aka Mr. Murrieta.
What a weekend we are having! We have lots of rain, big booms from Camp Pendleton, and it is Super Bowl weekend. I traditionally do not talk religion or politics, and for many people football is a religion, but I can’t get behind this Super Bowl. Yes, both teams worked hard but both also had a lot of ref help.
Now you may be thinking, why is my real estate guy writing to me about his Super Bowl angst?! Well, in many ways it is very similar to our real estate market. As a homeowner, you can increase value by upgrading your home with a pool, solar, new kitchen, etc. You can also create wealth by aggressively paying down principle or refinancing to a 15-year loan. However, as with championship football games, there are many things outside of your control regarding the market value of your home.
One of the biggest “refs” that dramatically impact our market is the Federal Reserve. Last week, they decided not to raise interest rates. This affects a myriad of things including consumer confidence, the stock market, interest rates, and even consumer cash flow as it stabilizes credit card rates after they have been on the rise for months. By keeping rates low, it spurs higher buyer activity which will reduce the supply of homes on the market. Low supply amid high demand means that this spring your home will be a winner.
We are already seeing a shortage of supply play out with homes $425,000 and under. When interest rates dropped down, home sales really start to pick up. When you are out showing homes in Murrieta and can only find 8-12 homes in total for new buyers, you know things are tight. When five of the homes go into escrow within the same week, you know the party is just getting started. Next up, offers over asking!
This means that between now and June will be the ideal time to sell. Usually, we would see this trend start in April, but the large decreases in rates and increase in consumer confidence are pushing things to an early start this year. Tax plan returns in April will likely further invigorate our local real estate market.
The Federal Reserve is always a factor but for some reason, this one call last week really had a much larger impact that usual. The timing was just right with the trade war, government shutdown, and lots of politics going on, thus my NFL analogy. One call at the pivotal moment can mean everything! Fortunately for homeowners, the Fed made the right call at the right time. Please let me know if you or someone you know needs help. As always, I appreciate your referrals!
Stefan West aka. Mr. Murrieta
I love quotes from movies, books, people, history, and even making up my own. Every now and then we remember quotes when the appropriate moments come along. Two recent moments reminded me of the movies Poltergeist 1 & 2. The first was waking up the day after school let out with an ominous...They’re here!” The second was on August 15th when school started again…”They’re back!” I know Poltergeist is creepy and not for everyone, but the sheer joy of kids going BACK to school is mind-blowing. I flat out giggled when dropping the kids off that first day of school and I definitely wasn’t alone!
Now you may be asking what this has to do with real estate. Besides your real estate expert being a VERY happy camper, there is actually a correlation between school and real estate sales. Believe it or not, our market hit a huge slowdown once school let out and the market was flooded with new listings. This led to slowing sales, market-wide price drops, and a whole lot of frustrated sellers and their realtors.
With school back in session, many sellers removed their homes from the market, thus shrinking supply. Family trips and vacations are over and people are back to the grind which includes looking to buy homes. Also, with so many price reductions over the last two months, we are seeing new buyers come into the market now that it is more fairly priced and interest rates have held steady.
At this point, we have had seven straight months of annual declines in pending sales from last year. For the rest of the year we will be transitioning to a traditional market of 3-5% year over year appreciation. We will likely see a bump in sales for October but it won’t be a landslide. That shipped sailed in March-May. We will also see an increase in cash-out refinances as people are investing in pools, debt consolidation, etc. If you or someone you know is considering doing a refinance, PLEASE call me. Let’s make sure you get the best rate and terms. I work with some of the best lenders in the business, so let me help!
I want to wrap up with a specific request to you. If you know anyone who may be buying or selling, please give them my card or contact info. This market is aggressive and hiring an experienced broker is now more important than ever. Please do not hesitate to call me with ANY questions about real estate here in California or any state in the US. I can help anywhere in the US. I love my job and live for this stuff!
Stefan West, aka Mr. Murrieta
"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man."
Man, the heat is ON and summer is in full effect. I am not sure why, but this year hit extra hard with a record-breaking 114-degree weekend and many more that were almost as bad. As a homeowner, I wince every time I hear my AC kick in. Sadly, it has become the white noise I fall asleep to. While I don’t want time to move faster, I eagerly look forward to late October with its cool air and stunning sunsets. Wow, I feel like I am writing a single’s advert. (Yes, I do like long walks on the beach, cookies, and serenading...)
Unfortunately, there isn’t a lot of heat in the real estate market. In fact, we hit a major slowdown in early June and things haven’t improved significantly since. We are seeing a little bit more activity which I attribute to people returning from vacation, but the headlines read pretty grim…
These are just a few stories from late July. They are finally reporting what I mentioned in earlier client updates, namely that our best months are March through May and then a glut of supply comes on in early June, depressing the market. With home prices and interest rates rising, this effect was magnified.
In June, sales of Southern California homes and condos dropped 11.8% year over year. With that said, the sky isn’t falling and I believe we are just moving toward a more balanced market. The first fall in pricing was more abrupt because many sellers overpriced their homes in a declining market. Right now, it is NOT a seller’s market unless the home is an absolutely stunning, turnkey, or a highly upgraded pool home.
The rest of the year will be a good time for buyers to take advantage of more supply and flexibility before interest rates raise further. Sellers shouldn’t be too concerned at this point. Entry level homes in particular are moving pretty quickly. Our local market is very strong in general and there is nothing in the overall economy that raises major red flags. However, keep an eye on the trade war talk and interest rates.
Thank you very much for all the referrals and please do not hesitate to let me know if you know someone looking to purchase or sell in the area. We are glad to help and always appreciate your referrals!
Stefan West, aka Mr. Murrieta
So, I am sitting at Elevator Brewery and Draught in Columbus, Ohio enjoying their amazing craft beer and short rib macaroni and cheese. I am not just savoring the food, I am also reflecting on the thrilling Cavalier’s victory and advancement to the NBA Championship. Lucky me, I watched game 7 of the eastern finals with a roomful of Cavalier fans right here in Ohio! Also, I had the BEST or second BEST meatball I have ever had. It was veal but it was real…delicious by Marcella’s Restaurant. Yup, I can rhyme.
I have to tell you, Columbus is kind of boring and they dress funny. On Memorial Day I walked the city streets and (no exaggeration) saw a total of 7 people over the course of an hour. It really shuts down out here and yes 5 of 7 were dressed funny, that’s like a 71.4% funny dress ratio. I am not picking on Columbus, just calling it as I see it. They probably think I dress funny too.
As I fly back tonight, I will research our current and future real estate markets. I anticipate many more houses hitting the market in June and prices evening out. Buyers will get pickier before making offers and negotiate more aggressively. Great homes at proper market pricing will sell fast. While that sounds obvious, this is the time of year where sellers start pricing too high and ignore the winds of market change.
After reviewing recent economic data, I strongly believe the Fed will raise interest rates again in June. I would be bold and guarantee it based on the ultra-low unemployment, but the new trade sanctions being put forth by Trump may introduce economic doubt. If they do raise federal interest rates, I do not see it impacting mortgage rates significantly this time around. Right now rates are kissing 4.75% or more, especially if the buyer’s closing costs or mortgage insurance fees are included in the rate.
In wrapping up, I have been getting calls from clients wondering if we are hitting a peak in the market. I don’t believe so at this time. I see a calming down of double digit appreciation to more traditional rate of appreciation. However, if you are waiting to time the market, no one gets it perfect except by accident. If I had a rental that I didn’t want long term, I would give this market a hard look and likely sell it.
Thanks to all my wonderful clients and for your referrals. I am going to miss some great clients, all of whom had me sell their homes but moved out of the area, state or country. Joe and Marie, Dylan and Courtney, Dale, Margie and Randy, Keith and Rosalinda – you will all be missed. Thank you for your business and trust. If you ever need anything for family, neighbors, or even for your next move – give me a call!
Stefan West, aka Mr. Murrieta
“Raindrops are falling on my head…” Here I am, all dressed up in a suit and tie yet I gave my umbrella to my wife. So while I may be a gentleman, I will be the WET gentleman at a real estate class today. C’est la vie. My inconvenience pales in comparison to the gratitude in my wife’s eyes as she scored my umbrella.
Since this is my first letter of 2018, I should have started with Happy New Year! I hope you had a wonderful holiday season. If you are like me, you love the holidays BUT it’s really nice to put away Christmas and charge into the New Year. So in that spirit... I am back in the gym on my gimpy knee (recent ACL/MCL surgery) and ran into a Murrieta real estate client who asked about the new Tax Cuts and Jobs Act of 2017.
What a great topic for this month’s letter! Many people are concerned the new tax law will negatively impact Murrieta home values. That remains to be seen but here are key changes homeowners should know:
· There is now a cap of $10,000 for state income tax and property tax deductions
· You cannot deduct mortgage interest beyond the interest on a $750,000 acquisition loan debt
· You can no longer deduct mortgage interest on equity debt (equity line)
Many Murrieta home owners with higher special assessments won’t be able to deduct their full property taxes and, due to low interest rates, aren’t deducting a lot of loan interest. So instead of itemizing, they’ll get:
· A standard deduction increased to $12,000 for single, $18,000 for head of household, and $24,000 for married tax payers (this will benefit many with low interest rates and definitely renters!)
· An increased child tax credit to $2,000 per child with phase out increased to $400,000
The bottom line is there are both pluses and minuses but many Temecula and Murrieta homeowners will benefit more if they have lower property taxes and interest rates. Renters will definitely benefit from the higher deductions thereby enabling them to buy homes in the future versus renting. Adding to this is the recent raising of loan limits across the board (conventional, FHA, VA) that should further drive our home market higher in 2018.
Stefan aka Mr. Murrieta
P.S. Enjoy the rain. What’s better than falling asleep and waking up to that wonderful sound?