There is no doubt that this is an unprecedented time in our history, and I wish that I could give you some clarity. At this time all I can offer is where we are and where we would like to be when this is all over.
As for the condition of the market: I am not going to tell you that I have all the answers but I can tell you my opinions and as to why I think what I do.
Home Values: I feel that we are going to see some correction in the market. Just prior to this happening there was/is a severe shortage of inventory under 200k. I feel that was pricing a lot of people out of the market. Most consumers with entry level jobs could barely afford a mortgage even with 2 incomes. So I felt that regardless we were going to see some correction in home values. We have seen a large uptick in listings over the last month and homes are still selling quickly in the under 500k price range. As it sits we are still extremely short on inventory. There are still fewer homes for sale currently than at this same time last year. With rent prices still on the rise, I would say that it is still a great time to buy if you can.
Lending: Lending is going to get tighter. In spite of what has been said about the fed interest rate, that doesn’t have a large effect on mortgage interest rates. The largest challenge right now is called selling paper. Most lenders have what they call a Warehouse of credit. For example they may have 20 million to lend. They take that 20 million and mix it with good, average, and not so great loans. Then once they have filled the warehouse they sell it. Either to a larger bank or as a commodity on the stock market. Due to the current circumstances it has become harder to sell off these warehouses. That means that there is not as much money to lend and the buyers on the secondary market will be less inclined to buy anything other than top tier loans. This combined with unemployment is going to make for a rough ride even once we get out the other side of the virus.
Real Estate: I have full faith that if you are in this for the long haul that everything will work out. If nothing else I am very candid. I tell it like it is, so i’m not going to tell you that it will be all sunshine and rainbows after this is over. I hope that it is but i’m going to prepare as if it isn’t. I am confident that we have a team of highly motivated agents and staff that will help lift each other up during this crisis. We will let our words and deeds be a beacon of light for the community and the rest of our industry.
Once again these are my opinions and mine alone. I may be wrong about some of these market issues but I promise that I am not wrong about how to serve our clients and community or the strengths that we all share as a collective.
I am always a phone call away if you need anything. Even just someone to listen.
Mike Hernandez Branch Manager My Home Group (480) 720-0730