It seems all we hear on the news these days are protests for this and protests for that. But has anyone bothered to look at the impact on the Real Estate Markets? I have already written about the exodus from cities to more rural areas, but what about the actual Real Estate values in and around large metropolitan areas? I see this as remarkably interesting as the very people protesting and rioting for change are taking the cities of California and across the nation and turning them into places where no one wants to live. Case in point Minneapolis Minnesota the epicenter for the uprising across the country. This phenomenon is being played out in big cities across the country.
As the “protestors” burn down inner cities and take over entire city blocks and want to defund the very people that are charged with keeping them safe, in turn, they are driving good tax-paying people out the city. Any halfway educated person can see that this will kill Real Estate values, as who in their right mind would want to live and try and work in a very unsafe environment. The consequences of allowing this destructive activity from city governments are killing the very city they have been sworn to protect. Most average citizens realize that they can’t change this and feel if they speak up they will be harms way so the logical choice is to move away from the city. We are seeing this from the very people running our Government. In California, even our Governor realized that trying to raise his family in Sacramento has become too dangerous so he purchased a house in the rural foothills (El Dorado Hills) to move his family away from the very unsafe environment that he has created.
People can only put up with this kind of government hypocrisy for so long before they feel they have no choice but to move to be safe. When government officials keep blaming everyone else other than looking in the mirror the citizens see this and know that they can’t fight city hall, so to speak. To make it worse when government officials pander to the very people tearing down their city they have been sworn to protect, we the people are quietly leaving this unsafe, hypocritical environment to a safer cleaner environment. With business employees able to telecommute they are finding they can work anywhere so out they go without making a fuss. This quiet migration will be the death of the big city unless some radical changes are made to protect the liberties of people within.
Something I have noted a while ago with regards to big tech companies that actually run the cities they are a part of is; that how long can these companies be taxed and gone to for money to run the city they are in. An example of this is Palo Alto California and the surrounding towns where such companies as Google, Facebook, Oracle, and more big tech companies reside. For Years now those companies have tapped to provide basic public services such as busses and public transportation and city parks. These companies have been rich enough to do these things as their employees live and work in those cities. As these young computer geniuses grow up and have families and suddenly realize that the city they help make has gone downhill due to their city’s government allowing rioting and looting, and defunding the police that are there to protect them and couple the fact that they have not been able to go to their office culture due to the pandemic you are looking at a perfect storm. These young families now have time to look around and see that it is not a good environment to raise a family, so they quietly move away.
A huge example of this is Elon Musk, the founder of Tesla. He stated publicly months ago that he is selling all of his Real Estate holdings in California. No one connected the dots on this one or they are sticking their collective heads in the sand. The Tesla factory in Fremont California where they produce the model S Tesla was closed due to the pandemic for a longer time than Mr. Musk believed was necessary. The local government tried to keep his factory closed for “public health reasons” and Mr. Musk said that he would make sure his workers were safe and he reopened his factory in defiance of local government. What happened next could only happen to a huge company like Tesla. The local government caved into Mr. Musk and allowed his plant to open without repercussions. It only makes sense as the taxes Tesla pays annually to the local California government was in the neighborhood of $6 billion and Mr. Musk threatened to move his plant. Meanwhile, Mr. Musk has sold all of his Real Estate in California and has bought an enormous amount of land just outside of Austin Texas. If one is blind Musk is Moving his whole show out of California and taking the tax base with him as Texas has promised Tesla that they can save the property taxes and business personal property taxes that he has been paying in California. Any business has to look at the bottom line and moving from California for Tesla is a good business move as the California Government continues to plague him and others like him for more taxes. How long before the majority of the big tech in California wakes up and realizes that they can move from California and save billions.
So as the government continues to look to “tax the rich” the rich are saying goodbye to high tax states in favor of more friendly and safer environments. Why does Warren Buffet live in Nebraska? These people did not get rich for being dumb so out they go in favor of a more business-centric city or town. We look at a once-great city such as San Francisco and what do we see even today before even more migration occurs. San Francisco has become an extremely dangerous and dirty city, so much so that large trade associations have decided not to hold their conventions there out of fear for their associates’ safety. Governor Gavin Newsome has been releasing inmates from prison at an alarming rate and these convicts are being released into these cities with no money or means to get a job, so more crime is on the horizon. This is being played out in Los Angeles and other large cities across the United States and we have seen the decline of other cities such as Detroit, Chicago, Minneapolis and more to come as local governments are allowing, and in some cases condoning, the actions of radical protestors and rioters. Real Estate values are quick to follow the downturn of a city and add the pandemic and stay at home orders people want out to a simpler life. As the young adults that started the tech revolution grow up and have families they are realizing that living in the city with their family is dangerous and now they have the ability to work from home, and that doesn’t seem to be changing anytime soon, so they leave and others follow. We as a people have choices to make and if we remain a free country people will have the choice to live where they want and most will choose a safe, clean environment. Then the big City dies like San Francisco and Detroit and with no tax base to rebuild they become crime-ridden, dirty places and add in defunding the police, and releasing prisoners early, people just leave making it even worse. Lastly, it is more affordable to live outside most big cities and the dollar goes farther allowing familys a better way of life. Interesting times makes for an interesting Real Estate market. Be smart and be safe. MAE Capital Real Estate and Loan is here to help with your buying and selling of Real Estate in rural areas.
Have you checked the price of Gold lately? If you do you will see that it is bumping up against $2,000 an ounce. This is about a $700 an ounce gain since March. It is fantastic if you own gold, but what is this signaling? Traditionally gold prices rise as an offset to inflation, but we don’t have any nor do we see any inflation in the future with more people out of work due to the COVID-19 scare. So why the sudden increase? So many questions as to what is going on in the world these days that things of late seem to be backward. The stock market hitting new highs during a pandemic with so many out of work. Interest Rates are at all-time lows. And the government is handing out money like it is nothing.
Unfortunately, the ladder is probably what the reason is for the increase in gold and silver prices. The reason is simple and yet complex. When the government puts so much stimulus (money) into the economy eventually that money will make it back into the economy, which is good right? Not always, as people view the government stimulus checks as “free money” so they spend it on other items than food and necessities. This effect has not been quantified yet in the economic world as we have never seen this in the history of the U.S. People that didn’t need the money to survive simply put it in their savings or invested it in the stock market. The government is considering another round of stimulus checks as I write this and there are a significant amount of people that really need the money yet there are significantly more that don’t need it. There is no real way for the government to determine who needs the money and who does not. Tax returns can show what people make but they are not accurate as most people write off as much as they can. So, the Government sends the checks out to all Americans to keep people spending and since we are in uncharted territory with all this stimulus gold and silver (precious metals) see this as a potential for future inflation.
The Government has also implemented the Paycheck Protection Loan (PPL) Program for small businesses. This program provided small businesses (businesses with less than 500 employees) with loans that can be forgivable under certain circumstances. Some of these “small businesses” received millions of dollars with no oversight. We are seeing news now of people buying expensive cars and other things with the PPL money. We have no idea who received the money, how much, and how they are spending it. I myself was offered $150,000 for MAE Capital Mortgage Inc. which I declined as we remain busy even though I had to lay off our receptionist and my wife. I might be too conservative in not taking the money given to me, but I was raised to borrower money only under dire circumstances or to leverage Real Estate. In addition, we don’t know what the payback terms will be as the government has not done its due diligence and could end up hurting more than helping, we just don’t know yet. This could lead to even more bankruptcies when these loans become due. Precious metals are taking this into consideration in a belief that there will be inflation due to this uncontrolled government spending.
Then there are the unemployment benefits that were pegged at an additional $600 a week and that was in addition to the state unemployment money that was, at it’s maximum, $400 a week. So, people have been getting $4,100 a month, and for most people that was a raise without work. This has created a disincentive for employees to go back to work and employers that have seen a slow down will not feel a responsibility to hire back the laid-off employees in the short term knowing they are getting paid by the government. This has created people with more money then they had before when they were working full time and time to spend it. This has contributed to more investment in the stock market in hopes of making even more money from “free money”.
These effects are why precious metals have been rallying. We are also seeing an extraordinarily strong Real Estate Market. These are assets that will grow if there is inflation or the devaluing of the dollar. The devaluing of the dollar to other currencies worldwide will cause an immediate increase in cost for goods that are imported to the U. S., and you guessed it, China will be the big winner of the U.S. Stimulus packages. It appears, as I write this blog post, that the U.S. government is negotiating for yet another stimulus package. This is a huge reason for the increase in precious metals prices as people are looking to the future to see the inflation coming. People will also ask the question; “is this political”? I won’t go there in this post as I believe there is definitely politics involved on both sides, but if and when the next stimulus package is released it will pump even more money into, what some believe an already bloated economy. We have all been hearing how people are really hurting with this pandemic, I would argue that sure there are some hit hard, but the majority of folks are doing just fine and more money will mean more spending which will put more inflationary pressure on our economy. As we are starting to see shortages of some products since a good portion of the U.S. labor force in manufacturing was laid off for a month or two or more. This shortage of supply of goods will drive prices higher thus creating inflation in areas where there would not have normally been. All these factors are scaring the economically minded person, and if you study basic economics you will read that holding assets during inflation is the best thing to do other than holding on to cash. The reason is that assets will increase in value and cash will decrease in value and precious metals are the original assets to go to during inflation. These are the reasons for looking at precious metals and why they are increasing at an alarming rate. On the Real Estate end of this discussion, we are seeing a rising real estate market outside of big cities. I will be following this discussion as the world evolves and posting more updates as we move further into stimulus and the pandemic. www.maecapital.com
We are now 4 months into this COVID-19 crisis and people are getting very restless. People that reside in US Cities are feeling a bit confined with their current living conditions. If you live in a city you know what I am talking about. From having to wear a mask literally everywhere even outside gets old after a while. Not to mention if you are one who lives in a high-rise Condo or Apartment complex you must wait for an empty elevator or take the stairs with your groceries. When sheltering in place in your space you are breathing other people’s recycled air in those high-rise complexes and people are worried for their health and the health of their family. Not to mention most big cities, especially in California, have large homeless populations and the city streets are dirty and unsafe. As more big cities move towards the idea of defunding the police this is also getting people extremely nervous as most big cities don’t have enough resources currently to keep their citizens safe. In addition, in California, the Governor is releasing dangerous prisoners into our cities at an alarming rate under the guise of protecting the prison population. At MAE Capital Mortgage Inc. for these reasons, we are seeing what we are calling "The Great Migration Out of Cities".
That said people are heading to rural Northern California in droves. MAE Capital Mortgage Inc. has offices in Rocklin and Roseville and since we do both Real Estate Sales and Mortgage Lending, we are seeing this very interesting dynamic with people able to work from home and embracing the fact that they can now live anywhere. There are more people with the desire to move out to the country where there is room to move about freely and can have outdoor space for there kids to play. My wife (Margie Mower) who is one of Rocklin’s top Agents is remarkably busy with buyers wanting the rural properties. She specializes in rural properties in Rocklin, Roseville, Loomis, Penryn, Newcastle, and the foothills. When she lists a property in a rural setting the price of these homes are between $650,000 and $1,500,000 and she is getting multiple offers as soon as they hit the market from people seeking shelter away from cities. She is hearing that the restrictions and the unrest in the cities are driving people away from the cities. With Politics running rampant in cities where large concentrations of people reside the average citizen has become scared of the movements to defund police and the encouraging of violent protests so much so that they are seeking a slower and easier way of life away from the unrest in the cities. The Governor of California is even moving out from Sacramento to El Dorado Hills which resides in the foothills of California about 40 miles from Sacramento. He is buying a $5.4 million on a Governor's salary during a time where his assets are allegedly all in a Blind Trust not for his use. Whatever your politics are I will bet you too would rather live in a safe environment without homeless, violent protest, filth in streets, and closed businesses. Schools in rural areas have been allowed to open as the Health Crisis is less concentrated in rural areas which is appealing to city dwellers with families.
If you are wondering where the people in the rural areas are moving to, it might surprise you to know that the majority are headed out of state. Yes, with the turmoil, and over-taxation, and an environment where businesses’ small and large are being looked at as part of the problem and not the solution it is no wonder people are leaving. California has another misleading ballot measure that, if passed, would repeal Proposition 13 (The Howard Jarvis Bill) and property taxes could rise to an amount that will push down real estate values. The Ballot measure is disguised as an education measure, but if this passes it would give the State an open opportunity to raise all property taxes on both residential homes and commercial property. This could be disastrous and push Cities like San Francisco and Los Angeles into further decline and more people leaving to seek cheaper housing. California is in a bad state currently with more people leaving than coming into California and it is all due to the current state of politics in the state that is running it's cities and businesses into bankruptcy and decline. It is obvious to us the trend and the attitude of buyers and sellers as to what their motivations are with what is going on in the world.
The world is an ever-changing place and with the health crisis that continues to give juice to the mainstream media and their fear machine, it is no wonder people want out of confined unsafe spaces like big cities. RV sales are also hitting all-time highs as people look to escape the mismanaged cities in California. Education and the thought of continuing to home school your kids is also playing a part in moving to rural areas in California where they are more apt to open schools first with smaller population sizes. As rural Home specialists, we are here to help if you are looking to remove yourself from a City and move to the quiet rural areas of California. We are also here for those that have been living rural and have found it time to leave the Golden State, we can help sell you home quickly. If you are seeking to buy or sell a property with a well and septic system (common on rural homes) we know who to call to inspect these properties and how to educate you with the new country lifestyle. We have many people that are making long-distance moves so if you or someone that you know needs our expertise give us a call. www.maecapitalcom 916-672-6130.
The first thing everyone needs to know is that we at MAE Capital Real Estate and Loan want all of our clients to be safe and healthy. Whatever your view is on the COVID outbreak is you will have to follow some rules when looking at homes during this time. People are still listing homes for sale, although things have changed dramatically in how your Agent can show a home to potential home buyers. The Listing Agents must also follow strict rules in order to list your home for sale and showing it to potential home buyers.
When a potential home buyer wants to see a particular home, he or she must sign a “Coronavirus Property Entry Advisory and Declaration Form” or PEAD-S for short. Everyone who is going to look at the house must sign this form prior to entry. This form must be presented to the listing Agent of every home you want to see. So, my advice would be to do some reconnaissance before asking to see a particular property. What that would be is to get in your car and go look at the outside of the homes and the neighborhoods before asking to go inside. What this will do is eliminate those houses that are not in a good location or have bad or dirty neighbors. Once you have done your recon trips on houses that interested you online then you can narrow down the ones you want to see inside. This is very important as not to waste your time and your Agent’s time at looking at homes that you would never want to buy anyway.
Once you have your list of homes you want to see the inside on present it to your agent so he or she can send you the PEAD-S for you to sign on each house you want to see. Note this form is sent to you from Docusign which is an electronic signature application. To help your Agent narrow down the amenities you wish to have in a house you should complete a Home Shopping Checklist and you can find this on our site by clicking here or on the link, there are many helpful tools to help you organize your finances as well as your wants and needs in a home. When it is time to go look at the homes on your list you will have to have signed each PEAD-S form for each property and your Agent has to have sent it to the listing Agents on each house you want to see and they have to have received it. Sometimes it can take a while for a Listing Agent to see the actual form as they may be busy when it is sent over. Patience will be your mandate for this process and all other process during this COVID crazy times.
Once your Agent has set the times and the Listing Agents have been given the PEAD-S forms then you can enter a house. Entering a house comes with another set of rules we must all follow. Every person entering a property MUST wear a mask and gloves we also provide booties to cover your shoes when entering a home. Although it should be a given but when looking at homes you should not touch anything other than door handles to open doors to inspect the house. Be sure to bring your checklists with you so you can see if the house offers all the items you want to have in a house.
For the Agent that listed the houses you are seeing you should be aware that the rules also state that the homes that are being actively shown must be cleaned between each showing. This is important for you to know as we in the Real Estate Industry need our client to be safe in the process of looking for homes. Also, we want to make sure that the seller’s of homes are also protected, so although it is a little extra work it is our responsibility to our Home Buyers and Sellers out there to be safe. We are all inconvenienced right now with the all that is going on but at least we can still show and sell homes during this crisis, but if we don’t follow the rules we may lose this privilege.
Patience is going to be your theme during the process of buying and selling a home in these trying times. Viewing homes is not the only area where you will need patience, also know that with interest rates at historic lows and lenders are backed up with refinances during this time and some lenders are still working from home in different parts the country so the loan process has also been painfully slow. So weather you agree with what is going on in the world or not, in order to buy a home or sell a home you will be burdened with additional requirements all due to the Novel Coronavirus narrative. We are here to help you with both your Real Estate needs and your home loan needs, remember bundle and save. www.maecapital.com.
If you have been looking to refinance your home loan now might not be the time to do it. Ok, I know this is contrary to the mainstream narrative when it comes to refinancing. Most people are hearing that now is the time to act as rates are at historic lows, if you have heard this you are hearing the narrative. It is true that interest rates are low, however, rates still should be lower. There are many reasons why I say this, and I will get into it in this blog. The biggest problem with lending today is not interest rates it is turn times and bottle necks in the industry.
It is true that interest rates are low, however, there are still parts of the rates that are not figured into the price of the interest rate. What I am telling you is that for most all Government loans, FHA and VA loans, there is a piece of the puzzle missing in the price of the rate. The price in the rate refers to the discount points. Before it was announced that you could take a pause or defer your mortgage payments during the pandemic the pricing on Government loans was considerably better. The best way to explain why is to show you behind the mortgage curtain, if you will. You see when lenders sell a mortgage in the secondary mortgage market to Fannie Mae, Freddie Mac, or Ginnie Mae (the Agencies) lenders will retain the servicing of the loan. What that means is that a lender will need to re-capitalize their money reserves by securing the mortgage with one of the above agencies by selling a portion of the yield to one of the Agencies. In other words let’s say you have a 3.5% interest rate on a loan (to make it simple) the lender may sell the loan to one of the agencies guaranteeing them a 3% yield. They then will keep the .5% to collect the payments from the borrowers and send the 3% to the agency they sold the loan to. What happens when borrowers stop making their payments? Well the lender still has to make those payments to the agency they sold the loan to. Thus, lenders will lose money on servicing loans during the pandemic. So, to offset this a lender will have to raise their rates to offset the losses in their servicing departments. It is more complicated than that but for simplicity that’s what’s going on with rates and pricing.
Thus, when people start making their payments again, on a regular basis, lenders will then be able to adjust their pricing on their interest rates back down. Interest rates are still artificially high although they are still low, if that makes sense. I am not saying when the pandemic is over that rates will automatically go down, however, in a normal world they should. Lenders might like the increased profits they are receiving from the higher upfront interest rates and fees. This is all new territory for everyone so to say this is the “new normal” and that it will be this way is confusing as I have done pricing before with a Mortgage Banker so I know how it was done. It may never go back to they way it was but competition is the key to lower rates and without it lenders could set interest rates and profit margins like OPEC with oil prices. This activity is illegal in the United States, however, everything has changed and that too might be a “New Normal”.
To add insult to injury, turn times on loans have slowed to a nauseating pace. If you are in the middle of trying to get a home loan whether it is a purchase loan or a refinance you are experiencing this. I have talked about this before in prior blogs but is has gotten worse with the increases in loan volume. You see the large lenders have not been able to get back to their work spaces yet and some are working from home and others from the office, so we are seeing that the right hand often doesn’t know what the left hand is doing so the time to do simple tasks like sign off conditions are taking 2-3 times longer than before the shutdown. This has impacted refinances and purchase transactions by adding an additional week or two or more, in some cases, to the process. We have also seen signing agents (Title companies and Escrow companies and Lawyers on the East Coast) taking longer to do their jobs as their offices have not opened to full capacity yet either. All this change has hampered the whole process of getting a home loan. It is frustrating to clients but to us that have always strived to hit our target closing dates on time it has been a real challenge. This will change in time; I can’t tell when as we seem to all be at the mercy of our local and state governments as to what can open and when and more importantly how they can open. Until the world figures out how to fight this pandemic and how to govern during this time we will continue to see change in the Home Loan industry. We are always here to assist you and give you the honest truth to what is going on in the industry. Please call us at 916-672-6130 we are here to help.
Ok we are a little over 2 months now since California shut down (March 16) so what is going on with interest rates? Interest rates are great let’s just start there. Interest rates are in the low 3’s and high 2’s currently. So what is driving interest rates, you would think the answer would be easy, however it is far from easy. There are many different factors that will determine what your interest rate will be and it will vary from person to person based on there credit scores, down payment or equity, cash back verse no cash back, loan size, loan program, fees waivers, and list goes on. If you hear an advertised interest rate that is really low it probably does not pertain to you or what you would want from your home loan. Interest Rates are also geographical meaning that depending where you live in the United States will determine your base interest rate. So how are rates calculated and how do they vary from lender to lender.
First lenders across the nation give California a little higher interest rate than the rest of the nation to begin with. This is due to the fact that California home loans tend to pay off faster than other parts of the nation. This affects interest rates in that the longer a borrower will hold on to their current mortgage the more interest a lender can accumulate over time. In California people tend to move more often that other parts of the country making the amount a lender can make on interest over time less so in order to compensate they raise the initial interest rate a bit. So if you are hearing, on the news, that interest rates across the nation have come down and they give you an average rate you can rest assured that California will be on the high side of the curve.
The next determining factor or factors that determine the interest rate you will get is your credit score(s). When a lender is pricing your loan, they have to use the low mid-score of a married couple and the mid credit score if you are single. When your Loan Officer (MAE Capital Mortgage) prices your loan with lenders across the country we will have to have your credit score and the amount you are putting down and other factors in order to get the rate that fits you specifically then we will shop for the best loan scenario. It also makes a difference if you are choosing a mortgage that will pay off bills in other words if you take cash out of the equity of your home on a refinance it will also increase the interest rate a bit. When you hear a lender advertising that they will pay off all your bills with a refinance know that is costing you a little bit more to do that. I would not discourage this just be aware of the increased costs even if you have 800+ credit scores the interest rate will be a bit higher.
If you are one of those who love to shop around to find the best interest rate you had better be prepared to give your exact credit score, down payment or equity position that is accurate as a bare minimum. Here at MAE Capital that is exactly what we do on every one of our loans as we are Mortgage Brokers that hold both a California Department of Real Estate License as well as the National Mortgage Licensing System (NMLS) license in order to be able to offer rates from lenders across the nation. Not all lenders are created equal so be aware that rates will vary from mortgage company to mortgage company and that has to do with their overhead requirements. The more people a lender has to employ the higher the cost for that lender to originate a home loan. A Mortgage Broker will have less overhead, in most cases, than a Mortgage Banker or a Bank who will underwrite and fund their own originated loans. The reason why a Mortgage Broker will have lower rates is the fact that they can shop the entire nation for lenders with the best rates and programs where Banks and Mortgage Bankers will only have their own set programs offered by there company. Mortgage Brokers also get what is called a wholesale rate verses a retail rate and that low rate is pushed to their/our customers.
The type of loan you choose will have a different rate than other loan types. A loan type is a FHA Loan, Conventional Loan, VA Loan, Jumbo Loan, Non-traditional loan, Private Money Loan, USDA Loan, CALHFA Loan, and more. All of these loans will have different rates associated with the risk they carry the higher risk loans, such as Private Money or Hard Money Loans carry the highest rates. Again, if you hear an advertisement for an interest rate or program know that what you hear is not what you will actually get, in most cases. For example; we have a lender that we sell loans to that has a program out now that has interest rates in the 2’s, but you have to have the perfect scenario in order to qualify for that program such as 750 mid credit score down payment or equity greater than 20% of the value or purchase price of that home, if you fit the parameters you win and get the rate. But if you are trying to take cash out of your home to pay bills off then suddenly you don’t and most people only hear what they want to and when they hear rates are in the 2’s they tend to pick up the phone and call around. Another factor that is currently changing the interest rates is the fact that many people have listened to the media and have stopped making their mortgage payment during the pandemic this not only hurts them but it hurts those with good credit and never being late on a mortgage. With people not making their payments during this pandemic it is hurting those that are, and are making higher interest rates. You see lenders have priced in the profit from collecting mortgage payments for the origination of a new loan before the pandemic and now they simply are not so we are experiencing higher rates because of this. One phone call to MAE Capital Mortgage Inc. and we will be able to run your credit while we have you on the phone and will be able to give you an accurate interest rate. I hope this blog helps people to navigate through all this and we are here to help. Give u a call to get your pricing today at 916-672-6130.
I have heard that some people are worried about the future value of their homes amidst this pandemic. I am hear to tell you that in my 35+ year stint in the mortgage and Real Estate industry and with my degree in economics I have never seen anything like this. I saw the stock market crash in 1987, the financial meltdown of 2006-2010 and various different corrections to the markets over the years. This was sudden and could not have been foreseen, unlike these other crisis’ this one came when an otherwise healthy world economy was doing well. Shutting down the economies across the world is something we have never seen before and really hope to never see again in my lifetime. It is going to take a bit to get the economies up and running again not for lack of desire to get up and running again but the fear of catching what has been advertised as a deadly virus, whether you believe it or not.
We all know the toils and the riffs of this virus and I am not hear to tell you what to believe but to show you facts from an economic point of view of the housing market. The housing markets are all dependent upon demand, demand to buy and sell. If we look at Real Estate from a demand side you can see in some areas have pent up demand, meaning that buyers have been sitting on the proverbial sideline waiting to buy until the virus threat has subsided. This holds true for potential sellers as well. The homes that are being listed during this time come with several guidelines in order to show them, so buyers and sellers may be set back with the showing guidelines. The changes to show homes are that a Realtor and the people looking at a house must wear mask and gloves, the Realtors has to call the listing Agent to obtain a special code to show a house so it can be tracked from the central Metrolist computer system. These are new rules and are not too bad to show a house and home sellers should be comfortable that there won’t be any residue, if you will, from people looking at their homes.
I think the biggest challenge the Real Estate industry will be to get potential home buyers qualified for a home loan coming out of this crisis. Interest rates are great and that will not be the problem it will be the job losses that may hold down demand for buyers to buy. Also those folks that let their credit go during the crisis will inhibit some potential home buyers from buying a home. An economy is dependent upon people working and when a mass number of people found themselves suddenly laid off from great paying jobs those people will not feel comfortable going out and buying a home very soon after they go back to work. On the other hand those that have been working from home and may live in a city may want to move out from the big cities to get away from overcrowding and may be looking to move to the outlaying subdivisions figuring working from home away from the big city may be a better alternative. That would create listings in the cities and demand for housing in the suburbs.
Home prices or values are based on demand and that will vary from town to town and city to city. Housing prices have not been affected yet by this pandemic, other than Real Estate sales as everything else during this crisis basically stopped or paused as a better hopeful word to use. To view the Real Estate Industry as paused is far easier to digest than to say it has stopped, as it has not stopped. We are, in fact, we are starting to see the pent-up demand from both sellers and buyers. As the shelter in place orders drag on, especially in California, people are beginning to push back from the order and go out and look at homes and list homes for sale. We have seen an increase in this activity in the last couple of weeks and our clients are telling us that they are more than ready to get moving rather it be buying or selling. No one knows what will happen with jobs but it is a fact that the longer this goes on the more job loss there will be as employers just can’t keep all the staff they had if the demand for their product has not come back.
So time will tell what will happen for sure, but I have some ideas and areas in the economy that I have been watching to get a handle and a pulse on the market. I see pent-up demand to hit first with an initial push to buy homes and sell homes. Once this initial demand wears off it will depend on the job market to dictate who can buy and who can’t. The more people that have jobs and feel comfortable with buying a large purchase such as a home will help the overall economy. Home buying and selling also creates jobs in home improvement areas such as contractors and home improvement stores. We have already seen a increase in demand at home improvement stores, but not sure yet if that is to improve their home to live longer in or to improve it to sell it. I also see that those folks that have been locked up in their homes in the cities getting tiered of the small confined space and may want to move to the suburbs where there is more space for a family to move around. I see Real Estate sales as gaining momentum as we are slowly released from the stay at home orders or as people become more frustrated with them. NO matter how you feel about all this virus stuff Real Estate will be bought and sold during all this and after all this.
I don’t see values declining the way they did during the financial crisis of ’08-10 as the reason for that decline was the weakness in financial markets and lack of liquidity. Meaning that the reason for the decline in values during that crisis was due to the evaporation of products that allowed people to buy a home with little or no money at all and when it was determined that the holders of those mortgage notes were not solvent a massive sell of occurred. Once the financial markets started to fail during that crisis and people ended up with negative equity in their homes they just let them go to foreclosure. Since then we have put some stops in the lending world that requires people to actually fully qualify to buy a home before the can buy a house, unlike the prior crisis. So in this health crisis we are not seeing anything like the financial crisis as people that own home now had to qualify for it and are more financial stable than before. However, we do have to look at all of those people that have lost their jobs during this crisis. This will be the single biggest factor in this health crisis verses the financial crisis. So the longer this goes on the longer it will take to see what will happen to values, but in my opinion, I think initially we will see an increase in demand then a slight drop off in demand until we get back to a more full employment situation like we were before this crisis. I see a steady or flat Real Estate market moving forward as people always need housing. I do not see a large decline in values, especially in California, as I see the types of jobs to where people make enough money to qualify to buy a house still here as those folks are working from home where in the last crisis we had jobs evaporate not shift like we see here. The future remains to be seen but I like to be an optimist on this as I believe people are resilient and will come out of this stronger and smarter. As usual if you need help with qualifying for a home loan or buying or selling Real Estate call us we are here for all of your Real Estate needs (916) 672-6130.
Ok enough is enough we need to open this economy back up. Despite what people say about the virus it has already played out in California in December January and February. You see every year in California the sun starts to shine more intensely in April and as we move towards summer. It has been widely publicized that the Coronavirus will not survive for long in hot environments. I personally traveled to Australia over the Holidays through the end of December and into January. Upon arrival in Australia I started to feel ill but I was on vacation, so I was not going to let a little cold get the better of my vacation. This mystery cold/virus had me not feeling well with a cough and infected eyes for 2 weeks and by the time we had traveled to the hottest portion of our trip ( Cairns Au.) the illness had subsided. As you know it is Summer in Australia that time of the year so it was warm the whole time. Then a month after I got home in February I got sick again almost the same thing but this hit hard and the cough was more severe and I had a fever and I coughed for a month until it went away the end of February. Then we heard about the virus from China and we were told to shelter in place in March and by that time it had already gone through California. The media neglects to show you a map of the world and how a contagion replicated itself and how it travels the world. If you look at a map you can see that the West coast of the United States, California, Oregon, and Washington would get this virus way before New York would, so it stands to say that California already has developed a herd immunity or it is just too warm for the virus to exist long enough to infect more people. This is not to say it won’t come back and then will we know what to do or do this all over again?
That said, we have to start to believe in in each other again and know that we will get sick and people will die from this virus and many other things that we get ourselves into as a free society. So how do we get the economy going again with people working from home and or laid off and non-necessary business’ that have been closed for so long how do we get it moving? This is going to be tough as the people that have been making money during this have to go out and spend it locally and if they are scared to go out and spend many small business’ will be forced to declare bankruptcy if they have not already. The Travel business: when will people start to trust air travel again, hotels, rental cars, air bnb? There are so many little avenues within the economy that depend on each other, so when you spend your money on travel you are supporting so many others than just the airlines. Restaurants: how are they going to look? Is the government going to make it a law that you must sit so far apart in a restaurant, or have a barrier installed and will consumers want to visit busy restaurants again? If laws are imposed on restaurants to not accommodate as many people, at a time, they will be forced to raise their prices to offset the increased space requirements or shut their doors. Restrictive laws will further inhibit growth and may force many of our favorite restaurants to go out of business. Banking: as you know you can’t go into your bank’s lobby as they are closed. Will they open up the lobby’s again or will they have realized that the consumer has changed they way they can do banking, will we see more virtual banks and less people working in a bank? All of these little things and so many more will play in as the economy opens again.
Do you feel comfortable with your job or your financial situation? That will be the most important question moving forward to open the economy. If you don’t feel comfortable spending, you won’t, and if there are many more people just like you the economy will not open as everyone hopes it will. The United States and capitalism are both all based on consumer spending, without it we have a stagnant economy. On the other hand, is there a pent up demand? Consumers that have been scared of going out now have the green light to move about so they go out in hordes and buy up things at a fevered pace. If that is the case the economy will quickly get back to some sort of normalcy.
Either way the Real Estate and the Mortgage Industry will need time to get back to normal as well. If consumers are tired of the house they have been locked in for the last month and a half they will seek out a new house for their family. If one family that decides to sell their house and buy a new one that will help Realtors, Mortgage Companies, Title Companies, Appraisers, Home inspectors, termite companies, sign companies, credit reporting companies and home improvement stores. So, if people don’t sell and buy after this is over you can see all these industries effected. However, there is another little problem that will arise out of all this and that is employment. The people that have lost their jobs during this crisis will not be able to buy a new home, in most cases, until they have gone back to work or can pay cash for a house. Households may have had one of the two workers laid off and may not have the ability to save for a down payment or may not feel comfortable so they will hold off until they feel comfortable again. Another concern people’s credit may have been hurt by this not allowing them to qualify for a home loan. People that have not made their mortgage payments will not be able to refinance to the low interest that will be there to stimulate the economy when this is over. People that did not make their rent or car payments may not be able to buy a home for 12 months after the crisis.
Not to be a downer but it will take some time to get back to Real Estate as normal. I heard from CAR (California Association of Realtors) that Realtors may not be able to show homes and that virtual tours are going to be the “new normal” of selling homes. This means people will not be able to see the home they are buying in the inside until they can do a walk through at the end of the transaction. This may see the demise of Real Estate transactions at the end from homebuyers seeing the house for the first time and may not like it. This will be interesting to watch unfold as people get more “used to” the new normal.
Let us conclude this with some positive news with the Mortgage industry. Interest Rates are the good news here with them staying down. Although there is still a lot of confusion in the Mortgage industry things are getting done. Now that we have figured out how to work with large companies that have their workers working from home we can navigate through the process as well or better than most in the industry. Here at MAE Capital we are booking new refinances every day. People can apply from their home on their computer or they can download our App and do it from their phone. As far as delivering documents to us you can scan the documents directly from your phone using an App like Cam Scanner. Our experienced Loan Originators can work virtually from anywhere so you will be taken care when you apply for your refinance with us. We look forward to working with you.
Your options for making your mortgage payment and paying your other bills during this Covid-19 crisis can be very confusing, but if you make a mistake navigating through all this your credit will suffer. That is why I have written this to inform you of what to do with your credit during this crisis. First and foremost, make your mortgage payment if you can! Why? There are many reasons for making your mortgage payment during this Covid-19 crisis, but the biggest reason is your future. If you put your house into forbearance, or pause your payment, or not make your payment at all, your credit could suffer and prevent you from getting a refinance or any credit when this all subsides.
If you are considering not making your mortgage payment because you have been laid off or have been put on leave during this crisis there are some steps you have to do to ensure your credit moving forward is not disrupted. The very first thing you need know is that when the Government tells you that you can defer your mortgage payment up to 12 months you have to realize that there are no rules for this and it has never been done before so take caution as private industry are the ones who are servicing your mortgage not the government. The rules have not changed with respect to the way mortgage servicers collect your mortgage payments and then forward their portion on to the secondary markets to pay for the bonds created by mortgage backed securities. Sounds confusing and it really is but know that if you just stop making your mortgage payments your credit will go bad as your mortgage company will continue to report your payment history to the credit bureaus.
“But the Government said we can defer our payments up to a period of 12 months.” Yes, they did say this, however, the Government doesn’t speak for private industry even if they want to. So that said if you find you can’t make your mortgage payment because you just don’t have the money you should call the company where you send your mortgage payments to and see what they can offer you as an option. The mortgage servicers will work with you, but you must do your part in helping them. When you call them, you will be asked some questions about your employment, savings and such, and then offer you some options. The first option you will probably hear about is the Forbearance option. Forbearance is where the mortgage servicer will allow you to defer your mortgage payments. Note the word that is used here “defer”, is where you will still owe what you have missed and it is added to the end of your loan and you will be charged interest on the payments you miss. This could extend your loan term by a year or 2 depending on how long you “defer” your payments. Another option I have been hearing about is the straight payment “pause” for 3 months. This is where if you have 250 payments left at the time of the pause and after the 3 months on pause you will start making your payments again with 250 payments left. Both of these options may be noted on your credit report and may hinder you from obtaining credit when this is all over, so you have to ask. This is very important that you ask the servicer how they will report to the credit bureaus, if they report it as deferred or in forbearance you will NOT be able to refinance under current guidelines, you would if the payments were just “paused” and not reported as “paused”.
Another situation that you will be hearing about as this crisis moves forward is the fact mortgage companies are not currently getting government aid to cover the costs of the servicer paying their bonds when they are not getting your mortgage payments. The consequences of this could be catastrophic for the mortgage industry to the extent of the 2008-2011 financial crisis. We are currently seeing servicing premiums not being paid in the interest rates that are being offered to consumers and the interest rates are higher as a result. If a majority of people don’t make their payments then Wall Street will be hit with nonpayment of bonds created by FNMA, FHLMC, and GNMA and that will hurt most people’s retirement accounts that have mutual funds that are heavy with these securities. I know you say” but that won’t affect me”, but you would be wrong you would feel it in higher interest rates and fewer financing options in the future.
As for not paying your revolving accounts or installment accounts you need to contact your creditors on these as well. If a creditor does not hear from you that you can’t make your payment they will report your payment as late on your credit report. You have to remember that government does not control private industry, so if your elected officials says you don’t have to pay your bills DON’T BELIEVE IT, you might be able to get a temporary reprieve from paying your bills but you have to contact each one and make arrangements to have your payment held for a period of time. Also make sure that if you do defer your payments that it won’t hurt your credit. Again, you must ask each creditor in order to get a reprieve if they even will. If they don’t give you a reprieve you will be obligate to continue to make payments and if you don’t then your credit will get hit.
Let’s talk credit again, as this is what could be what get’s you in the end. I can’t reiterate enough how important it is to check with each of your creditors before stopping payments as if you do stop making payments without telling your creditors your credit will be hurt and it could take a long time to recover and you could miss the low interest rates that are going to be on the other side of this crisis. I am going to simply go over the steps and options for you here, so if this is all you see I hope it will save your credit in the end. The options and steps you will have to do to defer or pause any creditor’s payments are as follows.
These are the options you will be offered so be prepared and talk like you know what is going on as most lenders will try to get the most out of you they can. Be honest with yourself and if you can make even a portion of the payment it is in your long-term best interests to make the payments if you can. Do your part and help others by making your payments. I truly hope this helped you to navigate the payment options for creditors. We are also here for any of your home loan and Real estate questions so go to our site for more information at www.maecapital.com
We are now in week 3 of the mandatory shelter in place order. Since my last update things have become clearer on why we are at a standstill. On the Real Estate front, it is pretty easy to report on as it is stopped for the most part except for existing purchases and some commercial deals. Our private money division is still seeing activity and people willing to lend in this environment, but it has slowed as well. Interest Rates have not done us any favors over the last week, but we are seeing some life as things start to get figured out. The appraiser dilemma is in the beginning stages of getting figured out as well.
Let’s look at interest rates and why they have not gone down to the lows they should be at. I read an article this morning that clarified things for me a bit more in an area where I had not paid attention to until now. The area of lending is the servicing side (where mortgage companies collect your payments). Think about it, if the government has mandated mortgage companies to stop collecting payments from homeowners for a period of at least 90 days what will happen to the mortgage company? Mortgage servicers must collect payments from borrowers and then they have to pay out on the bond they created and sold to Wall Street. The mortgage servicer still must make payments to Wall Street but if they have not been able to collect payments form the borrowers they will go broke quickly. I believe this has a large part to play in how new loans are being priced up front.
The 2 Trillion-dollar Stimulus Bill that is being signed by the President today does not carve out any funding for mortgage servicers as they don’t fall under banking in most cases. What this means is that while the Government has suspended mortgage payments from borrowers the lenders still have to make their payments on their bonds to Wall Street. This will get figured out in the next round of Stimulus, we hope, but until then mortgage bankers don't have their servicing portfolio to hedge their origination pricing so interest rates will stay high. Until this aspect of the mortgage industry is figured out we will see higher than normal interest rates and a degradation in service from all originators in the mortgage industry. As it stands all of the loan companies have to go to the same well to get their water, so to speak, so no one company in this crisis will outshine another for this reason. At MAE Capital we are a Broker which means we have access to funding across the nation, so we have our finger on the pulse of this evolving issue. MAE Capital will also be the first to find lenders that are willing to lend or adjust their rates down and when the market changes we will be on the forefront of the new economy.
As for appraisers in this market, which is another hold on closing loan transactions and Real Estate deals. Fannie Mae (FNMA) just announced new guidelines regarding what is acceptable for appraisers to deliver in this market. FNMA said that appraisers can do a drive bye appraisal and the agent or the homeowner can send interior pictures to get an appraisal done. FNMA also gave guidelines on “Desktop Appraisals” which are appraisals done from information only such as public record information and MLS information any other sources other than physically going to the house. As for refinances we are seeing more appraisal waivers being offered for those borrowers with good payment history and a lower loan to value. All these steps are positive and are moving in the right direction, but the time to implement these new guidelines is a major hold up.
Meanwhile the market for Jumbo Loans and non-Agency loans (non FNMA, FHLMC, GNMA) and non-qualified mortgages have basically closed down. In fact, today we got news from a few “Non-QM” lenders that they have shut their doors indefinitely as they have no money to lend. What this does is take an essential segment out of the Real Estate market that is essential for many investors seeking capital for fix and flips, construction, and rental property loans. We have received several notices today that companies have closed their doors that originate and close these loans. This market will take months to come back if ever.
On a positive note, I see the Qualified Mortgage market (Agency loans; FHA, VA Conventional Loans) coming back in the next 3-4 weeks as this all get’s figured out and the Stimulus Bill. I say 3-4 weeks but that could change based on the “curve” flattening out and how the contagion mutates and changes and hangs on in our society. The mortgage market will need some definite infusions of money from the Stimulus Bill in the serving side of the business before rates can come back to where they should be. We will be seeing interest rates in the 2s when this all shakes out so if you have been thinking of refinancing now would be the time to get your paperwork in order. However, if you have lost your job we can’t refinance you until you are back to work, but that may change as this evolves too. So this virus is killing us in more ways than one, but as Americans we will persevere.
OK the world has gone crazy, have you? Do you have 2 thousand rolls of toilette paper, 15 bottles of hand sanitizer? I get the idea of being prepared, but to hoard essential items is ridiculous, but with the media fanning the flames of hysteria I understand the effects. What the average person doesn’t understand is how all of this works from an economic point of view. We have a situation that we have never seen in history, and history is how we evaluate the present in economics. Economics and theories that support the way markets interact are changing as I write this. Obviously demand and supply is still in full swing, but in very different ways. What we are seeing here is a rapid shift in demand from a wide variety of items that people want or need on a daily basis such as cars and appliances and other items that are nice to have but in the overall scheme of things are not as necessary as food and basic need items like toilette paper and this is why we are seeing a rush on these items.
So, it stands to reason that if the demand for those nice items such as Real Estate has diminished, temporarily, you will see some real change. In the short term you will see Real Estate values will correct downward as people are not going to buy during these times. People are also worried about their jobs going away or that their income will be cut from layoffs or even getting sick. Interest rates are not helping with this at all, despite the Federal Reserve lowering their Funds rate to zero. What people don’t know that Long-term mortgage rates are not controlled by the Feds. In actuality, the mortgage markets have gotten worse and rates have risen significantly over the last few weeks. Where the long-term mortgage rates, in the beginning of March, was down to 3% and now after all the panic in the markets long-term rates are up to around 4.5% or more. Why is this happening? The answer is complex, but simply put, when everyone is trying to sell their investments and there are not enough buyers price has to go down to get people to buy. When talking about interest rates you get an opposite effect as Interest Rates have to go up to attract investors to buy them (the Mortgage Notes), put simply.
So, you have people with no jobs, or are laid off, and have a higher interest rate environment, the demand for housing dramatically down. What you have here is a perfect storm. The demand for housing or home ownership is going to stop until the world gets figured out. The good news is that those that do own a home will most likely be able to keep it as the Government has enacted measures that will not allow mortgage companies to foreclose during this crisis. Mortgage companies can offer forbearance as an option during these tough times, which is putting your mortgage payment off until you get your job back. Forbearance, has to be granted it is not a given even in these times, you have to ask your mortgage company for forbearance and they will grant it to you if you can prove you have been financially hit. So don’t just stop making your mortgage payment call first, but also know that you will have to pay the amount back that you are not paying now, it will be added to the end of your mortgage and you will pay interest on it.
Renters that lose their jobs or can’t pay for some reason can’t be evicted for up to 4 month but know that you will have to pay that amount back within 2 years to your landlord, so if you can make your rent do as you will get way behind and may get evicted in the end. It is always recommended that you make your housing payments if you can, because getting behind on payment that large may get you to a point in time where you just can’t make it up. On the other hand, if you are renting and have been saving to buy a home and you don’t use that money to live on during these times you could come out of this being able to buy at low prices.
If you have been considering selling your home, it might be prudent to wait until people get back to work in a few weeks to put it on the market. Realtors in this market are seeing people that had their homes for sale prior to this put their listing on Hold. What this means is that the sellers of property that put their listing on hold can’t show them or make offers on them but by doing so their listings are still being seen by potential buyers that after the crisis is over may be looking to buy. As in the Stock Markets you want to buy low and sell high and I think that in the short term there will be deals for investors to get in on, but it will be short lived. As this crisis ends and people go back to work their attitude will change towards buying again as they feel more financially secure. If your house is on the market right now be patient and talk with your Agent as to how to strategize the sell of your home when this is all over. I see that there will be a short-term drop in prices but will recover as the Stock Markets recover.
This is unheard of and we have never seen this before on any scale let alone as large as it has gotten, global. With no history to look back on we just don’t know what is going to happen. In history we had a pandemic in 1918 that ended up killing over 100 million people, we don’t see this happening with this one, but there was a war going on at time and no shelter in place orders. During that time the war machine was roaring so the economy was not hit nearly as hard as this one with everything shutting down. So, we don’t have anything else to compare to in history as to what is going to happen. I can’t help but to think when this goes away what economic carnage will it have left for the entire world to mop up? What I do see is that Interest Rates will come back down as the Government pumps money (liquidity) into the banking system and they start purchasing Mortgage Backed Securities again. With Rates going down people will refinance their existing debt to lower rates and take equity out of their home to recover from this time. For now, we all have to wait and be patient, put things on hold, and enjoy what we have and help others that may not be as fortunate.
Here is a topic I have not visited in while but feel it is time again to address what is going on with mortgage rates. The stock market has taken some serious hits over the last few days due to concerns with the Coronavirus and that has put downward pressure on the US Treasuries and the bond markets. Why you ask? I will get into the details of why later on but know that when there are panics in the Stock markets money tends to flow towards safe and secure investments while the markets are gyrating like bonds. Some of the reasons the Stock Markets have corrected downward is over fear of the Coronavirus and the price wars going on now with oil prices after Russia pulled out of OPEC. So there are a lot of economic new stories right now driving the markets.
Let’s talk about the effects of the Coronavirus and why it is driving the Stock Markets down around the world. But first you have to understand what stocks are. Stocks are shares of large companies that are sold to the public so the company can remain capitalized (i.e. have enough ready capital, money) to build and expand their business. People who buy and sell stocks tend to look for companies that will have good growth into the future to buy so the hope is the value of the stock will grow with the company. Investors in stocks will tend to sell their stock in a company if they foresee a potential down-turn in the company’s profits. That said with this threat of Corona virus in the public it is believed that people will not buy or do normal activities if they can not go out into the public, thus not spending money on goods and services they would normally have spent their money.
Now that you understand how the markets work in a basic form you now can see why the markets have been selling off. But how does that affect the interest rates you ask? Well this is where is gets interesting so follow along closely as I am about to open a door into a reality that few actually see or know about and that is economics. As we have seen the Stock markets selling off due to the potential earnings loss of companies due to lack of demand (people not buying goods and services), investors in the Stock Markets have been looking for a relatively safe place to park their client’s money during this correction. The place is the Bond Markets where fund managers and Stockbrokers park funds while Stocks settle down. Specifically, the United States Treasury Bonds are the specific bonds that are purchased. This is where it gets really interesting so hold on to your hat. Not only do Stockbrokers and Money managers park their funds in U.S. Treasuries, the Mortgage industry uses the 10 year Treasury Bond to hedge their bet on interest rates.
Hedging defined is buying or selling an investment to reduce the risk of an adverse price movement of another investment, kind of like an insurance policy. In other words, the folks that sell mortgages will buy U.S. Treasuries to offset the possible movements in the interest rates. The concept of hedging is important to know because the interest rates are being driven by this right now. As the Stock market continues to correct and Treasuries are being pushed to their lowest levels in the history of the Treasury market, so what does this have to do with long-term interest rates?. Although this does not directly affect interest rates it does take a way the hedge vehicle for mortgage bankers. In response to that when interest rates should be declining, they have actually raised. That’s right interest rates have gone up over the last few days as the Stock Markets declined the Bond Markets rallied but longer term interest rates have actually gone up.
The Federal Reserve saw this affect happening and decided to lower the rate they can control to try to stimulate the markets with low interest rates. You have to understand that the Federal Reserve does not control long term interest rates, the only rate they control is the Fed Funds rate. The Federal Funds Rate is that rate in which Banks can borrow from the Federal Reserve. The rub is that banks don’t need to go to the well for money in a strong economy to borrow money. So, there is little to no effect on long term mortgage rates with the Federal Reserve or “Fed” lowering their rate.
On another front is oil prices and their effect on long term interest rates. With Vladimir Putin pulling out of OPEC ( the largest oil cartel on the planet who sets oil prices around the world) and OPEC responding by lowering crude oil prices to as low as $31 a barrel creating essentially a war over the control of oil prices. This has a very adverse effect on American oil production as when oil prices dip to these kind of lows American oil companies cannot produce oil at that low of a price it will become more beneficial to import oil at the lower prices and hurting American oil producers and the workers that produce the oil. There are now worries over American oil producers filing bankruptcy. This now will impact American workers and those that support that industry like steel, heavy machines, plastics and so no, then the effects trickle down the towns in which those workers live and those companies that support those towns. This will inevitably turn up in our unemployment numbers signaling a slow down in the overall economy. This affects the Stock markets in the same ways as mentioned above.
There is a bunch of things happening to where the Stock Markets and the Bond Markets have been reacting crazy. This is a very unique time in our economy to watch what is going on as it is truly historic and has been going against everything we know and seen over time. There is a component that I have not mentioned here that is hurting the overall economy in ways it has no idea and that is the media. The media has been blowing this virus out of proportion to the point that people are panicking and running scared. I do not profess to know anything about this outbreak nor do I profess to be any kind of medical professional but what I do know is numbers and when you see the differences between the deaths by Coronavirus versus the regular Flu there is no comparison far more people have died year to date over the Flu, so it stands reason that there is a abnormal hysteria going on out there. I am not trying to discount how terrible this virus is, but I can’t buy into the hysteria.
So, if you are wondering and scratching your head as to why interest rates have not done what the media is implying this is why. Interest Rates are great I am not going to discount that and yes I love the attention we are getting from the media that interest rates are at historic lows it has been great for business, but don’t get set on getting a long-term mortgage in the 2’s without paying greatly for it. My team is ready and waiting for your calls to go over your existing mortgage and see if now a great time to refinance. We can refinance your mortgage without resetting the term which is a huge help with the over all interest you would pay on a mortgage over time. For example, you took your existing loan out 2 years ago and have 27.5 years left on your existing loan and you don't want to lose those years you have already paid. How about a refinance that would be a 27 year loan as to not take away the time you have already paid, we are doing this all the time. For more information on refinancing your home or investment property give us a call today and we will tell you the truth about Refinancing and give you the best interest rates from Banks across this great nation. 916-672-6130 and download our app for free.
It’s March 2020, not yet spring but in California it is always spring like weather. Do you know what your house is worth this year? Have you thought about selling and buying another home? This might be the perfect year to do just that. Why, you ask? Well when the earth the stars and the moon all align you should take notice. The interest rates are at historic lows would be the first good reason. The second good reason would be that our economy is at full employment (Full employment is when the unemployment rate is less than 4%). The third and most important for sellers is that the housing prices are still high, and we have not seen any correction in prices.
Interest rates are important for a variety of reasons. When you are selling a house, you want the rates to be as low as possible so more potential buyers can qualify your house. Low interest rates also provides a sense of security for home buyers when they are shopping. Low rates also create a sense of urgency with potential buyers as they don’t want to miss the opportunity to get a low interest rate. At MAE Capital Real Estate and Loan having control over both the Real Estate and the loan process can further save potential buyers and sellers as we will give buyers money towards their loan to lower their interest rate even further when we represent a buyer and do the loan. With Rates so low putting your home on the market sooner than later will get you property sold faster as the inventory is so low currently.
In addition to low interest rates Americans are fully employed according to the labor department. So, with the majority of Americans employed in this booming economy there should be more potential home buyers in the market today. These young buyers have more information at their fingertips than ever so they know that rates are low and that they can afford to buy. In a market where most people are employed wages tend to be a bit higher so employers can keep those employees they have and not lose them to their competition, thus keeping job security and higher wages to potential home buyers. This sense of job security is also making existing homeowners feel more comfortable with their finances and are exploring the possibility of selling and moving up.
We have not seen the influx of sellers yet as most potential sellers like to wait until spring to put their house on the market traditionally. Those that make the move early will reap the rewards from a quick sale at the top of the market if their house is price properly. All of this creates stability in the Real Estate prices as the current supply is less than the demand which usually means that prices should increase, We have not seen the increases yet as we are still seasonally stagnant with buyers waiting for the spring inventory to hit the market. With that said if you are thinking of selling your home this year it would be prudent to get your home on the market as soon as possible with rates low and full employment. Here at MAE Capital Real Estate and Loan we are here to help. We have programs for first time home buyers, we have the lowest rates in the market on home loans, we bundle our services to save our clients money and if we list and sell your home represent you when purchasing your next home we will kick in money to lower your payment even further. Give us a call (916-672-6130) or check out our site and download our App.
Hey there fellow bloggers and Real Estate enthusiasts we have a new Application/ App that just hit the market the beginning of the year and it's FREE. The app can be found both on Google Play and The Apple App Store and it is the MAE Capital App. This App is unique in that you can search Real Estate in the Quad County area around the Sacramento Area. As we are located in in Rocklin this is the beginning of a growing market for MAE Capital as we currently arrange loans up and down the State of California we are slowly growing the Real Estate presence throughout the state and always looking for partners to help.
The MAE Capital App is unique in that is combines or bundles the Real Estate process with the Home Loan process. Not seen in any other App on the market till now. You can search Real Estate and then see if the houses you have been looking at will qualify for financing as well as you. With one App you now have the power to see all the property on the market in real time and the search engine is Metrolist or the Multiple Listing Service (MLS). The searches have been broken down to towns and cities so you don’t have to dig too hard, the App will take you to the area you want to research. The App will show you open houses in the area so you have that information at your figure tips when out driving around looking at homes. Read about the tips and tricks to buying and selling Real Estate in the App.
You can get Pre-Approved right on the app with a push of a button and inputting some basic financial information. You can apply for a home loan and scan and upload all the documents you need to be approved for a home loan within the App. You can see current interest rates and get the status of your home loan all through the app. If you don’t understand the process flow or know what to expect, all the information is right there in the App. You can get all the information you need on your phone today.
If you are thinking about selling a home or piece of property in the near future we have the tools to help you understand the ins and outs of selling Real Estate. You can search property that has sold in your area to get an idea of what your home is worth. You can reach out to one of our Agents with just a few clicks in the App and an Agent will call you and go over what you need to do. If you aren’t ready to talk yet you can do the research yourself and learn what will be expected and how to prepare your home or property for sale. Then you can get qualified to buy your next home on the very same App.
If you are a Real Estate Investor you can search property and put parameters in that fit exactly what your investment needs are such as fixers or good rental properties. We also have all the information you need to know about obtaining a Private Money Loan to act as a cash buyer or buy a property or land that a bank won't lend on. Private Money is also a necessity when you are looking to flip homes as most traditional lenders won’t lend on extreme fixer properties. Do all the Research then contact one of our Agents to see the property you want to see. Our App is a one stop shop for Investors and good investors know that time is of the essence and the App can save you time and money.
If you have been thinking about buying Real Estate or Selling Real Estate you need this App. Or if you just like to look at Real Estate and wonder how much homes are listed for get this App. Get all the power in the palm of your hand and save thousands when working with MAE Capital as we will bundle the services to save you thousands. Which means we will take some to the Real Estate commission that is generated in the transaction and apply it towards your home loan to lower your interest rates and lower your monthly payments. MAE Capital Real Estate and Loan is your true partner giving you the tools and the information to be cutting edge in the Real Estate game. Click here to Download the App from the Apple store and click here to Download the App from Google Play the android solution.
When you need a home office but don’t have space for it, there are a few options you could consider: look for a larger home, build an addition, or increase your space by converting your garage. A garage conversion is the easiest and most affordable of these options, and it has the potential to become the workspace you’ve always dreamed of.
Picture Your Perfect Work Space
Whatever your garage may hold now, think of your garage conversion as a blank slate. You’ll have to empty your garage anyway to make the space livable, so go ahead and picture it as empty — but full of possibilities. If you do have a garage full of stuff, renting a storage unit is an affordable and easy way to store it all off-site. In Rocklin, the price for a self-storage unit over the last 180 days has been about $131.41 on average. When you consider the cost, think of it this way: renting a storage space takes the worry out of what to do with your stuff, and it’s way cheaper than renting a “traditional” office space.
With a clean space to work from, you can then come up with a plan to meet your needs. Ask yourself how you can maximize this space. Do you want it to be a multi-use space that can double as a guest retreat or family room? Or, do you need it to be a dedicated office space? Think about your work routine too, and in specific terms. For example, Entrepreneur.com says to ask yourself what type of work you’ll be doing, whether you need space for guests, what kind of storage you’ll need, and whether you’ll do video conferences or conference calls.
Along with the functionality you need, don’t hesitate to give your plans a personal touch. You aren’t in an industrial office building, so there’s no need to go all gray — unless gray is what you like!. We love these design ideas from House Beautiful, including decor that borrows from nature, bold colors, vintage and modern elements. This is your space, so it should inspire you.
Put Your Plan Into Action
Once you have a plan for how to set up your space, the next thing to consider is how to make it happen. Garages aren’t exactly built for comfort, so it will take some work to bring it up to livable standards. This part may require the help of a contractor because it will require construction and possibly also electrical work. Here’s what you need to consider.
Insulating Walls: If your garage is drafty, you may want to hang drywall and add insulation. Be sure to insulate the ceiling too so that heat doesn’t escape. You will also need to decide whether to keep the garage door or replace it to enclose the room. One option that’s ideal for letting more light into your office is to replace the garage door with floor-to-ceiling windows.
Heating and Cooling Systems: If you live anywhere other than a perfect climate, you’ll need a way to keep the room comfortable. According to the Spruce, if you have an attached garage, you may be able to extend your home’s HVAC system easily. Otherwise, you can consider independent systems, such as electric baseboards and a portable air conditioner, which you can find at retailers like Home Depot.
Flooring: Flooring is one element of your garage that’s more than just functional — you also want it to have a certain look and feel when you’re converting the garage into a room. An affordable and easy option is to lay laminate flooring. If you prefer carpet, the blog Garage Remodel Guides gives a word of caution about moisture, but choosing indoor/outdoor carpet can be a good solution. If you like wood floors, it’s recommended that you go with engineered flooring over solid hardwoods because engineered floors withstand moisture better.
The ultimate goal is to transform your garage from a space that’s cold and industrial into a room that feels warm and homey — and inspires productivity! After all, working from home gives you the opportunity to love where you work. So, why not make this space into exactly what you want for ultimate comfort and productivity?
Photo credit: Unsplash