[00:00:05] Speaker A: The Michael Hatfield ReMax team presents real Estate and More. Bay Area real estate is different than all of America and why? What's up with home buyers? What's on sellers minds? How is the market? And much, much more.
[00:00:22] Speaker B: Now here's your host, Michael Hatfield.
[00:00:26] Speaker A: Well, welcome to the Real Estate and More show. I've been looking forward to this episode for a Today we're diving into some thought provoking insights that you won't want to miss. Joining us again is a guest who is not only a highly respected in the industry, but also someone I personally admire for her integrity, her expertise and her hard work. She brings clarity to a world where real estate data can often be misinterpreted. So let's cut through the noise and get to what's really happening in the Bay Area market today. Welcome back to the show, Nance.
[00:01:03] Speaker C: Thanks, Michael. Nice to be here.
[00:01:06] Speaker A: Well, you know, the current mortgage 30 year fixed rate is they've been hovering about 7% and it's been nagging us for almost two years now, say February of 22. So the mortgage rate or the cost to borrow money to buy a home is of considerable interest to people that are interested and to the biggest percentage of potential buyers that we have today. So it's about qualifying for the loan and then you have the payments. You know, what are your thoughts on that?
[00:01:37] Speaker C: Well, it's a, it's a big deal. It's something to carefully consider about qualifying for the loan when you're interested in buying a house. And yep, I remember us talking about that previously and you had mentioned that the 30 year fixed mortgage rates. Right, you were talking about that previously that since June of 2020.
[00:02:00] Speaker A: I'm looking at, actually I'm looking at two graphs. One graph is a graph of the 30 year fixed mortgage rate since about June of 2020. And the second graph is a graph of the average home values, all types for the last five years in the Bay Area. And the first comment that I have to say is the 30 year rates think they show that it was at the 3% per annual APR from June of 2020 through about February of 2022.
[00:02:33] Speaker C: Stop a minute. Because that is monumental. 3%.
[00:02:37] Speaker A: 3%.
[00:02:39] Speaker C: That is amazing and incredible.
[00:02:41] Speaker A: From 2020 to 2022, a little more than a year and a half. It was at that level.
[00:02:47] Speaker C: And everybody huge sales period, especially in the Bay Area, right? Yeah, it was incred.
[00:02:54] Speaker A: And so then June of 2020 through February of 2022, those were really good years in a very active real estate market. Then there was a Steady climb of rates through 5%, then back to 6%, then up to 7%. Then for a short time in October of 2024, we saw it just dip down because it looked like the rates were gonna come down even more, and they didn't. And so it's been back at six to sevens in that rang. One thing I want to point out is that we need to think about what we're doing here. So if we can afford to buy a house for the rates and the monthly payment, and we sit back and we say, well, we're not going to do it because the rates are high, you know, that scenario, then we may be making a mistake. And you say, how so? And I say that if you were to take a look at that second graph, that second graph that I was talking about, you know, it indicates that from a rough average in 2020-20, well, say today, 2024, you know, the average home price has climbed from 600,000 to $800,000.
[00:04:13] Speaker C: Stop for a minute. That is significant. That's a huge deal. Really. And if you're a homeowner, you're very happy about that, right?
[00:04:23] Speaker A: Exactly.
[00:04:23] Speaker C: And the other thing that keeps coming to mind is that the average interest rate over 50 years is about 7.5. I think you've said 7.72 over 50 year. Really? Just, you know, digest that for a minute.
[00:04:38] Speaker A: So what I was getting at before I was told to stop is that if you look at the interest rates and you say on that graph one, that the difference between 5 and 6% or 1% in that period of time, you know, it might have been $15,000 that you would have paid more in that particular period of time. When you compare it to, well, what kind of appreciation you got, and that would be $200,000. Which one would you take?
[00:05:11] Speaker C: It's very significant.
Excuse me. And I mean, 15,000, in this day and age, somebody could spend that for a vet bill, for instance, for medical condition, or you probably couldn't even buy a car for that. So there you go.
[00:05:27] Speaker A: Yeah. So what are you doing? You're comparing 200,000 that you could make money in appreciation while you sleep as compared to potential paying more on the mortgage interest. Well, it looks to me like the mortgage interest loses out to the potential gain in home appreciation if you're sitting in the Bay Area and enjoying a really nice home. So keep that in mind. That's very good. I'm glad. She said to stop. I've heard that one before.
[00:05:56] Speaker C: Stop.
[00:05:57] Speaker A: You know, quit doing that. But home Appreciation is definitely very attractive in the San Francisco Bay area, whereas the increase in the mortgage rate is not over an investment standpoint that much cash flow wise. Well, you have to make that determination with your banker and with your partner that you invest with, whether or not you can deal with the monthly payments. And then of course, there's the affordability when you go for a loan, making sure that you can afford to pay for it, but the lender will do that for you, don't you?
[00:06:32] Speaker C: Absolutely, absolutely.
[00:06:34] Speaker A: What else is there about putting the mortgage interest rates at a lesser position in ranking? What is another good factor? Taxes. Right. Real estate taxes. So if we're paying real estate mortgage interest tax deduction, which you don't pay anything with it, I mean, it's a reduction to your taxable income, you know, that you can offset what you have paid to the mortgage company and just say, what I was paying to the mortgage company is the same as rent. If I was renting a house and then, you know, I can deduct it on my taxes. So you got the tax benefits as well, which is really, really good.
[00:07:19] Speaker C: And that's bright light, especially when we all have to pay taxes.
[00:07:23] Speaker A: ReMax.
[00:07:27] Speaker D: The real estate minute with REMAX expert Michael Hatfield. Bay Area housing markets are always changing. What should we think of that, Michael?
[00:07:34] Speaker B: You know, Mark Twain said, I seldom saw an opportunity until it ceased to be one. We live in the greatest housing market in the nation, but careful thought should be given. Each one buys or sells a home. A good agent can help you grasp a great opportunity.
[00:07:50] Speaker D: Tell us about discount agents, Michael.
[00:07:52] Speaker B: Discount agents can list your home, but without telling my secrets, they're unlikely to do all we do for clients. It's an unnecessary risk to save a few thousand by hiring a junior agent and lose tens of thousands through a poorly done transaction. You don't know what you don't know. It's wise to hire someone who does.
[00:08:10] Speaker D: If you or someone you know is interested in buying or selling a home, call the Michael Hadfield ReMax team at 7775 or go to michaelhatfieldhomes.com when your real estate needs are beyond the standard and you demand more than the status quo, look no further than the Michael Hatfield REMAX Accord team with offices in Danville and nine more Bay Area locations. Here's Michael Hatfield to tell us more.
[00:08:36] Speaker B: Do you have a housing problem such as you live in a three bedroom home with three children and need one more bedroom, you want better schools or your kids grown up, moved out and your home is just too large. Our team is a five star agent who serves our clients. Housing needs is our number one priority. Call us for a free buyer consultation to start working on your housing problem. Now let us help you to solve your housing issue, whatever your need may be.
[00:09:01] Speaker D: Call 925-322-7775 to partner buyer or seller needs with the Michael Hatfield Re Max Accord Team. That's 925-322-7775-925322-67775. Come discover a new level of excellence in real estate with the Michael Hatfield REMAX Accord team ready to make a.
[00:09:24] Speaker C: Move in the real estate market. Get in touch with the Michael Hatfield ReMax team at 9253-2277-7592-5322-7775. We're dedicated to helping you buy or sell with confidence.
[00:09:42] Speaker A: That's great. Mortgage rates are associated not only with the Federal Reserve interest rate, but they're also very closely associated with a 10 year treasury bond. Now I will point out that just recently I took a look at the treasury bond back in December and it was at 4.8% and change. And then just two days ago I looked at it and it had actually come down very quietly to 4.51 this week. I think it is slowly coming down which I hope will translate to more attractive mortgage interest rates.
[00:10:22] Speaker C: Although it's an interesting thought that many people have the misconception that when the 10 year treasury bond changes. Right. It directly affects the mortgage interest rates.
[00:10:35] Speaker A: Yeah, it doesn't. It's all kind of a nebulous thing that goes on there. Who knows? Exactly. But yeah, by what the Federal Reserve does is it has an input, but it's an indirect input somehow some way kind of secret kind of stuff. I don't know.
[00:10:49] Speaker C: In the secret box.
[00:10:51] Speaker A: In the secret box. But you know, one thing that, that I should mention is that when I said, you know, when you compare the mortgage interest cost as opposed to the potential home appreciation in the Bay Area, that home appreciation is not guaranteed. The mortgage rate also is not guaranteed. So if you do, our friend Aaron's where she says buy the home that you love and then date the rate. Date the rate. You know, that's, that's really pretty good. So let's think about the, the cost of a mortgage and let's just say that we take a $500,000 30 year fixed loan at 6%.
[00:11:29] Speaker C: Okay.
[00:11:30] Speaker A: The payment and interest on that would be $2,974 per month. If it were 7%, that payment would be $3,293 per month. So it's going to go up, what, $300 per interest point on a $500,000 loan. Of course you're going to be hooked up. If you work with us, you're going to be hooked up with a really good mortgage lender that is looking for your best interests at heart, just the way it does with us.
[00:12:01] Speaker C: Absolutely, Michael.
[00:12:02] Speaker A: Yeah. So tell me about January housing and sales.
[00:12:05] Speaker C: Okay. So interestingly, new home sales in our nation were up 6.7% year over year in December, and national annual sales were up over year 2023 by 5 or 2.5%. And that was the highest level since 2021. So that's encouraging. I mean, if I were going to go out and buy a home right now, I would obviously have to weigh do I want a new home or do I want a home that's been, you know, lived in and taken care of?
Sometimes somebody just wants a brand new home.
[00:12:42] Speaker A: Yeah. So they're there and we can help you with that. By the way, I would not recommend anybody just go into the, the new home builder office, because remember that when you go into an environment for an open house, that that agent, barring any other considerations, represents who, the seller, the developer.
[00:13:03] Speaker C: Correct.
[00:13:04] Speaker A: So you go in there and say, oh, well, Nancy, if you buy this home, then we'll give you a discount in your new furnishings by such and such. And then that way the actual compensation would go to the seller agent, which is right there in that office that they have. And the buyer's compensation that you would use to represent your interest would go into their pocket as well.
[00:13:34] Speaker C: And the thing is, also going into a brand new home sales environment, I would want my own representation in that situation so that somebody could watch out, an agent could watch out for my interests. So that's what I would prefer to do if I was in that situation.
[00:13:51] Speaker A: Yep. And I totally, totally agree with you. Get your own agent, sign up with them, don't step foot in that place until you have your agent along with you. If they don't want to go with you and you're a serious buyer, call us, we'll go with you.
[00:14:03] Speaker C: We'd be happy to.
[00:14:04] Speaker A: Absolutely. And that way you know what you're getting and you have somebody looking out for your interest.
Remember what our esteemed colleague Doza said to us? Don't ever try to represent yourself. He was so right. Well, in court. Right in court, don't go in trying to represent yourself. Get the best of the best and then you're protected as best as you possibly can. So we believe that as well.
[00:14:30] Speaker C: So another, another item on the January housing and sales topic, December pending sales dropped by 5.5% this last December 2024. And they were actually lower than expected due to the higher mortgage rates and weaker demand. And I also think possibly the election impacts were floating around in, in that season. So that could have factored into that as well.
[00:14:57] Speaker A: I totally agree with you. Well, if you're thinking about selling your home or finding your dream property, call the Michael Hatfield ReMax team at 925-322-7775. That's 925-322-7775. We're here to guide you every step of the way. And like we've always actually said that we look to our clients interests first and we feel that we take care of them. They're, they certainly want to take care of us as well as become friends quite often, don't you agree?
[00:15:30] Speaker C: I think it gives us joy in life and so we need that joy. Right?
[00:15:34] Speaker A: Always. Always. Well, let's do a home insurance update. More talk Buyer contingency of sale well, now in the contract, generally speaking, most buyers will have a contingency for being able to acquire suitable insurance that is now a contingency of the contract because of the results of the wildfires that we've had, some of the insurance companies having canceled insurance and then to replace it, people have had to go with the California Fair plan combination with a legacy carrier. So that happens, you know, and now it's just part of the contract that we see.
[00:16:20] Speaker C: So one of the things that we were talking about earlier was CoreLogic, a research publication for real estate, reported losses in part based on that aerial photography from the Pacific Palisades and Eaton fires, to be estimated between 35 and $45 billion. Those are some significant numbers. And they further speculate it may take years, just years, for the full extent of the losses to actually be known and many, many more years to rebuild. And so our hearts obviously go out to our friends and Californians, fellow Californians. There were roughly 5,900 structures in the Palisades and 6,100 structures destroyed in the Eaton fires. And they were primarily homes. But I think in this season it's just important to remember our Californians and do what we can also. Michael?
[00:17:19] Speaker A: Absolutely.
[00:17:20] Speaker C: I can't help but think that you.
[00:17:21] Speaker A: Know, and clear the space around your home. A lot of people are very focused on that right now so that they would not have to endure the heartache of having a wildfire if it could be possibly avoided. Another point that's come up, we got a call yesterday from a mortgage broker and it was already set to go on the show. This topic. But if your home is on the deck declaration page, let's say in your name, your personal name, and it does not show your trust as an additional insured or vice versa, then there's a possibility that you might have an issue with the insurance company paying off in the event of a loss. Why don't you say that again, Nancy?
[00:18:06] Speaker C: Right. And your homeowner's insurance. So when you look at your paperwork, your declaration of your homeowner insurance, it needs to say if you have a trust, and hopefully you do, if you own a home, that you have your trust listed as well as your name. So that's an important point to double check your declaration pages because once somebody's had a fire and maybe their home has burned down entirely, they don't need another heartache, they just need help.
[00:18:36] Speaker A: Absolutely. You know, I also noticed that State Farm just requested an emergency 22% rate hike, permission to premiums from California's insurance commissioner to raise the rates on existing policies. So last year they, I think it was last year they did the same thing. And, and now they're saying their situation is dire. But they said that once again in the previous complaint that they were having some financial difficulties in regards to making it. But then there was, I think it was LA Times went into it and they took a look in there and they found that they do have massive reserves from prior years. How they have them after going through the fires, I don't know. Don't hang your hat on that. But I just wanted to get out the point that, hey, number one, make sure that who has ever vested on the title of your property is vested on your declaration of your homeowner's insurance. And I also wanted to point out the State Farm has, you know, said that, hey, we need emergency rate hikes to our existing policyholders in, in the state of California.
[00:19:46] Speaker C: Yep.
[00:19:49] Speaker A: So we're at getting it right.
[00:19:51] Speaker C: Real estate, getting it right.
[00:19:53] Speaker A: We're trying to anyway. We do our best, that's for darn sure. Well, some buyers are concerned about home insurance in California, about the wildfires in our state and some turbulence in the home insurance industry. Well, we talked about the California fair plan and how that pencils in to a home buy today.
Just get with your experienced realtor and let them help and guide you in the direction and Coordinate with the agent that you may have, may not have. We have sources that are just tried and true and that have worked well for our past clients.
[00:20:30] Speaker C: We're going to take a short break. We'll be right back.
[00:20:34] Speaker D: The Real Estate Minute with Re Max expert Michael Hatfield. What does an agent do to get a home sold?
[00:20:39] Speaker B: Typically, an agent will prepare a comparative market analysis so he knows the home's value, then creates a marketing plan tailored just for your home. With these plans, he promotes the home globally and locally in social media, publications, open houses, all for the purpose of, of getting your home front and center with prospective buyers.
[00:20:58] Speaker D: As an agent, how do you get it sold?
[00:21:00] Speaker B: Michael we do each and every item in the plan. Negotiate vigorously on the client's behalf on inspection, repairs, staging and importantly the deal itself. We do everything we can to get the deal done and closed.
[00:21:14] Speaker D: Call 925-322-7775 now to schedule an appointment or complimentary home analysis. For excellence in real estate, call the Michael Hatfield ReMax team at 925-322-7775 or go to michaelhatfieldhomes.com now back to our show.
[00:21:34] Speaker C: Well, I think there's some level of comfort for folks knowing that they can get fire insurance some way. And the California fair plan has been helpful in the past along with, like you said, did you call them legacy, Legacy carriers.
[00:21:48] Speaker A: That's my term.
[00:21:49] Speaker C: Right, the Michael, the Michael term. But anyways, so there is a way, of course, sometimes these things cost more than we'd like, unfortunately. But it, it's hopeful, it gives you a way to hope to get that taken care of because as we all know, living in California gotta have fire insurance.
[00:22:09] Speaker A: Absolutely. So whether you're buying or selling, whether.
[00:22:14] Speaker C: You'Re buying or selling, The Michael Hatfield ReMax team has the expertise you need. Give us a call today at 925-322-7775 and let us help you make the right move.
[00:22:28] Speaker A: That would be wonderful. We would love to work with you if you're nice people. We only work with nice people.
[00:22:34] Speaker C: I think people just turn nice once they meet us.
[00:22:36] Speaker A: Michael Maybe so, maybe so. Well, we spoke a show back on rules regarding client representation for open houses and for home showings. We've talked about the new Sitzer Burnett lawsuit settlement against NAR that affected everybody. As in California, it's translated into a law effective January 1st where you have to have as an agent a signed buyer broker representation agreement as well as other documentation. Just this morning I had an old time client of ours, he's been Around a long time. And he sometimes listens, he sometimes does not listen. And he's interested in this one home. So we were getting set up to take him over there and it turns out that he's already been there.
Why did they do that? Because then it puts him in a situation where he's not represented unless he wants to be represented by some agent that has holed open the door for him, that doesn't know him, doesn't really get involved with their clients the way we do. Again, we really enjoy our clients and we really support them throughout all steps of the way and work hard. Yeah, and we do. We do. So back on it. I've went to a few open houses lately. I know. And everybody asks you to sign if they don't know who you are.
[00:24:00] Speaker C: They do.
[00:24:01] Speaker A: They do. They know who we are. But I mean if, if, if you go to an open house, they're going to ask you to sign in. Just be cooperative because if you don't sign in, you're not going to get good information.
And the other thing is, why don't you just take your real estate agent with you and then that way they can derive all of that behind the scenes information that you may not see know about. There's a lot to know. I was just looking at one of our files that we closed the other day. It was like 3 inches thick and it was just a normal file, 3 inches thick of legal documentation.
[00:24:38] Speaker C: It's amazing what goes into a buy and sell transaction. And I think you don't really realize it until you do it again, maybe, or you do it for the first time. It is kind of surprising actually, and important the documentation that gets done throughout that transaction.
[00:24:57] Speaker A: Absolutely, absolutely. So if you're thinking about, if you're.
[00:25:02] Speaker C: Thinking about selling your home or finding your dream property. That sounds wonderful. Call the Michael Hatfield remax team at 925-322-7775. We're here to guide you through every.
[00:25:17] Speaker A: Step and we'll enjoy every step of the way with you.
[00:25:20] Speaker C: Absolutely.
[00:25:20] Speaker A: Bay Area sellers, what's the market like right now? What's the current state of the Bay Area housing market for sellers and is it a good time to list?
[00:25:30] Speaker C: I would say so, Michael. I say it's a great time.
[00:25:33] Speaker A: Tell me why you say that.
[00:25:34] Speaker C: Why do I say so? Because there's limited inventory, number one, and there are a lot of buyers out there.
[00:25:42] Speaker A: The prices are still very, very appreciable. They're looking good. There's something you can appreciate. I agree.
[00:25:49] Speaker C: Oh, in the Bay Area. For sure. For sure.
[00:25:51] Speaker A: It is a good time to, to buy. And then also I'm gonna let you folks know that after super bowl, we gotta look out because we generally get a more of a surge of business after the Super Bowl Sunday. And that, I believe, is coming up this weekend.
[00:26:05] Speaker C: So, interestingly, a lot of, A lot of people we do talk to, they say they're gonna stay on the sidelines, and that's just their choice. They think that that's a good time. People are distracted the very beginning of the year, and so watch out.
[00:26:19] Speaker A: Yeah. So you're saying that more activity after Super Bowl. I think, I think you're right.
[00:26:25] Speaker C: I think so, yeah.
[00:26:26] Speaker A: So what does the demographic of today's home sellers look like? The home sellers, what do you think?
[00:26:32] Speaker C: Sellers? Well, I think there's still the fact that some people are downsizing. Right. And I think that some people are, you know, want to move. Right.
[00:26:45] Speaker A: And there's some people that have actually left the world and left the state and divorce sometimes. Exactly. We have a lot of conservatorships or successor trustees that are in charge of selling the home. A lot of our sales market is made up of that. So if your home is great, or if you help us, then we can help you get your home to where it is really a very attractive home, then we would be happy to do that and see if we can't make you the most amount of proceeds.
[00:27:14] Speaker C: Well, and we have resources to help you do that because you're not always going to know where to go for this or that. And that's what we do. And, and we want to help you, so let us help you.
[00:27:25] Speaker A: Oh, that's. That's wonderful thing to say because we really mean it. The other, the other thing that comes to mind is what words would you like to leave our audience with today?
[00:27:34] Speaker C: Nance, what would I like to leave them with today? That we're here to help you in any way we can with a real estate buy or sell. And we truly value our clients. And Michael said, as earlier, that we make many of our clients friends or vice versa, and we're blessed and we hope that we can do the same for you.
[00:27:55] Speaker A: We like to make it the best financial investment for you, whether it's proceeds from a sale or whether it's the money you have to spend for your dream home. The Bay Area housing market remains one of the most fascinating in the nation and shaped in part by the tech industry, but also also by so much more. We're talking climate, stunning proximity to the ocean to the mountains. The region offers an incredible quality of life and for families, top rated schools make it especially sought after place to call home. Thanks for being on the show, Nance. Thanks, Michael, and thank you for tuning in. We'll be right back with our next special guest. Stay tuned.
[00:28:35] Speaker B: Please remember to go to our new YouTube handle, my real Talk Show. That's My Real talk
[email protected] and touch that subscribe button. You can also find past air shows at our handle My Real Talk show on YouTube.com now back to our show.
