How's the Market-May June and Today?

[00:00:02] Speaker A: The Michael Hatfield Re Max team presents real estate and more. [00:00:07] Speaker B: Bay Area real estate is different than in all of America. And why? What's up with homebuyers? What's on sellers minds? How is the market and much, much more. [00:00:18] Speaker A: Now here's your host, Michael Hatfield. [00:00:21] Speaker C: Welcome back to the real estate and more show and thank you for tuning in. The year of 2024 has been an interesting r1 estate wise in the nation as well as in the Bay Area this year. Experienced agents know to be ever attentive and vigilant as the market continues to change. My guest today is as knowledgeable as they come in real estate as well as in life. Having raised two grown children, I'm continually impressed with her horror with clients. She's a ways of explaining concepts I've never been able to achieve. Truthfully, she is my most favorite guest on the show today, Nancy, to share and to help explain her thoughts and observations as well. A big welcome to my partner, Nancy Hatfield. Welcome back, Nance. [00:01:10] Speaker D: Thanks, Michael. [00:01:12] Speaker C: Oh, it's good to see you. You know, I got the first question here. It says, let's talk about where this market has been and in May and where it is right now in the Bay Area. You got anything to say about it? [00:01:27] Speaker D: So what about the May June reports? Talk about, you know, a little bit about that in the Bay Area. [00:01:32] Speaker C: Well, May was not the best month nationally. I think probably a lot of it is because interest rates kind of stayed the same. Buyers are kind of stayed on the sidelines. They haven't wanted to reach out and to go and to buy like they normally would. There's other reasons, I would think. But May was not a great month, June, maybe just a little bit of, but we're finding that many buyers are kind of on the sidelines and they're waiting a little bit to see if things are going to get better for them and prices come down a little bit from where they have been. What say you? [00:02:11] Speaker D: Well, I mean, the interest rates. Right. Those are definitely a factor, and they're pretty much the same that they have been for the last six months. Right. [00:02:20] Speaker C: Right. I. [00:02:21] Speaker D: And what can a new buyer do to get the best interest rates? What suggestions do you have? [00:02:28] Speaker C: Well, you know, it's interesting. We just are closed, actually closed last night on a buyer, and the buyer actually started early in the process of getting his lender, and he worked all of those interest rates with the various lenders until he got what he wanted. He said, listen, I have got to get an interest rate around 6.5 or less and right now the prevailing from week to week is around seven. So he kept working at it. And I know that he and his wife had excellent credit to. Their credit was phenomenal. They had extra excellent income. So why would a lender not want to reach out a little bit harder to come up with a better rate for this couple? And they did. He did come up with a 6.50 interest rate on his mortgage, making it more affordable and such. The way he did this is he started early. He started early in the game, which. [00:03:27] Speaker D: Is spectacular for them. And, you know, rates won't always be where they're at today. So that's the good news. But anyways, moving on, some experts say that mortgage rates should have been coming down by now, and that would fuel buyers to come to the plate and to participate. What is likely, likely to happen between, say, now and the election in November, Michael? [00:03:53] Speaker C: Well, I have to tell you, I've been a little bit surprised at the mortgage rates have not come down a bit earlier, but there's apparent reasons that they have not. And the sellers or potential home sellers have kind of stayed on the sidelines because they're of a class that is of more retirement age. And the buyers have said, well, you know, we have to have a better interest rate in order for the affordability for our family to work out over the time. So things have been kind of, I wouldn't say stale, but I would say pretty much in equilibrium. It's going to take the mortgage rates to come down a little bit to increase the amount of buyer demand for these properties. That's what I think what will happen between now and the election, I feel that it's got to come down a quarter to half a point. I'd like to see it get into the fives. Don't know. [00:04:48] Speaker D: Well, that would be encouraging, and it would stimulate buyers, I think, for sure. Generally today, most home buyers have a good idea what they can afford when they begin searching for their home. But when it comes to a lender assessing a buyer's ability to afford a loan, they are the best to make that determination. You know, it's because they are numbers people. A good idea is to try and locate a great lender with your experienced agent. And we have many, well, many tried and proven lenders, friends, some of them to interview by the friends, too. By the way, having your lender to assist right from the beginning is helpful to the process. And buying a home. [00:05:34] Speaker C: Yeah. Goes right back to what I was saying. It's important you start on it right at the beginning. If you do not, as a buyer, have a lender that you've zeroed in and say, well, I like this experienced lender and they can do a great job in procuring a loan for me, then, you know, we, as experienced agents have several people that we can refer you to, and it's better that way because at the very beginning, you start working with the lenders and you're on the same page, you're connected, you're part of a team. Buying a home today requires an experienced team. Don't think it does not. [00:06:12] Speaker D: It does. [00:06:13] Speaker C: Selling a home today, even more so. Getting a home ready to go on the market is not always an easy thing to do. You need somebody that has some gray hair, loss of hair, but something like that, I would say, wouldn't you? [00:06:30] Speaker D: I don't know if I'd go there. But anyways, moving along, the buyer group that makes up a large percentage of buyers are the age group called millennials, which we've all heard of. And this group is highly focused on loan interest rates. And many of them are pushing their home buying quests because of it. Some fear from what they or what they read that the housing market might pull back. And, you know, that's a factor in there as well. So I, for one example, believe that when you own a home in the Bay Area, appreciation will likely improve your home value. Overdose, time creating wealth. I mean, we've seen it with our own families and it just has been. So home value appreciation is more important, is a more important reason to buy than not to buy. Simply because of a mortgage interest rate, it stays six and a half percent. True. There was a time when rates were two and a half percent, and that was rather amazing. However, the 50 year average is 7.72, roughly percent. So there you go. [00:07:42] Speaker C: Yeah. And Nancy is going to let me say this particular saying that I like that came from a colleague of ours, Erin Merritt. She's an excellent real estate person up in the reno area, and she likes to say, marry the home, date the rate, meaning that get what you can get, get into the home, get it making money for you, enjoy your home. That's really the most important thing, is that you enjoy your home. Get in there, enjoy it. And then when the interest rates come down, jump in there and refinance. [00:08:20] Speaker D: Right. I mean, we know buyers are balking at buying now largely due to the interest rates, and I'm not sure that's such a good idea. In the Bay Area market says this market is driven by higher home buyer income and looking at historical mortgage rates, we see that rates move up and then they move down. And after doing the math, it has been considerably better to make a purchase so that the home does appreciate. [00:08:49] Speaker C: And that's not even talking about the tax benefits. I like the tax benefits that come with homeownership. It's that mortgage interest deduction that you get. You get depreciation that is like a non cash deal. They take 26 and a half years of the value of the structure on the property divided by those 26 and a half years. And each year you get to reduce your taxable income by that yearly amount, which is a good deal. [00:09:17] Speaker D: You just don't want to miss the opportunity to buy. Just hoping and waiting and praying that there's an interest rate of 3%. Because just if you can do it and you can make it happen, it just makes so much sense. [00:09:30] Speaker C: Yeah. Because what happens is that when that interest rate goes back down, everybody comes there and the buyers flood the market, drive the price up. It's like the number of loaves of bread on the shelves at the supermarket. So anyway, according to the big R website, I don't like to say their name, but they are reporting that may home sales were just 407,000 units sold in May. That would be home sales down roughly 3% from the same month last year. Further, home prices nationally were up 5% from last year. Also, the big R website reports that in May, almost one out of every five homes that were on the market went and had a price adjustment, which is kind of interesting. But then that's a good thing. That's a healthy thing for the market. The market is never going to be static. It's always going to be changing. And it's good to see those changes happen. And at some point it will turn back around and become a buyer. Market sellers. So pay attention to that. So here we are. We have sellers of retirement age, the biggest bulk of them saying, oh, I've got a 3% loan. Why should I be moving? Why should I put my home on the market? And then you got the buyers that are not wanting to pay, you know, 6% for the mortgage interest rate. Well, come on, they got to come together. If you're going to buy a home, you should really consider very seriously doing it today. [00:11:07] Speaker A: We're going to take a short break. [00:11:09] Speaker C: We'll be right back. [00:11:10] Speaker D: Here's Michael Hatfield, business owners. [00:11:12] Speaker A: Have you considered how important the appearance and impression your offices make to prospective customers? Appearance and impression are critical to clients, thus to your overall success. If your company could use that warm, inviting and welcoming appearance. I have an amazing complex of offices just listed for lease in the quaint town of Danville. Freshly remodeled, meticulously built, the 3700 square foot space enjoys incredible street exposure, front and side entrances, abundant parking, reception, conference room, eleven individual offices, even a team member kitchen. This premium space is located in a blue ribbon building maintained by the renowned Sherman properties group. Waste not 1 minute. [00:11:55] Speaker C: Call us now. Get help with buying or selling by calling the Michael Hatfield remax support team at 1800 857 63. That's 1800 857 63. And now back to our show. [00:12:10] Speaker D: And we're always here to help them. [00:12:12] Speaker C: Absolutely. [00:12:13] Speaker D: So in the residential purchase agreement there's, there is, unless it's removed by the buyer, the investigation's contingency. And it's a clause where a buyer promises to remove his or her right to vacate the contract if his or her inspections, you know. [00:12:34] Speaker C: Are not acceptable. [00:12:35] Speaker D: Exactly. So anyways, and one important factor a buyer today must make sure of is that he or she can obtain home fire insurance. That's becoming issue, particularly in California with, you know, the beauty that we have here. We have open land and, and homes are built often near there. So anyways, we're running into that with new buyers having more difficulty in acquiring home insurance in the state of California. Although we have been very fortunate and able to help, several of our buyers secured that type of insurance. [00:13:12] Speaker C: Just yesterday we had a property close and it was interesting. A little bit of history is important. State farm, because of a lot of the losses that were paid out due to the wildfires that we had in California. They vacated the California market and said we're not going to issue any new policies in California because of it. We can't make enough of profit to do it. So they, they represented roughly 20% of the home insurance market. They vacated California and then a couple other ones did it too. So making the ability to get home insurance really tough. So with that in mind, when you start working on a home you want to actually do the same thing that you've done with your lender. And we have fire insurance people. It takes a little longer to get it. You have to be a little bit more diligent and getting one that makes sense where your premiums aren't way too high. So start early on that. And like I say, we're experienced agents. We know where to find these carriers that can help. Incidentally, we had one client, we represented the buyers and this is just for your information, they had actually bound the insurance with the big f company. Back on the 10 June and then on the day that this was to close and the lender is to fund into escrow the loan. The lender says, we're not going to do it. We're just not going to do it. That's crazy. Why is that? The agent jumps in the middle of it, which happened to be me, and I said, why are you not going to do it? Because the roof, they said, is greater than 20 years old. Well, so what? And they said, we're just not going to do it. The bank says, well, if you don't have replacement cost for the roof, then we're not going to fund the loan. These are really great buyers, by the way. I mean, from a financial standpoint, they're well qualified for the loan. So we jumped in the middle of it, found the manufacturer of the actual roof, found that the roof was one of the strongest metal roofs that you could put on a property, a 60 year roof. And it was of a nature with an underlayment, which is a foil underlayment, not a straight tar paper roof. That this roof has been shown to withstand wind speeds of 120 miles an hour down in typhoon country. That is absolutely amazing. So I was able to secure the information on this roofing product, send it to the insurance underwriter, and in one day, with blessings from above, I have to admit, the insurance underwriter agreed to go ahead with the insurance policy and then the lender funded the loan and it closed last night. [00:16:21] Speaker D: Stimulus. [00:16:21] Speaker C: Yeah. So the actual moral to all of this is when you work with an experienced agent, whether or not it's us or anybody, folks, you've got somebody that can help you when these issues crop up, and they will. And this process that we have in the purchase of a home in California or the sale, these kind of things will, you know, they will pop up. [00:16:43] Speaker D: It's inevitable. So, Michael, what happens, for instance, if a buyer truly can't obtain suitable home insurance, what can you say about that? [00:16:53] Speaker C: Well, that's a very good question. It really is, because in a normal market, meaning that not a seller's market, not a buyer's market, kind of a balanced market, there are contingencies in the residential purchase agreement. One of those contingencies is what they call investigations. And a buyer, when he puts down the, the earnest money deposit, which is about 3% of the purchase price, into escrow, he agrees that within a certain amount of days, unless he waives it, that he will remove the investigations contingency. That means that somebody is going to do inspections. You're going to know from a professional standpoint, the quality or lack of, of the home and have a report so that you are firmly aware of what it will be. And you have so many days to remove that in writing, allowing the contract to proceed. And that's an important thing. When the market, however, is a seller's market, a lot of buyers will remove the investigations contingency right away on the offer, to get the offer accepted as kind of an inducement to the seller. And if you can't get insurance now, there's an issue, and the seller would actually have a. Well, you know, the buyer would have his earnest money deposit at risk. It's kind of interesting. [00:18:19] Speaker D: It's a tough situation. [00:18:22] Speaker C: So that's why you need to work with a really experienced realtor that can help you with assessing the condition of the home so that you know what to do with the investigation's contingency right. [00:18:33] Speaker D: From the beginning and navigate through those challenges, because there will often be challenges. It's just seems like that's the way it is. But you're good at that, Michael. [00:18:43] Speaker C: Oh, thank you. [00:18:44] Speaker D: You're good at that. [00:18:44] Speaker C: Well, you are too. You have a way of talking with the clients, and it's a very important thing because we're full service, meaning that we provide, we round out the edges. And one of the important things is we answer our phone to our clients as soon as we possibly can, even on vacations. [00:19:03] Speaker D: We do. We do. [00:19:05] Speaker C: Yeah. Well, let's shift gears a little bit, Nance, what do you look for when you pull up in front of a home that is for sale? If you were interested in that as a buyer, what do you, as, you. [00:19:19] Speaker D: Know, as a buyer, what would I look at? Well, first of all, just me. I would look at the front door. I'm always interested in what the front door looks like. And I'd like to see the condition of the front space. Is it nicely manicured? Is it a drought resistant or drought tolerant? How do gutters look? What if the roof, if I can see the roof, what kind of condition does the roof? I just take it all in, actually, Michael. So those are the things that I notice right away. [00:19:48] Speaker C: So you do this from the curb? [00:19:50] Speaker D: You can often do this from the curb or, you know, depending what kind of lot it is. Of course. [00:19:56] Speaker C: Yes. Well, interestingly, I think it's something like 80% of the people that drive up in front of a home are going to either say, okay, I like the way it looks from the front, and we'll proceed and we'll go inside of and take a look or they won't. It's one or the other. [00:20:12] Speaker D: Yes. We had clients recently who said they didn't like a downsloping roof when they drove up to the front of a home. And that just wasn't their thing. So we kept moving along. [00:20:23] Speaker C: It's really interesting. So, ladies and gentlemen, you've been listening to the real estate and more show. Today we're all about real estate, and we have my partner and lady of some 40 years here to provide the female input and to add her well prepared thoughts. So welcome to our show and we'll keep going here. So, for me, I'm a little bit different. When I drive up to a house, I'm looking at the garage a lot, too. And then, as a former home builder, I always look at the roof, I look at the condition of the siding, I look at the gutters, I look at the overall appearance of the home. Has this home been maintained? And I compare it with its vintage, and then I'll decide to look at that garage functionality. For me, all I really need is a microwave, an espresso machine, and a popcorn way of doing popcorn. [00:21:21] Speaker D: The garage always matters. And that's another factor that sometimes when you drive up to a house, the garages face towards the street, and some homes, the garage is to the side. So it's a very interesting personal feeling and that people get and they think, I don't really like that, or that's kind of nice, or it simply doesn't even matter. Because when you do buy a home, there's not going to be 100% of the things you absolutely love often. But if it's a good 80%, you know, it's worth seriously considering. [00:21:55] Speaker C: Well, you know, that's. That's a very good point. We tell our buyers you're not going to have any home, even a new home. And even if you build it, not everything is going to be perfect. So the best way to deal with that is to look for 85% to suit your needs. And the other 15%, we'll call it make it your own effort, make it your home. It's not sweat equity. It is make it your home effort. That's 15%, 10%. Find one that is close to what you like as absolutely possible and then go from there. So that's a very good point. [00:22:33] Speaker D: Right. You know, it's like you don't. It might be a deal breaker for you and your significant other or spouse or whatever. I mean, say you really got to have that family room kitchen combo and that's just a deal breaker. Well, then you need to find that. Or if you need and want a bedroom, say, on the first floor, versus a two story where all the bedrooms are upstairs, or sometimes people like a certain position of their home and the way it points to a certain direction. There's just so many interesting factors that come into play when people are looking for their home. [00:23:09] Speaker C: You know, I contend that the lady of the household is the senior vice president in charge of housing, and she is the one that actually is better at functionality with the family members. If there's an infant or a baby in the family, where the baby is going to go. If there is a seven year old, where's the seven year old? Let's think about that when the seven turns twelve and further work towards that. Well, what about us? You know, is this two story going to be great? It may be great because there is a bedroom on the first level. What do you think? [00:23:44] Speaker D: I think, or like if you have teenagers and you really like it that they're on another side of the house versus right up near, close to you and that you hear everything that they're, you know, up to. So it really just depends. [00:23:59] Speaker C: So, Nancy, what do you think? Is now a great time to buy a home in the San Francisco Bay Area? [00:24:06] Speaker D: I do. I sincerely do. I think the Bay Area is just such a fabulous place to live and to enjoy. And real estate has just proven over the decades that it is a good place to buy. [00:24:22] Speaker C: Yeah. Like most wealth is vested in the land. I think it absolutely is. But, you know, on the other side, in the flip coin, what? A flip side of the coin. What about, what about the sellers? What are the, is it a good time to sell? [00:24:39] Speaker D: Why not? No reason not to. [00:24:42] Speaker C: Yeah. Yeah. Because there's a limited inventory. A few more homes have come on the market in the last month to kind of change that. But in essence, it's a great time to sell as well because there is no real significant imbalance between inventory and the number of buyers. So that's pretty interesting thing right there. [00:25:04] Speaker D: Exactly. Exactly. [00:25:06] Speaker C: To close, what are your thoughts that you would like to tell the world of radio out there as well as podcast? [00:25:12] Speaker D: I'd say if you've got a question, Michael is a good guy to talk to. [00:25:18] Speaker C: I would say, hey, give us a call. Talk to Nancy. She has great opinions. She's been around a lot. She's a phenomenal mom. And so she knows how it is to look for a new house or sell a new home or make that home your own. We pride ourselves in the way that we represent our clients. We have certain individuals that think, oh, you just want it for compensation. You don't do much work. Well, they're wrong on both counts with us. Number one is we take on a client because they're nice. We only want nice people. It's always the client's interest, number one. So, you know, when you go out there for an agent, I would not recommend being with, I don't call them discount agents because you will not get the level of service that you really need. And as I mentioned before, we answer our telephone. Thank you for being on the show today. You've been absolutely amazing and it's been a great day. Getting our tune up on how's the market, May, June and now and talking about important aspects of the home buyer and seller market. My wife partner Nancy gets more beautiful every day and I am blessed to have her. [00:26:41] Speaker D: Thanks, Michael. [00:26:42] Speaker C: You've been listening to the real estate and more show. Please remember to go to our new YouTube channel, my real talk show. That's myrealtalkshow on YouTube.com. touch the subscribe button and if you like the video, please push that button too. Next week I hope you tune in. And in the meantime, have a blessed week. [00:27:04] Speaker A: 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 aired shows at our handle my real talk show on YouTube.com.