Recession Alert?! Housing market NOT in recession! Homebuyers seen to Gain More Bargaining Power in August


Homebuyers Gain More Bargaining Power in August

Homebuyers in several markets have regained some negotiating power as demand has decreased. According to a Redfin survey released on Thursday, the average sale-to-list price ratio decreased to 99.8% over the four weeks ending on August 28.

The research discovered that only 37% of residences sold for more than the asking price, down from 50% a year earlier. Additionally, on average, 7.5% of homes listed for sale experienced a price decrease each week as the previous four weeks.

The median asking price for homes has dropped by 5.8% from the record high set in May to $379,194, reflecting sellers’ efforts to make their properties more engagingly priced. However, compared to a year ago, this asking price is still 9% higher.

Despite the general slowdown, homes are still selling at a reasonably quick pace. The median number of days on the market was 26, slightly longer than a year ago when the market was much hotter. Many homeowners opt not to list their houses since interest from buyers has decreased, and they can no longer command as high of prices.

Strong Job Market Will Continue To Support Housing Demand – MBA

Despite economic challenges, employment opportunities appear to improve as US companies added 315,000 jobs in August. According to the Bureau of Labor Statistics, employment on nonfarm payrolls increased by 315,000 last month, with job growth remaining stable in most industries. The unemployment rate, however, increased by 0.2% to 3.7%.

“The August jobs report revealed that while the labor market remains quite strong, with employment growth still above a sustainable pace; however, that pace is slowing,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “Wage growth is still strong, with average hourly earnings up 5.2% compared to a year ago.”

Health care (+48,000), retail commerce (+44,000), and professional and business services (+68,000) all had significant job growth.

“Coupled with other recent readings, these data indicate an economy that is still growing, but perhaps at an inflection point,” Fratantoni added. “With this in mind, we expect that the Federal Reserve will stay the course with further rate hikes at upcoming meetings.”

Why the Housing Market Is Not In Recession

Fernando Ferreira, a professor of real estate at Wharton, disputes the notion that the American housing market is in recession.

Even though home sales are declining due to higher loan rates, he said there is still a disparity between supply and demand. There is no simple resolution for this mismatch, which is at the root of the present housing crisis in the United States.

Although prices have decreased as a result of the poor sales, as per Ferreira, who is also a professor of business economics and public policy, most Americans still find housing to be prohibitively expensive. According to the National Association of Realtors, the typical sale price of a home in July was $403,800, down $10,000 from a month earlier.

“There’s been a long-term trend of not allowing any new construction, at least not any type of dense construction, on both coasts and in the majority of big cities in the United States,” he said. “Over time, that created this gigantic difference between demand and supply of homes. And to be honest, that’s the main reason [for] these extremely high prices today.”

According to Ferreira, housing prices will only decrease significantly if there is more supply. The only option to expand home-building is to modify rules to permit more and various kinds of construction. He complimented the Texas cities of Dallas and Austin for allowing additional construction, particularly multifamily buildings, to keep up with the rapid population expansion.

Next week’s potential market-moving reports are:

  • Monday, September 19 – NAHB Home Builders’ Index
  • Tuesday, September 20 – Building Permits, Housing Starts
  • Wednesday, September 21 – Existing Home Sales, Federal Reserve Statement
  • Thursday, September 22 – Initial Jobless Claims, Construction Spending,
  • Friday, September 23 – No Report

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.


Do You Really Have to Have a 20% Down Payment Right This Minute? Presently, How Much Should You Save For The Best California Home Loan Interest Rate Today?

When the financial advice website NerdWallet surveyed home buyers in 2019, they learned that almost two-thirds of them (62%) thought they needed at least a 20% down payment to buy a home. That’s not true, especially if you’re a first-time homebuyer. NerdWallet’s survey found that the average down payment for first-time homebuyers in 2019 was 7%, and among all buyers, the average rose to 16%.

What kinds of home mortgages require less than a 20% down payment?

FHA Home Mortgages: FHA home loans start with a minimum of 3.5% down payment. 30 year fixed rate FHA loans also have more flexible standards for credit scores than other loan programs. USDA loans also don’t require down payments and can offer mortgages in USDA-qualified areas.

VA Home Mortgages: VA loans require no down payment for eligible veterans. You can get a 30-year fixed-rate VA mortgage or a 15-year fixed-rate VA mortgage with no money down. As of January 1, 2020, the VA lifted county loan limits, so you can get a no money down VA home mortgage in any amount you’re qualified to receive.

Conventional home mortgages: Conventional mortgages can offer down payments as low as 3% and potentially lower. Some mortgage lenders offer down payment assistance grants, especially for first-time and non-traditional home buyers.

How much should you save for a California home mortgage down payment?

You can use a mortgage calculator to see how much your payments will be with different down payment amounts. Save as much as you can, but as we’ve already said, you don’t have to save 20% for the down payment. As you save, keep in mind you will need to pay for other costs when you close your loan. You may also need to pay for mortgage insurance with a lower down payment.

You have many options for your mortgage and more flexibility in home buying and loan choice than a lot of online advice articles show. This is another reason you should work with an experienced California mortgage specialist who can help you plan to get a loan with a down payment you can afford along with monthly payments that help you meet your home buying and financial goals.



It turns out LA Times has had “20% down payment is dead” articles for 3-4 years – here is another one with the same headline:

Should I Start Refinancing My 30-Year Fixed Mortgage Soon Or Should I Aim For A Shorter-Term Mortgage? Need A Sound Advice Now.

If you can reduce your mortgage payments by refinancing and lock in a payment you know you can afford, you should consider refinancing. Here are a few financial tips for mortgage refinance that fit the current financial climate:

Do you have high-interest debt you’re working to pay off?

You may owe $10,000 or $20,000 in credit card debt. Have you looked at the difference between how much you’re paying in interest and how much on the balance you owe? You may find that 50, 60, and even 80 percent of your monthly payment is paying interest.

Using a mortgage refinance to pay off high-interest debt with a low-interest 30-year fixed-rate mortgage could save you thousands of dollars. Refinancing your mortgage to pay off high interest credit card debt may be a lot of work but your financial result will be worth it.

Do you have student loan debt you want to eliminate?

Student loan interest rates may not be quite as high as high-interest credit cards, but the average unsubsidized student (or parent) loan starts at 6 percent interest and can go up from there. Similar to credit card debt, you can save money on interest by refinancing to a lower-interest 30-year fixed rate mortgage.

Can you reduce your monthly mortgage payment?

Lowering your monthly mortgage payment is one of the best reasons to refinance. If you can locate a loan which has a lower annual percentage rate (APR) than your current loan, it’s worthwhile to investigate your refinancing options.

Can you afford a shorter-term mortgage?

If your finances have improved significantly since you got your initial mortgage, you may benefit financially from refinancing from a 30-year fixed mortgage to a 15-year loan term, or any other term such as 27 year, 25 year, 21 year, 18 year etc.  The options are limitless with a savvy independent mortgage broker on your side. The savings in interest can be substantial.

For example, if you have a $500,000 30-year fixed rate mortgage at 4 percent, you’ll pay approximately $859,300 in principal and interest over the course of your loan. If you refinance your loan to a 15-year mortgage, even at the same 4 percent interest, your total payments will be $665,719. That’s a difference of almost $200,000.

Refinancing your 30-year fixed rate mortgage can be a smart financial decision for a lot of reasons. An experienced independent mortgage loan broker such as California Platinum Loans can let you know what your options are so you can make the right financial decision.