What is Happening with the Napa Valley Real Estate Market?

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August 2022 Statistics

In August everything was down year over year. The total homes for sale were down 24.8% (65 homes), the number of sold homes was down 28.4% (31 homes), the number of pending was down 24% (24 homes), the average sold amount was down 7.1% ($152k on average), the average dollar per square foot was down 8.8% ($84 on average) and the average number of days on market was down 47.3% (39 days). To get a better understanding of the right time to buy/sell, click here for a breakout by town.

This might be a good time to buy with a potential softening of the market in certain places. Make sure to talk to a lender for preapproval and to understand what you can afford. If you don't have one I'm happy to help you find one in your area.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 6.33%

15 Yr FRM 5.55%

FHA 30 Year Fixed 5.60%

Jumbo 30 Year Fixed 5.65%

5/1 Year ARM 6.00%

VA 30 Year Fixed 5.65%

Our Economy and the Impact on Real Estate

With every other news headline talking about our economy, it’s impossible to not think about the impact it will have on real estate.

The truth is: even though the housing market is cooling, it is still nowhere near a normal market.

The question is: do you know that?

With media painting a certain picture, you may be thinking the worst about the market, putting your real estate plans on hold or worse, panicking that we’re going to see a housing collapse.

That’s why these are the 5 slides that you need to see.

A RECESSION DOESN’T MEAN HOME PRICES WILL FALL

We all remember what happened in 2008, and unfortunately for many of you, the words “recession” and “housing bubble” immediately bring back memories of the crash.

However, there are big differences between today’s market and the ones leading up to the crash.

Here are the reasons today is nothing like the last time.

Before the Great Recession, the housing market had:

• Loose lending standards

• An oversupply of homes

• Overtapped equity

Today’s market looks the opposite with:

• Stricter lending practices

• An undersupply of homes

• More equity

In fact, in four out of the last six recessions home prices still appreciated, and experts project the same for this year’s forecast.

HOUSING EXPERTS PROJECT CONTINUED PRICE APPRECIATION

While growing, inventory is still low overall. That’s why most major housing experts project ongoing home price appreciation in most markets. It will just happen at a more moderate pace moving forward.

Why? Because the amount of homes for sale still doesn’t match demand from buyers.

WAITING TO BUY? IT MAY COST MORE THAN TIME

As the saying goes, trying to time the housing market perfectly is a bit like playing the lottery.

While we can never truly foresee what’s going to happen, we can keep our spheres up-to-date on the latest insights, especially in a shifting market.

And the truth is, with the current unpredictability of mortgage rates and experts predicting continued home price appreciation, buying a home sooner than later may be the better financial decision.

Even at a more typical pace of appreciation, buyers still stand to make significant equity gains as their home grows in value.

THE SHIFTING MARKET IS GREAT NEWS FOR BUYERS

It’s probably one of the biggest questions right now: should I buy a home right now?

The good news is that what was once your greatest challenge may now be your greatest opportunity.

Today, data shows buyer demand is moderating in the wake of higher mortgage rates. Here are a few reasons why this shift in the housing market is good news for your homebuying plans.

• Moderating demand is slowing the pace of home sales

• Housing supply is finally able to grow which means more options to choose from

• Bidding wars have eased in recent months

This is great news for anyone that may have put off their buying plans in the last two years because the market was too hot for them to handle.

IT‘S STILL A SELLER’S MARKET

As there’s more and more talk about the real estate market cooling off from the peak frenzy it saw during the pandemic, you may wonder what that means for sellers.

The good news is: it’s still a seller’s market. Here’s why:

• Even though inventory is growing, there’s still a shortage of homes to meet buyer demand

• Conditions are still in the seller’s favor

• While buyer demand is softening due to higher mortgage rates, homes that are priced right are still selling fast.

“Overall, the best summary is that we’ll move from a gangbuster sellers’ market to a modest sellers’ market,” said Ed Pinto, Director of the American Enterprise Institute’s Housing Center

If sellers had any doubts about it, this should help clear up their confusion and shed light on the fact that they still very much remain in the driver’s seat for the housing market.

Bottom Line

While the real estate market continues to shift, there is still a lot of speculation about what the future holds.

Be sure to talk with your local Realtor for information pertaining specifically to your market.

Is Lack of Homes for Sale Still a Problem in Napa Valley?

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February 2022 Statistics

In February the total homes for sale were down 19.8% (25 homes) while the number of sold homes was relatively flat(down 3.5% or 2 homes) and the number of pending up 28.6% (18 homes). More glaring was the average sold amount which was up 34.9% ($370k on average) and the average dollar per square foot was also up 55.2% ($311.5 on average). The average number of days on market was up 17.1% (12.75 days). To get a better understanding of the right time to buy/sell, click here for a breakout by town.

This might be the best time to buy before the interest rates go up again. Make sure to talk to a lender for preapproval and to understand what you can afford. If you don't have one I'm happy to help you find one in your area.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 4.50%

15 Yr FRM 3.88%

FHA 30 Year Fixed 4.0%

Jumbo 30 Year Fixed 3.95%

5/1 ARM 3.82%

What to Expect of the Real Estate Market in 4th Quarter in Napa Valley

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September 2021 Statistics

In September we saw more inventory year over year and fewer homes sold. The average sold price is much higher than last year and the average number of days on market is lower. The absorption rate is still favorable for sellers but with the interest rates and more inventory, this could also be a great time to buy.

Even with the adjustments in inventory, it doesn't mean that there is a lot of inventory in your budget so if you do need a mortgage make sure to get preapproved and obtain a letter of proof of funds to include in your offer.

The absorption rate in September was 48% (6% lower than last month). As a reminder, typically rates below 15% indicate a buyer's market, and above 20% indicate a seller's market.

In September total homes for sale were up 7% (12 homes). The sold homes were down 28% (33 homes) and the pending was down 13.3% (13 homes). The average sold amount was up 55.3% ($587k on average)but the average dollar per square was down 0.5% ($3.5 on average). The average number of days on market was down 37.9% (32 days). To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 3.27%

15 Yr FRM 2.64%

FHA 30 Year Fixed 2.9%

Jumbo 30 Year Fixed 3.2%

5/1 ARM 3.13%

Do I Sell and/or Buy a Home? - June 2021 Napa Valley Real Estate Analysis

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This Is Still The Time to Sell!

June Statistics

The absorption rate in June was 56% (flat to last month). As a reminder, typically rates below 15% indicate a buyer's market, and above 20% indicate a seller's market. While this is a seller's market, the interest rates are still low which makes it a great time to buy as well!

In June total homes for sale were down 21.7% (48 homes). The sold homes were up 83.9% (52 homes) but the pending was down 13.2% (16 homes). The average sold amount was up 88.9% ($909.5k on average)and the average dollar per square was up 32.5% ($206.75 on average). The average number of days on market was up 53.2% (33 days). To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 2.87%

15 Yr FRM 2.31%

FHA 30 Year Fixed 2.5%

Jumbo 30 Year Fixed 3.05%

5/1 ARM 2.55%

Housing Supply Is Rising. What Does That Mean for You?

An important factor in today’s market is the number of homes for sale. While inventory levels continue to sit near historic lows, there are indications we may have hit the lowest point we’ll see. Odeta Kushi, Deputy Chief Economist at First American, recently said of our supply challenges:

“It looks like inventory may have hit a bottom (we’ve seen this in the higher frequency data as well). Unsold inventory in May was at 2.5 months supply, up from 2.4.”

We’re still not close to a balanced market, which would be a 6 months’ supply of homes for sale. However, we are seeing a slow but steady increase in homes coming up for sale. And that leaves many buyers and sellers wondering the same thing: what does that mean for me?

Buyers: More Options Are Arriving, so It’s Time To Act

If you’re a buyer, more inventory coming to market is a welcome sight. More supply means more options and less competition, which could mean fewer bidding wars.

According to the latest Monthly Housing Market Trends Report, supply levels are continuing to increase, which is different from the typical summer market:

“In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”

If you’re having trouble finding your next home, this news should give you the hope and motivation to keep your buying process moving forward. Experts project mortgage rates will begin increasing, which will make purchasing a home less affordable as time passes. You can still capitalize on today’s low interest rates, so stick with your search as more homes come to market.

Sellers: Our Supply Challenges Aren’t Over Yet, so Now Is the Time To Sell

If you’ve been putting off selling your house, you shouldn’t wait much longer. The year’s month-over-month gains in homes for sale have helped buyers, but we’re still very much in a sellers’ market.

Even with the number of homes for sale rising, we’re still well below the supply levels we’ve seen historically.

Of course, more homes are coming to market now, and more are expected in the coming months. Selling your house this summer gives you the chance to get ahead of the competition and maximize your sales potential before more homes are put up for sale in your neighborhood.

Bottom Line

More homes for sale means more options for buyers and more competition for sellers. Whether you’re looking to buy or sell, connect with your trusted real estate advisor today to discuss your options and why it’s still a good time to make your move.

Mortgage Rates Lowest in Nearly a Month But Not For Long

Slow and steady wins the race, and mortgage rates have been making slow, steady progress back down from recent long-term highs seen at the end of March.  Over that time, the average conventional 30yr fixed rate quote has fallen anywhere from .125 to 0.25% depending on the lender.  That's not a bad move over the course of 2 weeks and especially in an environment where lenders have every right to be defensive.  After all, there have been numerous "false starts" for the sort of winning streak we're currently enjoying.  

Beyond that, with rates so closely tied to covid and the economy, "higher rates in 2021" has been an easy thesis for market watchers.  Anything that runs counter to that will need to bring a compelling explanation.  It's no surprise, then, to see the "pause" of the J&J vaccine in the news this morning just before rates enjoyed another modest drop.  

Be careful though.  These are small-scale moves in the bigger picture.  Unless progress against the pandemic is legitimately derailed, we can't count on the good times to stick around for too much longer.  This could even be as simple as the market "taking a break" from the prevailing trend before deciding on the pace and timing of the next move.

BY: MATTHEW GRAHAM

Mortgage Rates

30 Yr FRM : 3.25%

5 Yr FRM : 2.72%

FHA 30 Year Fixed : 2.75%

Jumbo 30 Year Fixed : 3.32%

5/1 Yr ARM : 2.64%

There’s No Reason To Panic Over Today’s Lending Standards

Today, some are afraid the real estate market is starting to look a lot like it did in 2006, just prior to the housing crash. One of the factors they’re pointing to is the availability of mortgage money. Recent articles about the availability of low down payment loans and down payment assistance programs are causing fear that we’re returning to the bad habits seen 15 years ago. Let’s alleviate these concerns.

Several times a year, the Mortgage Bankers Association releases an index titled The Mortgage Credit Availability Index (MCAI). According to their website:

“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is…a summary measure which indicates the availability of mortgage credit at a point in time.”

Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available mortgage credit becomes.

The index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI (to below 100) as mortgage money became almost impossible to secure. Thankfully, lending standards have eased somewhat since. The index, however, is still below 150, which is about one-sixth of what it was in 2006.

Why did the index rage out of control during the housing bubble?

The main reason was the availability of loans with extremely weak lending standards. To keep up with demand in 2006, many mortgage lenders offered loans that put little emphasis on the eligibility of the borrower. Lenders were approving loans without always going through a verification process to confirm if the borrower would likely be able to repay the loan.

Some of these loans offered attractive, low interest rates that increased over time. The loans were popular because they could be obtained quickly and without the borrower having to provide documentation up front. However, as the rates increased, borrowers struggled to pay their mortgages.

Today, lending standards are much tighter. As Investopedia explains, the risky loans given at that time are extremely rare today, primarily because lending standards have drastically improved:

“In the aftermath of the crisis, the U.S. government issued new regulations to improve standard lending practices across the credit market, which included tightening the requirements for granting loans.”

An example of the relaxed lending standards leading up to the housing crash is the FICO® credit score associated with a loan. What’s a FICO® score? The website myFICO explains:

“A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders.”

During the housing boom, many mortgages were written for borrowers with a FICO score under 620. Experian reveals that, in today’s market, lenders are more cautious about lower credit scores:

“Statistically speaking, 28% of consumers with credit scores in the Fair range are likely to become seriously delinquent in the future…Some lenders dislike those odds and choose not to work with individuals whose FICO® Scores fall within this range.”

There are definitely still loan programs that allow a 620 score. However, lending institutions overall are much more attentive about measuring risk when approving loans. According to Ellie Mae’s latest Origination Insight Report, the average FICO® score on all loans originated in February was 753.

In 2006, mortgage entities originated $376 billion dollars in loans for purchasers with a score under 620. Last year, that number was only $74 billion.

Bottom Line

In 2006, lending standards were much more relaxed with little evaluation done to measure a borrower’s potential to repay their loan. Today, standards are tighter, and the risk is reduced for both lenders and borrowers. These are two very different housing markets, so there’s no need to panic over today’s lending standards.

The Reason Mortgage Rates Are Projected to Increase and What It Means for You

We’re currently experiencing historically low mortgage rates. Over the last fifty years, the average on a Freddie Mac 30-year fixed-rate mortgage has been 7.76%. Today, that rate is 2.81%. Flocks of homebuyers have been taking advantage of these remarkably low rates over the last twelve months. However, there’s no guarantee rates will remain this low much longer.

Whenever we try to forecast mortgage rates, we should consider the advice of Mark Fleming, Chief Economist at First American:

“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and/or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

Many things impact mortgage rates. The economy, inflation, and Fed policy, just to name a few. That makes forecasting rates difficult. However, there’s one metric that has held up over the last fifty years – the relationship between mortgage rates and the 10-year treasury rate. There’s no denying the close relationship between the two. Over the last five decades, there’s been an average 1.7-point spread between these two rates. It’s this long-term relationship that has some forecasters projecting an increase in mortgage rates as we move throughout the year. This is based on the recent surge in the 10-year treasury rate.

The spread between the two is now 1.53, indicating mortgage rates could rise. Actually, a bump-up in rate has already begun. As Joel Kan, Associate VP of Economic Forecasting for the Mortgage Bankers Association, reveals:

“Expectations of faster economic growth and inflation continue to push Treasury yields & mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, & last week climbed to its highest level since Nov 2020.”

How high might they go in 2021?

No one knows for sure. Sam Khater, Chief Economist for Freddie Mac, recently suggested:

“While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year.”

What does this mean for you?

Whether you’re a first-time buyer or you’ve purchased a home before, even an increase of half a point in mortgage rate (2.81 to 3.31%) makes a big difference. On a $300,000 mortgage, that difference (including principal and interest) is $82 a month, $984 a year, or a total of $29,520 over the life of the home loan.

Bottom Line

Based on the 50-year symbiotic relationship between treasury rates and mortgage rates, it appears mortgage rates could be headed up this year. It may make sense to buy now rather than wait.

Debating on Selling or Buying a Home in Napa Valley? What You Need to Know is Here!

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This Is Still The Time to Sell!

December Statistics

The absorption rate in December was 33.8%. As a reminder, typically rates below 15% indicate a buyer's market and above 20% is a seller's market. While this is a seller's market, the interest rates are still low which makes it a great time to buy as well! Not knowing what may happen with the new president I would advise to take advantage of the rates now! If you are considering buying and will need a mortgage, I would highly recommend reaching out to a mortgage lender for prequalification. This way you will be prepared and have one up on other buyers.

In December total homes for sale was down 21.9% (43 homes) but the total sold was up 42.1% (32 homes). The number of pending sales was also up 28.3% (13 homes). The average sold amount was up 63.7% (up $602k on average) and the average dollar per square was up 63.8% (up $275 on average). The average days on market was up 29.3% (20 days). To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 2.87%

15 Yr FRM 2.40%

FHA 30 Year Fixed 2.35%

Jumbo 30 Year Fixed 3.35%

5/1 ARM 2.30%

Debating On Whether to Sell or Buy? This Is The Time! Napa Valley Statistics

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Debating On Whether to Sell or Buy? This Is The Time!

November Statistics

The absorption rate went down slightly since last month. It was 47.6% in October and 44.7% in November. As a reminder, typically rates below 15% indicate a buyer's market and above 20% is a seller's market. While this is a seller's market, the interest rates are even lower than last month which makes it a great time to buy as well! If you are considering buying and will need a mortgage, I would highly recommend reaching out to a mortgage lender for prequalification. This way you will be prepared and have one up on other buyers.

In November total homes for sale was down 25.4% (73 homes) but the total sold was up 40.4% (23 homes). The number of pending sales was also up 50% (31 homes). The average sold amount was up 40.2% ($427k on average) but the average dollar per square was flat at 0.2% (on average of $758). The average days on market was down 17.1% (67 days this year at 80 last year). To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 2.80%

15 Yr FRM 2.38%

FHA 30 Year Fixed 2.33%

Jumbo 30 Year Fixed 3.14%

5/1 ARM 2.42%

It's Still A Great Time to Sell!: Napa Valley Statistics & Analysis

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It's Still a Great Time To Sell!

October Statistics

The absorption rate has dropped but is still at 47.6% mostly because of the town of Napa again which had a 54.7% absorption rate. As a reminder, typically rates below 15% indicate a buyer's market and above 20% is a seller's market. While this is a seller's market, the interest rates are still at historic lows which makes it a great time to buy as well! If you are considering buying and will need a mortgage, I would highly recommend reaching out to a mortgage lender for prequalification. This way you will be prepared and have one up on other buyers.

In October total homes for sale was down 31.7% (106 homes) but the total sold was up 14.9% (15 homes). The number of pending sales was also up 23% (17 homes). The average sold amount was down 7.6% ($126k on average) but the average dollar per square foot was up 34% (on average of $203). The average days on market was up 26.1% (117 days this year at 93 last year).  To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 2.92%

15 Yr FRM 2.42%

FHA 30 Year Fixed 2.38%

Jumbo 30 Year Fixed 3.28%

5/1 ARM 2.74%

Thinking About Selling Your Home? Napa Valley Statistics & Analysis

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Thinking About Selling Your Home? Napa Valley Statistics & Analysis

September Statistics

The absorption rate is over 100% again (107.6%) mostly because of the town of Napa again which had a 142% absorption rate which makes this a seller's market. As a reminder, typically rates below 15% indicate a buyer's market and above 20% is a seller's market. While this is a seller's market, the interest rates are at historic lows so this still makes it a great time to buy as well!

The only statistics that were down year over year was inventory which continues to decrease and days on market. As buyers continue looking for more space, we are seeing that the number of sales and pending sales are increasing year over year. If you are thinking about selling, this could be a great time!

This is also a great time to buy with historically low mortgage rates. If you are considering buying and will need a mortgage, I would highly recommend reaching out to a mortgage lender for prequalification. This way you will be prepared and have one up on other buyers.

In September total homes for sale was down 33% or 116 homes but the total sold was up 23.4% (25 homes). The number of pending sales was also up 21% (21 homes). The average sold amount was up 25.3% ($284k on average) as was the average dollar per square foot (up 25.3% at an average of $208). The average days on market was down 5.4% (101 days this year at 107 last year).   To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 3.04%

15 Yr FRM 2.57%

FHA 30 Year Fixed 2.43%

Jumbo 30 Year Fixed 3.40%

Two New Surveys Indicate Urban to Suburban Lean

There has been much talk around the possibility that Americans are feeling less enamored with the benefits of living in a large city and now may be longing for the open spaces that suburban and rural areas provide.

In a recent Realtor Magazine article, they discussed the issue and addressed comments made by Lawrence Yun, Chief Economist for the National Association of Realtors (NAR):

“While migration trends were toward urban centers before the pandemic, real estate thought leaders have predicted a suburban resurgence as home buyers seek more space for social distancing. Now the data is supporting that theory. Coronavirus and work-from-home flexibility is sparking the trend reversal, Yun said. More first-time home buyers and minorities have also been looking to the suburbs for affordability, he added.”

NAR surveyed agents across the country asking them to best describe the locations where their clients are looking for homes (they could check multiple answers). Here are the results of the survey:

• 47% suburban/subdivision

• 39% rural area

• 25% small town

• 14% urban area/central city

• 13% resort community/recreational area

According to real estate agents, there’s a strong preference for less populated locations such as suburban and rural areas.

Real Estate Brokers and Owners Agree

Zelman & Associates surveys brokers and owners of real estate firms for their monthly Real Estate Brokers Report. The last report revealed that 68% see either a ‘moderate’ or ‘significant’ shift to more suburban locations. Here are the results of the survey:

Bottom Line

No one knows if this will be a short-term trend or an industry game-changer. For now, there appears to be a migration to more open environments.

Daily Mortgage Rates

• 30YR 2.88%

• 15YR 2.40%

• FHA30YR 2.42%

• Jumbo30YR 3.49%

• 5/1ARM 2.73%

Virtual School Is Changing Homebuyer Needs

Some Highlights

• With remote learning sweeping the nation this academic year, organized spaces with enough room for kids to learn effectively are high on buyer wish lists.

• If you’re trying to make room for your family’s growing needs, multi-purpose rooms and dedicated workspaces may be features to consider in your next home.

• Reach out to a local real estate professional today so you can find a home where your kids feel confident and comfortable too.

Daily Mortgage Rates

• 30YR 2.87%

• 15YR 2.38%

• FHA30YR 2.38%

• Jumbo30YR 3.48%

• 5/1ARM 2.73%

Why Is It so Important to Be Pre-Approved in the Homebuying Process?

You may have heard that pre-approval is a great first step in the homebuying process. But why is it so important? When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real. So, before you start shopping around, it’s helpful to know your price range, what you’re comfortable within a monthly mortgage payment, and ultimately how much money you can borrow for your loan. Pre-approval from a lender is the only way to do this.

According to a recent survey from realtor.com, many buyers are making the mistake of skipping the pre-approval step in the homebuying process:

“Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months, only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are missing this crucial piece of paperwork.”

This paperwork (the pre-approval letter) shows sellers you’re a qualified buyer, something that can really help you stand out from the crowd in the current ultra-competitive market.

How competitive is today’s market? Extremely – especially among buyers.

With limited inventory, there are many more buyers than sellers right now, and that’s fueling the competition. According to the National Association of Realtors (NAR), homes are receiving an average of 2.9 offers for sellers to negotiate, so bidding wars are heating up.

Pre-approval shows homeowners you’re a serious buyer. It helps you stand out from the crowd if you get into a multiple-offer scenario, and these days, it’s likely. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war and land the home of your dreams.

Danielle Hale, Chief Economist for realtor.com notes:

“For ‘a buyer in a competitive market, it’s typically essential to have pre-approval done in order to submit an offer, so getting it done before you even look at homes is a smart move that will enable a buyer to move fast to put an offer in on the right home.’”

In addition, today’s housing market is also changing from moment to moment. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals (a loan officer and a real estate agent) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a home to purchase.

Bottom Line

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. If you’re ready to buy this year, reach out to a local real estate professional (who can also connect you with a trusted lender) before you start searching for a home.

Daily Mortgage Rate Survey

30YR 2.94%

15YR 2.50%

FHA30YR 2.34%

Jumbo30YR 3.59%

5/1ARM 3.05%

Sellers Are Returning to the Housing Market

In today’s housing market, it can be a big challenge for buyers to find homes to purchase, as the number of houses for sale is far below the current demand. Now, however, we’re seeing sellers slowly starting to come back into the market, a bright spark for potential buyers. Javier Vivas, Director of Economic Research at realtor.com, explains:

“Seller confidence has been improving gradually after reaching its bottom in mid-April, and now it appears to have reached an important recovery milestone…After five long months, sellers are back in the housing market; while encouraging, the improvement to new listings is only the first step in the long road to solving low inventory issues keeping many buyers at bay.”

Even with the number of homes coming into the market, the available inventory is well below where it needs to be to satisfy buyer interest. The National Association of Realtors (NAR) reports:

“Total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million). Unsold inventory sits at a 4.0-month supply at the current sales pace, down from both 4.8 months in May and from the 4.3-month figure recorded in June 2019.”

Houses today are selling faster than they’re coming to market. That’s why we only have inventory for 4 months at the current sales pace when in reality we need inventory for 6 months to keep up. But, as mentioned above, sellers are starting to return to the game. Realtor.com explains:

“The ‘housing supply’ component – which tracks growth of new listings – reached 101.7, up 4.9 points over the prior week, finally reaching the January growth baseline. The big milestone in new listings growth comes as seller sentiment continues to build momentum…After constant gradual improvements since mid-April, seller confidence appears to be reaching an important milestone. The temporary boost in new listings comes as the summer season replaces the typical spring homebuying season. More homes are entering the market than typical for this time of the year.”

Why is this good for sellers?

A good time to enter the housing market is when the competition in your area is low, meaning there are fewer sellers than interested buyers. You don’t want to wait for all of the other homeowners to list their houses before you do, providing more options for buyers to choose from. With sellers starting to get back into the market after five months of waiting, if you want to sell your house for the best possible price, now is a great time to do so.

Why is this good for buyers?

It can be challenging to find a home in today’s low-inventory environment. If more sellers are starting to put their houses up for sale, there will be more homes for you to choose from, providing a better opportunity to find the home of your dreams while taking advantage of the affordability that comes with historically low mortgage rates.

Bottom Line

While we still have a long way to go to catch up with the current demand, inventory is slowly starting to return to the market. If you’re thinking of moving this year, connect with a local real estate professional today to better understand what’s happening in your local market. You’ll want to be ready to make your move when the home of your dreams comes up for sale.

Daily Mortgage Rate Survey

• 30YR 3.12%

• 15YR 2.62%

• FHA30YR 2.38%

• Jumbo30YR 3.68%

• 5/1ARM 3.25%

Homes Are More Affordable Right Now Than They Have Been in Years

Today, home prices are appreciating. When we hear prices are going up, it’s normal to think a home will cost more as the trend continues. The way the housing market is positioned today, however, low mortgage rates are actually making homes more affordable, even as prices rise. Here’s why.

According to the Mortgage Monitor Report from Black Knight:

“While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing the average-priced home the most affordable it’s been since 2016.”

How is that possible?

Black Knight continues to explain:

“As of mid-July, it required 19.8% of the median monthly income to make the mortgage payment on the average-priced home purchase, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the average of 25% from 1995-2003.

This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period.

In fact, buying power is now up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.”

This is great news for the many buyers who were unable to purchase last year, or earlier in the spring due to the slowdown from the pandemic. By waiting a little longer, they can now afford 10% more home than they could have a year ago while keeping their monthly mortgage payment unchanged.

With mortgage rates hitting all-time lows eight times this year, it’s now less expensive to borrow money, making homes significantly more affordable over the lifetime of your loan. Mark Fleming, Chief Economist at First American, shares what low mortgage rates mean for affordability:

“In July, house-buying power got a big boost as the 30-year, fixed mortgage rate made history by moving below three percent. That drop in the mortgage rate from 3.23 percent in May to 2.98 percent in July increased house-buying power by nearly $15,000.”

The map below shows the last time homes were this affordable by state:

In six states – Arkansas, Iowa, Kentucky, Louisiana, Maryland, and West Virginia – homes have not been this affordable in more than 25 years.

Bottom Line

If you’re thinking of making a move, now is a great time to take advantage of the affordability that comes with such low mortgage rates. Whether you’re thinking of purchasing your first home or moving into a new one and securing a significantly lower mortgage rate than you may have on your current house, reach out to a real estate professional today to determine your next steps in the process.

Ready to Sell? The Market is Saying it's Time! Napa Valley Statistics & Analysis

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Ready to Sell? The Market is Saying It's Time!

July Statistics

The absorption rate is over 100% (102.6%) which makes this a seller's market. As a reminder, typically rates below 15% indicate a buyer's market and above 20% is a seller's market. While this is a seller's market, the interest rates are at historic lows so this still makes it a great time to buy as well!

The only statistic that was down year over year was inventory which continues to decrease. As buyers continue looking for more space we are seeing that the number of sales and pending sales are increasing year over year. We are still seeing more luxury homes selling and at faster rates. For these reasons the absorption rate is so high. If you are thinking about selling, this could be a great time!

If you are considering buying and will need a mortgage, I would highly recommend reaching out to a mortgage lender for prequalification. This way you will be prepared and have one up on other buyers.

In July total homes for sale was down 25.7% or 92 homes but the total sold was up 30.4% (31 homes). The number of pending sales was also up 68.7% (57 homes). The average sold amount was up 62% ($606k) and the average dollar per square foot was up 19.4% ($114.25). The average days on market was flat at 102 days both this year and last year.  To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 2.92%

15 Yr FRM 2.41%

FHA 30 Year Fixed 2.38%

Jumbo 30 Year Fixed 3.58%

5/1 Year ARM 2.75%

The Latest Unemployment Report: Slow and Steady Improvement

Daily Mortgage Rate Survey

30YR 2.82%

15YR 2.37%

FHA30YR 2.25%

Jumbo30YR 3.57%

5/1ARM 2.75%

Last Friday, the Bureau of Labor Statistics (BLS) released its latest Employment Situation Summary. Going into the release, the expert consensus was for 1.58 million jobs to be added in July, and for the unemployment rate to fall to 10.5%.

When the official report came out, it revealed that 1.8 million jobs were added, and the unemployment rate fell to 10.2% (from 11.1% last month). Once again, this is excellent news as this was the third consecutive month the unemployment rate decreased.

There is, however, still a long way to go before the job market fully recovers. The Wall Street Journal (WSJ) put a potential date on that recovery:

“July’s payroll growth, at 1.8 million, still leaves total payrolls 12.9 million lower than in February. And yet if job gains continued at July’s pace, that deficit will be erased by March 2021. If payrolls reclaim their last peak in 13 months, that would be remarkably fast. It took more than six years after the last recession.”

Permanent vs. Temporary Unemployment

During a pandemic, it’s important to differentiate those who have lost their jobs on a temporary basis from those who have lost them on a permanent basis. Morgan Stanley economists noted in the same WSJ article:

“The rate of churn in the labor market remains incredibly high, but a notable positive detail in this month’s report was the downtick in the rate of new permanent layoffs.”

To address this, the core unemployment rate becomes increasingly important. It identifies the number of people who have permanently lost their jobs. This measure subtracts temporary layoffs and adds unemployed who did not search for a job recently. Jed Kolko, Chief Economist at Indeed and the founder of the index reported:

“Core unemployment fell in July for the first time in the pandemic. That’s the good news I was hoping for.”

What about the housing market?

The housing market has continued to show tremendous resilience during the pandemic. Commenting on the labor report, Robert Dietz, Chief Economist for the National Association of Home Builders (NAHB), tweeted:

“Housing continues to rebound in another positive labor market report. Home builder and remodeler job gains of 24K for July. Residential construction employment down just 56.4K compared to a year ago. Total residential construction employment at 2.85 million.”

Bottom Line

We should remain cautious in our optimism, as the recovery is ultimately tied to our future success in mitigating the ongoing health crisis. However, as Mike Fratantoni, Chief Economist for the Mortgage Bankers Association, reminds us: “The pace of job growth slowed in July, but the gains over the past three months represent an impressive rebound during the ongoing economic challenges brought forth by the pandemic.”