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By Kim Murphy
Murphy and Murphy Southern California Realty 

Real Estate Round-Up: It's a great time to sell

 

Last updated 3/21/2020 at 3:24pm



California is experiencing the single longest economic growth period in its history. The housing values in Fallbrook have been steadily climbing since the first quarter of 2009.

The last few years have seen 2% increments, but values have continued to rise. As a seller, the current value of your home has met or exceeded where it was in 2005-2006. Homes priced above $750,000 experienced the largest sales increase ever reported.

Most sellers who contact the office are moving out of California. They are looking for a place with lower taxes, so their retirement nest egg will last longer. They are prepared to forgo the great weather in Fallbrook for a less expensive and more comfortable lifestyle.

Prices in these new locations are noticeably lower than in California, which is why people are considering Idaho, Texas, Tennessee, Oregon, Nevada, Arizona, North and South Carolina, Florida and Georgia.

Owning real estate provides a clear safe harbor for gaining wealth. The stock market is showing its vulnerability, with both the steepest loss since October 1987’s “Black Monday,” falling 27.6% and the biggest gain since October 1987, climbing over 9%, all in the same week. All that said, real estate value continues to remain stable in Fallbrook.

Interest rates have also shown volatility this past week. Reaching a low of 3%, leading to enormous volumes of refinance business, which prompted the banks to artificially raise rates due to their lack of liquidity. The most recent 100-point drop-in interest rates by Federal Reserve, should eventually move the mortgage rates back closer to 3%, but how soon is unclear.

Despite the volatility, current interest rates remain near 4% which is historically low. These low interest rates do not just benefit buyers. When interest rates drop, it expands the pool of buyers who can afford your home. There currently is over a 2-point spread between the 10-year Treasury bond and the 30-year fixed rate mortgage, which would predict that there might be additional reductions in mortgage interest rates.

In January, the Federal Housing Administration loan limit increased to $701,500 and Veterans Affairs loans have no limit. Inventory levels are less than 50% of normal and the current month’s supply of detached homes is a scant 2.5 months, which benefits sellers.

A balanced market has a six-month supply. Buyers are braving this challenging market in large numbers, so why are sellers waiting on the sidelines?

Put all of this together, in the hands of a professional Realtor with strong negotiating skills and you have the making of a very successful sale. So, why wait?

Many sellers we meet with are considering selling but believe that they can wait awhile. Waiting is always an option, but given the current market activity, with no guarantee on the future, I would recommend getting off the fence and jump in.

There may be some who are reading this, thinking that if it is so good and with consumer confidence being so high, why not wait awhile? The thing about hoping to find the “top” of a market is you never know it is the top until it drops, and it is rolling down and you can never recapture the top.

For many of the reasons mentioned above, it is also a great time to buy! Based on the numbers of buyers looking at our listings, this is not a secret. Home prices are gently rising, gone are the days of huge jumps from month to month.

Even though inventory is low, there are motivated sellers who have made the decision to move to their next location, and they are marketing their home at a fair price.

Interest rates are low, and even though they might go lower, it’s just like the seller who looks to sell only at the peak, if a buyer is waiting to buy only when interest rates are at the bottom, we won’t know the bottom is here, until rates start to go back up, and you can never recapture that previously lower rate.

Many lenders will lock a buyer into a rate and, if the rate drops, adjust the loan to the lower interest rate, so the risk is minimized.

With rates this low, it is a good time to consider purchasing an investment property or second home. Even if housing, like the stock market, has an adjustment, rents have consistently risen over the past decade.

As the shortage of housing in all price-points, especially workforce housing and first-time homebuyers housing, continues, the demand for rentals and therefore the price to rent will remain stable and possibly climb. What better way to protect your future, then through passive income received from a rental property?

Despite the current world news, real estate remains a solid investment, and there appears to be no better time to sell or buy. We’d love to talk to you about what that looks like for you.

Kim Murphy can be reached at kim@murphy-realty.com or (760) 415-9292 or at 130 N. Main Ave., in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.

 

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