Current Housing Market

Welcome to Monopoly Life, the podcast that unpacks the unpredictable twists and turns of the current housing market. Have you ever wondered who's buying homes in Southern California at these skyrocketing prices and interest rates? You're not alone. Join us as we dive deep into the heart of Anaheim and Orange, dissecting trends, crunching numbers, and unraveling the mysteries behind today’s housing frenzy.

From exploring why so many homes are still selling despite high rates, to revealing successful buyers' strategies, we cover it all. Hear real stories and expert insights on navigating the market, whether you're a first-time buyer struggling with down payments or a homeowner dealing with rising insurance costs.

This isn't just about market statistics; it's about understanding the bigger picture and making informed decisions. Tune in, leave a review, and join the conversation as we tackle the tough questions and uncover the solutions that can help you secure your dream home in this wild market.

Your feedback is crucial! Leave a review and let us know your thoughts and questions—we might just cover them in our next episode.

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Sergio Hernandez
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Omar A. Martinez
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Transcript

Current Housing Market

 Welcome to another episode of Monopoly Life. Today we're going to be discussing our current market and where we're at with the housing. Who the hell is buying all these homes in Southern California right now at these prices, at these interest rates? I get this question asked a lot lately who's buying this? And, uh, the market is absolutely crazy. Obviously, every market is different throughout the country. It definitely is. We can speak about, um, you know, just a Southern California area here, Anaheim in the city of orange. And, uh, it's absolutely bananas. What can you tell us about, uh, the market that you're seeing? I know you pulled up some numbers just to see, um, where things were headed. Absolutely. And like Sergio said, I want to reiterate it. This is where we live. These are the numbers here. And from what I see on the internet, every market is different. Okay. But, uh, here in Anaheim, uh, that's where I live. You know, I remember when we bought our house 20 some odd years ago was one of the more affordable places to live in in Orange County. Mhm. Compared to everywhere else, even Santa Ana Santana was more expensive than Anaheim. Yeah. You know, and, uh, so you start going through the numbers and you hear people and I talk to people that are professionals like, hey, this, this isn't sustainable. Who's buying this? How are they making their payments? And those are all valid questions. They're all great questions. Um, and we have to look at trends, right. That's what you go to school. That's what they tell you to do. You're taking an exam. That's what they tell you to do. Look at the trends. So what I did is I took it upon myself to look in the neighborhood where I live at. Um, and I went back 60 days and I looked at the properties that sold. Right. There was 18 properties that sold in the last 60 days. Out of those 18 properties. How many do you think put less than 10% down. Anybody? Anybody? Half. Five? 10%. The correct answer. Two out of those 18%, excuse me, two out of those 18 houses that sold but less than 10% down, one put, 3.5% down, the other one put 10% down. That doesn't help the first time homebuyers does. Not at all. Yeah, because I mean, they're taking offers with people that are with 2,040% down. Exactly. So 13 out of those offers or homes that closed, they put anywhere between 20 to 45% down. Yeah. So we're talking, you know, 150 all the way to at least 360,000 down to buy a home. All right. And other three were cash. So, you know, you start thinking about the market like okay these people are obviously qualifying, you know, and people say, well what happens if they stop making their payment? Well, if they stop making their payment, first thing that could happen is they could put their house on the market and sell it and still walk away with equity. You know, um, the other thing is the payment. I ran the payment on, like the top three properties that sold all those top three properties put anywhere between 10 to 25% down. The average payment was anywhere between, what, 6500 to $8200 a month? Yeah, and that was with all in principle, interest, taxes and insurance. Um, and not only that, but the insurance for those who don't know. Here in Southern California, insurance is expensive. You know, I know two of my neighbors that either got, uh, their premiums doubled or they got dropped. Yeah. You know, so right now, happening a lot. Yeah. Right now we're we're not we're not calling our insurance companies for anything. And I think Sergio could attest to that. Yeah, absolutely. I mean, um, what we're getting calls from past clients, you know, saying that their insurance companies dropped out and they're having no shop for new ones, and there's double and triple the price depending on what area you live, whether you're a fire hazard risk, one, 2 or 3, whatever that is. We're not insurance agents, but we definitely know that, uh, premiums have definitely gone up. I know mine is almost tripled in the last three years, and I'm just hoping they don't drop me because I know the one that I'm going to have to shop for is going to be even more expensive. Absolutely. But what's driving the market? I mean, this is absolutely bananas. The market is, you know, multiple offers still if it's priced reasonable, I mean, there's just a the entry point, the affordability is just out of control. I mean, for anybody looking to buy versus a rent, I mean it's a huge amount of payment compared to what you're renting. Absolutely. So homeownership is not for everybody. It's obviously and you know, I looked at the rents in the in the neighborhood. There was I think five properties for rent. All right. And um, those five properties ranged anywhere between 4000 for a three bedroom. Uh, and a four bedroom was about 5300. There was one adu. And I think they wanted $2,600 for an Adu, literally probably 4 to 700ft². Yes, exactly. Yeah. So for $2,600. So rents, I mean, some people might say that's high, you know, especially depending on the part of the country that you live from. But for us, 2600 is pretty economical. Yeah. Well, especially when you're looking at a mortgage payment, probably over $6,000. Absolutely. Yeah. So definitely I mean, but what's going to drive the market? I mean, a lot of people say something's got to give, right? Like these prices, these interest rates, something's going to collapse. But there's still a record amount of equity in people's homes right now. And, you know, there's still a lot of demand because we have a lot of millennials that are still coming in the market that are primed to be buying real estate, obviously, if that's the right time for them in their situation. But, um, what's driving the market? What could happen? Well, you know, nobody really knows. Everybody's been really wrong. I mean, we were supposed to have like six interest rate cuts this year. We haven't had one. We'll probably just have one. Who knows? Uh, but I think interest rates, you know, for the rest of the year, maybe they drop a little bit, maybe in the 60s and the low 60s, but that's it. Interest rates are going to remain high for the foreseeable future unless something happens. Um, and people are just stuck in their homes. It's an asset to have a 2 or 3% interest rate. Absolutely. All of I think it was like a stat of 60% of all mortgages out there are like 4% and under something crazy. So, I mean, where are people going to go? They're not looking to move. You know, unless you're, you know, unless you're inheriting the property because somebody died, unless you're divorcing or you have a job relocation out of the state, you're probably not selling. Those are the people that are selling right now. Absolutely. Um, so everybody's bidding on the few homes that are available, and you hit it. The major problem is still inventory at the end. It's supply and demand. Yeah. Supply and demand. So too many, too many people that want to buy houses and too many, few and few houses to choose from. Yeah, absolutely. And not only that, but if rates do drop a few months back, a statistic came out that for every 1% that the rates actually drop, there's what, 3 or 5 million people on the sidelines that are ready to jump in to buy these houses. Yeah. So what is that going to do? It's going to drive up the property values even more. Yeah. You know, if you sit back there's no easy solution. I mean you look at the fed I mean you drop interest rates and raise values. I mean what do you do. You know, they're kind of a position. Yeah. It's a tough position. So because there's so much demand still there's just not enough inventory at the end of the day. And that's just what's keeping up these prices and going them up. I mean, year over year I think we're up like between 9 and 10%, something like that still. Um, from, from last year to this year. That's that's insane. Yeah. And you know, I, I see online a lot of people talking about how in their market they got like 200% more listings, right? Yeah. And I'm like, wow, that's that's crazy. But then I started looking at them and they do have a lot of price cuts. So I looked at the properties that that are for sale right now. Currently, there's a 14 properties for sale in that same zip code. Out of those 14 properties, two of them have price cuts, right? Um, I've seen more like in different cities, but I think as those people are trying to hit grand slams. Yeah, they're just trying to see if they hit a number and you're trying to fish. If you can sell this for this amount, I'll move. I'll take it. You know, I'll hit the lottery. Absolutely. But if it's price reasonable, especially on, you know, the median price under a million, I mean it's going to sell quick multiple offers and you better entry level. That's entry level down here in Southern California. Yeah. And you know going back to your point surge, how around approximately 60% of the people have a 4% or less interest rate? You know, it's like you go back and you say, well, hey, I want to downsize for all those people that are ready to retire the baby boomers, they want to downsize. It will cost them more money to downsize. As opposed to just keeping the property that they own now. Yeah. You know, and there's a simple factor is this they're paying 2 or 3 or 4%. Now they're going to sell their house. Hopefully, um, they don't get any capital gains or they roll it over and buy another house. You know, the numbers just don't don't work as well as they used to. Yeah. For the simple reason of that low interest rate. Yeah. The baby boomers are staying in place because there's it's too expensive to do anything else unless, again, unless they're leaving that estate. You know which some are. But at the same time, we still have a lot of people coming in absolutely that want to buy here in the Southern California area. So it's um, it's obviously a big issue. Um, but at the end of the day, uh, home ownership is not for everybody. So if it's the right time for you, um, if you're able to make those payments, the house is going to be worth more, you know, five years from now, ten years from now, there's no doubt about that. So what options do people have? I know solutions. Yeah. Solutions that are happening right now in the market. I mean people are having to combine households. You know, you're combining the income and living together and buying something together. Um, because remember it's not always your forever home. It's always your dream home. On the first home, you know, you try to buy it. And then if it takes two families to, to get into a home, um, to combine the income and be able to make the payment, at least you're in, you know, and then, you know, who knows, a few years down the road what could happen where you buy another one. That's the objective. I've seen that, uh, quite often lately. And then the second option is I've seen people. On the loan option side if they have a lot of down payment, um, we give them options to maybe go with a lower down payment or even minimal down payment and use the extra money to build an Adu. Building an accessory dwelling unit will allow them to generate rental income. Um, that will offset that bigger mortgage payment, for instance. For instance. Go ahead. You know, like the let's say you got a $7,000 mortgage. Mhm. But yet you build that Adu and you get $2,600. That's $7,000 mortgage now is dropped down to what, $4,400. Yeah. So that's the options that Sergio is talking about. Yeah. That's a it's a good option. Or I'm also seeing combined like baby boomers are actually selling their home and combining a home with their kids and one living in an Adu unit and one living in the main house. Um, because, you know, at the end of the day, I mean, people want to live with family. Absolutely. And especially the parents and stuff like that. Um, and if you could afford it that way and move into a bigger home with an Adu, that's an option as well. So I'm seeing that quite a bit. Um, just because the barrier of entry is. Ridiculous, right? Um, and, you know, another way to look at it is I think we talked about this before. The American dream is changing. Yeah. Okay. It's, you know, three bedroom, two bath, white picket fence with one family. It could be now two families. And it's okay. It's getting your foot in the door. And I feel that a lot of people need to look at this as a business. Because in ten years, you're going to wish you bought a house in the next couple of years because the property values are going to be more expensive, you know? And if you look at it as a business, if you're already renting a house with somebody or renting an apartment with somebody, again, look at it as a business. Hey, let's buy this property. Let's have a goal. Let's live here. People want to say 2 or 3. Let's go with five years, see where we're at in five years. Either we rent it out, take cash out, sell it, split the profit, go buy our own individual house however you want to do it. But you know that in five years, the likelihood of you gaining money, getting the tax benefits from owning a property are going to be far better than you actually renting the home. Yeah. You know, so take a look at that option if it's available. But let's just talk, you know, if it's not available to them right now, you know what they should do. I think you continue to do what you're doing, save up the money, even invest. You don't necessarily need to buy real estate to invest in real estate. Meaning there's REIT's available, um, you know, as an investment that you can potentially participate in the market that way. Um, so there's many ways, but if you're looking to buy in the next, you know, 12 to 24 months, you should also speak to professionals to make sure that you're in that right position. Absolutely. Like, you know, you're getting a lot of call. I know I got some calls this week people wanting to buy. You know, but they had low Fico scores, low 600 Fico scores. It's like, hey, what's going on there? Let's let's work. Let's use these 12 months or 24 months to work on your credit. Yeah. To get you a better fit, to get get you a better Fico score. The higher the Fico score, the lower the rate, the lower the Fico score, the higher the rate. It's quite simple. So if we could prepare today and get a plan together for tomorrow, it's going to be more beneficial for all parties involved. And another thing, when you said you can invest online, there's so many platforms. One that comes to mind is is a company called drive. They buy properties throughout the United States, and you can invest as low as $100 and be part owner of this property. And they'll use them out either as a as a rental month, a month rental, or some of them. Some of them might be short term rentals. So you have those options available to you where you could actually invest in real estate and be part owner of five houses with $500, you know, and let let the games begin. Yeah. Remember, guys, this is not financial advice. We're not being sponsored by them to promote them. It's just an option. Do your own research. Absolutely. Um, we're just kind of bringing you what the current housing market is doing right now, what some of the solutions are happening right now for people to get into homes and and if you don't, that's a perfectly fine tune. But let's plan ahead, because one day you will be getting into a home and you're better off being prepared than not prepared. Whether it's your credit, your income. Let's take a look at it. Um, also, we do have a homebuyer guide available for anybody that wants to look at it. That gives you a little bit of step by step of what happens in the transaction process. You might not be ready to speak to somebody, but you can definitely messages and we'll send that over to you without having, you know, a gazillion calls on the internet. But, um, yeah. No, it's, uh, it's quite crazy what's going on with the market. I mean, it's good for people that own already that have bought already. I mean, it feels good, but at the end of the day, it's monopoly money. You know, if it's your primary residence and you have a ton of equity in the home, I mean, people still need cash. And, you know, you know, if you're looking for a solution, we can definitely help you out with the solution. So just reach out to us. We'll be more than happy to take the time to plan it out for you guys, whether it's 12 months from now or 24 months. Absolutely.