Mo Hadid

California REALTOR®

What is going on with Mortgage Rates?

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Rising mortgage rates are no doubt one of the biggest factors impacting the housing market right now.

But it’s important to remember that the low rates of the last few years were an anomaly.

As inflation rises and mortgage rates climb, many may see their purchasing power shrink and their dream of homeownership fade.

However, it’s important to remember one big piece of economic wisdom: there is no better hedge against inflation than homeownership.

Historically, we have seen homeownership outperform inflation in most decades. So if there’s an asset to invest in, housing is one of the few tangible assets that tends to hold its value.

Have questions about mortgage rates or today’s market? Contact Mo Hadid today.

 

Concerns of a recession are rising. What does that mean for the housing market?

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According to a recent survey, more and more Americans are concerned about a possible recession. Those concerns were validated when the Federal Reserve met and confirmed they were strongly committed to bringing down inflation. And, in order to do so, they’d use their tools and influence to slow down the economy.

All of this brings up many fears and questions around how it might affect our lives, our jobs, and business overall. And one concern many Americans have is: how will this affect the housing market? We know how economic slowdowns have impacted home prices in the past, but how could this next slowdown affect real estate and the cost of financing a home?

According to Mortgage Specialists:

“Throughout history, during a recessionary period, interest rates go up at the beginning of the recession. But in order to come out of a recession, interest rates are lowered to stimulate the economy moving forward.”

Here’s the data to back that up. If you look back at each recession going all the way to the early 1980s, here’s what happened to mortgage rates during those times (see chart below):What Does an Economic Slowdown Mean for the Housing Market? | Keeping Current Matters

As the chart shows, historically, each time the economy slowed down, mortgage rates decreased. Fortune.com helps explain the trend like this:

“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

And while history doesn’t always repeat itself, we can learn from it. While an economic slowdown needs to happen to help taper inflation, it hasn’t always been a bad thing for the housing market. Typically, it has meant that the cost to finance a home has gone down, and that’s a good thing.

Bottom Line
Concerns of a recession are rising. As the economy slows down, history tells us this would likely mean lower mortgage rates for those looking to refinance or buy a home. While no one knows exactly what the future holds, you can make the right decision for you by contacting Mo Hadid with Quest Real Estate to get expert advice on what’s happening in the housing market and what that means for your homeownership goals.

Happy July

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Happy July!

There are so many fun things to do in Sacramento, CA. Keep reading for some fun events happening this July.

 

Independence Day Boat Parade

When: July 2nd

Where: Old Sacramento Waterfront

“The Sacramento Yacht Club is excited to announce the annual Independence Day Boat Parade ready to sail away!

Decorated boats will be leaving The Sacramento Yacht Club in West Sacramento, cruising north up the Sacramento River, and passing through Old Sacramento. The boats will continue up the river, turn around at Virgin Surgeon, and head back to West Sacramento.” For more information click here.

 

Folsom Pro Rodeo

When: 4/2-3

Where: Dan Russell Rodeo Arena

“A family tradition for over 60 years the patriotic event offers family fun with non-stop rodeo action, outstanding nightly fireworks, mutton busting, a high American flag which arrives by skydiver, and much more!” For tickets click here.

 

Independence Day Fireworks Shows

When: July 4th

At Sutter Health Park: the annual Fourth on the Field event is family friendly with food trucks, music, entertainment, and fireworks. The fireworks show is best seen from inside the ballpark but it’s also visible from outside the park along the Sacramento River near Tower Bridge. TICKETS for Fourth on the Field inside Sutter Health Park, home of the Sacramento River Cats > HERE

In Old Sacramento: view much of the Fourth on the Field fireworks show from either the west or east side of the Sacramento River near Tower Bridge.

For more information click here.

 

Sacramento Republic FC vs Oakland Roots SC

When: July 9th

Where: Cal Expo

Sacramento Republic FC faces off against Oakland Roots SC.  Special Salute to service game. For more information click here.

 

Elk Fest

When: July 9th

Where: Morse Community Park

“Elk Fest is a festival that unites members of our community to showcase the wonderful diversity that makes the city of Elk Grove a special place to live. This festival is an opportunity for families, businesses, clubs, community organizations, and neighborhood associations to come together for one special day to celebrate the richness of the Elk Grove community. The event runs from 11:00 am to 2:00 pm.” Click here for more information.

 

CA State Fair & Food Festival

When: July 15-31

Where: Cal Expo

The CA State Fair & Food Festival returns July 15-31, 2022! Join the family fun event with great food, games, and entertainment. For more information click here.

 

Cornhole Championship

When: July 16th

Where: Cal Expo

“Bring your teammate and gear up for the 5th Annual CA State Fair Cornhole Championship at the Miller Lite Racetrack Grandstand! The California Cornhole Association is making their stop at the CA State Fair & Food Festival Saturday, July 16.” Click here for more information. 

 

Family Campout

When: July 22

Where: Fairytale Town, 3901 Land Park Drive
Sacramento, CA 95822

“Spend the night under the stars at Fairytale Town! This exciting overnight adventure includes exclusive play time inside Fairytale Town, a craft activity, a scavenger hunt, fun lawn games, and bedtime stories! Wake up the next morning under Fairytale Town’s canopy of trees to a light continental breakfast.” For more information click here. 

 

Cirque du Soleil – Alegria

When: July 28- 31st

Where: Sutter Health Park, West Sacramento, CA

“Alegría is an all-time Cirque du Soleil classic reimagined for a new generation to fall in love with. At the heart of a kingdom that has lost its king, Alegría witnesses the power struggle at play between the old order and a new movement yearning for hope and renewal. With its unforgettable soundtrack, exciting acrobatics, surreal costumes, vibrant sets and playful humor, Alegría unfolds a touching immersive experience imbued with a joyous magical feeling – a quintessential Cirque du Soleil spectacle.” For tickets click here.

 

Old Sacramento Underground Tour

When: Wednesday-Sunday

Where: Sacramento History Museum

“Come see and learn how Sacramento lifted itself up out of the flood waters during the 1860s and 1870s! Tour guides explain how the streets and buildings were “Jacked Up!” to avoid further flooding as visitors explore two spaces that were created by the city’s successful raising process. This historical tour includes hollow sidewalks, sloped alleyways, and the Underground spaces themselves. Our colorful cast of guides ensures no two tours are ever the same!” Learn more here.

 

Midtown Farmers Market

When: Every Saturday, 9:00 am – 1:00 pm

Where: 20th Street between J & L streets and K Street between 19th and 21st streets

“Owned by the Midtown Association, this free, family-friendly market takes place year-round, every Saturday, on 20th street between J and L streets and on K Street between 19th and 21st streets. The Midtown Farmers Market showcases local agriculture, prepared foods, and artisans and crafters while providing an opportunity for Midtown residents and business owners to discover regionally grown foods.” Learn more here.

*Events are subjected to change*

Home Prices: Will They Fall or Continue on The Same Path?

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Home Price Deceleration Doesn’t Mean Home Price Depreciation | MyKCM

Experts in the real estate industry use a number of terms when they talk about what’s happening with home prices. And some of those words sound a bit similar but mean very different things. To help clarify what’s happening with home prices and where experts say they’re going, here’s a look at a few terms you may hear:

  • Appreciation is when home prices increase.
  • Depreciation is when home prices decrease.
  • Deceleration is when home prices continue to appreciate, but at a slower pace.

Where Home Prices Have Been in Recent Years

For starters, you’ve probably heard home prices have skyrocketed over the past two years, but homes were actually appreciating long before that. You might be surprised to learn that home prices have climbed for 122 consecutive months (see graph below):

Home Price Deceleration Doesn’t Mean Home Price Depreciation | MyKCM

As the graph shows, houses have gained value consistently over the past 10 consecutive years. But since 2020, the increase has been more dramatic as home price growth accelerated.

So why did home prices climb so much? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was high and supply was low.

Where Experts Say Home Prices Are Going

While this is helpful context, if you’re a buyer or seller in today’s market, you probably want to know what’s going to happen with home prices moving forward. Will they continue that same growth path or will home prices fall?

Experts are forecasting ongoing appreciation, just at a decelerated pace. In other words, prices will keep climbing, just not as fast as they have been. The graph below shows home price forecasts from seven industry leaders. None are calling for prices to fall (see graph below):

Home Price Deceleration Doesn’t Mean Home Price Depreciation | MyKCM

Mark Fleming, Chief Economist at First American, identifies a key reason why home prices won’t depreciate or drop:

“In today’s housing market, demand for homes continues to outpace supply, which is keeping the pressure on house prices, so don’t expect house prices to decline.”

And although housing supply is starting to tick up, it’s not enough to make home prices decline because there’s still a gap between the number of homes available for sale and the volume of buyers looking to make a purchase.

Terry Loebs, Founder of the research firm Pulsenomics, notes that most real estate experts and economists anticipate home prices will continue rising. As he puts it:

“With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant.”

Bottom Line

Experts forecast price deceleration, not depreciation. That means home prices will continue to rise, just at a slower pace. Contact Mo Hadid today so you can get the full picture of what’s happening with home prices in Sacramento and to discuss your buying and selling goals.

Is the boom over? Is the market crashing or correcting? 

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Is the Housing Market Correcting? | MyKCM

If you’re following the news, all of the headlines about conditions in the current housing market may leave you with more questions than answers. Is the boom over? Is the market crashing or correcting? Here’s what you need to know.

The housing market is moderating compared to the last two years, but what everyone needs to remember is that the past two years were record-breaking in nearly every way. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand. At the same time, there weren’t enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.

This combination led to record-high demand and record-low supply, and that wasn’t going to be sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. As realtor.com says:

“The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”

Home Showings Then and Now

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below):

Is the Housing Market Correcting? | MyKCM

The 2019 numbers give a good baseline of pre-pandemic demand (shown in gray). As the graph indicates, home showings skyrocketed during the pandemic (shown in blue). And while current buyer demand has begun to moderate slightly based on the latest data (shown in green), showings are still above 2019 levels.

And since 2019 was such a strong year for the housing market, this helps show that the market isn’t crashing – it’s just at a turning point that’s moving back toward more pre-pandemic levels.

Existing Home Sales Then and Now

Headlines are also talking about how existing home sales are declining, but perspective matters. Here’s a look at existing home sales going all the way back to 2019 using data from the National Association of Realtors (NAR) (see graph below):

Is the Housing Market Correcting? | MyKCM

Again, a similar story emerges. The pandemic numbers (shown in blue) beat the more typical year of 2019 home sales (shown in gray). And according to the latest projections for 2022 (shown in green), the market is on pace to close this year with more home sales than 2019 as well.

It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this:

“. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”

Bottom Line

If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Contact us today with any questions about the Sacramento market and what it means for you when you buy or sell this year.

Increasing Demand for Luxury Homes

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Luxury Homes Are in High Demand | MyKCM

As people realize their needs are changing, some are turning to luxury housing to find their dream home. Investopedia helps define what pushes a home into this category. In a recent article, they point out that a luxury home isn’t only defined by its price. Location is also an important factor. It could be a condo at a desirable city address, a spacious home on the water, or one with access to luxury activities like arts and entertainment, high-end shopping and dining, and more. The home itself will also boast some of the finest features available.

According to the Luxury Market Report from the Institute for Luxury Home Marketing, there’s been a substantial increase in how many buyers are purchasing luxury homes over the past two years. It says:

“. . . North America recorded the fastest growth of demand during the first year of the pandemic. Also, demand has . . . consistently increased, and even in April 2022, we saw a higher volume of sales compared to 2021.”

If you own a luxury home, it could be a great time to list your house today while demand is so high. But first, let’s understand where the demand is coming from.

What’s Driving the Heightened Buyer Demand for High-End Homes?

The same report says more people have reached a certain net-worth threshold, and that’s contributing to the increased interest in luxury housing:

“In 2020, we saw a 2.2% growth in the number of individuals with wealth of over $5 million in net value, but in 2021 that number grew by an outstanding 19.8%.

This total increase has resulted in the introduction of over 660,000 new individuals into the high net-worth bracket, which, combined with the existing affluent looking to both diversify and add new properties to their portfolio, provides a true insight into why the demand for luxury properties skyrocketed during 2021 and into 2022.”

So, if you’re looking to make changes to your real estate portfolio or are looking to sell your current house, it may be a great time to list and benefit from the high demand for luxury homes today.

Bottom Line

If you own a luxury home and want to know how strong demand is in the Sacramento area, let’s connect so you can capitalize on current market conditions while buyer demand for upscale homes is so high. Contact Mo Hadid today.

Mo Hadid
Broker & CEO

(916) 804-0039|Contact Mo
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