Friday, January 6, 2023

2023 real estate and market

 It's a little soon to be talking about 2023 without it only being speculative.  As of now we're seeing rates around 6.25% on a 30 year fixed.  We've been told the feds are going to cut back on the rate hikes as we're seeing positive signs in the economy with inflation.  We're not out of the woods yet!  

Home prices in Placer county are down 10-15% from the high in July 2022.  Prices over time will continue an upward trend.  This correction has mostly to do with supply / demand and of course the value of the dollar.  Inflation was caused by the government printing money and wreck less spending.  I don't want to get political here but I prefer our gov. to be conservative when it comes to economic policies.  To be transparent, I'm more liberal on other things.  Really though, I guarantee they don't manage their own finances like they do the tax payers money.   At what point is the deficit going to be unmanageable?  Are we already past the point of no return?  The scary answers to those questions I believe is that the interest payments alone are unsustainable and we'll default.  Next question is when?  I think the answer to that questions is scary too, not too far away... maybe within 5 years.  With the impending default, what will that do to our county?  Not an easy one to answer!  We're in a global economy now and defaulting will cause a ripple effect and likely take down other countries too.

It's only Jan 6th and my phone is already ringing.  I'm going to show a house in 45 minutes to a buyer.  Sellers are calling looking for a game plan.  I was curious before Christmas how this year would start out and it's going better than I expected.  There will be plenty of business out there.  People are always having to move.  Weather its for work, marriage/divorce, kids... there's always activity.  We are expecting more people to hunker down this year.  A lot of people like myself are in a cozy fixed rate mortgage and don't want to mess with anything in the 6's.  We're going to see roughly 30% of real estate agents get out of the business.  There's simply not enough deals to go around.  There's the ol saying too, 20% of the agents do 80% of the work.

For buyers out there, my advise is to run numbers with your lender.  If you don't have a good lender, I can recommend several.  Find your comfort spot on payments and that will dictate your price range.  Review all your options with the lender.  ARM loans, jumbo, bridge...  Over the past 20 years selling real estate here at Re/Max Roseville, I would stay away from ARM loans, but now I think it's a viable option.  Get in with a better rate and look to refi in 5 year.  Do an ARM loan with a seller credit to buy down the rate!  Get it in the 3's maybe.

With regards to selling a property in Placer county right now, we're looking at a downward trend in prices.  If I was a betting man, I would guess this downward trend will change come spring.  It's likely better for a seller to hold off from going on the market right now.  I put more power in the buyers position, but as I mentioned I think that will change.  We're accustom to seeing the market down in the winter and up in spring.  This trend is likely to repeat.

With all this said, I don't have a crystal ball.  We can only use the information we have at hand and guess as to what the future holds.  One thing I've learned is that it's all about perspective.  Eye of the beholder.  

I welcome a strong and productive 2023 selling houses in Roseville and Rocklin.  


Wednesday, November 23, 2022

Investors doing 1031 exchange in 2023

 In 2022 I did an abnormal amount of 1031 exchanges for clients. Finding replacement investment properties that make sense and cash flow with 6% cap is what one should expect. Avoiding capital gains is the main goal of course but you want to park your funds in a property that makes sense.  I’ve been a full time roseville real estate agent since 2004. Over the years I’ve come to know what makes sense when doing a 1031 exchange.  Knowing the time frames, 45 days to identify a property then closing within 180 days is important to keep in mind. 

If you’re needing to do a 1031 exchange, make sure you contact an experienced roseville realtor like myself. 

Feel free to give me a call with any of your real estate questions. 

Re/Max Gold - Chad Phillips 

Thursday, September 29, 2022

Fall 2022 Roseville Real Estate quarterly update

 I reflect on the market over the years and it's always interesting to me.  We try to predict what will come next and we're usually wrong.  I know I'd return my crystal ball if I could.  With that said, I wasn't completely wrong.  We knew we were close to the peak and the Roseville home prices had to subside at some point; however, I thought prices were going to come down more.  Who would have predicted rates going to 7% in 1 year?  

It's been a been an exciting and productive year for me.  I've done more business this year than ever before and still have 3 months left.  The first half of the year I was doing 5-6 sales a month.  Now I'm down to 1 a month.  I'm not the only one to slow down!  Title companies have laid off a lot of people, lenders are cutting back on their processors and underwriters.  Our company function budget has all but dried up.  Everyone is tightening the belt and for good reason.  We're just now starting to see more doom and gloom predictions for 2023.  This last fed rate raise sent shock waves thru the stock market and the real estate market.

It comes down to affordability!  Rates nearing 7% will force prices down.  Inflation is taking a bigger bite out of everyone's paycheck.  Supply and demand is like gravity as both are extremely strong forces.  Demand for housing is still strong, people need a place to live.  Rents are still holding strong so that's helping to keep home values up, but I think affordability is going to push values lower in 2023.  If you have the ability to save up some money, there should be some good deals next year.  I'm already starting to see some short sales.  We haven't seen any short sales or foreclosures in a decade. 

I know of a large local Roseville home builder who had 21 escrows in August and 20 fell out.  That's no bueno!  The main reason why is that buyers aren't able to lock in interest rates when they first sign a purchase contract.  When the house is build and ready to close the deal, the buyer needs to revisit the lender with the current interest rates.  Buyers went from low 4's to high 6.  A large enough swing in the rate to cause them not to qualify for the purchase anymore.  Builders are doing everything in there power to keep prices up in the developments so they resort to offering to buy down the rate, more upgrades and full commissions to agents.  Yes, we're again best of friends with the builders when the market goes down.  Some builders weren't offering a co-op with agents there for a while.

I know of some land development projects in Orangevale, and Sacramento that will be available at discounted prices as land is a long term hold a downturn in the market occurs.  There's hold costs associated with that and usually no returns.  

My land development in Roseville is coming together.  At the corner of Main St. and Porter, I'm mapping that for 10 lots.  I'll have the tentative map and conditions soon.  I'm currently awaiting the city's review of my plan.  This will be a good project for a small home builder in Roseville.

Let's hope the stock market and real estate market doesn't tank like last time.  Certainly different circumstances involved, but that's not to say we couldn't have the same result.  My advise is to be cautious and conservative right now.

If you have a property or project you have questions about, feel free to give me a call.

Re/Max Gold - Chad Phillips

Roseville 2998 Douglas Blvd. Ste 125

Roseville CA. 95661


Friday, September 16, 2022

Roseville real estate agents - Sept. 2022

 We're in full swing with Biden policies and inflation is steady at around 8.2%.  Isn't this awesome?  Don't expect things to change anytime soon.  The idea of printing more money to stop inflation is WRONG.  With that said, the world will not stop spinning.  For us real estate agents in Roseville, we need to stay on top of the market changes.  Looks like interest rates are going to go up another 3/4 point at the next fed meeting.

We're seeing real estate prices in our area (Placer and Sacramento County) come down.  We're roughly down about 5% this year with what I'm seeing.  There's pocket areas like Sun city Roseville that are holding steady, but the new construction is slowing way down.  JMC home has 20 out of 21 escrows fall apart in Aug.  The problem is that buyers cannot lock rates until the homes are ready.  By the time the houses are built, rates went from 3-4% to 5-6%.  The new homes in Roseville and Rocklin are trying to keep the prices up for the neighborhood; however, they're having to offer upgrades and incentives to attract the buyers now.  Some builders we're giving roseville realtors a commission, but now we're their best friend and getting the full 3% commission.

Seems we're going to continue to see prices pull back with interest rates going up.  When is the ideal time for a buyer to jump in and buy real estate?  The monthly payment is balanced out with lower prices and higher rates.  The one advantage to lower prices is lower property taxes.  

When we see home prices come down where you can rent the house out and make the payment is coming.  Currently you still need to put down around 25% and have it pay for itself.  

Looking forward to home prices and what Roseville home prices will do this winter.

Friday, August 19, 2022

Recession and real estate Sacramento / Placer County

 Here' we are in Aug 2022 and the circus goes on.  Congress just passed the clubbing baby seals act.  Well, they didn't actually call it that but its just as fitting as the inflation reduction act.  Neither name has anything to do with what's in it.  Spend more, get more taxes is the anthem.  I'm not trying to get political here but the policies that we're dealing with have a direct impact on the economy and the real estate market.  The costs will out weigh the new taxes that are squeezed out of the middle class.  Inflation will continue to rise with the policies.  

The federal deficit is a run away train.  It's so bad that no one wants to talk about it.  Trump was able to get the deficit to hold steady for a short term when we were firing on all cylinders, but then covid we released on the world and we printed an addtional 4 trillion.  Game over!  I'd like to have a discussion of how this plays out.  Do we default on China and tell them to kick rocks?  How will this cookie crumble?  Right now we're doggie paddling and hoping for the best.  Biden already raised the debt ceiling once and next year will need to do so again.  We're approximately at 125% debt to GDP.  It's a house of cards!  We're not alone though, other countries are in similar positions.

I wonder if the problem is even worth pondering.  Even if there was a way to correct our direction, will we choose the right path.  Seems to me it comes down to the haves and have nots.  Life's not fair, buy a helmet.

Switching to real estate now, I know lenders are struggling.   Refi's are gone, that leaves purchases and the market is slowing.  Inventory is up and prices are reseeding. We have cycles in real estate, it's normal.  We haven't found the new normal since our 2008 implosion.  It's going to take a couple decades to see a new pattern.  It used to be a 7 year cycle.  Now we're looking like 10-12 year.  Maybe now the gov has got so large that there are more variables in the equation.

In todays market, I would be very cautious about buying a million dollar home.  I guess it's all relative but if our market drops 10%, like it probably will then you had better plan on riding this out.  

Our rental market is still strong.  People need places to live.  Cash flowing an income property is key.  I'm currently looking to build 10 rental houses on Main St in Roseville.  The lots are large enough for an ADU too.  I'm going to plumb utilities for the ADU, that will be phase II.  There is no retirement plan at a realtor, need to have passive income.  

What will next year bring?

Thursday, June 16, 2022

2022 recession - real estate market update Roseville Remax

 Seems its been 6 months since I did a market update on my Blog.  To start this year I was super busy and slammed.  I had 13 deals in escrow at one time and that was a little stressful as I do my own files.  I'm still going strong with 5 in escrow now; however, I sense things are going to hit the brakes.  

Interest rates are on the move and not likely to slow down.  Our gov spending over the Covid crisis was inevitable to come back to bite us.  There is absolutely a cost when you print too much money!  My first econ class was all about supply and demand.  Fairly easy concept...  The problem in lies "power".  The Dems and Reps have lost their way on working together.  The result is the American people getting screwed over.  I'm not saying there are simple answers to the problems we face but it truly feels they are making things worse on purpose.  These rate hikes are necessary to gain some control over inflation.  At what rate will things calm down?  7%, 9%.  My folks talk about the time when rates got up to 20% in the early 80's, a bit before my time but that is hard to comprehend with todays prices.  Sure they were 20%, but houses were around $100K.  A million dollar house at 20% rate would be insane.  A viable change they could do is to remove the cap of 10K property tax deduction.  I'm not a wealthy person and pay more than 10K in property taxes every year.  That should be deductible on your federal taxes!

In regards to the real estate market, we've seen 10 years of strong appreciation.  I think we all know this ride would come to an end at some point.  A correction is required and I think we've come to the affordability ceiling.  30 year conv rates are at 5.75 right now.  We're going to 6's soon.  At the end of the day can only pay so much on the mortgage every month.  There's only 2 factors in the house payment, principle and rate.  One has to give and we know rates are going up.  Along with rates going up, the cost of everything else is too.  Energy costs are directly linked to the cost of goods.  With the trajectory we're on I foresee prices coming down around 10% by the end of the year.  It's more of a correction that we've been expecting.  To make a prediction though is laughable right now.  We have way too many variables to consider.  The focus for our economy as a whole should be on oil prices.  We need to get a lock down on oil prices.  We're exporting oil now to make more money.  There is greed in the oil business and Biden is exacerbating the problem with cancelling XL pipeline and disallowing drilling/fracking permits.  Trump called it!  If Biden gets in office gas prices are going to be 6-7-8 bucks a gallon.  Gas prices would have jumped on Trump too, but likely around 4-5 bucks.  His better energy policies would help but gas prices aren't that simple.  Russia is playing a roll, no question.  

Feels like I'm rambling here a bit.  I'll try to stay on topic.  It's tough because the politics are bleeding into everything now a days.

The folks out there that are locked in with a good rate in the 2's and 3's are likely to want to sit tight and not move.  Why would they?  I'm one of them and we're locked in at 1.99%.  It's like free money.  I don't want to give that up and get 6% on another house now.  

In the last 4-6 weeks, we've seen a shift in the market.  In the beginning of this year I sold 11 houses in Roseville, all were cash deal.  I had trouble getting those deal together.  Even though we we writing strong over asking cash offers, we were still getting beat out on homes.  It was insane!  A month ago I put a nice single story on the market in Orangevale and I only got 1 CalHafa offer.  For those who don't know what that is, it's a first time buyer with no money.  They needed 20K seller credit to pay for their closing costs.  I'd say that's a shift in the demand.  I have other clients (sellers) who missed the window by a week or two.  They ended up pulling the house off the market and renting because it's not selling.

The honey holes are drying up.  A lot of people did well in the stock market and were able to pull money for a down payment to buy a house.  With the stock market tumbling and peoples 401K's dwindling I think we're heading for a recession.  I'm sure they will announce in the beginning of July, it's official, we're in a recession.  

My advise is to stack chips folks and rain in on spending.  We might be in for a bumpy ride.  Look to keep your monthly costs were you can manage.  If you over extend yourself right now I think you'll be sorry.

For having the best year in real estate with 6 months left to go, I know this seems gloomy.  I'm certainly not the only one thinking things are going to get worse.  To what extent, we'll soon find out. 

Tuesday, September 21, 2021

Fall 2021 Placer and Sacramento Real Estate Update

 We came into 2021 with all cylinders firing.  We didn't have the typical slow down that we usually have in the winter.  The market has been strong and continues to hold but we've finally seen a dip where the buyers aren't having to get as aggressive on offers in order to procure a property.  I have to tell you it was quite exhausting for buyers and agents alike.  When your buyer is writing around 50K over price, releasing all contingencies and still not getting the property it can be deflating.  You have to consider the appraisal and who wants to buy a house and know you're underwater on day 1.  We seemed to have peaked this summer in July with the aggressive over asking multiple offers.  We still have a shortage of homes and inventory, the demand has cooled down a bit.  

I have been getting a lot of calls from sellers lately and my first question now is if they're moving out of state.  A lot of people are over California!  It has to do with a multitude of things; such as, politics, fires and the ability to work from home now.  People are looking to take their equity and move elsewhere and pay cash for their house.  I can't say I blame them.  That's easy living!

This winter will be a good time for those buyers that weren't able to get a house to get in.  I think we're going to see a "normal" market next year.  When I say normal I mean 2-4% appreciation and a more balanced supply/demand.   New home construction is still going full speed ahead.  Builders are still having supply issues and it's not just lumber.

The one wild card we are facing is inflation.  This isn't just CA of course.  It should be concerning to all on how much money the administration is looking to print.  I don't want to get into politics but economically speaking we're writing checks we can't pay for.  There will be fall out and repercussions for the trillions of dollars printed.  I guess we'll just have to see how the cookie crumbles.

We do have a new curve ball that was added to the mix.  A new bill was passes - SB-9.  Here's a link if you would like to read more:

This bill was passed with the idea that the urban areas need more housing and this will allow certain owners to split their property where zoning wouldn't allow it before.  There are plenty of conditions with this and it's so new that no one is exactly sure how it's going to play out.




Let me know if you have any real estate needs or questions.  I'm happy to help!



Chad Phillips Real Estate Broker Associate  RE/MAX GOLD
916-390-1476 2998 Douglas Blvd #125 Roseville CA.  95661 | |

LIC # 01405825