December 2023 Real Estate News

{original post 12/15/2023}

Hello! Thanks for tuning in to this month’s newsletter. It’s our goal to bring valuable real estate content and local updates to you, so we hope you enjoy it! ☺️🏡💛

In this e-newsletter, we will share a review of the California 2023 housing market, explore projections for next year, and offer 5 tips to help you buy your next home.

The Schwaegerle Team strives to educate and empower all people on the ins and outs of real estate, so thank you for tuning in and following the team on social media!

2023 California Housing Summary

Looking back on 2023, we can see that the interest rate spikes took a hit on the market, but not in a way everyone expected. We did see prices slow down and dip through the beginning of the year, but the market regained its previous position in the spring and summer, and we ended the year at a 4.8% price gain. This can be explained by the “lock-in” effect. About 90% of homeowners have rates below the current market average, so they feel locked in to their current home. As you can see in the chart below, the unit count for SLO County just plummeted once the rates spiked. There was no incentive to sell if a seller had to buy a new home at an interest rate 2-3 times higher than their current rate. Each point on the chart below shows the trailing 12-month average for total number of home sales. A lot fewer people bought and sold this year, which means they are waiting on the sidelines until homes become more affordable.



2024’s Biggest Challenge: Housing Affordability
Housing affordability is still the major factor affecting the housing market. The California Association of Realtors (CAR) forecasts the California housing market will rebound in 2024 as mortgage rates are expected to moderately decline next year. We have already seen this taking place since some rates are coming in closer to 6% instead of 7%. A CAR snapshot released at the end of Q3 this year shows that at current rates and prices, only 15% of Californian households can afford the median priced home. This is such heartbreaking news. 



How can we fix the affordability issue? Too many people are being driven out of their hometowns and forced to relocate out of California due to the lack of affordability, so what can we do?
 Here are four ideas: Build more houses. Classic supply and demand. If there is an oversupply of bananas, the price of bananas will go down. It’s the same for homes.Lower interest rates. We’ve seen how this works, and it may loosen up some of the “rate-locked” homes. Sellers don’t want to move because they don’t want to lose their low rate, so they feel locked into their current home. Lowering interest rates will incentivize sellers to sell, which will open up more inventory.Lower taxes. California’s cost of living is 1.33x higher  than the US average. By lowering taxes, people will have more discretionary income to spend on their housing. House hacking. Buying a multiunit property and renting out the other units to help reduce your out-of-pocket expenses each month is a great strategy. Even room sharing is becoming increasingly popular. Websites like spareroom.com and sharinghousing.com are starting to take off. We are huge believers in house hacking, and actually have some exciting news coming your way soon that will help you take advantage of this strategy!!Obviously, we cannot predict what the Federal Reserve will do or where rates will end up. However, we do have access to this magical dot plot which shows where the Federal Reserve’s Board of Governors and Presidents believe the federal funds rate should be in the future. As you can see below, it does look like the Federal Funds rate will be staying higher for longer, but may be back down to the 3-4% range by 2025.




5 Tips to Help You Buy Your Next Home:

Stash cash. Save as much money as you can right now through reducing your expenses, getting out of debt, and earning more income.Consider buying in more affordable markets. Look at expanding your search criteria to include locations that have homes below your pre-approved price range. House hack! We are the biggest fans of the house hacking strategy. We’ve been house hacking in total for a few years and can firsthand express how this method can help cover some of your mortgage costs.Consider new construction. Sometimes it is easier to buy new construction because builders have inventory they need to turn and they are willing to offer incentives to get you in the door. Plus, who doesn’t want a brand new home in SLO County?!Consider alternative financing options. Maybe you find a property where the owner will carry the note for you at creative terms to help you get into the property. Maybe you buy a property subject to the existing mortgage, or assume the current mortgage. Get creative!

FREE First Time Homebuyer Seminar Recap

Watch our First Time Homebuyer Workshop Here!

Everyone knows someone who wants to buy a home. Sometimes it can feel impossible with today’s rates and prices, but people are still buying and selling every day… how? They have a game plan.At The Schwaegerle Team, our mission is to connect with individuals to achieve their real estate dreams, experience financial freedom, and love where they live. That’s why we put on a FREE First Time Buyer Seminar at our office in SLO this month. You can watch the recap by clicking the link.   Curious to know how to buy a home on the Central Coast? Here's how!Here’s what we covered:First time buyer loan programsDown payment assistance grantsHow much money do you actually need to buy a house?Earnest money deposit and contingenciesRepair request negotiations and how that can save you moneyHow to use the house hacking strategy to make your house pay you to live there!Who do you know that could benefit from this content? Will you share this with them and let them know they are welcome to come to the next workshop we put on at our office? We believe in educating and empowering all people about real estate, so please feel free to reach out at any time with questions!

Coming Soon
4 bed/3.5 bath home in Santa Maria - $699,000
3 bed/2 bath manufactured home in SLO - $290,000

Current Active Listings 
1680 Main St #32, Morro Bay - $170,000
13190 Cambria Rd, Santa Margarita - $190,000
3355 Greenacre Dr. Santa Maria - $495,000
1638 7th St, Los Osos - $749,000
5255 Escarpa Ave, Atascadero - $1,499,000

Current Pending Listings
3591 Sacramento Dr #56, San Luis Obispo - Listed for $729,000

Just Sold
1076 Santa Maria Ave, Los Osos - $969,990

Let's Be Social
Thanks so much for reading our newsletter this month! We want to hear from you! Please let us know how we can support you on your real estate journey. Whether you just purchased a new home, want to explore home-buying options, are curious about what your property might be worth, or just want to know more about the market, please reach out! 

@theschwaegerleteam
@closeinslo
@your.realtor.slo
@kylereis70

You can also follow us on YouTube and Facebook for more updates throughout the month.
 
The Schwaegerle Team donates 2.5% of all transactions to Dream Makers. Thank you for helping make dreams come true for terminally-ill adults in SLO County!