November 2023 Real Estate News

{original post 11/17/2023}

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 the 2024 housing forecast, offer advice on next steps as a first time homebuyer, highlight the awesome new ADU financing laws, and blow your mind with assumable loans (you read it here first).

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!

2024 California Housing Market Forecast 
The California Association of Realtors forecasts the California housing market will rebound in 2024 as mortgage rates are expected to decline next year. 

-Existing, single-family home sales are forecast to total 327,100 units in 2024, an increase of 22.9% from 2023’s projected pace of 266,200.
-California’s median home price is forecast to climb 6.2% to $860,300 in 2024, following a projected 1.5% decrease to $810,000 in 2023 from 2022’s $822,300. 
-Housing affordability* is expected to remain flat at 17% next year from a projected 17% in 2023.



“2024 will be a better year for the California housing market for both buyers and sellers as mortgage interest rates are expected to decline next year,” said C.A.R. President Jennifer Branchini. With mortgage rates trending down, we will see a rise in first time homebuyers who were pushed out of the market this year. 

First Time Homebuyer – What Do I Do First? 
Starting out in California as a first time home buyer can be daunting. Between rent, bills, medical and auto insurance, student loans, and car payments, how can one save up enough to buy a house? We know how it goes. It is expensive. Most people don’t have the ability to get a 20% down payment, and the good news is that you actually don’t need a 20% down payment in order to buy a home. There are loan programs with as low as 3.5% down through government backed FHA loans. There are even CalHFA and GSFA loans that will cover the 3.5% down for you if you are a first time buyer and meet their qualifications. We recently had a transaction where a buyer used the CalHFA loan and had the seller pay a 2% closing cost credit, so they only came $9,000 out of pocket to cover their earnest money deposit. Can you imagine getting into a home with only $9,000 out of pocket? Well, it can be done! But how?

The first step towards home ownership is getting your financial house in order. This includes cutting costs, getting out of debt, increasing income with side hustles or a second job, and being willing to sacrifice now so you can enjoy later. If you are looking at buying your first home, the first step is to get together to discuss the home buying process. Creating a game plan will help make a huge difference and establish a path to success.

News for ADUs!
We are some of the biggest fans of ADUs. We are always looking at property with secondary units or the potential to add an ADU for extra income. The US Department of Housing and Development  through FHA just changed some of their rules on how they underwrite loans for properties with ADUs. Here are the three major takeaways:

-They will actually acknowledge income from ADUs and use up to 75% of it to help you qualify for the home! 
-Use 50% of the estimated rental income from the conversion of an existing space like a garage, storage room, or basement to an ADU to help certain borrowers qualify!
-Add ADUs to the types of improvements that can be financed under FHA’s mortgages for new construction!

Essentially, these three changes will help advance the adoption of ADUs nationwide. As we have seen in California, the creation of ADUs has been a low cost, efficient way to add more units to the housing supply. Now the Federal government is taking it to the rest of the US. These changes are significant because if there are more financing options available to help people buy homes with ADUs and build ADUs, then more people will have access to them. This will help relieve some of the housing pressure we see, and create more affordable housing.

Assumable Loans
Imagine if you could buy a house and get a 2.85% interest rate right now. Well… you can! Did you know that all government backed loans are assumable? Government backed loans include FHA, VA, and USDA loans. This means that you can take over a borrower’s interest rate, repayment structure, current principal balance, and other loan terms. Just imagine purchasing a property with a super low interest rate that is already several years into the amortization schedule. You would be able to pay down the loan so much faster as each payment would be having a much larger percentage go toward principal than interest. This would be significant savings! 



For example, take a look at the difference between the payment on a $530,000 house at a 3.25% and 7.95% interest rate - it’s close to $1,300 more at today’s rates than what we experienced at the start of 2022. 

Assumable loans are going to be a golden goose to those who can buy a house with them. Currently, only 18-20% of loans out there are government backed and the rest are conventional/private. With prices remaining high, sellers may consider letting a buyer take over their lower interest rate loan as a way to help make the home more affordable. This could be a true win-win as the seller could get a premium price for their property and the buyer could have a much more affordable monthly payment.

This all sounds wonderful, yet how does it actually work? First of all, the borrower must be approved by the bank to be added onto the loan. That means the buyer still has to qualify and go through the underwriting process. This process will take longer than a traditional 30 day escrow. We may be looking at an escrow timeline of 45-90 days, so all parties would have to be agreeable to that as well.

Assuming loans will become more popular as rates continue to float around 7%. This type of purchase is still such a new concept to most people that it will take some education and time for it to be further adopted. If you’re interested in learning more about this creative option for purchasing, please reach out to us. We are ready to help you!

Food Drive Success!



What a successful event! We are so grateful to everyone who participated in our annual food drive this past week. Over 50 bags were overflowing with healthy and nutritious food items for our local community. The New Life Food Pantry serves about 60-90 people during their business hours, and it’s amazing to see how much of an impact our neighbors made this season! Thank you!  

Coming Soon
3 bed/2 bath home in Santa Maria - $495,000

Current Active Listings 
1680 Main St #32, Morro Bay - $170,000
13190 Cambria Rd, Santa Margarita - $190,000
3591 Sacramento Dr #56, San Luis Obispo - $729,000

Current Pending Listings
1076 Santa Maria Ave, Los Osos 

Just Sold
145 South St #A-59, San Luis Obispo - $200,000
2080 & 2098 Rachel St, San Luis Obispo - $964,900

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!