The Impact of Rising Mortgage Rates on Buyers and Sellers

A homebuyer’s guide to PMI: what it is, who it’s for, and why it matters. If you’re looking to buy a new home or have bought a home in the past, you’ve probably heard of private mortgage insurance. There are many misconceptions about PMI, like how it’s impossible to get rid of or that it’s better to avoid it altogether by saving for a 20% down payment instead. However, is it really better to put off homeownership just to avoid PMI? In my opinion, the answer is no, and if you understand what PMI is, you’ll understand why. That’s why today, I’m explaining what PMI is, how it works, and why you shouldn’t let it stop you from purchasing a home and building equity. Is everyone required to pay PMI? No. PMI is an insurance policy that you pay to protect the lender if you stop making mortgage payments, and it’s required only when you put down less than 20% on your home. If you're putting in more than 20%, then you won’t need PMI. How do you drop PMI? The good news is that PMI can be removed once you’ve built up 20% equity in your home. Even if you didn’t put 20% down, you might already have 20% equity in your house if you’ve owned it for a few years. You can then contact your lender and ask them to remove PMI, but they may need an appraisal to confirm it. "It’s quicker and easier to manage PMI than to wait until you’ve saved up a full 20% down payment for your home." On the other hand, if you don’t want to wait for your home’s value to increase, you can make a lump sum payment to reduce your loan balance. This will boost your equity and allow you to ask your lender to remove PMI right away. Dropping PMI can save you $200 to $400 a month. That’s money you could use for other things or put toward paying off your mortgage faster. However, is this cost work putting off your home purchase? In my opinion, the answer is no. The reality is it’s often quicker and easier to manage PMI than to wait until you’ve saved up a full 20%. Home values rise over time, so if you wait, you might miss out on equity. Often, the equity you’ll gain will more than make up for your PMI payments. I hope this information was helpful. But if you still have more questions, or better yet, ready to take the next step in buying your home, give us a call at 916-862-5463 . We're here to help guide you through the process.

Real estate showed resilience in 2024—what's next with rates and inventory? 2024 has been a year full of unexpected events. From political turmoil and global economic shifts to crypto fluctuations and escalating international conflicts, it has certainly been a turbulent time. However, despite all the chaos, one sector has remained surprisingly resilient—the real estate market. Let's look back at what happened in real estate in 2024 and what is expected for 2025. What happened in 2024? 1. Market resilience amid chaos. The year was marked by global uncertainty, from geopolitical conflicts to economic fluctuations. Despite these challenges, the real estate market remained steady. Home values increased by approximately 3% to 4%, providing stability for homeowners and investors. 2. Low inventory and low sales. High interest rates played a significant role in shaping the market. These rates made it difficult for buyers to afford homes and discouraged sellers with low-rate mortgages from listing their properties. As a result, inventory remained tight. 3. Sales trends • We are likely to see home sales staying below 4 million, similar to 2023. Meanwhile, Sacramento saw a significant improvement, with sales increasing by 10–15% compared to the previous year. • Many buyers who had been waiting on the sidelines due to high rates decided they could no longer delay their purchases, contributing to slightly improved sales figures. 4. Inventory is creeping up. Inventory levels are beginning to creep up, leading to homes staying on the market longer and more frequent price reductions. Despite these changes, inventory levels in several areas remained below pre-pandemic norms. "Waiting will hinder your net worth and economic security." What to expect in 2025 1. Sluggish 2025. Looking ahead to 2025, the market is expected to remain relatively sluggish, particularly during the first half of the year. With a new administration implementing pro-growth policies, there are hopes for economic stimulation and increased investment, which could boost consumer confidence. What this means: This shift could encourage buyers to make significant financial decisions, such as purchasing a home, once they feel more secure in the economy. However, the outcome of these policies remains uncertain, and the impact on the housing market will depend heavily on how these economic changes unfold. Interest rates will still be high. Interest rates are projected to remain stubbornly high, likely hovering around 6 to 7% throughout 2025. While the Federal Reserve is unlikely to aggressively lower rates, any slight dip in interest rates could create a surge in buyer demand. Should this happen, we could see a 10% increase in home sales compared to 2024. Home prices are expected to appreciate at a more typical rate of 2 to 4%, consistent with historical trends. Economic chaos. Global economic uncertainty is expected to continue. Despite this, there is hope for a positive employment outlook, with jobless claims likely to remain steady. The U.S. economy may also see an influx of investments, leading to job creation and further economic growth. These developments, however, remain speculative, and the future remains unpredictable. The great news The real estate market should remain relatively stable in 2025, with minimal changes in interest rates. Although the global economic situation may present challenges, the housing market is expected to continue its steady course, with home values gradually appreciating over time. If you've been putting off buying a home, you're limiting your financial growth. Waiting will hinder your net worth and economic security. Compound interest is an incredible tool, but its key is time. By waiting for rates to drop, you're costing yourself a lot of money. The message is clear : if you don’t own a home, buying one will set you on the road to financial security and the middle class. If you need proper guidance, contact me at 916-862-5463 or email me at Steve@HomesByElevate.com . Let's work together for a successful 2025!

Learn about lender-required vs. cosmetic repairs and how to negotiate them. As the year comes to a close, a common question among buyers and sellers is: What repairs is the seller required to make, and how does the repair negotiation process work? Here's what you need to know. First, sellers are not obligated to make any repairs . Repairs are part of the negotiation process and can be categorized into two types: lender-required repairs and cosmetic or deferred maintenance. Lender-required repairs are necessary for buyers seeking financing, and the seller must complete them for the deal to close. Cosmetic repairs, such as dry rot discovered during the inspection, are negotiable and typically involve minor issues that arise once the buyer is under contract. When entering negotiations, buyers should only request repairs that were unknown before the offer was made. Buyers should not assume they can ask for repairs on issues that were visible before the offer was submitted. Doing so can complicate negotiations. Additionally, your deposit is protected by an inspection contingency, which provides a set period—typically 12 to 14 days—to request repairs based on the inspection results. "As a seller, my advice is to handle necessary repairs before listing the home." Once repairs are agreed upon and the contingency is removed, the deposit is no longer protected. This makes repair negotiations a critical point in any real estate transaction. The primary reason deals fall out of escrow is when the buyer requests legitimate repairs, and the seller refuses to make them, or when the seller demands more money than the buyer is willing to pay for those repairs. As a seller, my advice is to handle necessary repairs before listing the home. This generally leads to fewer repair requests and a smoother transaction. For buyers, it’s essential not to overreach and request repairs that do not significantly affect the home’s value or livability. In the long run, many minor issues will not matter once you've moved in. Key takeaways: 1. Only request repairs that are required by the lender or are urgent, legitimate issues. 2. Home prices often reflect deferred maintenance, and repairs should align with that. 3. Approach negotiations with grace, understanding the other side’s perspective to reach a win-win outcome. Repair negotiations are often the reason deals fall apart. By understanding which repairs are necessary, addressing them early, and approaching negotiations thoughtfully, both buyers and sellers can ensure a smoother process. If you need guidance, don’t hesitate to call me at  (916) 862-5463  or email me at  steve@homesbyelevate.com  . Let’s make sure your deals don’t fall apart!

Despite 6%- 8% interest rates, home values are projected to appreciate by 3%- 5%, offering stability in a tight Sacramento market. After a long, tumultuous election cycle, the dust is finally settling. It’s been a wild two years, and while politics often steals the spotlight, the real estate market has its own story. With Thanksgiving and the holiday season upon us, I’m taking a moment to reflect. At Elevate Realty Group, we are truly grateful. The past two years have marked the lowest home sales in the Sacramento region’s history, yet our team has thrived. And it’s all thanks to you—our clients and supporters. Your trust and loyalty drive our success, and I am incredibly thankful. Now, if you plan to buy or sell a home, here’s what I see for 2025 and what it means for you: High interest rates are likely here to stay, ranging between 6% and 8%. I get it—that’s not the news anyone wants to hear. But understanding why can help you plan better. The government’s significant spending in recent years has created lasting effects, including the need for higher interest rates to manage inflation. The Federal Reserve is focused on stabilizing the economy, and part of that battle means accepting higher rates and potentially rising unemployment. Low sales, but not without hope. I wish I could say we’re about to see a booming market, but that’s not true. I predict only a modest 10% increase in home sales compared to 2024. It’s a step forward but not enough to change the overall dynamic. Many homeowners with existing low mortgage rates are choosing to stay put, which means tight inventory. But here’s the silver lining: home values are still set to rise. "I recommend looking for similar homes within your zip code." Real estate appreciation holds steady. For homeowners, there’s good news. While we won’t see sky-high price jumps, a constant 3% to 5% appreciation aligns with historical norms. This means your investment will continue to hold its value and grow. In times like these, stability is reassuring. It might be time to reconsider if you’ve been waiting to buy. Those who sat out waiting for interest rates to dip have often been proven wrong. The market may not be perfect, but staying on the sidelines could mean missing out on equity gains and other opportunities. Don’t let hesitation cost you in the long run. As this year winds down, I encourage you to focus on what matters most—family, connection, and looking ahead. The real estate market, like life, has its ups and downs. The secret? Staying informed and ready to make your move when the time is right. The 2025 market may not be a perfect picture, but it will be more than manageable with the proper guidance. At Elevate Realty Group, we’re here to help you navigate whatever comes next. Whether you’re buying, selling, or just exploring your options, contact me at (916) 862-5463 or steve@homesbyelevate.com . Let’s make a plan for a year of resilience and growth together.

How condition, location, and local supply ultimately affect your price. As we officially enter the fourth quarter of the year, it's a great time to reflect on some of the key topics we've discussed throughout the year, particularly when it comes to real estate. Whether you're thinking about selling your home in the near future, pricing your home correctly is crucial for a successful sale. Here are three key things you can use to find the best price for your home: 1. Condition. This might be the single-most important factor when selling your home since it’s one you can actually control. Homes in better condition not only sell for more money, but they also sell faster and with better terms. How far you go to improve your home’s condition before selling is up to you, but a few simple things you can do include doing a fresh paint job, matching your house’s flooring, fixing cosmetic problems, etc. If you need a more detailed guide on how you should upgrade your home, just reach out to me; I’d love to go over your situation with you. "I recommend looking for similar homes within your zip code." 2. Location. While you can’t change your home’s location, it’s critical when you’re deciding what your list price should be. Real estate is hyper-local, so you can’t take for granted that houses in one neighborhood are just as desirable as ones a few streets over. If your home happens to be in a less desirable part of the neighborhood, you can offset that disadvantage by focusing on improving your home’s condition. Buyers may be willing to overlook the less-than-ideal location if your home is in better condition compared to others in the area. 3. Supply. A lot of sellers ignore this factor when pricing their homes, but you shouldn’t. Don’t just consider your local neighborhood; even supply in your wider area can have an impact on your price. Do some research and look for houses similar to yours in your zip code. This way, you can get a better idea of what the competition is pricing at and go from there. After all, if you price way above what a similar home is listed for nearby, your home might not get many showings. If you're thinking about selling your home or have any questions, feel free to reach out to us at our website or give us a call at 916-436-SELL. We're here to help you navigate the real estate market and make the best decisions for your situation.

Discover why remorse, surprise repair issues, or appraisal hiccups leave buyers with no choice but to cancel escrow. Why do buyers cancel escrow, and what can you do to stop it? Continuing our educational series, we’re tackling one of the most frustrating issues in real estate, and understanding why buyers back out after accepting an offer can save you time, money, and a lot of headaches. Here are the top three reasons deals fall apart and, more importantly, how you can prevent these deal-breaking problems from derailing your sale: 1. Buyer’s remorse. In today’s 2024 market, approximately 30% of all properties in escrow end up back on the market. The No. 1 reason? Buyer’s remorse. With interest rates high and homes more expensive than ever, buyers often feel pressure to make quick decisions. Unfortunately, around 50% of cancellations happen within the first few days after an offer is accepted. This can be difficult to prevent, but experienced agents often sense when a buyer hesitates. By asking the right questions and getting a feel for the buyer’s motivation and agent, you can minimize the risk of a deal falling through due to buyer’s remorse. "Buyer’s remorse, repair issues, and appraisal discrepancies are the top reasons deals fall through in 2024." 2. Repair issues. The second most common reason for escrow cancellations is repair issues. After a buyer’s offer is accepted, they typically conduct inspections. If unexpected repair needs arise during these inspections, it can make buyers second-guess whether they still want the property. This creates a “second negotiation,” as buyers often request repairs or concessions, leading to heightened tensions. To prevent this, I recommend completing pre-inspections and handling necessary repairs before listing the home. At Elevate Realty Group, we follow this process 99% of the time, drastically reducing the risk of cancellations. When buyers find nothing unexpected in their inspections, the transaction moves forward smoothly. 3. Appraisal discrepancies. The third issue that often causes deals to fall apart is appraisal discrepancies. Imagine this: the buyer offers $500,000 for your home, but the appraisal comes back at $450,000. Now you’ve got a problem. Appraisal issues create another round of negotiations, and if the buyer and seller can’t agree, the deal may collapse. The best way to mitigate this is by working with an experienced agent who can price homes within market value. Pricing your home accurately helps prevent surprises during the appraisal process and keeps the deal on track.  These potential issues—buyer’s remorse, repairs, and appraisal problems—can often be avoided with careful planning and the right real estate agent. When sellers take the proper steps upfront, they significantly increase the chances of a successful sale. If you have any questions or need help with your real estate needs, please contact us at (916) 862-5463. Most of the horror stories in real estate stem from not having a clear plan or an experienced agent who knows how to manage these challenges.

What you need to know about the latest interest rate trends. The real estate market has shown more positive signs in the past 18 months than we've seen in a long time. It's been a long and challenging journey, but we've finally witnessed one of the largest decreases in 30-year fixed rates over a year. This shift in the market has the potential to open doors for many who felt homeownership was out of reach. I’ll discuss this decrease and why it's a game-changer. Significant decline in 30-year fixed rates. We've hit a new low for 30-year fixed rates in the past year and a half. Today’s rates are comparable to those in early 2022, hovering around 6% to 6.5%. That’s a big deal when considering California housing prices. So, what’s driving this reduction? Even though the Federal Reserve (the Fed) hasn't recently met or reduced interest rates, we're seeing these changes. Understanding rate predictions. You might remember from our educational videos two years ago when the Fed began increasing interest rates. Forecasts of the 10-year Treasury largely influence thirty-year fixed mortgages. The market is signaling that it expects interest rates to decline. "Bad news for the economy often means good news for interest rates—now might be the right time to buy or refinance." Stock Market Influence. This anticipation is linked to the stock market’s recent downturn. As the stock market unwinds, there’s a growing expectation that the Fed will soften its interest rate policy as we move further into the year. This puts downward pressure on interest rates and the 10-year Treasury, making borrowing more affordable. Economic factors and rate volatility. But it’s not all sunshine and rainbows. It’s ironic, but bad news for the economy can be good news for interest rates. If you’re a buyer in today’s market or bought in the last year with a 7% to 8% mortgage, it might be time to consider refinancing or buying. I predict that interest rates will fluctuate as the economy navigates these uncertain times. Looking ahead: what should you do? The stock market is a predictor, forecasting where the economy is headed in the next quarter or year. Similarly, as interest rates fall, it’s a signal that people expect rates to continue dropping. I would anticipate a volatile rate market, so keep an eye on it if you're considering refinancing or buying a home. If you’ve been holding off on buying a home because of high interest rates, now might be the time to start looking. Rates in the 6% range could be an excellent opportunity to lock in a mortgage. I expect rates to trend downward for the rest of the year, but volatility will remain. Avoid making rash decisions based on news headlines or market fluctuations, especially regarding stock trades or liquidating 401(k)s. We’re trying to determine the current economy—whether job numbers indicate a recession or an economic slowdown. This uncertainty is driving interest rate momentum and volatility. If you’re considering selling, reach out to us. It’s been a great year for home sales; prices are still high, and homes are selling fast. If you want to buy a house, please visit us at www.homesbyelevate.com . We’re here to help or at least educate you on the process.

Learn about the latest news on interest rates in today’s market. We’ve been in a challenging interest rate environment for almost two years now, but that might be about to change. If you’re planning to buy a home, refinance, or if you bought a home in the last year and a half and your payments are higher than you’d like, then here’s some good news for you. We can finally say without a doubt that interest rates have peaked. We’re certainly well off the high of about 8.5%. We’ve been starting to hear and see that the core inflation numbers year-over-year have started to moderate, and they’re within the range where the Feds want them to be. While not everything is perfect, as many goods continue to be very costly, inflation is well under control and not rising. In the last two years, the Consumer Price Index data showed that when you consider food, groceries, gas, motor vehicles, auto insurance, and other items, prices have increased by nearly 28% across the board, which is ridiculous. However, the most recent CPI numbers range between 2.5% and 3%. This means that the statistics for July are only 2.5% to 3% higher than they were in July of last year. The Fed wants to see this trend continue month-over-month to confirm that inflation is truly evening out and not increasing. "I believe we’ll see rates drop below 7% within the next six to 12 months." Because of this, people are anticipating some changes in interest rates. We might see some quarter- to half-point decreases in the federal funds rate as early as next month, and by September, we’ll likely start to see interest rates adjust and come down. It’s important to remember that this is not a prediction, and do not rely only on it to make any sudden decisions. However, if you’ve been priced out of the market due to high interest rates or are waiting to refinance, I believe we’ll see rates drop below 7% within the next six to 12 months. Currently, rates are between 7% and 7.5%, but I wouldn’t be surprised to see them at 6% to 6.5% by the end of the year. This could create opportunities for many to enter the market or refinance. If you’re considering buying or selling, reach out to us at www.homesbyelevate.com or call us at (916) 436-5050.

Learn more about today’s inventory and its impact on buyers and sellers. It’s summer, and we are halfway through the year. Even though I am on vacation in the mountains of Truckee, I couldn’t wait to share some important updates with you. There's big news in the national and Sacramento real estate markets that you need to know about inventory. Nationally, we’ve seen a significant increase in the housing inventory. It surpassed four months of supply for the first time in over three years. This is big news because low housing inventory has been a major factor that drives competitiveness in the market, like what we have been experiencing lately. There are several factors that influenced the rise in inventory. Initially, the COVID-19 pandemic led many homeowners to hold onto their homes. But as the pandemic started to ease, buyer demand surged—during this time, homes sold quickly. But then, the rising interest rates discouraged homeowners from selling and moving, which affected the number of inventory in the market. "With more homes available, there’s less competition and better opportunities to negotiate." Now, we are seeing a 30% to 35% increase in inventory nationally. This resulted in slower home sales, potentially affecting home prices. We’ve also seen a 20% increase in price reductions locally, and while it’s not unusual during the summer months, it’s still good to be aware of it. For buyers, this increase in inventory is good news. With more homes available, there’s less competition and better opportunities to negotiate. As interest rates moderate, buying a home is easier. Locally, we haven’t yet reached three months of supply, meaning, we are still in a seller’s market. But the trend toward increased inventory favors buyers. If you're thinking about buying or selling a home, don't hesitate to contact us at 916-436-SELL. We're also offering free, no-obligation renovation consultations, even if you're not planning to move for a while. We're committed to providing value and helping you make the best decision for your real estate goals.