Even when inflation is high like today, Americans recognize owning a home is a powerful financial decision. Because inflation has reached its highest level in 40 years, it is more important than ever to understand the benefits of home ownership. Rising inflation means prices are increasing across every commodity, and that includes goods, services, housing costs, and more. When you buy a home, you lock in your biggest budgetary item each month.
For 9 years in a row Americans have chosen real estate as the best long-term investment. The following graph depicts the results of the latest poll conducted:
When inflation has risen in the past, home prices have risen as well. A house is an asset that typically increases in value over time even during inflation. According to Mark Cussen, Financial Writer for Investopedia:
“There are many advantages to investing in real estate…It often acts as a good inflation hedge since there will always be a demand for homes regardless of the economic climate and because as inflation rises, so do property values…”
Whether you are a first-time homebuyer or an investor looking to increase your family’s wealth or retirement fund, look no further than property.
If you like the idea of investing in real estate but dread the headaches inherent in becoming a property owner, consider becoming a private real estate investor with Sun Pacific Mortgage. Check out our website: www.sunpacificmortgage.com or call us at 707-523-2099. We are a family owned and operated company which has been in business for almost 34 years. We provide well-vetted opportunities, and you provide the funds to allow qualified borrowers to purchase or refinance their homes anywhere in California.
With interest rates rising and inventory falling, it is no surprise that we found this May very different from last May. Here’s a snapshot of what happened in three of the North Bay counties last month in single-family residence sales:
492 Sold (22% fewer than 2021)
416 New Listings (40% fewer than 2021)
396 Closed Escrow (30% fewer than 2021)
504 Homes left at end of May
185 New Listings (37% fewer than 2021)
230 Closed Escrow
174 Homes left at end of May (16% fewer than 2021)
87 New Listings
117 Closed Escrow
195 Homes left at end of May (17% fewer than 2021)
Marin County remained the hottest of all 7 North Bay counties. The experts expect more inventory to appear from now until the end of August, which might improve the picture to a degree in spite of expected increases in interest rates.
If you are looking to purchase or refinance in these tight markets and have been turned down for a mortgage at a bank or lending institution, give Sun Pacific Mortgage a call at 707-523-2099 or visit our website at www.sunpacificmortgage.com. We offer privately funded loans based on equity, not credit scores. As an added bonus, we are FAST! Most loans fund in less than a month. Buying and refinancing can be a torturous process, or it can be smooth sailing with Sun.
Over the last thirteen years real estate has been in a Bull market, which changed the way that we look at the 7-year cycle that previously rang true. This heating and cooling of the market, low interest rates, and removal of subprime loans has created something better and different than before.
Some of the gains have been:
Larger equity increases across the entire state
Record low default and foreclosure rates
High demand / Low Inventory
An increase in well qualified borrowers
As we addressed in the first State of the Market, (which you can read here: pt. 1), top economic experts do not foresee a bubble situation. The market gains do not support it.
Now in June, Private Money Lending has remained unchanged. In fact, you could say that the miserabilism and rising rates have increased the benefits of our loan programs. Hard Money rates are constant and now overlap with conventional lenders who are tightening their lending requirements.
This has created a prime opportunity for Direct Private Lending and brought in a higher frequency of qualified Borrowers. So here is a recap of our last month:
In May, our investors helped fund over $18 million in loans at an average interest rate of 9.5%.
This is up from April’s $17 million at an average of 10.2%*.
*Note that lower rates are granted to Strong Borrowers with Low LTV.
While talk of inflation, recession, and panicked markets continue to consume the energy of the media – remember that real estate continues to be strong. The last two weeks in our local market had some of the highest amount of new listings coming on the market in a very long time. Buyers are flocking at open houses. One we went to last weekend had over 30 buyers touring the house at the same time.
The market may be changing and look different, but there is a reason why mortgages are used to hedge problems in the economy. It’s because of the strength in real estate.
One of the hottest topics in the world of real estate today is the shortage of available homes. There are just too many Buyers and not enough Sellers. This means good news for Sellers, not so much for Buyers. But as life begins to return to normal, that may begin to change.
If we look for the root cause(s) of this shortage, we find the factors that contributed to this problem and what the future might hold as a remedy.
Where did the shortage come from? Don’t blame the rush of Buyers wanting more “home office friendly” dwellings. This low supply was a product of the lack of new homes built over the past decades.
Historically, builders completed an average of 1.5 million new housing units per year. However, the building gap in the U.S. totaled more than 5.5 million in the last 20 years. To correct this shortfall, new construction would need to accelerate to more than 2 million housing units per year, according to The National Association of Realtors.
When we look at existing homes, the latest reports indicate a positive housing supply growing gradually month-over-month showing that things are beginning to shift. Some experts are optimistic enough to say that we may have turned the corner.
Here in California, it is still a great time to sell. Growing companies, families wanting more house and space for joint work-live situations, Californians who moved away starting to move back, these are all reasons real estate remains strong and more homes are being built!
If you are hesitant to put your home on the market because you fear you will not find a replacement, consider a Bridge Loan from Sun Pacific Mortgage. Accessing your present home’s equity, you would be poised to present a very strong offer on your new property. This very popular private money loan would allow you a quick close with a cash offer, something every Seller is looking for at this time.
Give us a call at 707-523-2099 or email us through our website at www.sunpacificmortgage.com to see what we can do for you to ease the tension of selling and buying in these competitive times.
For a variety of reasons, thousands of California Homeowners are adding Accessory Dwelling Units to their property. Whether it is for housing adult kids, aging parents, or another source of income, these smaller homes can be built for a fraction of the cost of a new house and can be installed relatively quickly.
These units are viewed as part of the solution to California’s housing crisis and as a result we have seen laws passed over the last five years which have made it considerably easier to obtain permits while slashing local fees. Nevertheless, these projects are expensive, the rules can be complex, and the bureaucratic hurdles can be daunting.
ADUs can be attached or detached. They can be new builds or a conversion of an existing structure. According to a survey of ADU owners in Berkeley, the median construction price in 2020 was $150,000 or about $250 per square foot. Construction prices had risen dramatically since 2020, so the cost will be considerably more in today’s economy.
In support of these constructions, the law states that local governments retain some authority to set objective standards for such things as height limits, setbacks, parking requirements and landscaping, but if the ADU is no more than 800 square feet and16 feet high, set back at least 4 feet from the property line, it is eligible for a permit in any residential or mixed-use zone.
Local officials must act on a completed ADU application within 60 days or else it is automatically approved. At least that is what the law requires. A developer in Campbell who specializes in ADUs says that there is still “a ton of boxes to check” to get the project approved.
An ADU is still a complicated, costly project no matter how small it is because it requires a kitchen, a bathroom, a sewer connection and permits. As a builder in Los Angeles stated, “The stuff that you don’t see is the most important stuff-the foundation, the plumbing the electrical, what’s hidden behind the walls.”
The other key point to consider in a decision to add an ADU to your property is the increase in your property tax bill. Newly constructed ADUs are assessed at market value upon completion, which in California with a 1.25% tax rate, could raise your property tax on an ADU valued at $200,000 by $2,500 a year.
The idea of an ADU is a bit more glamorous than the reality when examining all the aspects associated with the build. But, for many Homeowners it had been the answer to otherwise unsurmountable problems. Weighing the pros and cons before embarking on a project this large, and consulting with local officials and contractors is essential to a successful outcome.
If you have been denied a loan from your bank or other lending institution, consider a privately funded loan from the investors at Sun Pacific Mortgage. Call us today at 707-523-2099 or visit our website at www.sunpacificmortgage.com to see how we can help you with your real estate financing needs.
A newsletter to current and future Investors at Sun Pacific Mortgage
For over 34+ years in the lending business, we have always viewed our Investors as our biggest asset. Without you there would be no Sun Pacific Mortgage! You provide the revenue that allows Borrowers to become homeowners. We have always strived to be as transparent as possible to support the confidence and trust you place in us.
With this in mind, we thought this might be a suitable time to review just what happens behind the scenes here at our office, before we even present a loan to you.
There are a number of qualifications we put a Borrower through, starting with the loan to value, loan amount, location, and property. Provided the property is lendable, the loan amount & loan-to-value are reasonable, and the location is within California, we will take the next steps to qualify the loan.
This next step is to obtain the necessary information & verification about the Borrower, including a loan app, credit report, preliminary title report, something supporting the income & assets of the Borrower, and property valuation (we require documentation to support the valuation such as MLS Comps, a BPO, online valuation methods, or we will get an appraisal if the loan is over 65% LTV, a Commercial property, or if value isn’t apparent).
We work to get something to show what the Borrower’s stated income is; such as bank statements, CPA letter, employment letter, paystub, 1099, 1040s, W-2, etc. It is also important to let you know we always speak directly to any Borrower 65 years or older, to ascertain that they fully understand the loan, fees, are coherent, etc.
As a note, many other Private Money companies do not obtain anything showing income or assets; they lend solely on the equity in the property. That type of lending is true Hard Money – lending on the equity of the property. We do hold this opinion too but like to see that the Borrower can afford the payments and we are not setting up a valued Investor with a foreclosure.
After ascertaining what appears to be a legitimate Borrower with a lendable property, we work with Title & Escrow to obtain all needed payoff demands and Title clearances. We do this to ensure that you as the Lender are provided a clean and clear Title report with the best possible Title insurance that we can obtain.
We get about 60 requests a week for new loans! You see only about 25% of what comes across our desk. We have a tight vetting process and underwriting procedure. Only after this is all done will we submit the Trust Deed Offerings to you for review & approval.
If you have interest in a particular Offering, simply respond to the offering email with your interest. You are not approving the loan but instead, we can send you our due-diligence package that we have compiled through our vetting process for your review.
Once approved, our in-house Processors prepare Private Money Loan Docs and any other required forms for Title.
In addition to having one of the top private money attorneys on retainer, we attend the quarterly CMA (California Mortgage Association) conventions to ensure we are up to date on all Private Money lending regulations. Yearly we keep up on our training with an 8-hour Mortgage Licensing Continuing Education Course through the National Mortgage Licensing Board, and every 4 years we do a 20-hour Continuing Education Course through the Department of Real Estate.
So, there you have it, a glimpse into what we are doing behind the scenes to assist in bringing you qualified Borrowers & properties to lend against, for stronger returns.
Just as the pandemic put a temporary damper on the housing market, so too did the jump in mortgage rates. But just as the economic shut down didn’t have a lasting effect on the market, neither will this increase in mortgage rates. And the reason is the same – very little inventory. There are still more Buyers than Sellers and that is driving the market right now.
Despite the slight increases in interest rates, and decreases in inventory, it doesn’t necessarily mean the market is going down. Because Builders have not built enough housing and interest rates remain relatively low, it is thought that the industry might slow, but not fall.
Waiting can be a gamble in this game of real estate. Even if you wait to purchase with the thought that prices could be coming down, if rates increase it will all be for nothing. And renting will not be a cheaper option in the long run.
The market is stable. It hasn’t been driven by Investors, Flippers, and bad mortgages, but by legitimate Buyers. While demand may slow down eventually, there are no signs of prices going down anytime soon.
If you need a loan fast or have not qualified for a conventional loan, consider a privately funded mortgage through Sun Pacific Mortgage. Give us a call at 707-523-2099 or visit our website at www.sunpacificmortgage.com if you are purchasing or refinancing in California.
Analysts, Economists, and Industry Commentators have much, and sometimes divergent, opinions about the present and future of real estate in Sonoma County. They all agree, however, that sales data in the coming months should provide more concrete indicators of the market condition.
The experts have commented that when hot markets shift to cooler, the effects are typically reflected in reductions in multiple offers, overbidding, and the number of homes going into escrow. All these realities result in less appreciation, but historically, over the longer term, real estate remains an excellent and robust investment.
The monthly median home price, 6-month rolling average proves the point:
The average days on the market typically ebb and flow seasonally with spring often seeing the highest demand. Spring 2022 has just seen the lowest average days on the market ever recorded.
The combination of quickly rising prices and the fastest mortgage rate increase in over forty years is going to affect purchase demand. As this phenomenon occurs, the private mortgage business picks up steam. Using this avenue of financing allows otherwise ineligible Buyers to get into the real estate market and profit from the appreciation which continues to rise.
Sun Pacific Mortgage, a family-owned and operated business located in Sonoma County, serving all of California, has been in the Private Money Mortgage business for over 34 years with impressive results and loyal, appreciative clients and investors. With our year of experience, we can close escrows in as little as a week. Give us a call at 707-523-2099 or visit our website at www.sunpacificmortgage.com to investigate the loan programs we have available in funding purchases and refinances or how we can help you start increasing your wealth. We look forward to your call.
At the top of the question list for Buyers last year and this year is, “Why is it so hard to find a house to buy?” Simply stated: The number of Buyers greatly outstrips the homes available for sale. There are two main reasons the housing supply is low and what it may mean for you:
New home construction fell behind for the past five decades except for 2008. Builders exceeded the average of new homes during these years of the housing bubble. As a result, an oversupply of homes caused home values to decline. That was one of the factors that led to the housing crash in 2008. Since then, the level of new home construction has fallen off, and for the last 13 straight years, Builders haven’t been able to construct enough homes to meet the demand.
When the pandemic hit, the meaning of “home” became even more appreciated. With work and school moving into homes, there was a rush to find suitable housing for all the new activities happening in a sometimes- too- small space. At the same time, Sellers hesitated to put their homes on the market because of concerns about the pandemic. Not to forget mortgage rates dropping to the lowest seen in decades, adding to the urgency to buy now.
Even today, Buyers find themselves looking at scant inventory and higher prices. Offers exceed listing prices by a considerable margin. Basically, inventory is still low. Still, you shouldn’t put your plans to buy on hold because you are waiting for additional houses to hit the market. With prices continuing to rise and construction materials becoming ever harder to obtain, that could end up being a longer wait than makes sense.
If you need a loan today but can’t meet the stiffer qualifications of a conventional loan, give Sun Pacific Mortgage a call at 707-523-2099 or email us through our website at www.sunpacificmortgage.com, to discuss a Private Money loan mortgage. We have helped thousands of Californians over the past 34 years to purchase or refinance their own residence or a rental property. We can make your offer look better than others with a fast, all-cash close, often closing in 1 week to 1 month!
The short answer to this persistent question is, “Nobody knows.” This statement comes from Edward Seller, Associate Vice President for Housing Economics at the Mortgage Bankers Association.
So, where does that leave the everyday Homebuyer with rents soaring faster and steeper than mortgages? One Redfin Realtor said that she hears people are more worried about the stock market, rather than mortgage rates because they believe housing will be a better investment. Many Buyers see that the time is right for going all-out in bidding for scarce housing right now before it gets worse.
This anxiety regarding the unpredictability of rising rates explains the reason the housing market has not cooled yet and explains the surge in Buyers trying to get ahead of those higher rates now.
But do you keep getting turned away by other Lenders? Sun Pacific Mortgage has the answer with our Private Money loan programs: home or land purchases, refinancing, and bridge loans for business or commercial purposes. We have hundreds of Real Estate Investors who can finance your housing loans even if you do not qualify for conventional lending. Even poor credit, bankruptcy and less-than-perfect properties are not show-stoppers for our mortgage qualifications. Give us a call at 707-523-2099 or visit our website at www.sunpacificmortgage.com to discover a possible road to homeownership for you in these unpredictable times.