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Sun Pacific Investor Newsletter

A Newsletter for Investors in Trust Deeds

Integrity  •  Knowledge  •  Honesty   –   March 2020

How are You doing?
How is the Market doing?

Our office is open and busy right now.  We do not anticipate slowing down. We realized that our hometown – Santa Rosa, Sonoma County, California – has taught us a BIG lesson:  No matter what happens, be it wildfires or Coronavirus, we will be open and help all we can! Sonoma Strong!

After the fires it was predicted that many people would leave the area due to potential danger of fires.  Some said Santa Rosa would become a ghost town. Just the opposite happened. Surprisingly, most decided to rebuild, and the fire areas are abuzz with house building noise.  It’s exciting and fun to watch.

Now we have the Coronavirus scare.  What havoc will this create? The stock market seesaws up and down and will likely continue to be up and down.  What about real estate?

Quote from Eli Tucker – Licensed Real Estate Agent as promoted in his local paper:

“Currently, buyers still seem more motivated by historically low rates and lack of buying opportunities than they are concerned that the likely impact of the virus. It seems that long-term confidence in local real estate is still a stronger influence on people’s decisions.”

With the volatility in the stock market and uncertainty about the Coronavirus some are concerned we may be headed for another housing crash like the one we experienced from 2006-2008.

There are many indications this real estate market is nothing like the 2006/2008 market but instead is staying strong. The 30-year conventional rates are at an all-time low and realtors & financial institutions are busy with potential home buyers knowing now is the time to buy, and homeowners are refinancing into historically low rates.

Despite the media noise, we want to assure you our family Hard Money company is completely in business, rapidly getting offerings out to you for approval and then funded.

Here are some facts showing the current market is stronger:

1. Mortgage standards are nothing like they were back then.

During the housing bubble, it was not difficult to get a mortgage. Today, it is tough to qualify.  Not everyone can get a loan.

2. Prices are not soaring out of control. 

Below is a graph showing annual house appreciation over the past six years, compared to the six years leading up to the height of the housing bubble. Though price appreciation has been quite strong recently, it is nowhere near the rise in prices that preceded the crash.

Annual Home Appreciation

3. We don’t have a surplus of homes on the market. We have a shortage. 

The months’ supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued appreciation. Statistically there were too many homes for sale in 2007, and that contributed to prices tumbling. Today, there’s a shortage of inventory which is causing an appreciation in home values.

4. People are equity rich, not tapped out.

In the run-up to the housing bubble, homeowners were using their homes as a personal ATM machine. Many immediately withdrew their equity once it built up, and they learned their lesson in the process. Prices have risen nicely over the last few years, leading to over fifty percent of homes in the country having greater than 50% equity. But owners have not been tapping into it like the last time. Compared to 2005 – 2007, homeowners have cashed out over $500 billion dollars less than before.

Bottom Line

Real Estate market is still strong.

We are in business and doing well, buyers are still out shopping, homeowners are still refinancing to pull cash out for their businesses or personal use.

Nothing has slowed down in our office and we don’t see it slowing down.

Fk Integrity  •  Knowledge  •  Honesty   -   March 2020

Broker & Owner
The Guys in the White Hats

Sun Pacific Mortgage & Real Estate

(707) 523-2099
800 Mendocino Avenue #2, Santa Rosa, CA 95401

CA BRE License # 01464899
NMLS # 360993

Investor Newsletter – Current Scene and The Market