My New Blog

Ok, its 2023 now. I have given thought again as to the current state of market conditions concerning mortgage interest rates for the present moment and into the year 2024.

Home Mortgage Rates are slowly dropping now and this should continue to the end of 2023. Other economists have expressed higher interest rate predictions to be the norm but as long as the US does not engage in a war or have another extreme market government caused condition like the past Covid Lock Down had on business and the world, I see a brighter forecast for 2023 and 2024.

The mortgage rates could, in my opinion, be in the low 5% range or lower with Variable Mortgage Rates which may be fixed for 7 years before they adjust.

There are just too many people that want to return to work force now and the Government knows they should leave business alone so that the recovery of the economy through "Trickle Down Economics" can do what it normally does when goods and services are purchased with respect to buying and improving Real Estate.

My first Mortgage in 1974 was at a rate of 22.5 FHA and there was also an oil embargo which was similar to what was seen in the past couple of years.

 Mortgage Interest rate in 2023 will continue to fall and in 2024 the interest rates will fall again. Why, well because it will be a Presidential Election Year and the Government officials will be beating their chests again as to How Great and Wonderful They Are in taking credit for the recovery, when it was Free Market Enterprise all along doing what it does to recover on its own.

I predict 2024 will have both a stronger Market for purchasing homes and a Refinance Market with even lower rates.  Homeowners and Investors will have equity saved and the lenders will be coming out of the wood work to service and create these new loans.

 Lenders have been reducing many office staff personal at this time to reduce overall office costs but will add staff when the business picks up. Even the same goes for Silicon Valley Tech which has recently made huge adjustments to labor, but I believe the Tech Industry will think its way out of this mess and create a better mouse trap, widget or technological wonder or find blue collar jobs until they can return to Tech.

Just have to take it one day at a time to get through 2023 Market Conditions which I predict will improve toward the end of 2023. Then the economy to be getting along better in 2024 of an Election Year as election officials do not want to mess up an improving economy just before an election. Interest rates will drop again further in 2024. 

The recent movement of mortgage interest rates is still a bargain compared to the 1980's during a recession.

In 1974 FHA Mortgage Rates went from 5% to 22.5% percent. I personally had a 22.5% FHA loan on my first house.

The recent increase in mortgage rates is a small upward bump compared to these prior rates. It is still a good time to buy a home at the current low rates because home appreciation is still projected to increase this year and next based on your location.

The objective is to get the house you can afford now and if you are financing a mortgage there are two ideas to consider to offset the current mortgage interest rates. The first is to pay the new home mortgage payment each month and then to write a separate check toward the mortgage as Principal Only. By adding a second Principal Only Payment to the mortgage will save interest off the back end of your mortgage and over time will save thousands of dollars off the overall cost of a mortgage and pay off the home quicker. 

The other idea is to a a future time say when the rates drop, to refinance your home mortgage to a lower rate. The third idea is to compare Fixed Rate Mortgages to Variable Rate Mortgages. For years I always took a Variable Rate Mortgage over a Fixed Rate any day since the loan would not readjust upward until say 5 or 7 years. So as long as there was equity in the home mortgage, it should not be a problem to refinance to a lower rate when the time came verses the cost of a Fixed Rate Mortgage.

Lately, more buyers are seeing the advantage of a variable mortgage rate now verses a higher fixed rate mortgage in the current market. Its just simple math to see the cost savings when comparing fixed to adjustable mortgage.

The phone, email and websites are now picking up pace with requests for real estate appraisals and valuations. There will be an increase in real estate market activity  directly after the 4, of July 2022. I expect both real estate agents and appraisers to be busy the last two quarters of 2022 as summer usually has the most activity with buyers looking to relocate. 

Find a Professional Lender to show different ways to finance a home. 

I will close for now with my mantra which is "Plan your Work and Work Your Plan or Someone Else Has a Plan for You. 

Good luck in finding the best rates because real estate values will continue to climb into the future.

Since there is no present over supply of bank foreclosed properties and an over supply of buyers to the market. Therefore, competition for homes will continue in the current market. 

With the recent current events of increased inflation of goods and services, new real estate mortgages as of 6/2022 are also on the rise. National News shows a slowing of listings of homes for sale, yet home prices continue to rise.

 Location is everything as not all real estate markets react the same as others to the number of buyers or sellers in a market area.

Here is Central California, there is a shortage of homes and an over supply of buyers to the market. In looking at the current condition, I as a working Real Estate Professional can compare back to the 1970's when the same conditions existed with construction companies working 24 hours with several crews building new home communities as the need for homes was the same senario as today.

Home Interest rates were 22.5 % for an FHA Loan with a 20 Year mortgage in 1974 and a lot of interest was applied with little principal to the mortgage.

This time was after the Oil Embargo where lines of cars were stopped at gas stations and the ration of gas. Your license plate determined by odd or even numbers if you could purchase gasoline at a gas station on a particular day.

As for current real estate mortgage rates. if you can buy now, then you should go for it. Down the road in a few years mortgage interest rates will return to lower rates and you can always refinance or, do like I did in the 1970's by paying two mortgage payments at a time or more to offset mortgage interest rates. 

I have always made a mortgage payment, followed by a separate check labeled "Principal Only" to pay off as quick as possible higher interest mortgage loans. 

So essentially, by paying additional sums each month toward your mortgage you are effectively paying off sooner a loan and significantly reducing the mortgage interest.

This is not Rocket Science or Fuzzy Math. It works and many of my real estate customers over the years thanked me again and again as to suggesting this simple method to build equity in their home faster with a plan of action.

My former mentor always told me to "Plan your Work and Work your Plan, or Else Some one else has a Plan for you."

If you have any real estate questions or concerns, give me to discuss your thoughts or concerns? 

Tom Melville
Aptos, Ca

Licensed as a California Real Estate Professional since 1980 to the present.

Here is my forecast for 2022 Real Estate Market.

There continues to be an oversupply of buyers to the market and a shortage of available home for purchase.

The First quarter or first month of 2022 interest mortgage interest rates will drop to continue the Purchase and Refinance Markets. 

Lenders are offering pay bonus for experienced staff support in Dec 2021 so expect another year of record sales of homes and refinance of existing loans for lower interest rate loans.

Lenders are considering Desktop Appraisal Products for home purchases which is designed to speed up the appraisal process - but I dont think a desktop is faster if it involved added scanners/inspectors into the field, while the appraiser stays in front of a computer observing the property via a cell phone video camera. But it might work to some degree to lessen the overall workload of appraisals to be completed by the current shortage of appraisers left in the field. 

My appraisal business will continue to deliver Nothing but the Rush assignments which are full inspections by the appraiser. I inspect at noon and deliver the full report in 3-4 days or less not weeks from now.

Most appraisal firms will be back logged with weeks or months of appraisal work as it has been in all of 2021 to the present. Hopefully the Desktop Appraisal Assignments will help the process in 2022.

Contact me if you have a real estate need or question that just needs to be answered.

Tom Melville
California Real Estate Broker / Certified Residential Appraiser
41 years professional licensed in California Real Estate since 1980 to the present.





 

20 years ago there were 20,000 appraisers in California. Today the figure is approximately 9,500. Of this number there is approximately 4,500 Certified Residential Appraisers left in California able to appraise properties over 1 millions dollars.

The other 5,000 appraisers are trainees, licensed appraisers( 17%) and Certified General Appraiser(32%) able to complete both Commercial and Residential Properties.

A real estate appraisal today for mortgage lending purposes is 50-70 pages in length and takes about 25 office hours to just produce 1 report. Its a college term paper in my mind and no two reports are the same with MLS CMA and Statistical Charts and Scatter graphs from CMA exported data into the reports. 

Since June of 2020 to the present June 2021 most appraisers are receiving 30-40 requests a day for quotes on fees for appraisal work. 

Last year in June of 2020 I decided to only do the rush assignments and that has been my business model for the last year to the present. Most appraisal firms I know of with several appraisers are backed up 1 or 2 months worth of work. I don't work that way as all I do is the rush, where I inspect a property at noon and deliver the report in 3-4 days or less. 

Presently my rush fees are $1,800 - $3,000 for one house appraisal as all I do is the rush or the complex properties. A lot of home sales in Silicon Valley use my services and just want the report ASAP. My reports are High Quality Reports with CMA and Statistical Charts and Scatter Graphs. Home sf sizes range from 1,500 sf to 6,500 sf.

Yes I turn down about 99% of the appraisal requests per day yet I am able to complete 10-15 reports each month.

 What are my regular fees?

 I don't have any as all I do is the rush and each property is a custom quote on complexity, location and short window of time to complete the report on time.

 If I take non rush assignments then the result is my rush work would become late. It is a simple business plan which is working due to the shortage of overall appraisers in Northern California.

 I am experienced to work on high end complex properties in Silicon Valley and the local rural mountain woods locations. My work vehicle is a well used Toyota 4 Runner, 4 Wheel Drive which can get me anywhere I need to go.

So I expect this market to continue to the end of this year and on to 2023 if mortgage interest rates continue to remain low as indicated by the Fed.

If you have any needs or questions for a Real Estate Broker or an appraiser with 41 years professional experience, let me Know. Tom Melville Brea 00774101 831-883-0406 Aptos Ca. 

Recent mortgage banker news is that more mortgage applications were again coming in as this is summer now.

 After the July 4th holiday, I expect the market activity to increase again with more real estate listings of homes for purchase with loans and more refinance loans. I am still seeing properties with older mortgages at 7% that are now getting around to refinance to lower rates.

 It is very important to know your current interest rate and how much you can save with a refinance. Additionally, more listing and properties will be added in July, August and September. This market will continue all the way into December with present activity.

Looking Back at my own first house purchase in a runaway real estate market Circa 1974. San Diego properties were increasing in value very fast. Purchase Price $29,500 with a 20 year mortgage FHA at 22.5% loan rate. My Payment was $500 per month. Same house today is in the $450K value range.

 When I bought my first house in 1974 as a single guy at the tender of 20 years old, my FHA interest rate was 22.5%. My monthly payment was $1 dollar toward principal loan each month and $499 dollars eaten up into interest on a house that only cost $29,500. 

I made double payments with one principal and interest and the second payment principal only. Eventually mortgage rates returned to lower levels back then but many people did not understand the higher interest rates were eating up and equity.

Some people made their on time monthly payments on home loans but still lost homes due to the higher interest rates or market conditions eating up any equity in the 22.5 % FHA Home Loans like the one I had.

Today these low rates are amazing, but back in 1977 my PHD college teachers in Real Estate were forecasting residential homes would be in the million dollar range and it was difficult to comprehend back then, but they were right. 

It you have any questions or thoughts about Real Estate and would like free advise then give me a call. I am a Broker Owner of my own Real Estate Firm and a Certified Residential Appraiser.  

Melville Appraisal 
Tom Melville Properties
Dre 00774101
Broker Owner 
831-883-0406

 

Real Estate has been a part of my life even before adulthood. My step father owned a Real Estate Office during the 1970's in San Diego. It was tough even then selling homes for $30K or $50K back then and it really meant something when you face a appeared in a real estate newspaper ad stating that you belonged to the millionaire Club in Real Estate after transferring One Million Dollars worth of Real Estate Transactions in One Year. Now not so much as the world has changed since then and to the present due to the Principle of Change which is a constant. 

It was tough keeping a real estate office open back then circa 1970 and now with the financial over head of running a real estate business. At the side of my parents real estate office there was a separate 400 sf room which then used as a Pinball Arcade and PackMan at the time to generate more cash to pay the rent on the building. Looking back at those times and the present as of May 2020 and the corona virus which has shuttered all types of businesses for months at a time with no income. 

Real Estate Agents are seeing that they don't have to be at an office to work in the business. The business has always been in the field as many people still say. 

I see large real estate offices with hundreds of agents today becoming obsolete as new ways to represent the public and meet the public no longer requires to meet in a real estate office.

 After 40 years in the real estate business of Brokerage, Appraisal and Consulting that I will operate from now on as a Discount Real Estate Brokerage helping homes owners with property transfers by reducing my commission on homes I list to 4.5% of the sales price. Since I work for myself my overhead costs are much lower than larger companies yet I can deliver the same sales outcomes and allow the homeowner to save on house commissions when marketing their home with me. 

As a Real Estate Broker/Certified Residential Appraiser I am experienced with high value real estate between $500K to Six Million dollar transfers so the saving of equity for sellers can be significant. 

If you would like to talk about your real estate I am available 12 hours day or more to discuss your real estate concerns. Covering Santa Cruz, Ca, Monterey Ca, San Jose and Santa Clarita. 

Tom Melville Broker
Dre 00774101
Tom Melville Properties / Melville Appraisal
831-883-0406

Prior to 2020 in November/December of 2019, I was looking at the several different market indicators that would tell me where my business and the real market would be in the next 6 months from Nov 2019.

Here is what I knew in Nov 2019.

1. The interest rates for mortgage lending were low.
2. Foreclosures were not an issue and were minimal in number.
3. There continued to be shortage of homes available for purchase.
4. There was an over supply of buyers to the markets
5. New home communities were now being built on land purchased years ago.
6. Interest rates on mortgages would drop again as it does 1st quarter of year.
7. Competition for homes with multiple bids.
8. Lenders were looking to hire and offer bonus pay for mortgage loan originators.
9. Lender were looking to hire support office staff for next surge in lending.

Yet when Covid 19 was effecting real estate, so many real estate professionals, including appraisers claimed there would be doom and gloom in the market place. Over 50 real estate appraisers in nearby counties forecast the market was going to go down or be flat for a long time. None of that is what i saw in my research and my forecast of 2020. 

Looking at the above market metrics i updated office equipment and told the appraisers i knew the market would be on steroids and an upward market. Still many appraisers thought i was nuts. 

Having seen and been involved every different California market in real estate since 1980 to the present allowed me to clearly see the present moment in 12/2019. 

Only recently I was asked to explain my forecast in 2019 on a Zoom Meeting to 50 appraisers who called the 2020 forecast wrong.

 I listed and explained the simple real estate metrics above. To me it was a no brainer as it was all clear to myself the forecast of 2020. 

If you have thoughts or questions about current real estate matters call me to discuss your thoughts or concerns. 

Tom Melville 
Broker, Certified Residential Appraisal
Dre 00774101 
831-883-0406

Licensed Real Estate Professional in California since 1980 to the present.

04/12/2020

Real Estate Appraisal has always been an Essential Service to the Financial Sector.

 During the present California Shelter in Place rules for the public, it takes a minimum of Twenty Percent of all Essential Business to remain open to keep the economy of a city  moving forward. 

Real Estate Appraisers are presently making home inspections using Personal Protection Equipment at a minimum of mask, gloves and booties if requested by the home owner. 

There are several guidelines on the present Shelter in Place that are followed by Appraisal Associations, Realtor Associations both National Association of Realtors and the California Association of Realtors and Real Estate Property Management Companies as to proceed and inspect a home. 

Lenders are required to have a full interior appraisal inspection to assist home owners with cash out refinance. It is possible to have an exterior only appraisal of your home, yet the lenders prefer interior inspections to insure the value of the property being appraised.

 Even during the California 1989 Earthquakes and other large brush fires in summer, appraisers were ordered out to the field to inspect homes to see the extent of damage.

 This current Shelter in Place time is busy for appraisers as with the low refinance interest rates, many home owners are using equity in their homes to get through this period of time.

If you need a real estate professional to appraise your property, then give me a call. Or if you need to consider listing or consultation as to listing a property on the MLS, I cover that service as well.

Tom Melville, MRA, MNAA
Real Estate Appraiser, California Real Estate Broker/ Owner
Melville Appraisal, Tom Melville Properties
AR012768, DRE# 00774101
831-883-0406

2020 will be a strong Real Estate Year that includes both Purchase and Refinance Markets. There has been a surge of 30.2 percent in mortgage applications since the first of the year. The refinance market jumped to 43% for the week and is up 109% higher than a year ago. 

The low mortgage interest rates should continue to the November elections which will work well for first time buyers, investors and homeowners looking for a refinance loan option.

If you are considering selling or buying or need an appraisal of your property, then give me a call to discuss your real estate needs.

Tom Melville Broker / Appraiser       831-883-0406
Melville Appraisal / T.Melville Properties serving Santa Cruz, Monterey, San Jose and Santa Clara Counties.