January is Better Than Expected

January total sale numbers came in only marginally lower then last year. That is very good news when you consider the stock market was in turmoil, the government shut down was well under way and interest rates were near recent highs. Final sale volume numbers were down by a just over 10%, dropping from 83 last year to 74 this year. The decline was almost exclusively in the greater Truckee market where sale numbers went from 39 a year ago to 28 this year. Squaw / Alpine also recorded a decline by 3 sales. That may not sound like much until you realize it went from 7 sales a year ago to just 4 this year. That equates to a near 50% drop. I suspect with the strong start to winter we may see a turn around next month. The Tahoe Basin  and Tahoe Donner both had slight increases of 15%. All in all I am very happy with these numbers and look forward to it being the start of another solid year for real estate in our region. 

Additional good news for the market is a subtle increases in inventory of 15%. Now many of you might be asking why is an increase in inventory good news? In my opinion it starts to balance the market out. We have been in a long running seller market, while that is good for sellers it is not so good for buyers. I have, and always will be about things being a win, win, and we need some buyer wins. Yes it probably means any appreciation this year will be limited but, considering the years of well above average appreciation we have had, it will be ok to have an average year or even a flat year. 

Lets talk about mortgage interest rates. What many people don’t realize is that stock market struggles usually translates in to good news for mortgage interest rates. That couldn’t have been more true with the recent market struggles. The stock market is off the bottom but interest rates are still at there most recent lows. I recently saw a rate sheet showing 4.375 for a conforming 30 year fixed rate. This kind of rate will only help with affordability which in turn will help keep the market on a solid footing. One other piece of information I recently saw is the inversion of rates between conforming loans and jumbo loans. Typically a jumbo loan is going to have higher rates than conforming loan because conceivably, the jumbo loan is higher risk. Currently, rates are just the opposite, so there is a .25 to .375 better rate on a jumbo loans. Apparently some folks are borrowing just enough to get the jumbo loan amount to get the better rate. From there you can pay down a lump sum to reduce the balance after 90 days. This is known as recasting the loan. The term ‘recast’ meaning the bank recalculates your monthly payment based on the new balance created after making the lump sum payment but, you retain the rate and length of term of the loan. In this inverted rate scenario it could be an interesting strategy. The concept is a little complicated so if you would like to discuss this idea further please contact me.