Hello everybody! Irina Grinevich here
with Realty One Group and today I wanted
to record this video in light of the
recent events and the stocks market with
the virus and shelter-in-place and how it
all reflects on the housing market. Many
are concerned that we're heading into
the next crash like we had in 2008 and
which is hard to forget but here I
am to provide some statistics some proof
to you first of all to you know provide
information that is all checked out that
is solid and something that you can rely
on. On the other hand, I really hope that
everyone's safe out there and also that
are you guys are you know in the in the
sound state of the mind. I know all of
the routines have been just disrupted we
are you know kids are home we are
working from home everybody is working
from home and that it's not something
that we're all used to and that really
plays tricks with us so it's important
to keep keep up with your routine. So if
you're getting up at 6:00 in the morning
on your normal day, - keep on doing that
get up at 6:00 in the morning, do your
workout, meditate, eat well.
Quarantine does not mean that we drop
everything and just change and shift so I
think keeping the routines that we had
during our normal routine and normal
work hours it's critical to keep a solid
mind and keep the panic down. There's no
reason to panic. We're gonna live through
this as you you know you might have
heard on some channels. Another point
that I want to make is that media is
really pushing their point maybe beyond
and that is obvious just I would
encourage you to stay busy go out in the
park right now it's beautiful in green,
not too hot, not too cold - this is a great
opportunity to spend time with the
family and catch up on your hobbies.
So with that being said, I want to dive
in right into the topic of the video. So
I've prepared some charts and as
we're gonna go through the, I encourage you to ask me any questions in comments and
then I would be happy to address each
situation separately. What we see
right now, and I'm talking about local
markets in Sacramento, is that we see an
increase in canceled listings and we
observe cancellations on during us grows.
So on the question "how's market doing"
I say, you know, it's day by day, hour by
hour. Mortgage rates are changing
literally by hour, every hour so it's
hard to say how things are. Some of my buyers and some are the
sellers decide to hold up and I fully
respect that decision and some others
are actually deciding that they need to
move make the move right now which there
are some benefits to that, but in any
rate, my job is to keep you at par with
all information. The good information,
that is solid, that you can make
appropriate decisions. Let's walk
through a little bit you know what was
happening in the last recession with the
with the home prices so as you look here
in nineteen in nineteen eighty prices
actually increased and so did in 1981 in
1991 they decreased by just a little bit
and then they went back up in 2001 what
was really really memorable is a 2008
recession they dropped and so that is
what we remember and that's what you
know bringing concern to many homeowners
out there so what I'm trying to say is
that not every recession actually means
price drop or home prices changes like
like we've seen in 2008 and why why that
was I'm actually gonna walk through that
too is that we had some practices that
did not prove to be effective it was
really hard not to
in 2008 so for example if you know we're
working as a waiter at the restaurant
and when you're applying for a home
mortgage you claim that you earn a
million dollars you know in your income
you would be handed you know signed an
appropriate mortgage so people were in
you know the lending lending practices
were not as careful and cautious as they
are today so we've learned from our
mistakes from back when so that's that's
one of the things and also another
important piece of information is
actually the interest rate they've
started at and this is June of 2018 and
then September of 2018 December and then
March July and then March of 2020 so as
you can see they started at mid fours
and then they went up and then they
dropped to the record low of 3.29 and
then they just rose and the reason why
they're rising then again I don't have
all of the you know all of the little
details because that's not you know my
area of expertise necessarily but
because of the huge demand of refinances
and which was just overwhelming for so
many lenders they they had to drop the
federal rate down to zero and increase
artificially the mortgage interest rates
cool off the demand so that's pretty
much with what's been happening and the
rate is has been changing our
every day so if you have any further
questions I would point you to your
lender if you don't have one reach out
to me I have phenomenal professionals
that I work with on my personal deals
and then that I would happily recommend
you to but what I wanted to also talk
about is touch base on mortgage
standards back then so this is actually
mortgage credit availability index it's
basically it shows how hard or easy it
was to get you know availability of
mortgage credit at the point of time so
the higher the index the easier it is to
get a mortgage during the housing bubble
the index KY rocketed you can see at the
very at the very top you know and that
was the the index was really high and
then after the housing market dropped
after the bubble burst you know and
after so many foreclosures from all of
that we've learned our lesson and now
bank and lenders are highly regulated so
it is actually on a harder site to get a
loan there's so much paperwork there's
so much proof that you need to submit
and therefore possibility of having this
same crash because of the mortgage
because the landing is highly unlikely
so take a look and I will be posting all
of these in comments below and then the
second point is that the prices prices
are not soaring out of control like they
used to so this is the annual home price
appreciation and as you can see in 2001
80 leading to 2005 right before the
crash prices were really really
appreciating really high some might even
say out of control and then if you look
at 2014 leading up to 2019 prices were
you know keeping very stable and again
that is another another good indicator
that things are way more and in control
today than they were before the last
recession
and then normal appreciation is and I'm
reading here referring to an excellent
source that I have is 3.6 and while the
current in appreciation is slightly
above that but it's still very much in
control so so probably home prices right
now are very steady and while they are
appreciating which is probably caused by
low interest rates they're really in
control now we're gonna take a look at
the months of inventory because what
happened was when the market dropped is
that because of the huge inventory of
houses on the market back then the
supply the inventory that needs you know
needs to sustain a normal real estate
market is approximately six six months
now here we see that as it was at 8.2
and today at 3.1 so so anything more
than six months you know is is
overabundance and that will cause prices
to depreciate anything less than a
shortage you know it will lead to a
continued depreciation so that is that
is also an important point because say
you know say buyers halt and say you
know we have what we have right now in
the market just Dan accumulate dates
what would happen because of the because
of the still historically low interest
rates and because of the short
availability of properties on the market
market is still going to keep growing
and appreciate it because of the short
supply of properties in the market so
that is another indicator that things
today are very different than during the
last bubble and then we're also it was
okay now I'm gonna touch on people are
equity rich today but they're not tapped
out so this this is this this graph
right here shows you know the year and
how much equity was pulled out of the
out of the housing so what what was
happening in the last three sessions
that homeowners were ATM machine and
then immediately withdrew their equity
once it was built up to use for whatever
reason now while today we're seeing 50
percent equity and almost you know in
majority of the housing buyers for
actually home
right now are not tapped out so compared
to what we saw last time and this is in
billions you can see that it was in the
800 billions of dollars and then
compared to today it's a lot less so
should something happen when when they
would tap out and the market would
freeze they they basically would owe
more than their property would be worth
we call it upside down and so many would
actually abandon their property and then
you had this huge inventory of
properties that are instruct the story
is gonna be different today because
people are smart bull have become smart
we've learned from our mistake and now
we're not tapping out the equity from
our house so with that being said today
we are in the completely healthy
up until three four weeks ago it was a
completely healthy economy and this
really reminds me of 2001 9/11 where you
know it came out of blue right now it's
a medical situation you know and yes of
course market is not the same it's not
business as usual but it's honestly this
will come and depending everything
depends on how well and how fast we deal
with the virus spreading and how well it
contained because once the confidence
you know consumer confidence increases
and restaurants bars you know malls and
stores are open back up spending will go
up again and economy will spike right
back up so that's gonna like my mind to
tation in my thoughts what's happening
on the market if you are a buyer I there
are certain precautions that I
personally implement for my clients and
that is a lot of virtual showings if you
want to see a house you know we can
definitely arrange something virtual
where I go there with with the camera
and today today's day and age our
cameras are so amazing but I you know
you could do you could do show zoom in
any detail if the house can show any
detail of the house and your room and
you would be performing walkthrough
right alongside with just on the other
side of the screen and
you know things could be done and then
offers be written also contingent upon
physical you know in-depth physical now
if you're a seller things could of
course are being adjusted accordingly to
prevent any any spread of the virus
meaning you know wiping off the
doorknobs and having shoes covering on
all you know for all the visitors so all
of those things will be present my
listings and again a lot of the would be
done virtually a lot of the showings
would be done virtually we would not be
performing open houses anytime soon just
control you know control the environment
and you are part to help to help you
know make this this situation path but
all in all what we're hearing out there
is that because it did not happen due to
the housing market or poor economy
performance it was just a simple out of
the blue situation that is being heavily
worked on to contain and and help solve
so if you have any questions about your
specific situation if you have a
property that you've been considering
and looking at or Prout you've been
looking to sell your property just give
me a call reach out I'm here to help the
bottom line is that you and your family
are so take an opportunity go and not
walk with the kids and do those hobbies
and crafts that you never have time for
I personally really want to get back
drawing and some piano playing so I'm
just just using the opportunity and
kirai encourage you to as well you guys
have a great day and just keep your mind
steady and OnPoint you know just do what
we can to control it and that's our
mindset number one all right you guys
take care and I hope this was of help
you
