Market opening for first-time low-pay buyers – Orange County Register

First-time home buyer Diale Ebewele found the perfect condo in Tarzana in just six weeks. He locked in an interest rate of 4.99% by putting just 5%, or $19,750, on a sale price of $395,000. Escrow closes Monday for my client.

“What excites me is being able to find a place in a very decent and safe area close to my work,” said Ebewele, administrator of the health care sector.

Until recently, it was very difficult for low-cost buyers, first-timers or not, to be able to compete with cash offers or big buyers. The last time I remember low-cost buyers being able to compete was in 2018.

Yes, affordability is offset by the rise in house prices over the past three years, the rising cost of living and the 2 1/2 point jump this year in mortgage rates. (Thursday, the 30-year Freddie Mac rate jumped nearly half a point to 5.55%.)

Mortgage purchase requests are down 21% from the same week a year ago, according to the Mortgage Bankers Association.

“Mortgage applications remained at a 22-year low, held back by significantly reduced refinance demand and weak homebuying activity,” said Joel Kan, associate vice president of economic and industry forecasts. of MBAs.

Recession fears, plummeting consumer confidence and the prospect of falling real estate values ​​are pushing many potential buyers away.

This market lull may be the perfect time for first-time, motivated buyers.

Patrick Veling, CEO and President of Real Data Strategies offers some sound advice for homebuyers.

1) It’s never a bad time to buy a first home, assuming it meets your lifestyle needs, including size, neighborhood dynamics, and location.

2) Buying real estate is always about your personal time horizon. If you plan to hold the property for a short time, now may not be the best time to commit to current property values, unless you are paying an entry-level price.

3) Mortgage rates below 3% were a gift from God, which will probably never be repeated in our lifetime. Rates today are historically cheap and inflationary pressures are likely to drive up the cost of money even further in the near future.

California regional MLS numbers show pending home sales in Southern California fell dramatically in July, Veiling said. Compared to a year earlier, sequestrations had increased from 32% in Riverside County to 38% in San Bernardino County, 39% in Los Angeles County and 43% in Orange County.

As sales slow, homes on the market have fallen from 6% in San Bernardino County to 9% in LA County, 20% in Orange County and 28% in Riverside County.

It’s good for home buyers. With more than 31,000 Southern California homes for sale this month, listings are at their highest level in more than two years, according to Steven Thomas, chief economist at Reports on Housing.

On the other hand, it is still 8% below the average of the last 9 ½ years. And its 18% below the average for the three years before the COVID-19 lockdowns, according to figures from Thomas.

Low inventory levels can get stuck in the mud due to a lack of motivation to sell. Record mortgage rates have been recorded by both homebuyers and refinancers around the COVID timeline. Perhaps doubling your mortgage interest rate is a no-start for most.

Potentially higher property taxes would be another tough pill for homeowners considering selling.

“People don’t have to sell, so they don’t sell,” Thomas said. “I may not be in love with my house, but I’m in love with my loan.”

Freddie Mac rates the news: The 30-year fixed rate averaged 5.55%, 42 basis points higher than last week. The 15-year fixed rate averaged 4.85%, 30 basis points higher than last week.

The Mortgage Bankers Association reported a 1.2% drop from the previous week in mortgage applications, which remain at their lowest level in 22 years.

At the end of the line : Assuming a borrower gets the average 30-year fixed rate on a conforming loan of $647,200, last year’s payment was $1,012 less than this week’s payment of $3,695.

What I see: Locally, well-qualified borrowers can obtain the following fixed rate mortgages without points: A 30-year FHA at 5%, a 15-year conventional at 5%, a 30-year conventional at 5.375%, a -balance (647 $201 to $970,800) at 5.5%, a 30-year conventional high balance at 5.875%, and a 30-year buy jumbo (or for over $970,800) at 5.375%.

Eye-Catching Loan of the Week: A 30-year-old jumbo locked at 4.5% for the first 10 years with a one-point cost.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or [email protected] His website is

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