Public Health Numbers on Upswing Again: After rising in the face of a more aggressive Delta variant of COVID-19, the number of new cases has been on the decline for the past week after reaching a plateau the preceding week. Hospitalizations also appear to have peaked, and though they have yet to come down from their elevated levels, they should begin to follow new cases down as well. California has also made some progress on vaccinations with nearly two-thirds of adults having received their first dose of the vaccine.

U.S. P/E Ratio Improves on Stronger Profits: Following a strong bump in U.S. corporate profits during the second quarter, equity markets valuations make a little more sense. Over the past 18 months, the value of publicly traded companies here at home (as measured by the Wilshire 5000) has reached nearly 18 times the current level of U.S. corporate profits. Last quarter, that number fell to 16.8, which is still elevated relative to the standard range of 7-11 times, but it is a positive sign for overall risk that the two indicators have started to come back into alignment.

Interest Rates Hold Steady for Now: Despite ongoing inflation and improving economic conditions generally, uncertainty about the virus and future economic conditions, particularly in light of the expiration of several key government stimulus programs including forbearance and pandemic unemployment assistance, interest rates remain near historic lows. Although this has yet to show in the mortgage applications or weekly sales figures, it is perhaps preventing a stronger seasonal cooldown after such a strong homebuying season earlier this year. Consumer even showed a slight uptick in homebuying sentiment in our July Housing Sentiment Survey.

REALTORS® Report More Seasonal Cooling Last Week: Last week, REALTORS® reported declines in business activity across the board. Fewer members did a listing appointment (33.3%), fewer added a new listing to the MLS (28.2%), fewer entered escrow (23.7%), and fewer closed a transaction (24.4%). However, more REALTORS® reported an increase in optimism about sales and listings next week, which is consistent with the broader market data that has held up surprisingly well despite ongoing supply constraints and some buyer fatigue. In another positive sign, the number of REALTORS® reporting a transaction falling out of escrow has fallen for the past 3 weeks.

Large Rolls of Unemployed as Pandemic Unemployment Ends: The Pandemic Unemployment Assistance, or PUA program, has now ended with nearly 1.6 million Californians on continuing claims at the end of August. Some of those workers may go over to traditional unemployment insurance, but some may begin to reenter the workforce as well in the coming months as job openings remain near record highs. However, with more than two million workers on some form of unemployment assistance as we began September, the economy still has a lot of healing left to do and the expiration of many forms of assistance will likely usher in more disruption in coming months as stimulus starts to work its way out of our economic system.

Mortgage Applications Corroborate REALTOR® Survey: Despite a modest increase in homebuyer sentiment for California consumers in August, mortgage applications just posted their 16th consecutive year-to-year decline last week. The overall index is showing a similar pattern of seasonal slowing that we observe in the weekly California home sales data, but the home sales figures have avoided more substantive declines up to this point. However, we expect home sales to continue their gradual decline as the market remains competitive and buyers continue to grapple with rising prices and a lack of available units.

California Association of REALTORS | Contributed

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Three years ago, the L.A.-based mortgage professional was on the cusp of making her dream of buying a home – before she turned 30 — a reality. She was single, 28 years old and wasn’t going to let a little thing like not having a 20 percent down payment stand in her way.

Her parents, like many people, felt she should hold off until she could save for a larger down payment. But Jocelyn had other ideas.

“I did my homework and knew using mortgage insurance (MI) would allow me to make as low as a 3 percent down payment,” she explains. “I bought my townhouse for $278,000 and put down $13,900. It would have taken me almost eight years to save $55,600 for a 20 percent down payment! As it was, my 5 percent down payment used up most of my savings.” Fast forward a few years and her decision paid off. Due to low interest rates and increased demand for housing, her home had appreciated significantly. In March 2020, she sold her townhouse and made an $86,926 profit.

“Imagine if I had waited eight years to save for a 20 percent down payment!” marvels Jocelyn. “I wouldn’t have been able to get my foot in the door of homeownership when I did.”

The sale of her townhouse allowed Jocelyn to move up to a much larger house in a gated community in Simi Valley, CA. Typically, when buyers like Jocelyn move up, they have enough equity or profit from the sale of their previous home to put down 20 percent.

Relying on her experience as a loan processor and mortgage insurance employee, Jocelyn chose to buck that trend and use MI as a financial tool again.

She purchased her second home this spring for $537,500, and despite having enough money for a 20 percent down payment, Jocelyn put down 11 percent or $60,000.

“In my last house, I cut myself short by using almost all my savings for my down payment,” Jocelyn explains. “I didn’t want to do that this time around. I knew my new house needed some repairs and updates. Plus, I was purchasing it during the uncertainty of the pandemic, and I wanted to have ready cash in case I lost my job.”

Her decision gave her the financial freedom to remodel her kitchen, buy furniture, pay off two credit cards and still have savings left for a rainy day.

In addition to having a bigger house in a better location, Jocelyn feels she made another great investment. She reports that four neighborhood homes like hers recently sold in the $550,000 to $560,000 range, most likely increasing her equity by $17,500 in less than six months. In fact, she may soon qualify to cancel her MI.

“I try to educate people about all the tools and resources available to homebuyers,” says Jocelyn. “I tell them, ‘I’m living proof.’ Had I waited those eight years to save for a 20 percent down payment, I would have missed out on all this money and the perks of being a homeowner!”

For more homebuyer stories and resources, visit readynest.com .

-NewsUSA

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