Introduction
Every so often, The CREM Group likes to tell our readers what we see for mortgage interest rates in the future and how they might impact the market for Southern California probate and trust properties. That’s not all. Our sister company, CREM Management, tracks mortgage rates (all interest rates), and we advise our commercial real estate clients buying and selling residential properties to heed mortgage interest rate trends.
As of this writing, we are in August of an election year, the stock market is on a rollercoaster ride, and the weak economy indicates lower mortgage interest rates for the balance of the year. However, the pundits have differing views on how quickly interest rates will fall, and the supply and demand of real estate lag behind the changes. It’s not an easy market to predict.
Mortgage Rates Have Fallen Quickly… But
Freddie Mac reports that mortgage rates have fallen on 30-year fixed mortgages to below 6.5% for the first time since May of 2023. These data are coupled with the National Association of Realtors report that home listings in June rose 23% year over year, accompanied by a 4.1-month supply of unsold houses. It’s the highest number of months since May 2020, according to a Jim Sergent USA TODAY piece on Monday, August 12, 2024.
For home buyers, the drop in interest rates and the increase in supply should mean lower principal and interest payments and better affordability. There are lots of “ifs,” however.
Even with a larger supply of homes, the median-priced homes rose to an all-time high of $426,000 in June 2024. More houses, yes, but higher priced.
Both Jim Sergent in his USA TODAY piece and Telis Demos of the August 9, 2024, Wall Street Journal “Don’t Bet on a Quick Drop in Mortgage Rates” article say that even with the recent drops, we’re still above the median interest rate of 4% that we have enjoyed during the last several years.
What does that mean? Buyers aren’t ready to move just yet.
How Are Probate and Trust Properties Affected?
The CREM Group, which started in 2015, has a decade of experience in the Orange County and Los Angeles residential real estate markets, specializing in probate, trust administrations, bankruptcies, partitions, and receiverships. Because the sale of probate and trust homes takes much longer than the sale of standard homes (not in probate, trust, conservatorship, or receivership status), the prices are generally much lower for comparable property, and the P & I will be generally lower regardless of prevailing interest rates.
Commercial Real Estate Investors Pay Attention
Commercial real estate interest rates tend to tick .5 to 1% higher than residential mortgage rates. As our CREM Management clients know, we do our best to advise our investors on the best time to buy property to maximize the ROI on their commercial real estate investments.
Our well-honed market analysis, supported by the latest real estate software programs, helps us use data-informed decisions to aid our landlords in evaluating rental properties—including interest rate estimates and other information—so that they can invest, manage, and divest themselves of their investment properties more wisely. Each of our analyses builds on the others. We keep current with supply, demand, social trends, and market conditions, including interest rates, to secure the best experience for our commercial and residential clients. Our job is to:
- Get Optimized Rental Value for Your Property
- Some people buy probate homes at rock bottom prices, fix them up, and rent them out.
- We keep an eye on interest rates to advise our office building, warehouse, shopping mall, manufacturing, and apartment building owners what we see and how to position themselves for optimized rents.
- Gain Crucial Insight into Current Market Conditions
- “The only constant is change.”
- We’re always on the lookout for recent, near-term, and long-term trends in the Southern California real estate market.
- Determine Your Cashflow from Monthly Rental Value
- Interest rates affect cashflow in a big way.
- The economy, the political climate, and the local and state laws are taken into consideration as our staff evaluates transactions for our clients.
CONCLUSION
Even though mortgage interest rates have fallen dramatically in recent months, it will be challenging to know what to expect for the balance of the year, as the economy shows signs of fading with the weak jobs reports in recent weeks. The Feds could lower rates as a result, but as they say, anything can happen.
If you’re considering investing in probate or trust properties in Southern California, you would be best served by working with professionals like The CREM Group. If you’re looking to invest in commercial properties, our CREM Management team is an excellent choice to manage properties you’ve acquired. Either way, the CEO of both firms is Mark Cianciulli, an attorney and CPA who founded both companies to enhance and serve the Southern California real estate market.
Questions? Please get in touch with The CREM Group through this link and CREM Management right here.