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Hillary Caston
Laguna Beach Real Estate Agent
Laguna Beach, California
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Which Way is the Laguna Beach Real Estate Market Heading?

Is this a time for you to be buying oceanfront property in Laguna Beach? Let us tell you about interest rates and why you should wait expect to refinance in the next 6 months.
Written Oct 15, 2010, read 1503 times since then.
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Let me begin by offering a quick word to the wise – unless you’re a buyer who’s head over heels in love with a particular Laguna Beach home, it’s definitely a very good idea to wait before you buy a property. Any property.  Not forever.  Just a little bit longer.

Hmmm, you’re thinking. Realtor tells me to hold off on buying a home. Well you can stop scratching your noggin’ in stunned bewilderment.  I’m about to tell you why I’m dispensing such surprising advice. It all has to do with the path that Laguna Beach Real Estate is on. Ready? OK here goes…(drum roll optional)   

Interest rates are a goin’ south — droppin’ like Newton’s apple. Plunk! As in lower than they already are.

Right now jumbo rates (property $729,000 or above) are in the 5% range for a 30 year fixed. As Madame Hillary gazes into her crystal ball, she sees the rates dipping into the 4’s. A 30 year fixed conventional loan will slip into the 3’s. And a 15 year conventional will be crawling all the way down, down, down to the high 2’s.

Why do I believe things are headed in the southbound direction?  Simple economics, folks. We’re all familiar with supply and demand, right? OK, in six months when the banks unload their overflowing inventory of foreclosures and short sales, the result will be a major jump in supply. Or to put it another way, we’re looking at glut city.

And what do gluts do? You there in the back. That’s right. They drive down prices. In this case, home values AND ta-da! – Interest Rates. Gotta happen. It’s an ironclad law of nature.

There’s another ramification to all of this – because of the record number of foreclosures and short sales, there is now a swelling pool of people with not-so-hot credit. Financial institutions  will be facing a crucial decision – either lower FICA standards, or severely limit the number of people who qualify for a loan.

Now, if you’re just itching to buy that Laguna Beach home or any home in South Orange County right now, the very best advice I can send your way is this —  Make the best deal you can on the assumption that the property will be worth about 10% less once the inevitable glut occurs. So when you obtain your loan, just figure you’ll be re-financing in the near future. And whatever you do, don’t buy down the loan by paying for a point. Remember, the house will very likely be worth less than you bought it for, so you’ll be losing money in the long run. And the banks will be laughing all the way to the … (fill in blank).

If you absolutely want a Laguna Beach property, and want it now, make sure the chosen property has two very important things – plenty of equity and a motivated seller. That’s your ticket to a great deal.

If you’d like to learn more about Laguna Beach homes, I’ll be delighted to help. As somebody who is well-focused on this one-of-a-kind community, I can answer all of your questions and help you discover the numerous opportunities the Laguna Beach Real Estate market has to offer.

 

Learn more about the author, Hillary Caston.

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