What should we do before we put our property on the market?

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Question of the week: What should we do before we put our property on the market?

Answer: The answer to the question of the week has many variables, what type of property, what is is being used for now, where is the property located, what is the local market like, how long have you had/lived in the property, are you interested in maximizing return and not worried about time frame, or is time frame important…

Let’s take the last variable first, price versus time. No matter what a property’s condition is, or where it is located, asking price determines how long before you get an offer and can close on the sale.

Looking at sales data for California for the month of June, inventory contracted for the month as the number of sales increased. The median number of days on the market has held steady, at about three weeks.

What about prices? Sales prices went up, dramatically in Los Angeles Country, up 8.6% from May to $910,370, but were relatively flat in Orange County, and down almost 3% across the state.

In Southern California, (Los Angeles, Orange, San Diego, San Bernardino, Riverside, Imperial Counties) the sales price to list price ratio in June was essentially 100%–on average buyers paid what sellers asked. That said, over 38% of listed properties across the state had price reductions, the highest percentage of reductions this year; the average price reduction on those listing was 4.7%.

What do all these numbers have to do with the question?

It shows that if a property is priced to the local market, it will take about three weeks to sell and the sales price will be the final listed price.

What makes the listed price correct? Thirty-eight percent of sellers found they were asking too much for their properties as they over-valued their properties for the condition they were in.

Perhaps they spent a lot of money over the past few years upgrading, remodeling, landscaping, and making a beautiful home, and wanted to recoup all they spent, and perhaps more.

Or, perhaps they were selling a property that had not been improved, upgraded to the 21st century, and was being sold “as is”, but were asking for a buyer to pay the same amount as a more modern and up-to-date home in the area.

Either way, know the local market plays a factor in what steps you may, or may not, wish to take before putting your home on the market.

A few steps that do not require much expense, but make a difference to potential buyers, is to de-clutter the property. The more open your home appears the more appealing it is to a family that will be trying to see how they will live in the property, if and how their furniture may fit.

None of your kids want grandma Ethel’s amazing collection of Hummel figurines and the extremely large display cabinet grandpa Max made, and expanded a few times, to hold her collection. In reality, neither do you—this is a great time to market the pieces individually or as a collection, so you can clear space and show how large your dining room is.

Purge closets, cabinets and drawers. Clean out the garage—it may be great storage for you, however buyers may want to use the garage to park their car(s).

While you are decluttering, look around and see if you need all the family photos on the walls and every piece of furniture.

Counter tops in the kitchen and bathroom(s) should be clear, showing how much counter space you have. (Also, don’t think some buyers won’t look inside your fridge…)

If you have pets, be aware of the odor some pets create which can be very off-putting. I am particularly affected by cat odors—many times over the years I have walked into a home and immediately knew there was one or more cats in the home and I rushed the appointment before my eyes and nose completely gave out. We all get used to the natural odors of our homes and may not notice lingering cooking or pet odors, ask a very good friend, or your agent, to be honest with you and let you know if there are odors you need to eliminate—and don’t argue with them if they say there are!

After you have purged, either selling, donating, throwing away, or renting a storage space for stuff you will sell, donate or toss in the future, it is time to tackle the appearance and condition of the property. 

The next steps begin the trade offs between expenses to improve the property and increase appeal for some buyers, and price you can realistically get for the property for the condition it is in.

Some buyers will be looking for the “worst” home in the “best” neighborhood they can afford. They see the value of buying the home for below what the average price is in the area and doing minor, or major, repairs, painting, carpeting, landscaping, themselves.

Others, want to be able to close the transaction, have their furniture moved into the property and not have to do anything to the property for several years when routine maintenance and repairs pop up. These buyers are willing to pay for the top of the market in the area to eliminate work and costs in the near- to medium- future.

In between the two extremes, is deep cleaning the home, painting walls where pictures have come down and left evidence of their being there, replacing burnt out bulbs, switches that do not work, touch up scuff marks, replace cracked window, and other small dings, dents, and flaws.

Not all real estate agents agree with me on this step. The chances are very high that when you accept an offer, the buyer will engage a physical inspector contractor to go through, over, and under (if possible) your home looking for major defects and concerns. Plumbing, electrical, structural, HVAC, all will be examined with any defects or suggested corrections noted.

Very often, buyers use this report to re-negotiate the price, or require repairs, or both, before they will close the transaction.

My suggestion is get your own physical inspection. A buyer’s inspector may come up with some items your inspector does not, or vice-versa, however having your report will enable you to meet with your agent and discuss the repair costs for the items listed and what impact they may have on the price/value of your home.

You may decide to forgo the $15,000 re-pipe or electrical upgrade and adjust your price accordingly. Or decide to pay the $2500 for a new garage door, including automatic opener, as it spruces up the curb appeal of your home.

When negotiating with your buyer, you can present the report you have in hand along with the repairs you have completed and are will to do.

Before spending tens, and tens, and possibly tens, of thousands of dollars to get your property prepared for the market, consider the return you will get in sale price for the dollars spent. Is the return significantly higher than the costs compared to making minimal improvements to the property and accepting a lower price?

One factor that is important whichever route you take in the cost-price decision, clean drives price exponentially more than most repairs. A vacant, very clean, home that needs some repairs and/or upgrading will likely sell better and faster than an untidy, perhaps odorous, home that is fully furnished, with some, or no, repairs needed.

All that said, be very aware of the local market, what has sold, what is on the market, and how your property objectively compares. If you are thinking of selling within the next year, start visiting open houses, following closing prices and keeping track of conditions, list prices and sales prices.

When you are ready to put your home on the market visit all of your “competition.” In general, is it better to sell at a slightly lower price to sell faster than to try to maximize price and take longer to sell. If lowering your price a bit results in selling your home faster than your neighbor, it often is worth it.

If you, or someone you know, is considering selling your home in the future and will be purchasing another home, contact me to determine your purchasing power based on different sales prices for your current home.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Rates for Friday July 24, 2026: Geo-politics, not economic data, are moving rates up this week. Renewed attacks between the United States, and some Arab nations, and Iraq has caused oil prices to surge, plus President Trump announcing continuing, and adding new, tariffs with trading partners, have caused rates to jump up this week.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.50              Up 0.125%

30-year high-balance conforming        6.620%        Up 0.125%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

 Are you more likely to watch soccer after the World Cup?

I have watched the English Premiere League (EPL) and other European leagues and championships for many years. The number of people I know, or meet, who have also started watching European football and the EPL increases every year.

I have not, and likely will not in the near future, watch any professional soccer league in the United States. I suspect it is because the best professional soccer players, with one (Lionel Messi), possible more, exceptions play in Europe. My comparison is the PGA Tour Champions, for professional golfers older than 50; they are really good, but not as good as the players on the PGA tour. The MLS, the best soccer league in the United States, is similar, the best players from other nations that play in the league are a bit past their prime.

Hopefully, the World Cup has ignited some passion in you for the game and you will become a fan of a team to follow—either domestically or overseas—and enjoy what a wonderful game it is.

{awaits comments about: low scores, players writhing on the ground…}

Should we move Mom and/or Dad?

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Question of the week: Should we move Mom and/or Dad?

Answer: As we reach, and pass, 60, more and more of our conversations with friends, clients, neighbors, and others in our generation are about our parents and their housing situation.

Mom and/or Dad are aging, and their current home is too big, too far, not amenable to deteriorating physical abilities. They may have already recognized they should not be driving, but still need to go to the store, doctors’ appointments and ideally socialize.

But…they have been in their home for decades and are whatever word defines entrenched to the Nth degree. But…they acknowledge that their living situation is not ideal for themselves, or you.

For those who are financially able, having in-home care enables Mom and Dad to stay in their home longer—sometimes the pushback is they feel they don’t need help, or they don’t want “strangers” in their home.

Financially able is the key factor, on top of their housing costs, mortgage (if they still have one), insurance, taxes, utilities, maintenance, they add the costs of the licensed personnel who will be taking care of them.

Other costs, beyond the costs of care, many homes are not compatible for elderly residents. Doorways are not wide enough for a walker or wheelchair, bathrooms are fraught with challenges from being able to get into and out of showers, to being able to lift oneself off the toilet. Ramps may be needed to get in and out of the house, or from one room to another. Stairs? Is there enough in asset accounts, or equity, to “senior-proof” (think make ADA compliant) the home, and pay for in-home care?

For those who are transitioning to their “final stages” of housing, many do so later than they should, almost always because of their emotional attachment to their homes, as well as fear of major change. Often leaving not only their homes but also their friends and social groups; ironically for many since they have likely have not seen their friends or social groups for some time given their inability, or lack of desire, to leave their home.

The most common, and obvious, initial move for Mom and Dad, is to downsize to a smaller home, either house, condo, apartment; often in a senior living community (most have minimum age requirement of 55 years of age). Known as independent living, many of these communities also have available services for residences, such as housekeeping, gardening (if applicable), dining services, transportations services to medical appointments and social outings—all for a fee of course. Not uncommon in some regions, are also recreational facilities such as golf courses, tennis and/or pickleball courts, gyms, and swimming pools.

This stage enables Mom and Dad to retain independence, while likely smaller than their current home, enables them to retain some of their furniture, put family photos on the walls, and personalize their living environment.

Very importantly, community events such as dances, workshops, games, outings, book clubs, etc, etc are constantly being scheduled so there are opportunities on a daily basis for residents to get out of their homes and socialize with other residents.

As Mom and Dad age further, or if one becomes widowed, the next step is to down size a bit further; ideally, they still have enough physical and mental ability to take care of their basic needs.

The step, where we as a family are now, is the transition from independent, to assisted, living. Mom and/or Dad need assistance with dressing, toileting and bathing, ensuring the right medications are taken at the right time, convenient dining facilities, or meals delivered in their residence. Many of the residents in assisted living are ambulatory challenged, needing canes, walkers or wheelchairs, and require a lot of attention and assistance on a daily basis.

For those who require on-going medical care or rehabilitation, nursing homes, or skilled nursing facilities (Sniffs to industry) provide 24/7 licensed nurses, physicians on premises, and medical monitoring. These facilities are akin to a hospital ward with single or double rooms for residents, nurses’ stations, etc.; they are residential medical facilities.

From a cost stand point, as seniors move from through these stages of housing the costs increase due to the amount of services required, as well as professionals with more expertise and their attendant higher labor costs.

Unfortunately, for the most part, our parents generation did not partake of long-term care insurance that provide financial benefits to offset costs for housing and care as we age.

MediCare and, if applicable, Veteran’s benefits can cover some of the costs associated with senior care and living, but in most instances not all. Which makes discussions with parents comparing costs and financial ability very important—and better to have sooner than later.

Sitting down and going through their income from pensions, social security or other sources, examining their assets accounts, savings, retirement, annuities, and their home equity will provide the basis for what resources are available to them for their housing, and care needs.

Seniors who own their homes, especially in Southern California, have the advantage of the tremendous equity growth they have enjoyed over the years, decades. It can be leveraged through sale or mortgage options, to provide for them to age in place, or elsewhere.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Meet Kevin Warsh, the new Chairman of the Federal Reserve. On Wednesday, Warsh having attended his first Federal Open Market Committee (FOMC) meeting, held a press conference to talk about the meeting. The FOMC is the committee that sets the Fed’s benchmark interest rate, as such the comments by the Chair can have a big impact on markets. Which is what happened this week when, while not changing its rates, the members of the FOMC were divided on rates between now and the end of the year; there appear to be more voices indicating the fed funds rate will increase. Inflation is the primary focus that could result in higher rates as labor market data suggests a soften in that sector of the economy.

Rates for Friday July 10, 2026: Rates closed last week flat from the end of June, but spiked this week on the Fed comments, and the renewed hostilities between Iran and the United States as cargo ships were targeted in the Strait of Hormuz. Rates are at their highest since mid-May.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.375%        Up 0.25%

30-year high-balance conforming        6.50%          Up 0.25%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

For those who are dependent on, maybe a bit addicted, to the weekly assault on their in-box from an aging, increasingly crotchety, mortgage dude, with questionable insights, poor grammar and dad-joke level humor at times, my apologies for your July supply of said missives.

Having not sent last week due to holiday weekend, next Friday’s WR&MU will also be missing as Leslie and I travel to Northern California, more specifically Lake Tahoe, to enjoy some time with long-time friends (fall semester 1980). I would apologize for the emptiness you may feel, but I am one who tells people never apologize for taking time off.

Will the ROAD Act help home buying affordability?

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Question of the week: Will the ROAD Act help home buying affordability?

Answer: Hopefully, but…

This week the 21st Century ROAD to Housing Act (“Renewing Opportunity in the American Dream”) passed both houses of Congress and is awaiting President Trump’s signature to become law.

Note that as of this writing, Trump is withholding signature on the act until the SAVE Act is passed by the Senate.

The intention of the act is to use the power of legislation to make housing more affordable by increasing housing supply, reducing regulatory barriers and update federal housing programs to make them easier to navigate and increase funding.

Two somewhat unique aspects of the ROAD Act* are that was passed with tremendous bipartisan support in both the House of Representatives and Senate, very rare in the past several decades for any major legislation; as well, unlike most housing bills at all levels of government, the Act focuses heavily on the supply-side of the affordability problem.

Too many legislative acts, especially at the local and state level, have looked to putting more money into the buyers’ side of home buying, expecting to increase affordability.

For instance, Senate Bill 417 in the California legislature is an $11.25 billion housing bond that will, among other items, provide $1 billion in homeowner assistance in the form of down payment and mortgage assistance programs and another $1.25 billion dedicated to veterans’ home loans. Other funds will go to construction of new affordable rental housing, farmworker housing, tribal housing, student housing, and housing for homeless population.

No money is being earmarked to building more homes for purchase. There is no corresponding bill that would support the bond by enabling building new homes for purchase, easing regulations, guidelines, fees, etc to greatly reduce the red tape and costs to build those new homes. Depending on the location of new home construction, fees to developers add $40,000 to $120,000 for permits, plan checks, development impact fees, utility connections, agency fees, among costs.

What SB417 will do is increase the pool of eligible home buyers, i.e. demand, but not increase supply. More demand, same supply, prices increase, homeownership is less affordable to those not fortunate enough to obtain the funds from the state for their home purchase.

The supply side focus of the ROAD Act looks to address home affordability in a few ways.

The headline part of the Act is as restriction on the number of single-family homes that large institutional investors can own and purchase to 350 units. Institutional homeownership is seen by some to be a major factor in affordability as they compete with homebuyers with the ability to purchase quickly with all cash, waive contingencies a family purchasing may request and can become major homeowners in neighborhoods and cities.

On the other side, investors often purchase properties distressed properties, those in foreclosure, vacant, or in need of major rehabilitation. They increase the rental stock in neighborhoods, enabling families unwilling, or unable, to purchase, to live in a single-family home in a neighborhood instead of apartments. Finally, the percentage of homes owned by institutional investors (those owning 1,000 or more homes) was about 500,000 homes nationwide, less than one-half of one-percent of the housing stock in the United States; in some areas, particularly in the Southeast, investors can own up to 20% of the housing stock in some cities—these are the primary areas of concern for those supporting the limitation on investor home ownership.

Private equity firms, real estate investment trusts (REITs), and other entities that currently own more than 350 single-family homes will not be required to sell any of their inventory, which could crash prices in some areas, but would not be able to purchase more.

This is a great headline part of the law, however, when an entity reaches the 350-home limit it is not that difficult to create another entity and purchase more homes.

Since the Constitution was ratified by the original thirteen states, and before as it was being debated, the separation of powers between local, state and federal governments has been a source of many lawsuits and court decisions. A provision in the act will skirt another battle between regulatory authorities at all levels by the use of incentives instead of mandates to encourage local governments to streamline permitting, allow greater housing density, encourage the construction of ADUs, among other areas to increase housing.

As such, the Act includes an incentive program for localities that have been consistent in increasing their housing supply. There is a pool of $200 million per year to award those who qualify with funding every year for five years. This enables long term planning and building for municipalities who have proven their ability to allocate resources successfully to increase their housing stock.

Covid caused significant harm to commercial property owners as work-at-home became mandatory, and in the seven years since it has become predominate for many industries. In the act is a pilot program for local governments to assist in converting vacant commercial buildings into affordable housing. Office buildings, malls and other largely vacant buildings can be converted to housing, helping the property owners and those in need of affordable housing.

In February, our question of the week discussed manufactured housing as an option for building housing on vacant lots, or for ADUs. Included the ROAD Act is more federal funding for the construction of factory-built, i.e. manufactured, homes, reducing the cost of new housing stock.

One more very unique aspect of the ROAD Act is that is it “only” 381 pages, not several thousand as many major pieces of legislation seem to be.

Will the ROAD Act increase home affordability? Yes it can, may, will, in areas where local governments take advantage of the funds and incentives in the Act to leverage their resources. However, in other areas where construction and rehabilitation is retarded by onerous regulations, lawsuits, reviews, fees, permits, etc, the opportunities for success will be limited until changes are made to encourage developers to build, convert and rehabilitate to increase housing.

*When did it become compulsory for legislatures to attach acronyms to all pieces of legislation? How many hours are spent by aides and interns? Let’s make the acronym HOUSE! Homes Our United States Expect? HOME? No, that is the crossword acronym for the Great Lakes. DRIVEWAY? Too long. DOORS? Dwelling something something Road to Success? I like Road…)

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Mixed signals from the Commerce Department as its revision of 1st quarter GDP showed the economy grew at a seasonally and inflation adjusted 2.1% rate, previously the estimate was 1.6% growth. The major factor in the revision was a decrease in imports. Why mixed? While GDP increased, the major driver for our economy, consumer spending was revised down to 0.5% growth in the quarter, the weakest growth in quarterly spending in four years.

Unlike April, incomes outpaced inflation in May, increase at a 0.7% clip, which matched the increase in consumer spending.

Inflation continues to climb. The personal-consumption expenditures price index, the Fed’s preferred gauge for inflation, rose 0.4% in May and 4.1% from a year ago, its highest level since 2023. Core prices (food and energy excluded from index) rose 0.3% for the month and 3.4% annually.

Rates for Friday June 26, 2026: Rates continue their downward trend this week.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.125%        Down 0.125%

30-year high-balance conforming        6.25%          Down 0.125%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

I have enjoyed the clips of visitors from other countries in the United States to cheer on their teams in the World Cup. The take over in Boston by the Scottish, Norwegians doing their rowing in Times Square, a German touring the South. One very common aspect of many of the videos is their outright joy in trying American food, and food outlets for the first time.

The smile when a Brit tastes biscuits and gravy for the first time. The wonder as Swedes go to a Buckee’s. The disbelief in the first bite of a Chipotle burrito. Biting into a baby back rib at a roadside barbecue.

As well, their appreciation of the small towns far from the major cities across the country.

As long time readers of the WR&MU know, I love road trips, in large part for the small towns, their diners and restaurants, the warmth of the locals, and the beautiful vistas we are blessed to have access to across America.

Go USA!

Did FHA allow discrimination in home loans and sales?

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Question of the week: Did FHA allow discrimination in home loans and sales?

Answer: This week’s question is in honor of Juneteenth, which became a federal holiday in 2021. It commemorates June 19, 1865 when Union troops arrived in Galveston, Texas to announce the end of the Civil War and ensure the last slaves in the United States were freed.

In answer to the question of the week, yes; FHA did allow discrimination in home loans and sales.

The Federal Housing Authority was created in 1934 as part of President Franklin Roosevelt’s “Alphabet Soup Agencies,” created as part of his New Deal.

The primary purpose of the FHA was to make homeownership more accessible by insuring mortgages approved and funded by FHA under their guidelines. Affordability and accessibility expanded greatly as FHA mortgages required very small down payments, three-percent (3.0%) and were 30-year fixed rate loans. Low down payments and low monthly payments due to the extremely long amortization period broke open the housing market to millions of American families. But…

Besides the positive aspects of low-down, low-payment, fully insured mortgages, FHA’s underwriting policies also reinforced racial segregation.

FHA engaged in redlining, marking neighborhoods with Black and other minority populations (which could include those of Asian, Italian, Irish, Hispanic or Jewish descent among other ethnicities) as “high-risk” for lending.

Until the landmark Shelley v. Kraemer Supreme Court decision state courts enforced racially restrictive housing covenants. In 1948 the Court ruled that judicial enforcement of the covenants violate the Equal Protection Clause.

Guidelines used by FHA favored neighborhoods with covenants that maintained “racial homogeneity,” supporting the use of deed restrictions that prevented homes from being sold to minorities. Because the FHA was not making judicial decisions, it did not change its policies because of the ruling in Shelley.

Unless a neighborhood, or individual seller, was taken to court by potential buyers to sue under the Equal Protection Clause, restrictive covenants remained in effect, and home buyers could use FHA financing.

At this point we need to mention that the Veteran’s Administration, created in 1944 under the GI Bill, also enabled discriminatory lending against veterans. When created in 1944, the VA, unlike FHA at the time, did not directly make loan decisions or fund mortgages, it guaranteed loans.

As a benefit of serving in the armed forces, the GI Bill authorized the VA to guarantee 30-year fixed rate mortgages to veterans with no money down. Loan decisions were originated, approved and funded by local banks, real estate professionals, savings and loans and other lenders, many of whom support segregated neighborhoods and homeownership.

In the late 1940’s and well into the 1950’s suburbia exploded across the United States, creating millions of homes in neighborhood developments to house returning veterans and their families. Access to the new housing was, in staggering percentages, not available to minorities, even those who fought to against tyranny in World War II to provide freedom to hundreds of millions in other nations.

The historically economic impact of federal agencies not only ignoring racial covenants and discriminatory lender practices but aiding and abetting such practices, is the inability for the building of transferable wealth for generations through the inheritance of home equity.

Consider a Black, or Hispanic, or Asian family, the husband has returned from serving in the Army in 1945. While he was gone his wife worked in a textile company that made uniforms for the troops. They want to purchase a home for $12,000 in a new neighborhood with no money down and a mortgage payment of about $80 per month. But cannot because of covenants stating “No person whose blood is not entirely that of the Caucasian race shall use or occupy any building on any lot, except domestic servants employed by a white occupant.” (actual covenant from Southern California subdivisions*)

Over the years the home value increases. They were not able to sell the home in the 1960’s for $25-30,000 and purchase a bigger home and continue to grow equity. They were not able to tap equity to open a business, pay for college for children, purchase additional property for themselves or children.

When they passed away they did not have tens, hundreds, of thousands of dollars they could pass onto their children and grandchildren, enabling them to accumulate more wealth.

It is estimated that American homeowners have approximately $35 trillion in home equity, about 70% of which is owned by White Americans. Had minorities not been discriminated against by federal agencies, would the amount of equity by higher? Debatable due to many factors of supply and demand impacting prices and affordability. Would minority families have significantly more home equity today absent federal guidelines that prevented opportunities to build equity over the past ninety plus years? Absolutely.

It was not until the Civil Rights Act of 1968, which included the Fair Housing Act prohibiting discrimination in housing and mortgage lending based on race, color, religion, and national origin (later expanded to additional protected classes) that racial covenants and discrimination in lending practices were illegal.

But illegal in law is not the same as absent from practice. Despite the law, many home sellers and real estate professionals continued to redline and discriminate against minority buyers.

Anecdotally, I was driving around one weekend in the early 1990’s visiting open houses looking to meet agents and generate referrals, when I saw a for sale sign from a well-known company in the area and the broker owner, who was in her mid-60’s, was the agent holding the house open. The house was in her neighborhood, part of which was on a waterway, and as I was walking in a Black couple was walking out. I waited until the couple left, handing them a card as they did so, of course, and commented that it seemed they liked the house, making positive small talk. To which she replied, “they may but I’m not going to the them buy it; we’ll find another buyer.”

I was shocked, perhaps not that she was thinking that way as I had known her for a while, but that she said it. It made me uncomfortable not only for her saying it but thinking I would agree.

Martin Luther King Jr. said, “The arc of the moral universe is long, but it bends toward justice.” The bend continues.

*When I started in the industry in 1987 it was not unusual to see these covenants on homes that were the subjects of our business. While no longer legal, the homes had not transferred since the Civil Rights Act of 1968.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Retail sales boomed in May, up 0.9%, well above the impact inflation had on sales, which supports stronger employment and GDP growth in the second quarter. In a vacuum the news would push rates higher, but economic vacuums do not exist.

Rates for Friday June 19, 2026: Economic data may indicate higher rates, but the foundation for a peace deal with Iran and tankers of oil cruising through the Strait of Hormuz has rates holding steady from last week.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.25%          Flat

30-year high-balance conforming        6.375%        Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

I don’t know who is more excited, Sammy or myself. Leslie returns in the wee hours tonight (tomorrow?) from her trip with our daughter to Rome and Sicily. A bonus is our youngest, who was the purpose of the trip due as a graduation present, will be staying for all of next week.

A great Father’s Day gift!

Dennis

Are homes more affordable?

/in /by

Question of the week: Are homes more affordable?

Answer: Depending on your starting point, yes.

Using median home price data from the California Association of Realtors for the month of April, homes in California are more affordable.

The median price for a single family home in April was $914,810 statewide; up 2.9% form March’s $889,190 median price, and up a scant 0.4% from last April.

Los Angeles County’s median price was $845,410 in April, down 0.6% from April 2025 ($850,270) and up 2.1% from March’s $828,300. Orange County did not see the month-to-month increase as seen in LA and the state; the median price in April was $1,470,000, only 0.2% growth from March’s $1,467,500 but up a strong 3.7% from April 2025 price of $1,417,450.

Back to our affordability question.

Comparing the statewide median price in April for 2024-2026, homes are more affordable—requiring approximately 4% less income to qualify for an 80% loan to purchase the median home.

 April 2024April 2025April 2026Difference 2024-2026
Median Price$904,101$911,400$914,810$10,800
20% Down$180,802$182,280$182,962$2,160
80% Loan$723,208$729,120$731,848$8,640
Rate6.875%6.625%6.375%-0.50%
Payment$4,750$4,670$4,565($185)
Income$14,394$14,150$13,835($564)

As you can see, home prices have increased very moderately over the past two years, significantly less than inflation. The decrease in mortgage rates is the primary factor in the increase in affordability in the state.

Will the trend continue?

Affordability may continue to increase for home buyers; however, it may be more due to prices declining as rates are not expected to go down in the near, or medium, future due to inflation remaining higher than desired for a the ever-elusive balance between maximizing employment with minimal inflation.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Inflation data supports comment above out rates not helping affordability as the Consumer Price Index rose 0.5% in May, and was up 4.2% for the past 12-months, the fasted annual increase in three years. The core index (energy and food prices stripped from data) shows how much those two components impact our economy. Without those two data sets, prices in May increased 0.2% from April and were up 2.9% annually. Energy prices spiked 40% year over year—impacting every other component of CPI.

Rates for Friday June 12, 2026: Despite the spike in inflation, rates are steady for second week in a row due to comments from the White House that a deal is very close to being signed to end the conflict with Iran.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.25%          Flat

30-year high-balance conforming        6.375%        Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

Are you excited for the World Cup?

Chances are you are not—most Americans are not, it is the “wrong” kind of football.

My “first” World Cup was the 1978 Cup between host country 1978 and Netherlands, my sophomore year in high school in Brussels. What I remember the most about the tournament was the numerous department stores and that had banks of televisions in their windows for the locals to watch games—sidewalk watch parties, before watch parties became a thing.

The highest rated Super Bowl audience was the glorious Super Bowl LIX when the universally beloved and respected Philadelphia Eagles wiped out the Kansas City Chiefs 40-22. The international television audience for the game was estimated to be almost 200 million viewers.

The final game of 2022 World Cup final in Qatar between Argentina and France (one of, if not the, greatest finals ever—Argentina won on penalty kicks after the game was tied 3-3 after two overtime periods) had an international television audience estimated at 1.5 billion viewers.

If the United States team can make the round of 16 it would be a great success for the team, matching results from 1994, 2010, and 2014. In 2022 the team made the quarterfinals.

The furthest the United States has ever advanced was in 1930 when they lost in the semi-finals in Uruguay to Argentina 6-1.

Due to my high school tenure there, the team I root for, after the United States of course, are the Red Devils of Belgium.

Kum op, Rode Duivels!  Allez les Diables Rouges!

(Belgium is bilingual, Flemish and French)

Dennis

Will our children be mad at us?

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Question of the week: Will our children be mad at us?

Answer: This is question has so many possible responses due to so many factors not being in the question: How old are the kids? Did they ask to go to a concert and spend the night with other kids you don’t know? Were you singing at the top of your voice to the grocery store soundtrack playing “Born to Run?” Did you tell their fiancé about the time s/he was in high school and their pants fell down during the school talent show?

Did you die without having a trust and will?

Depending on your relationship with you child(ren) and their natural demeanor, the first questions above may result in a “no” or “not too” mad at you.

Regardless of your relationship with your child(ren), dying with no estate planning will very likely have them upset with you, quite possibly very upset; putting some tarnish on memories, and impacting their grief process.

(I am not an attorney—below is for general information to provoke a discussion for you to have with an attorney)

Dying without a valid will is called dying intestate. Intestacy does not automatically require probate, but too often does.

In California, when a person dies with assets in their name alone, and those assets do not automatically pass to someone else the estate (assets possessed by deceased) must go through probate.

Such assets can include real estate, bank accounts, investments.

What is probate? It is a court supervised process for settling the estate of a deceased person.

If there is a will, probate validates it. A person is appointed to represent the estate as administrator. S/he will ensure debts, taxes and expenses of the deceased are paid, and the remaining assets are distributed to heir or beneficiaries as decided by the probate court.

I recently read a summary of a presentation at the Los Angeles County Bar Association’s annual program that featured bench officers for Los Angeles Country probate courts. If you do not have an estate plan, after reading below you will likely, I hope, schedule an appointment with an attorney that specializes in trusts and estates.

Every year 85,000 probate cases get filed in LA County. Of these, approximately 35-40,000 cases go to trial. There are about 12-15 probate judges in the County to handle these cases.

Depending on their weekly calendars, the bench officers, the judge or presiding judicial officer, have 1500 to 2000 matters each week they must handle.

Fred is a widower who passes away owning a home he has had for 40 years that is worth $1.2 million, he has $500,000 in an IRA and about $75,000 in his bank account. He has two adult children by his first wife, he second wife whom he lived with for 25 years had two adult children he never adopted, but lived with he and their mother for their teenage years. He has a simple will he completed leaving his home and other assets “to my children.”

Who gets what? Does “children” include the step-children whose mother contributed to the assets in the estate but went to Fred when she died? Will there be a fight over who is appointed to administrator? Do the step-children make a claim on the estate?

Fred’s estate is very likely headed to probate, which will entail hiring a probate attorney, which will be one of the debts paid from the estate. Every contest to the estate will require a filing for the court to review and rule upon. As can be seen from the numbers above, if the probate is in LA County, the probate could take a few years to settle.

Fred’s children will be stressed, frustrated, upset, and not happy with him for not taking the time, and spending probably 5-10%, or less, of the cost of the probate attorney, to have an estate plan with a trust and will created, the estate could settle in a matter of months with minimal headaches for the family.

If  your parents do not have an estate plan, and  you will likely be the court appointed administrator, it may be a good investment for future piece of mind and sanity to offer to pay for their estate plan, explaining the reason being you do not want to be burdened with probate after they pass.

“We don’t have children.”

“I’m not married.”

“I’m young.”

Theses are the most common comments I receive from clients when I encourage them to get a trust. Regarding no children or spouse, someone will have to probate their estate, and a court will make a decision as to who gets the proceeds. Would you rather the judge determines which of your relatives making claims are rewarded with your passing, including your niece and nephew who are constantly engaged in nefarious activities? Or would you rather determine which, if any, friends, relatives, charities, organizations, received proceeds from your estate?

Regarding the last comment, being young. Age does not make you immune from dying, nor does it necessarily make you immune from dying before you are “old.” Covid taught us that. Accidents and nature happen. If a young couple both die in an accident with no estate plan, and they have children, it is very likely there will be a fight between grandparents, aunts, uncles as to who will raise the children, who will be executor and control the assets of the estate, all of which will cost money and create animosity between the orphaned children’s closest relatives. An estate plan will clearly set up who will raise your children, be in charge of the financial support they will receive, and steward the estate to, hopefully, provide for future education and living needs.

Finally, who do you want to decide to pull the plug or leave the tubes, wires, and machines keeping your heart beating for who knows how long? A very important part of estate planning are the medical directives authorizing who makes decisions should you be incapacitated.

Click on your calendar on your computer or phone, depending on where  you are reading this, and schedule a time next week that you will set aside to make an appointment with an attorney to start the process.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Higher rates on the table with Labor Department’s job report for May. Far exceeding the 80,000 expectations, the economy added 172,000 jobs in May. March, April and May averaged 188,000 new jobs each month, the highest pace since March 2024. Unemployment remained the same as April at 4.3%. It may be the World Cup effect for some sectors new hiring as leisure and hospitality added 70,000 new jobs and local government—supplying public safety, infrastructure, transportation—added the most jobs in a month, 55,000, in over two years.

While total salaries increased with the expanded payrolls, wages grew from last May by 3.4%, ordinarily a nice increase, except when inflation is 3.8%. While more households are bringing home paychecks, those already with paychecks are feeling the crunch from inflation—which can lower demand and consumer spending, possibly slowing inflation.

Rates for Friday June 5, 2026: Rates this Friday are barely holding flat from last week as the strong employment data points to the Fed possibly raising rates to cool hiring, the economy and inflation.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.25%          Flat

30-year high-balance conforming        6.375%        Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

Yes, election day was Tuesday. However, there is another vote you can cast today—with many almost as many options on your “ballot” as there were for governor in California.

It’s National Donut Day! Cast your vote for best donut by picking up a glazed, jelly, crueler, old fashioned, buttermilk.

This brings me to my favorite and the source of arguments similar to “is a hot dog a sandwich” debates; my donut shop vote is the apple fritter.

And a hot dog is not a sandwich, but a hot dog in a bun is!

Dennis

Will our homeowners insurance go up again?

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Question of the week: Will our homeowners insurance go up again?

Answer: Probably.

In 1988, California voters passed Proposition 103 that moved California’s Insurance Commissioner from an appointee of the governor to an elected position beginning with the 1990 election.

Ostensibly, an elected official that was independent of the executive branch would result in a decrease in some insurance rates, put barriers in place for rate hikes by insurance companies as they had to be approved by the Insurance Commissioner’s office, and would expand the regulatory authority of the Department of Insurance (DOI).

As we have seen over the past decade, the Insurance Commissioner has become a very political, and the fourth highest paid statewide elected official. Politics is long on pandering to donors and emotions and short on unintended consequences of policy platforms.

Case in point, California Insurance Commissioner Ricardo Lara, who was elected in 2018 and whose is term limited out of office this year. For most of his term, Lara’s department slow-walked requests for rate increases from insurers, or flat out denied the applications. One result was many carriers pulling out of the state, particularly for property coverage.

It is difficult to determine with accuracy the amount of increase in property insurance premiums since Lara took office in 2019 as the DOI does not publish rate statistics for the overall market, that said estimates run from increases from 40-60% for most homeowners, for those on the FAIR plan (more below on FAIR) premiums have tripled since 2021.

A major factor in the insurance market has been the wildfires that have estimated costs of up to $40 billion in losses by insurance companies since 2024—most of that from the Palisades and Eaton fires in 2025.

Major insurers have denied coverage and/or rejected renewals for property owners in areas prone, or highly susceptible, to wildfires do to the extremely high liability and cost burden it must then pass on to other policy holders—as approved by the DOI. As result, over half a million consumers are covered by California’s Fair Access to Insurance Requirements, the FAIR plan, which was established in 1968 to provide basic coverage to property insurance for those who cannot obtain coverage in the open market. The FAIR plan is backed insurers who are licensed in the state to issue policies, with the “big six” covering most of the costs.

As major insurers pulled back, or out, of their coverage in the state, the number of policies issued by the FAIR plan exploded from about 270,000 policies in 2021 to almost 685,000 as of March of this year, approximately 8% of the insurance market. If there are a series of major events, the exposure could completely collapse the property insurance market, requiring a bailout from the state.

Initially meant as a last-ditch policy for a very small percentage of property owners, between the flood of new policies the FAIR Plans total exposure has surged from about $220 billion in the fall of 2024 to $724 billion at the end of 2025—which must be covered by the private insurance market.

Earlier this week, it was announced that the FAIR plan would be increasing for many homeowners by 29.1% starting October 15th, the modicum of good news is that the DOI rejected the 36% increase sought by the FAIR Plan.

Not all policy holders will experience the 29.1% hike. About 25% may see premium decreases by up to 80% , about 50% will see increase from 30-50%, the remaining 25% will see small changes in premium depending on wildfire risk and how “hardened” their properties are to prevent or mitigate damage from wildfires. Looking at property-specific risk, the FAIR Plan is starting to decrease premium costs for properties that are considered lower risk to wildfire damage.

As for policy holders with “traditional” coverage, the estimated premium increase over the next year is 7-10% across the market, however, like the FAIR Plan some may see decreases while others see higher premiums.

With the FAIR Plan on the edge of a crumbling cliff, the election for the state’s next Insurance Commissioner takes on as much, or more, importance as every other office on the ballot. Like every open office, there are a lot of people on the ballot, in this case eleven. Polling shows about six are serious contenders.

California uses a top-two primary system instead of the traditional political party primary selection process, as such it is possible that the final two candidates in November are very much alike in what their positions will be. Depending on whether the new commissioner understands the nuts and bolts of insurance, i.e. risk mitigation and requirement for ability to remain solvent after claims, the future of the homeowner’s insurance policies and premiums could become healthier, or become a burden on the state and its taxpayers to pay for poor policies and decisions.

Elections are important, do the math and consider if the policies put forth by candidates are feasible to ensure fiscal strength and stability or will require more funding from all taxpayers to pay for their plans.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

No surprises in economic data for April.  The second revision for 1st quarter GDP was revised down from 2.0% growth to 1.6%. The Personal Consumer Expenditure (PCE) index, the preferred index for the Fed when consider inflation and rates, increased 0.4% in April after March’s 0.7% increase, and was up 3.8% from last year. Stripping out energy and food, the core index was up 0.2% in April and was up 3.3% from last year. Personal incomes were flat from March, or down 0.4% to inflation, while consumer spending was up 0.5%, or almost stagnant after inflation. Not great news for rates…in ordinary times.

Rates for Friday May 29, 2026: To paraphrase a famous campaign slogan from the early ‘90’s, it’s the war dingbat. Markets were less concerned with the raw economic data than the news on “possible,” “close,” “near” agreement between the United States and Iran that could open the Straits of Hormuz and cease hostilities, as result rates are down from last Friday.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.25%          Down 0.125%

30-year high-balance conforming        6.375%        Down 0.125%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

May seems to have flown by for me—likely not for students who have had their eye on the end of their school year which seems further away the closer it gets, if memory serves me right.

Congratulations to all the graduates and their families as you enter the next stage of education and life!

(P.S. if anyone is looking for a very affordable car for their new driver or recent graduate, we are selling our 2001 Infinity…inquire here)

Dennis

When should we sell our home?

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Question of the week: When should we sell our home?

Answer: This is a question many families are asking, regardless of their stage in life. The answer has become more complicated because of the prolonged historically low interest rates during the Covid era.

Those rates fueled a tremendous spike in home prices due to the low rates increasing purchasing power by 20-25% from pre-Covid interest rates. If already a homeowner, monthly mortgage payments declined significantly, in some cases as much as 50%, by refinancing.

Here we are six years after the on-set of the pandemic. The median home price has increased from $588,000 in May 2020 to $915,000 in April, 2026, a 56% increase in value.

The vast majority of those who purchased or refinanced during the pandemic have mortgage rates of 3% or less.

Using 3% as the rate, purchasing the median priced home in the state with 20% resulted in a monthly mortgage payment of $1985 per month. Fast forward to present day, with a mortgage rate of 6.375%, the monthly payment for purchasing the median home in the state is $4565 per month, a 130% increase.

When should we sell?

Why are you thinking of selling?

If you purchased your first home in the pandemic, you may need more room as your family has outgrown the 2-bedroom, 1-bath home. Your home has a tremendous amount of equity, but the prices of homes that fit your family’s needs have increased at the same rate. Selling your home will provide a substantial down payment, but still leave a large mortgage with a high interest rate.

Your family needs more room, you won’t need less room until your children leave for college or jobs, or relationships—so it will be a while that everyone is sharing the bathroom during the morning rush hour.

Waiting for prices to come down, if they come down, and if they come down will it make a big difference in your buying-selling calculus?

My advice in this instance is to get an idea of the price for the right-size home in areas you may want to live. Then we do the math, which is pretty simple. What is the estimated amount of the proceeds from the sale of your home for down payment on the new home, calculate the monthly payment for the new mortgage, taxes and insurance.

Based on your income and other debt obligations, can you qualify to purchase at this price? If not, what is the top price range, and where might those homes be?

Your monthly payment will go up considerably, that said, how much has your income increased since you purchased your home? How much longer will you be working and will you likely have higher income moving forward? What is the percentage of your income is the new payment—what was that percentage when you purchased your current home. So while the payment will go up a lot in actual payment, how much might it go up in “relative payment,” relative to your income.

If you need to compromise on location, is that compromise worth the increase in the size of the home for your family.

If the answers are yes, now seems to be a good time to sell your home and move into a home that has more space for everyone.

What if you have owned your home for twenty plus years. It is a large home that your family grew into, and out of as you are now empty nesters. You do not need as much space, want to down-size.

Having lived in your home for a long period of time, you have a low mortgage balance, and a lot of equity. This puts a wrinkle in your decision to sell, which we covered earlier in the year, capital gains. Depending on the appreciation of your home, and a few other factors, your net proceeds from the sale of your current home may be greatly reduced to pay Uncles Sam and Gavin.

However, because you are down-sizing, you will likely be purchasing a new home at a much lower price than the selling price of your new home. Is the difference great enough that you may not need a mortgage, or a mortgage so low the payment change may not be noticeable even with the higher mortgage rate?

Keep in mind, if you are over 55 you will be able to transfer your property tax base to your new home. If you purchase your new home for less than the sales price of your current home, your tax base stays the same; if you purchase for a higher amount, the difference between your sales price and purchase price is added to your new tax base.

For instance, if your current tax base is $350,000 and you sell for $1,000,000—if your new home costs $850,000, your tax base is $350,000; if your new home costs $1,100,000, your new tax base is $400,000.

As with the younger family, do the math. Where would you buy, what is the price, when the dust settles what is your payment and is it affordable? What is the tax liability for capital gains to the IRS, a flat amount, and the State of California, taxed as ordinary income.

When the calculus is complete, does it support your desire to down size to a smaller home with less maintenance, upkeep and other reasons you are considering such a move.

When is a good time sell?

In 2022, when rates and inflation jumped quickly and significantly, the WR&MU covered timing the market and is now a good time to buy a home.

The answer to our question of the week regarding selling your home, is not much different than when to buy a home—does the financial calculus enable you to meet your housing needs and desires?

If the answer is yes, do not try to chase prices and rates down, because in the long run, you can’t time exactly and there is a price for waiting.

Click below to schedule a time to go through your calculus as to give you the information you and your family need to answer our question of the week.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Rates for Friday May 22, 2026: Not a lot of rate changing economic news this week. Of note, however, is news that more members of the Federal Reserve who vote on whether to change their benchmark interest rate are forecasting a rate increase later in the year if inflation remains sticky, or increases further. There was some reaction, up, in the rate markets, but by today rates have settled back to be flat from last Friday.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.375%        Flat

30-year high-balance conforming        6.50%          Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

As we enjoy our barbecues, travel, relaxation of our three-day weekend, take time to be thankful for those who have given their lives to defend the freedoms and liberty we enjoy.

We are not a perfect country, but we are more less perfect than any other, and I am grateful to be a part of this great nation.

Dennis

When would we need an appraisal, other than to purchase or refinance?

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Question of the week: When would we need an appraisal, other than to purchase or refinance?

Answer: I was catching up with my friend Tom, who I met in the early part of this century when we started working together. Tom was my go to appraiser for all my clients in the area until May 2009. 

Why the sudden stop? The Home Valuation Code of Conduct (HVCC) was implemented by the Office of Federal Housing Enterprise Oversight—a lot of words to say the primary regulator for Fannie Mae and Freddie Mac, subsequently put under the umbrella of the Federal Housing Finance Agency when it was created in 2010 as a result of the Dodd-Frank Act.

The HVCC mandated that mortgage originators could not have “direct relationships with appraisers.” Meaning, we could not order appraisals directly, nor once we received a report, communicate directly with the appraiser. The result was an explosion of Appraisal Management Companies (AMCs), and a detrimental impact for many years to the overwhelming majority of borrowers (in my opinion and experience).

The HVCC was the result of then State Attorney General of New York Andrew Cuomo’s investigation of appraisal practices and alleged pressure on appraisers during the rapid housing price expansion (bubble) leading to the 2008 crash in real estate. The core of the investigation uncovered coercion, intimidation and “we need…” from several Washington Mutual offices in New York State.

From an originator’s perspective, I lost my excellent communication with Tom to anonymous relationships with AMCs. For almost a decade I could call Tom and get a quick opinion of value, discuss property conditions, when appraisal was received go through comps and justification of value for me to relay, if necessary, to clients and agents.

In place of this long term relationship, appraisals ordered via a website, the AMC would have random assignment of an appraisal. When appraisal was complete, if there were errors, or issues with value, we had to go through the AMC to then go to appraiser. Many times it was necessary for us to go to AMC management to show errors in the appraisal and value and appeal for new valuation from another appraiser—many times our appeals were valid and the AMC would pay to cost of the new appraisal. This could take weeks due to an intransigent appraiser who would  not agree that other comparable sales were more relevant, or a deduction in value for some reason (busy street, no view, etc) was too high, or appreciating value for some reason (extra large lot, extra large garage with additional room, workshop, very recently remodeled kitchen, etc) was too low.

We went through a long period of poor appraisals because the fees charged to borrowers for appraisals were similar to what Tom and other long-term, excellent, appraiser were charging, which meant the fee paid to the appraisers through the AMCs were significantly lower than the market prior to HVCC. As a result, the appraisers in the AMC rotations were generally willing to work for low fees—and we got what was paid for.

Okay, I’m through cleansing my mind from that period of our lives. Back to my lunch with Tom.

I asked him what was keeping him busy these days. Since HVCC, Tom concentrated on commercial and industrial business, while still doing residential appraisals, but not through AMCs.

When would a family need an appraisal if they are not buying or refinancing a home?

A fair amount of his residential appraisal requests comes from attorneys.

Estate planning and execution can require appraisals to provide value for the estate for tax purposes. Does total estate exceed the $15 million for individuals, $30 million for married couples, below which is the federal estate tax exemption? When a trustee dies with real estate in the trust, values may be needed as beneficiaries may want to trade some liquid assets for real estate assets, or purchase real estate from other beneficiaries.

Another legal situation that may require an appraisal is a divorce as assets are being divided as part of a settlement. I say “may” as if property is being sold there generally is not an appraisal as the market will dictate the value of the property. For a couple with multiple properties and other assets, appraisals are critical to the “you get the house in Long Beach, I get the cabin in Big Bear and the condo in Palm Desert…” divvying up.

Companies, partnerships, looking to dissolve a partnership, or sell a company, find appraisals critical to negotiations and settlements.

Property tax appeals are a reason for an appraisal to possible lower property tax based on the County assessor’s value—a pre-construction appraisal may be used with an after-construction value to show how much the value of the property actually increased. 

Tax incentivized appraisals may keep the industry busy if the “billionaire tax” passes in California (hopefully not), as properties are appraised to determine if a California resident is a billionaire or not (the Smith family is not).

Any transfer of property or lien situation, are possibilities to use Tom’s services.

One more appraisal service that make me chuckle, Tom has done quite a few appraisals for bail bonds. Before agreeing to post $100,000 bail for brother in-law John who has been indicted for fraud with his hospice care billing, an appraisal will likely be required by the bail bondsman to ensure there is enough equity to cover his bond.

To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!

Have a question? Ask me!

Three years, that is when the Consumer Price Index was as high as it was in April after rising 0.6% for the month for year-to-year prices increasing 3.8%. The core CPI (energy and food stripped out) shows the impact of rising gas and grocery prices on the economy, as the year-to-year increase in the stripped-down index was 2.8%, one-percent lower than total CPI. The data strongly re-affirms the consensus of no cut by the Federal Reserve in the near future, and increasing number of those who feel a hike may be in the cards this year.

Retail sales were strong in April, up 0.5% for the month. But…retail sales are based on dollars not units, so the 0.6% increase in prices for the month result in less bang for the consumer for their buck. Part of the increase in sales the past two months has been driven by tax refunds, to consumers, with most returns filed, refunds will be slowing, which may (should) slow sales in the coming months.

Rates for Friday May 15, 2026: Rates spike on the economic news, as well some are indicating the meetings between Presidents Trump and Xi in China did not result in any strong declarations of peace between the two nations pushed today’s rate jump.  Not sure what expectations were between these two head-strong leaders, but they were higher than what occurred, or what was reported occurred.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.375%        Up 0.25%

30-year high-balance conforming        6.50%          Up 0.125%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

Thank you for those who sent polite messages last week indicating you prefer my version of the WR&MU to the AI version.

Long time readers of the WR&MU know I am chronophile, a history buff, but a bit more perhaps. As such, one of my favorite parts of the daily paper is “this day in history;” I enjoy seeing major events occurring on the same day.

This morning I learned that two global cultural icons for the United States were launched on this day, only twelve years apart.

In 1928, at a theater on the corner of Sunset and Gardner in Hollywood, a test screening was run for “Plane Crazy.” Today you can find Hollywood stars on the sidewalks near the intersection for Bette Midler and Robert Zemeckis. More appropriately to today’s date, are stars for Donald Duck, Minnie Mouse, Walt Disney and Mickey Mouse.

Appropriate, because “Plane Crazy” was the debut of Disney’s Mickey Mouse.

Twelve years later in San Bernardino, two brothers opened their McDonald’s hamburger stand. Almost forty years after the first McDonald’s in 1940, I was one of many high schoolers at the International School of Brussels who flooded the first McDonald’s that opened in Belgium—a huge event in the city for the tens of thousands of ex-patriots from many nations, and Belgians.

Mickey D’s and Mickey Mouse were definitely strong symbols for America and its culture in Europe in the late 1970’s and early ‘80’s.

Happy Birthday to the Mickeys!

Dennis

How does your industry use artificial intelligence?

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Question of the week: How does your industry use artificial intelligence?

Answer: Artificial intelligence (AI) is broadly defined as computer systems that can perform tasks that normally require human intelligence.

The mortgage industry has used AI for decades—though the systems used were not yet labelled “artificial intelligence.”

Here are some areas where the industry uses AI:

Credit

Credit scoring has been a “thing” since there has been banking, essentially scoring is estimating risk. While not always a numeric score, banks and lenders looked at character, outstanding debt, ability to repay, collateral, and determined if an applicant was a good risk or not.

In 1956 Bill Fair and Earl Isaac founded Fair, Isaac and Company (FICO)—many people thing the “Fair” is for fairness in the scoring methodology.  They applied data analytics to estimate credit risk, assigning numeric values to various factors. The FICO score standardized a method with numeric values and individual lenders subscribed to their service.

Using punch cards inserted in computers (one of my favorite movies, and acting duos), computerizing credit scores began in the late 1950’s. With the establishment and consolidation of credit bureaus and more and more lenders and creditors reporting to credit bureaus, consistency, and less discriminatory, in scoring was important to lenders.

In 1989 Fair, Isaac, using the information from the three major credit bureaus made available a credit score that was applicable to any institution looking to establish credit risk.

Over the decades, the scoring methodology adapted with more information on timely credit payments and defaults and the profiles of those who tended to derogatory credit repayment.

Programs were able to look backward across millions of accounts and profiles to project forward potential credit risk. Artificial intelligence became a foundation for all credit decisions through scoring past and current behavior and assigning degrees of risk.

Underwriting

When I started in the mortgage industry in 1987, we were dependent on courier services and the United States Postal Service. Fax machines were not yet standard in all offices, and we had to provide underwriters original forms and paper copies of all the borrowers information (statements, taxes, etc). The time from which a file left the office for the underwriter to a loan decision was about two weeks. Credit reports could also take up to two weeks, processors and loan officers eagerly awaiting the daily package of reports for our borrowers.

A major technological leap was the fax machine, we could send a document directly to an underwriter, in minutes. This led to direct line communication—I remember how excited everyone was when we had a printer that enabled the credit company to print credit reports in our office.

In office communication, obviously, changed dramatically with the internet and email.

In 1995 our industry took a tremendous leap forward, and processing and underwriting turn times were cut significantly, more than half in most cases.

In February and April of that year, Freddie Mac, the Fannie Mae, introduced their Automated Underwriting Systems (AUS). The systems used statistically based models to underwrite residential mortgage applications.

At first, underwriting departments input the data for the AUS to analyze and produce a decision on the application. Which was fantastic.

In 1999, the mortgage industry took another giant leap for lending-kind when Fannie and Freddie made their AUS systems available via the internet, enabling brokers, lenders, wholesalers, to input their applicants information and receive loan decisions in a matter of minutes.

Today, a conversation with a borrower can result in a loan decision during the phone call as we are able to quickly obtain a credit report, upload all the information we have obtained, directly upload that to one of the AUS and receive one of three decisions: approve, refer (can be approved if certain criteria are met) or declined.

What would take an underwriter several hours to review, analyze, calculate, to reach a decision then convey it, AUS is able to do in less than a minute.

Rates

Artificial intelligence does not set rates, but it does provide data for those who do set rates.

Mortgage rates are determined by a myriad of factors, inflation, bond yields, action by the Fed, labor markets, demand, risk, consumer behavior, and more, are taken into effect as lenders set rates and prices for selling their production and investors set the rates and prices for buying mortgages.

And with all the information, rates come down to educated guesses by suppliers and buyers as to what they forecast when looking at the data as to where the economy is headed and whether rates will be going up or down.

The ability to analyze massive amounts of data for the economy, markets, trends, news, and look back at historical data and coinciding market movements, is where AI has become a cornerstone of interest rate markets.

As markets move throughout the day, AI is providing information to lenders as to whether they might want to raise, lower, or keep rates the same. In our current turbulent environment with energy prices, international conflict, instant news, we are receiving more intraday rate change notifications as lenders try to stay ahead of broader market changes.

What is the future of AI in the mortgage industry? As defined, artificial intelligence does tasks that are normally performed by humans. I can see a future in which several levels of human interaction is by-passed by streamlining the mortgage process—if this does come to pass the mortgage industry will contract exponentially.

Dennis and Leslie need a mortgage, either to purchase a home or refinance. They log onto a website set up an account and input all the information on the standard mortgage application, click a button and a credit report is obtained with their credit score. The click another button and their application is uploaded to Fannie Mae and/or Freddi Mac and they receive a loan decision within seconds.

Once they have the decision, they click another button that puts their application on the market and their lender folder in their account begins to fill with offers from lenders with their rates and terms. They select their lender, lock in their loan, put their income and asset information in the folder for the lender, whose AI based system analyzes, sends out disclosures, determines if an appraisal is needed, and is ready to fund in a matter of days.

Of course there will still be a market for human mortgage professionals to guide borrowers on options, help solve problems, and work to obtain approvals—but fewer borrowers will need these services.

Sorry to my fellow mortgage professionals for this vision of our future, but we know it is coming since many lenders currently offer this ability directly to consumers for their own products and rates.

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Frustrating times for the predictors, experts and pundits as their expectations for various economic indicators and data have not been as accurate as their historically close expectations have been. Wall Street’s consensus on the job market for April was 55,000 jobs being added to the economy, after seeing 185,000 (upwardly revised) added in March, and their estimated impact of rising oil costs working through the economy. Employers added 115,000 jobs last month, led once again by healthcare. A positive sign for taxpayers, in some (many) circles, is that for the seventh month in a row government employment fell. April is the second month in a row with positive job growth, breaking a streak from May 2025 to March 2026 when job gain and loss alternated every month.

Also in the report, unemployment remained at 4.3% and hourly wages were outpaced by inflation. Overall, the data supports the Federal Reserve hold steady on its benchmark. That said, if labor market continues to grow and inflation does not recede, some are suggestion a rate hike later this year.

Rates for Friday May 8, 2026: After spiking early in the week, mortgage rates end the week are flat from last Friday after climbing the prior two weeks.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:

30-year conforming                              6.12%          Flat

30-year high-balance conforming        6.375%        Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.

I use AI more and more, usually ChatGPT, sometimes Microsoft’s Copilot, to quickly answer questions and for some research. One area I have leaned on AI a lot is entering different ideas for meal creation. I have an idea of some ingredients I want to use, like pears, gorgonzola like cheese, with orzo, grilled pork or chicken and it provides me with some ideas for other ingredients, dressings, glazes, etc.

What if I used AI to write the WR&MU? Click here to see.

Dennis