Solano Real Estate Scene: It’s a red-hot market during trying times

I wrote an optimistic article in April that I called “A Bullish Call on Solano County.” Covid-19 and the stock market losses created fear and uncertainty in my office and among my friends, clients and family. My inspiration for writing this article and most of what I say in the paper and on social media is based on my desire to share some of the lessons I have learned from analyzing loan applications in six different decades and to hopefully make folks feel less worried and stressed. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful,” is one of my favorite Warren Buffett quotes, along with, “For 240 years it’s been a terrible mistake to bet against America, and now is no time to start.” Since April Fool’s Day, the Dow is up 25% and the national average rate for mortgages below $510,400 is down from 3.6% to 3%. Buyers and borrowers with FICO scores above 740 are being quoted rates in the mid-2s and this last week I saw a young, high FICO, U.S. Air Force pilot lock in at 2.25% and paying less than 1 point for an APR of 2.35% on a 30-year, fixed rate to purchase his first home in Dixon for $500,000 with nothing down using his VA loan benefit. Mortgage rates are now at historic lows and the monthly payment, not including taxes and insurance on this loan, will be $1,529. Rates in the 1980s were above 10% during my first 10 years in the business and the payment on a $500,000 loan would have been $3,500 per month. Sure, the average home prices were well below $175,000 in Solano County back then, but wages were lower, too, and a pound of butter was less than a buck. I love high-quality butter and often pay 600% more for butter today than I did when Mary and I were married in January 1979.