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Chris Salese

For those of you who don’t like or eat eggs, then I’m sorry, I may have just lost you at the beginning here with my egg play.

However, if you are still reading, then you are probably familiar with a few common cooking terms such as over-easy, over-medium and over-hard as they relate to the preparation of your fried egg.

Either way, my attempt to compare the real estate market at this time to an egg might not be very popular, which I can understand too.

However, before you “fire up the grill” on me, please read on.

Recently, there was a report released by CoreLogic, a leading data analytics firm, which contained some interesting information.

In this report, their President and CEO, Frank Martell, said “CoreLogic’s Market Conditions Indicator has identified nearly one-half of the 50 largest metropolitan areas as over-valued.”

He went on to say, “often buyers are lulled into thinking high-priced markets will continue, but we find that over-valued markets will tend to have a slowdown in price growth.”

While this is simply one opinion and there are likely numerous others, the “over-valued” term that frequently floated around well over a decade ago, is back again.

If you remember, the market bubble during that time was dominated by 100 percent home financing products, interest-only payments and adjustable rates.

Collectively, this created no starting equity for you and extremely limited your ability to build equity as a homeowner.

On top of that, there were very few cash transactions during that time, along with a ton of unstable buyers who had super limited credit profiles.

In addition, appraisers were pressured for valuations by various parties who were tied to the commissions of the transactions.

As a result, fraudulent activities increased, which led to a ton of applicants falsely claiming to occupy their homes and loads of double escrows that saw the buying and selling of the same property on the same day.

Even job growth was problematic then, since it was centered on cyclical industries.

The over-valued market back then was cooked.

But today’s over-valued market seems to be much different. According to various publication sources, the trend of larger down-payments and making both principal and interest payments, has been more in favor this time around.

It has helped to provide built-in equity at the time of purchase and the ability to continue to build equity going forward for homeowners. There’s been more cash transactions and much smarter use of fixed-rate mortgage programs too.

Not to mention, appraisers have been separated from parties who are tied to the commissions of the transactions, the credit profiles of buyers are more stable and improved, plus there’s much less fraud these days.

Furthermore, job growth appears to be in more diversified and less cyclical industries this time around.

All that being said, despite a couple light cracks in the side of the egg here and there, maybe it’s more appropriate to view this fried market egg as “sunny-side up” instead.

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Chris Salese can be reached at chris@delsurmortgage.com or 707-363-4439. He is a licensed California mortgage lender (LO NMLS #254469 — State License #CA-DBO 254469 — Corp License #4170013 Corp NMLS #3113) and equal housing lender.

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