Affordable starter homes for first-time buyers are in great demand this year, leading to shrinking inventories and a competitive market. That means that buyers’ options are limited. This leads to increased competition for those homes that are available, spurring bidding wars and pricing out entry-level buyers.
A recent analysis by Zillow found that there were 8.6 percent fewer homes on the market in January 2016 than a year ago. Sellers have more negotiating power in competitive cities, mostly in the West, where job markets are hot, and demand for housing is heavy.
Buyers competing in a tight market must be prepared. They should get pre-approved for a mortgage and know their maximum price before house shopping so they can make a competitive offer. They should also take another look at their must-have list and decide where they’re willing to compromise, if necessary.
Here are five surefire signs that you are facing a competitive market for buyers.
1. Short time on market.
The fastest and easiest way to tell if sales are hot in your local market is to measure how quickly properties in your price range are selling. You can get a sense of the demand by simply tracking listings on real estate web sites.
A more accurate method is to review “median days on market” data from your local multiple listing service. You may not be able to access this data yourself, but your real estate agent should be able to get it for you. Look at the monthly and the year to year trends for the Zip codes where you are looking. If houses are selling in three months, that is clearly a seller’s market; in two months or less, you are probably looking at a hot, competitive market.
Another measure of demand is called “months’ supply.” It represents the number of months for the current inventory available for sale at the current rate of demand. A months’ supply of six months is considered balanced; the smaller the months’ supply, the hotter the market.
2. Jumps in sales.
An easy way to take your market’s temperature is to compare the current monthly sales rate to one or two years previous. Sales vary seasonally, but not over 5 percent when compared to the same month a year earlier.
If you see sales jump 10 percent or more, your market is taking off, and inventories may not be keeping up with demand, which is going to make it competitive for buyers. Follow local data on Zip codes or neighborhoods available on real estate listing sites, or ask your agent for information on sales trends.
3. List-to-price ratio.
When homes start selling at prices higher than their listing prices, it is a sure bet you are in a competitive market. If the list-to-price ratio is above 100%, the home sold for more than the list price. If it is less than 100%, the home sold for less than the list price.
MLSs make this statistic available to their members on a monthly basis, so you can get the data from your agent. Some also release it publicly. Some real estate web sites report local list-to-price ratios.
4. Deadlines on offers.
When sellers start placing deadlines for offers on their listings, obviously they are expecting more than one bid and they see no reason to extend the selling period. When you see a listing with deadlines, prepare for battle if you want the house.
5. Cash offers.
Cash offers, as opposed to offers financed by mortgages, are very attractive to sellers because they do not have to take the chance that a buyer’s financing will fall through or that an appraisal will come in low, and the seller might be asked to lower the price to save the deal.
In lower tier price ranges, many cash offers come from investors who are planning to flip the house or convert it into a rental. An increase in cash offers are a sign that competition is stiff. MLSs compile data on cash sales in local communities and Zip codes and you can get the information from your agent.
Soaring sales, prices above list, days on the market below two months, months’ supply below four months, cut-off dates—these are signs that buyers will likely face multi-bid situations. Be ready to move fast with the best offer you can make and be patient if the right deal takes months to appear. Even so, never bid on a house you do not like—you might end up living in it for many years to come.
Even though the average interest rate for the 30-year fixed loan fell 5 basis points from last week, they remain elevated as the Federal Reserve considers another hike of its own.
The Freddie Mac Primary Mortgage Market Survey found the average for the 30-year FRM was 7.18% for the week of Aug. 31, down from 7.23% seven days prior. A year ago, it was at 5.66%.
Meanwhile the 15-year fixed remained unchanged at 6.55%. For the same week in 2022, the average rate was 4.98%.
“Despite continued high rates, low inventory is keeping house prices steady,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes.”
Between Aug. 14 and Aug. 29, the benchmark 10-year Treasury yield was above 4.2%, with an Aug. 22 high point of 4.36%. But while some expected spreads between Treasurys and mortgages to narrow to more normal levels, the recent movements show this has yet to happen.
Zillow’s rate tracker had an 18 basis point decrease as of mid-morning Aug. 31, to 6.88% from an average of 7.06% for the prior week.
“After reaching their highest level in more than two decades last week, mortgage rates fell this week on economic data showing more modest economic growth in the second quarter and a cooling labor market,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a Wednesday evening statement. “Revisions to the second quarter estimate of economic growth, which showed a moderation in consumer spending and large downward revisions to business investment — two factors frequently pointed to as sources of strong economic activity — helped push bond yields and mortgage rates downward.”
An inflation gauge the Federal Reserve looks at in its decision making process, the Personal Consumption Expenditures Index, rose 3.3% annually in July, higher than June’s 3% increase but still lower than 3.8% in May and 4.3% in April.
Besides investors reaction to this data, mortgage rate volatility will be driven by Friday’s monthly Bureau of Labor Statistics report.
At noon Thursday, following the PCE announcement, the 10-year Treasury yield was down 3 basis points to 4.09%.
“Signs of a cooling labor market also helped rates trend lower this week,” Divounguy said. “Labor demand is still far above pre-pandemic norms but is slowly easing: Job openings fell in June to their lowest level since March 2021.”
“As we’ve noted previously, the recovery in home prices is broadly based. Prices rose in all 20 cities in June, both before and after seasonal adjustment,” Craig Lazzara, managing director at S&P DJI, said in the report. “Over the last 12 months, 10 cities show positive returns. Otherwise, half the cities in our sample now … [Read more…]
Over the past few years, mortgage rates have reached new all-time lows and haven’t strayed too far from such levels, despite some upticks here and there.
As a result, everyone and their mother grandmother has refinanced to take advantage of the situation. In fact, many have been able to reduce their already-low interest rates several percentage points.
At the same time, the push to shorten mortgage terms has proven successful. During the third quarter, a whopping 37% of borrowers shortened their loan term while refinancing, according to the latest quarterly refinance report from Freddie Mac released today.
That’s up from 32% in the quarter prior and the highest level since 1992.
So just to great this straight, borrowers are snagging interest rates at levels never seen before, and they’re opting to pay off their mortgages in half the time with 15-year fixed mortgages.
Heck, mortgage lenders are even touting 10-year fixed mortgages on TV these days (because the rate is lower and seemingly more attractive).
Not only that, but everyone is going with a fixed-rate mortgage as opposed to an ARM, with more than 95% of refinancing borrowers choosing a FRM during the third quarter.
Anyway, thanks to these very favorable conditions, just about everyone who could refinance did, and even those who historically could not (underwater borrowers) were able to take part thanks to HARP.
Make Hay While the Sun Shines?
You can’t really blame anyone. The environment has been ripe for refinancing. While this is great news for homeowners and the housing market in general, there has to be a loser, right? No, I’m not talking about the Fed’s balance sheet.
Sure, mortgage brokers and loan officers have probably made a killing over the past several years, but now banks and mortgage lenders are coming to terms with the slowdown and shedding jobs like crazy.
Put simply, the future doesn’t look very bright for those in the industry, and that’s not just speculation.
Freddie Mac noted in its refinance report that mortgage rates have remained below 5% for much of the past four years, meaning few borrowers who took out loans during this time will have an incentive to refinance in the future.
[The refinance rule of thumb.]
As a result, the median age of the original loan before refinance increased to 6.7 years during the third quarter, the oldest since analysis began back in 1985.
Most Homeowners Won’t Refinance Again
This chart won’t go any lower, so the next refinance boom is hard to imagine.
So today’s mortgages are practically unrefinancible. No, that’s not really a word, but it might be soon.
How is today’s homeowner with a 15-year fixed mortgage set at 2.75% going to do any better? Or the borrower with a 30-year fixed at 3.5%? These loans aren’t going to be refinanced unless someone really, really needs cash.
The only hope for an uptick in volume is via home equity lines (that don’t disrupt the first mortgage) or a return to subprime lending.
Sadly, this means the mortgage industry isn’t going to “knock the cover off the ball” anytime soon.
Yes, there’s talk of the purchase money mortgage market steadily improving as home prices rise and more borrowers list their homes. But it won’t be enough to stop the bleeding.
The MBA expects mortgage volume to sink 32% in 2014, with $1.2 trillion in total production. I wouldn’t be surprised if the numbers came in short.
To make matters even worse, a lot of individuals seem to be numb to the low rates still on offer. Just imagine how high a 6% mortgage rate will look to these people.
The good news is that those who refinanced during the third quarter will save approximately $6 billion in interest over the next 12 months.
According to iPropertyManagement, just over one-third of American households are rental units, such as apartments, townhomes and even single-family residences. That means that of the approximately 332 million people residing in the United States, over 110 million rent.
With that many would-be tenants searching for a new rental unit at any given time, criminals will be out there looking for vulnerable people they can con out of their hard-earned money. However, there are some tell-tale signs that someone is trying to scam you in your apartment search.
Here’s what you need to look for so you don’t fall victim to common rental scams.
1. Don’t fall for misleading advertisements
Landlords and property managers often reach a potential renter by posting advertisements about their available units in newspapers, magazines and on a listing website. That translates into an unthinkable number of rental listings highlighting what’s on the market at any given time, not to mention all vacation rental listings out there.
Or, at least, what’s supposedly available. Rental listing scams are rampant, so it’s imperative to know how to differentiate between a legitimate advertisement and one full of lies.
Don’t be fooled by beautiful pictures advertising an apartment that looks perfect before doing your due diligence on all property matches. When searching for the next place to call your own, keep these suggestions in mind to avoid common rental scams.
2. Review apartment rental listings carefully
When reading advertisements, pay attention to the way it’s written. Skip listings with misspelled words, improper abbreviations or incomplete information. Details are important, so be extra wary if an apartment ad has errors, blank spaces or confusing terms.
Those kinds of no-nos are a potential clue the person posting the ad is not advertising a real place for rent. Or, maybe they aren’t really a legitimate landlord.
3. Is a month’s rent too low?
Another common rental scam is creating an environment that’s too good. For example, is the monthly rent unexpectedly low for what’s being promised? If the average cost to live in your dream neighborhood is $2,000 a month for a one-bedroom, be wary of apartments being advertised in the same vicinity for far less.
Seeing is believing, so be sure to tour the rental property before signing a lease. That investment of time could go a long way to preventing rental fraud.
4. Cash is not king for a security deposit or first month’s rent
Run, don’t walk, from any supposed landlord requesting cash for any debt relating to renting a property, like an application fee or a security deposit. Giving cash means it will be difficult to prove the payment was actually made. Therefore, even if the would-be landlord offers to provide a written receipt, that paper means nothing if they request money and the transaction is a rental scam.
Other payment methods
Other tips when paying rent, the security deposit or the first month’s rent include:
Not wiring money. When you wire money, you run the risk of not having enough of a paper trail.
Using the actual payee’s name and phone number on payment apps like Venmo to ensure the money reaches a legitimate destination
Familiarizing yourself with staff personnel to gain reassurance you’re dealing with a legitimate landlord
The more information you have, the better you can protect yourself from the bad people out there trying to engage in rental scams.
5. Avoid landlords who will not meet in person
It’s said a picture is worth a thousand words, but sometimes, a photo is not always what it seems. Anyone can create and post breathtaking images, its amenities and the surrounding area in an online listing, hoping viewers will like what they see. Therefore, it’s imperative to meet the property manager, landlord or their authorized agent in person before signing on the dotted line.
And, of course, visit the apartment you’re interested in to ensure posted pictures of the abode match the place depicted in the photos. Walking through the rental properties that may become your home is the best way to decide if you like the place. You might feel a vibe you don’t like or realize the available storage space isn’t sufficient for your needs.
Don’t be satisfied with a virtual tour, because the apartment in the video may not be the one you actually rent. If you have to insist on a personal walk-through before renting, you might want to consider walking away instead. This is a sign it could be a rental scam.
Unusual circumstances
A different set of challenges arise when extenuating circumstances prevent a potential tenant from touring a property before renting. One example is if you live out of town and are unable to travel to a new city to visit the apartment prior to signing a lease and moving in. While it’s best to avoid that situation, there are steps to take to decrease the likelihood of falling for a fraudulent listing.
They include:
Asking a friend or relative to check the place out for you
Checking the property address online
Surfing Google Earth for additional details
Requesting the landlord provide references from prior tenants
6. Vet the landlord
Researching a supposed landlord before renting from them can go a long way to preventing fraud.
One way to do that is by checking the website of the county auditor or county recorder where the rental is. That should help you determine who owns the property you want to rent. Be extra careful if it’s difficult to decipher ownership because that could make it easier for someone to perpetrate a fraud.
Hit the internet
While perusing government websites about your would-be landlord, check the criminal courts, too. It could reveal a supposed landlord’s checkered past or their clean background.
Another good place to look online is the county’s municipal court, or wherever you file rental disputes. Does the property owner sue to evict many tenants? How often do they win those cases?
And yet another website to peruse is the Better Business Bureau in the city where the property is or where the landlord has their headquarters. Consumers should report both positive and negative interactions with the business community, so a quick check of their website could reveal whether the landlord or their rental company has ever perpetrated rental scams.
7. Read the lease. Really.
No matter how honest or direct a landlord or property manager might appear, don’t solely rely on a rental listing to decipher what an apartment and its community actually offer.
When you sign a lease, you’re entering into a contract obligating you to perform certain acts, like pay rent on time. The document also explains what the landlord is responsible for, like providing working heat.
If you don’t understand or agree with everything contained in a lease, voice your concerns to the landlord before signing it. It’s too late afterward.
Avoid inexplicable blank spaces on a lease
Don’t sign a lease that’s incomplete. Any missing but pertinent information, such as monthly cost, the rental term and details about who is financially responsible for utilities, are immediate red flags the contact isn’t legitimate.
Rental agreements should also be error-free
A lease agreement is a written contract between a landlord or property manager and a tenant. When a would-be tenant and landlord sign a rental agreement, they enter into a contract requiring certain acts of each of them.
For example, the tenant agrees to pay the rent according to the terms of the contract. The landlord promises to perform whatever the lease promises.
However, a lease pocked with typos, or missing or inaccurate information could be a sign the document is a fraud.
8. Avoid an immediate move-in request
A supposed landlord who insists a potential tenant move in immediately, before a personal walk-through of the place, does not sound legitimate. If nothing else, they sound desperate to rent their unit.
When you tour an apartment and meet the property manager or their representative, they’re meeting with you, too. Normally, an owner takes an interest in who lives in their units. Not taking the time to vet you, as well, should worry you.
Be concerned if they don’t demonstrate that level of concern for their property.
What to do if you’re a victim of rental scams
Unfortunately, despite best efforts not to fall victim to fraudsters, it still happens. If it does, you can fight back.
An initial response is to contact local law enforcement to report the crime. Provide as much information as you can when you contact local authorities to help them in their search for the fraudulent landlord.
Try canceling your method of payment of the security deposit or rent you paid in advance. If you paid cash, you’re out of luck. Using a traceable method, such as a check or credit card, gives you some some recourse to take them to small claims court.
If you wrote a check, contact your bank to determine if somehow, the check was not yet cashed. If it was, report the fraud to your bank. You can also try to stop the payment.
File all the complaints
Don’t forget to file a fraud report with the Federal Trade Commission. While the feds won’t resolve your individual complaint, they use submitted reports to investigate rental scams, unethical business practices and cases of fraud.
The Internet Crime Complaint Center, also known as the IC3, offers another tool for fighting rental fraud. Anyone who believes they’ve been a victim of an Internet crime may file a complaint through that website.
Enjoy a successful apartment search
Finding a great place to live that suits your lifestyle and is affordable is challenging enough, and the prospect of fraud makes it that much more difficult. Create a paper trail of payments for rent or deposits by paying by credit card or check, never by cash. Meet the landlord or their representative personally when you tour the premises and read the written rental agreement thoroughly before signing.
Then, sit back and enjoy your new surroundings.
The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or finance advice as they may deem it necessary.
Flowers have the remarkable ability to elevate the decor of any home. Whether you live in an apartment in Irvine, CA or a home in Lexington, KY, adding a touch of elegance and freshness to your living spaces will make a positive impact. Whether you’re a seasoned floral enthusiast or just starting, these expert tips will help you enhance your home’s floral decor.
1. Embrace neutral tones for timeless elegance
“When in doubt, use neutral tones. Colors like white and green compliment any space regardless of decor choice, while also adding a touch of modern elegance,” shares Stephanie from Mercer Island Florist.
Neutral tones act as a canvas, allowing your flowers to take center stage. White lilies, green foliage, and soft creams create a serene atmosphere that complements any interior style.
2. Focus on flower variety, space, and placement
Flowers can freshen up any space, but their impact depends on the flower variety, space, and placement. Justine Aylward, Program and Category Manager at Floral at New Seasons Market, advises, “For higher spaces like mantles or bookcases, go dramatic with tall and draping flowers and branches to make a statement. Try tall flowers, such as lilies or sunflowers that drape a bit with an accent flower like hanging amaranthus.”
3. Match containers to your home’s style
According to Lawrence The Florist Team, “Choose containers that mimic your home’s style, whether it’s new or vintage, to inspire your arrangement’s design. Bring the beauty of the Pacific Northwest into your home by choosing local seasonal foliage and flowers with your favorite colors and textures whenever possible.”
Selecting containers that resonate with your decor style can fluidly bring your space together.
4. Maintain freshness for longer lasting blooms
“Flowers do best away from direct light and kept as cool as possible. Even putting them in a cool dark room when you are not home enjoying them can extend their life. I also recommend a re-cut of the stems at an angle and changing the water often,” states Ann Vandehey, owner of Annabell’s Garden & Floral Design.
A recut of the stems at an angle and regular water changes keep your blooms vibrant for longer.
Owner of Goldenrod Floral Design Carlee Donnelly, advises, “When choosing or designing flowers for your own home, always, always strip any bottom leaves or foliage from the stems. Leaving foliage in water will cause your flowers to die faster.”
“The key to longer-lasting blooms is fresh, clean water,” says the Ribbon and Twine Floral Team. “Remove all leaves and dirt from the stems before placing them in the vase and refill with new water every few days.”
Clean water and removing foliage is essential for keeping your floral arrangements vibrant.
5. Embrace seasonal blooms
Cory Beckman, Owner of Milwaukie Floral and Garden, emphasizes the importance of freshness, “Fresh is best. Local flower shops refresh selections all week long, but in my professional experience shopping midweek guarantees a good selection of fresh blooms.”
“To add cheer to a room or spruce up your decor, keep it simple and fresh by asking your florist for the flowers that are currently in their peak season,” says Laura Gifford Kerr, Owner of Gifford’s Flowers.
Seasonal blooms not only reflect nature’s beauty but also align with the changing seasons, keeping your decor fresh. Choosing flowers that are in season ensures their quality and affordability.
“Pick flowers that are in season, even going with a bunch of the same flower. Keep it simple,” suggests Owner of Emerald Petals, Hilary Holmes. Single-variety blooms gathered in your favorite vase create a timeless and elegant look that suits any decor style.
6. Choose containers wisely
“Use an opaque container that will disguise any discoloration in the water,” advises The Flower Lab Team. “Ask your florist for a design that reflects the home’s style, such as modern garden style, or architectural for the most appropriate style.”
Containers play a crucial role in enhancing your floral arrangements’ visual appeal and blending with your home’s decor.
7. Create a living arrangements for longevity
Val Wayne of Acorn Floral recommends creating living arrangements. “Start with a decorative planter, choose a few orchid plants from your local grocery store or garden center and a few small 2 inch potted plants and assemble them pot and all inside your decorative planter. Then use crumpled butcher paper to wedge all the plants in place and cover with sheet moss. These living arrangements can run up to hundreds of dollars retail, but you can DIY one for under $100.”
Living arrangements are ideal for home decor because they can last for months and instantly elevate a space. It’ll be worth the cost when you consider the shelf life.
8. Combine flowers with herbs for aromatherapy
According to Lisa Aliment of Bear Creek Florist, “Growing herbs like sage, mint, or rosemary isn’t just for cooking anymore. Add those clippings to simple flower bouquets to add more aromatherapy to the room.”
The combination of flowers and herbs can engage multiple senses, enhancing the ambiance of your space.
9. Set the mood with color and design
“When selecting flowers for your home, think about the feeling you are trying to create,” advises Jennifer Silberg, Owner of Juniper Blooms. “Colorful, vibrant flowers bring a lively energy to the room, while a soothing neutral palette provides a more calm and peaceful environment.”
Consider how the flower arrangements can guide the viewer’s gaze around the room, whether through tall, eye-catching designs or low, intimate ones.
10. Brighten every room with small bunches
The One Little Bunch Team suggests, “Smaller bunches placed throughout the house will brighten up each room. A little bunch in the bathroom adds freshness and a pop of interest, or add a little bunch to your side or entry hall table for a welcoming surprise.”
Small floral accents can elevate the ambiance of every corner of your home.
11. Improve your mood with bouquets
“Flowers are not only beautiful but studies have shown that people report reduced stress levels when receiving bouquets or having flowers in their home after just 3 days,” says Melissa Mercado-Denke, founder of Campanula Design Studio. “Keep it simple – just a few bud vases in areas you spend the most time such as your kitchen or bedroom will have a positive impact on your mood.”
12. Create nostalgic vibes with flower choices
Juliet LaVassar, designer at LaVassar Florists, recommends selecting flowers that evoke memories: “Smell and memories are closely related, according to a 2020 Harvard study. Having flowers around that remind you of loved ones or life events brings joy into your home.”
Personal touches in your floral decor selections add a sentimental dimension to your home.
Incorporating these tips into your home decor journey will not only enhance your living space but also infuse it with the timeless beauty and natural charm of flowers. Whether you opt for dramatic arrangements or simple single-variety bouquets, the right flowers can transform any room into a sanctuary of color, fragrance, and elegance. So, let your creativity bloom and watch your home come to life with the magic of flowers.
For years, residents in Solano County heard about a mysterious group buying up thousands of acres of farmland and making millionaires out of property owners. The agricultural land had been owned by the same families for decades — some of it for more than a century.
But the company, Flannery Associates, did not say what its plans were for the land, dotted with towering wind turbines and sheep grazing on pastureland. It paid several times market value and made offers on properties that were not for sale, according to officials familiar with the land purchases.
Then, last week, a survey was sent to residents asking them what they thought about “a new city with tens of thousands of new homes, a large solar energy farm, orchards with over a million new trees, and over ten thousand acres of new parks and open space,” according to a screenshot of the survey shared with the Los Angeles Times.
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That’s when it became clear that Flannery Associates had big plans for the rural landscape.
Over a five-year period, the company became the largest landowner in Solano County after purchasing more than 55,000 acres of undeveloped land. The company has paid more than $800 million since 2018, according to court records.
U.S. Rep. John Garamendi, who represents the region, said for years he and other officials were unable to determine who was behind the dizzying land grab. Flannery Associates has purchased land that was restricted to open space and agricultural purposes under a state conservation program.
The company seeks to rezone the land, which would require approval by multiple state and county agencies and wouldn’t be as simple as asking residents to vote on the issue, officials familiar with the process said. But the lack of residential zoning in the area does not seem to be a factor for Flannery Associates.
Since its buying jag began, the company has filed suit in federal court against a group of families the firm purchased property from, seeking $510 million. Flannery Associates claims the families conspired to inflate their property values in a scheme to get more money.
Garamendi (D-Walnut Grove) lambasted the company for how it has handled the purchases and for not working with local residents.
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“Flannery Associates is using secrecy, bully and mobster tactics to force generational farm families to sell,” Garamendi said during an informational committee hearing on Tuesday that addressed the company’s actions.
For years, residents and politicians speculated that Flannery Associates was backed by foreign investors seeking to spy on Travis Air Force Base. Located in Solano County, the base is one of the busiest military facilities in the nation. Most of the land surrounding the base is now owned by Flannery Associates, according to county documents.
Some of the company’s financial backers were revealed in an article last week by the New York Times, and they include a cadre of tech entrepreneurs and venture capitalists.
On the eastern end of Solano County, the city of Rio Vista is now surrounded by Flannery Associates land. Mayor Ronald Kott said that, like many Solano County officials, he had not been approached by anyone from the company to discuss plans for the land.
Although he’s now aware of the company’s goals and some of the financial backers, he’s still unsure how his city of 10,000 residents found itself surrounded by land owned by a group of tech billionaires.
“I have more questions than answers,” Kott said. “Our destiny is going to be determined by whatever they’re going to do.”
A cyclist rounds a curve on Montezuma Hills Road in Solano County.
(Paul Chinn / San Francisco Examiner via Getty Images)
Flannery Associates has said little since it was formed as a limited liability company in the state of Delaware in 2018. The company’s actions were first reported by ABC7’s San Francisco Bay Area news station, KGO, which said a mysterious company was purchasing large amounts of land.
Flannery Associates is led by Jan Sramek, a former Goldman Sachs investor who found fame and fortune by the time he was 22, according to a 2010 Business Insider article. Sramek previously worked out of Goldman’s offices in London, but his LinkedIn profile now lists Fairfield, Calif., in Solano County as his primary location.
In a self-help book he co-wrote, Sramek says if given the chance to give his younger self a bit of advice, he would quote Ayn Rand: “The question isn’t who is going to let me; it’s who is going to stop me.”
He did not immediately respond to requests for comment.
For years, Garamendi and U.S. Rep Mike Thompson (D-St. Helena) tried to pierce through the opaque veil that surrounded Flannery Associates. Then, in the last week, representatives of the company attempted to arrange sit-down meetings with the Congress members and the survey was sent out to residents.
The survey said that the issue of a new city might be on next year’s ballot, which was news to Garamendi and Thompson. There have been no efforts made by any groups to get a new measure on the ballot for this project, according to officials. The survey also said the developers would replace the county’s existing aqueduct — calling it “one of the most polluted in California” — generate tax revenue for schools and be entirely funded by private sector money.
Thompson said the company’s actions had raised food and national security concerns. He’s asked the U.S. Air Force, the Treasury Department, the Defense Department and the FBI to investigate the land purchases. Thompson met with representatives from the company, including Sramek, according to KGO.
“And I don’t think they had a clear understanding of the significance of livestock in Solano County,” Thompson said. “And it was my impression that they kind of pooh-poohed the agricultural value of the land.”
Garamendi plans to meet with representatives from Flannery Associates at a later time, according to his office.
Solano County Supervisor Monica Brown is not familiar with Silicon Valley and spent most of her professional career as a schoolteacher. She heard from friends who received the survey and wondered if the company had the best interests of the county’s current residents in mind.
“We’re growing food and helping people. Why would you stop economic growth like that?” she told the Los Angeles Times. “Why would they spend $800 million and not be transparent about it?”
Flannery Associates has purchased more than 140 parcels of land, according to court records and county assessor data. That number is growing every day, officials say.
But in its lawsuit, the company claims that it overpaid and is seeking to claw back some of its money.
Attorneys for Flannery Associates have referenced personal relationships and text messages among neighbors in court documents — neighbors who could be influenced, they argue, by a scheme to drive up asking prices for the land.
The lawsuit has had a chilling effect on some landowners in the Montezuma Hills and Jebson Prairie area of the county. Multiple residents in the area declined to comment about the company for fear of being named in a lawsuit.
Others who spoke on condition of anonymity to avoid retaliation by the company say they feel as though Flannery Associates will target anyone who speaks out about the company’s aggressive tactics to buy land.
Garamendi called the lawsuit a “heavy-handed, despicable intimidation tactic.” He said that the company managed to purchase all the land without any of the current governmental safeguards in place to flag the issue. He said that, in the future, information about large land sales, and who is buying and selling, would be vital for lawmakers and residents.
Thompson introduced a bill that was inspired by the Flannery Associates land purchases that would provide more effective tools for state agencies to investigate large land sales.
Through a spokesperson, Flannery Associates said members of the company “care deeply about the future of Solano County and California and believe their best days are ahead.”
The company said the project aims to bring “good-paying jobs, affordable housing, clean energy, sustainable infrastructure, open space, and a healthy environment” to Solano County.
“We are excited to start working with residents and elected officials, as well as with Travis Air Force Base, on making that happen,” spokesperson Brian Brokaw said.
The company says it resorted to secrecy while purchasing the land to avoid rampant real estate speculation. But it has not disclosed specific details about the scope of its project. Representatives for Flannery Associates are meeting with community leaders to present their vision, according to Brokaw.
Michael Moritz, venture capitalist and longtime San Francisco resident, is one of the financial backers behind the company. In a 2017 email viewed by the New York Times, Moritz described an opportunity to invest in a new California city. He explained how investors could transform farmland into a bustling metropolis.
Sequoia Heritage, the $15-billion wealth management firm Moritz founded in 2010, did not immediately respond to requests for comment.
But in a February New York Times opinion piece, Moritz described some of his frustration with San Francisco and how the city had become “a prize example of how we Democrats have become our own worst enemy.”
He described legislators who deceived voters with tweaks and rule changes to the city’s charter so they could stay in power and drive seismic shifts in the local government.
“The core of the issue, in San Francisco and other cities, is that government is more malleable at the city level than at higher levels of government,” Moritz wrote. “If the U.S. Constitution requires decades and a chisel and hammer to change, San Francisco’s City Charter is like a live Google doc controlled by manipulative copy editors.”
Other financial backers with Flannery Associates include LinkedIn co-founder Reid Hoffman; Andreessen Horowitz venture capital firm investors Marc Andreessen and Chris Dixon; payments company Stripe co-founders Patrick and John Collison; Emerson Collective founder Laurene Powell Jobs; and entrepreneurs turned investors Nat Friedman and Daniel Gross, a Flannery Associates spokesperson confirmed.
Although those names were not repeated at an agricultural committee hearing on Tuesday, lawmakers were thinking of the financial backers’ actions.
Flannery Associates’ land buys threaten the makeup of eastern Solano County, mainly the land under the California Land Conservation Act, which sets aside properties for agricultural purposes and open space. The penalty for not obeying that policy does not seem to dissuade Flannery Associates, former West Sacramento Mayor Christopher Cabaldon said during the committee hearing.
The act, also known as the Williamson Act, can include a fee for the incompatible structures built on the land. For billionaire property owners, that could just be seen as the price of doing business.
“In some sense,” he said, the conservation program has “been like a flag that says, ‘Buy here.’”
The Flannery Associates project illustrates just how weak current tools are for dealing with a project of this size. Secrecy further hampers state regulators unaware of a buyer’s intent for the land, Cabaldon said.
Brokaw, the Flannery Associates spokesperson, said the company wouldn’t comment on specific issues brought up during the committee hearing but was meeting with county and state leaders to address their concerns.
Officials and landowners worry that much of the infrastructure needed to build a new city is just not present in eastern Solano County. And an influx of development would almost certainly drive out any farmers from the region.
But another scenario that could present itself is Flannery Associates moving ahead with its project only to have it fall apart years later.
“Even if the project is rejected locally … you can’t reset the clock,” Cabaldon said. “You cannot turn it back and say, ‘OK, no harm, no foul. Let’s just return to the way that this community was two years ago.’ Because the owners will be gone, the family farmers will have left.”
Times staff writers Jessica Garrison and Ryan Fonseca contributed to this report.
The role of economic data in determining mortgage rate momentum is hard to overstate these days and today provided another solid example. This morning, the average mortgage lender was offering rates that were modestly HIGHER compared to yesterday afternoon. After the data hit, most lenders ended up offering mid-day improvements that brought the average easily below yesterday’s.
The data in question was the Job Openings and Labor Turnover Survey (aka “JOLTS”). While it’s not quite on par with reports like The Employment Situation (the official name for the big jobs report most frequently referred to simply as “the jobs report”), it’s been an increasingly reliable source of inspiration for rates.
Today’s installment was the weakest since March 2021. Mortgage rates tend to improve when data comes in weaker. This is both a general truth and a specific consequence of the Fed’s current stance on rates. The Fed wants to see more evidence that high rates are having a negative impact on the economy. Yes, it does seem odd to be rooting for economic pain, but as far as the Fed’s concerned, a softer labor market is a good price to pay in exchange for lower inflation.
30yr fixed rates are still in the 7% range, but if the week’s remaining economic data were to be as downbeat as JOLTS, that could change. Just be aware that surprises can occur in either direction when it comes to the data.
In a new report from First American, Chief Economist Mark Fleming reveals that two of the three key drivers of the Real House Price Index (RHPI), nominal house prices and mortgage rates, dragged affordability lower in June. The 30-year, fixed mortgage rate increased by 0.3 percentage points and nominal house prices accelerated by 0.8% compared with May.
The Three Key Drivers of the RHPI:
Median Household Income is one of the fundamental factors determining the amount of housing a particular consumer can afford. incomes can be tracked over time to demonstrate how rising/falling incomes impact consumer house-buying power.
Interest rates drive how much a home buyer can leverage their median household income to purchase more or less housing. As interest rates fall, consumers are able to purchase a more expensive house due to lower borrowing costs. The opposite is true for rising rates.
House price levels are measured using a weighted repeat-sales house price index that tracks how prices of single-family residential properties rise and fall over time and across numerous geographies.
While household income increased by 0.4%, it was not enough to offset the affordability-dampening impact from higher mortgage rates and prices. Consumer house-buying power declined by nearly $9,000 compared with May and remains $32,000 lower than one year ago. Fleming predicts the outlook for house-buying power to be heavily dependent on the path for mortgage rates, and that path is highly uncertain.
“It’s likely that mortgage rates continue to hover in the 6.5-to-7.5% range for the remainder of the year, which means affordability will remain a challenge for many homebuyers,” said Fleming.
How High Will Mortgage Rates Go?
The RHPI can be referenced to model shifts in income and mortgage rates to see how they impact consumer house-buying power or affordability. Rising incomes and falling mortgage rates each boost house-buying power, while falling incomes and rising mortgage rates each sap house-buying power.
As of mid-August, the average mortgage rate nationally sits at approximately 7%. In June of last year, the average mortgage rate nationally was roughly 5.5%. Holding incomes constant at their June 2023 level and assuming a 5% down payment, the increase in mortgage rates alone reduced house-buying power by nearly $57,000.
An average of several industry forecasts projects that mortgage rates will end the year lower, at 6.1%. If those forecasts are correct and the average mortgage rate decreases from the 7% level to 6.1%, house-buying power increases by nearly $32,000. However, if mortgage rates drifted upward to 7.5%, house-buying power would fall by an estimated $16,000.
Uncertain Outlook for Mortgage Rates
The 30-year fixed mortgage rate is loosely benchmarked to the 10-year Treasury bond. Since the end of the Great Recession, the 30-year fixed mortgage rate has on average remained 1.7 percentage points (170 basis points) higher than the 10-year Treasury bond yield. The spread usually widens during periods of economic or geopolitical uncertainty, as is the case in today’s market.
As the industry forecasts predict, it’s reasonable to assume that the spread and, therefore, mortgage rates will moderate later in the year if the Federal Reserve stops further monetary tightening and provides investors with more certainty. However, it’s unlikely that mortgage rates will revert to the 5.5% levels of 2022 until inflation has moved closer to the Federal Reserve’s 2% target and it begins loosening monetary policy, or there’s a significant economic downturn.
Mortgage rates ticked down modestly after job openings data for July came out yesterday, but rates remain elevated.
Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 7.18% as of Aug. 31, down from last week’s 7.23%. By contrast, the 30-year fixed-rate mortgage was at 5.66% a year ago at this time.
“Despite continued high rates, low inventory is keeping house prices steady,” said Sam Khater, Freddie Mac’s chief economist. “Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes.”
Other indices showed lower mortgage rates.
HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.07% on Wednesday, compared to 7.22% the previous week. At Mortgage News Daily on Wednesday, the 30-year fixed rate for conventional loans was 7.06%, down from 7.36% the previous week.
What to expect with the Fed ?
At the last Federal Open Market Committee meeting, Federal Reserve Chair Jerome Powell emphasized the importance of July’s core Personal Consumption Expenditure (PCE) Price Index for the Fed’s future path. The results came in today and the PCE price index jumped slightly from year-ago levels but grew at a mild monthly rate, which is more in line with the Fed’s 2% inflation target.
Meanwhile, the labor market is cooling as U.S. job openings dropped in July. However, more robust data points will be required to confidently assert that inflation is moving in the desired direction, said Realtor.com Economist Jiayi Xu.
“Despite mortgage rates hitting 20-year highs, we still expect them to reverse course and trend lower as we gather more solid evidence of inflation improvements in the coming months,” added Xu.
What does it mean for the housing market ?
Incentivized by return-to-office demands, some buyers have adjusted to the higher mortgage rate environment and are moving forward with their home search, according to Realtor.com’s 2023 Hottest Zip Codes report. However, first-time homebuyers are facing greater challenges to make such adjustments.
“Fortunately, new homes remain an option for many, as builders are continuing to add homes with a somewhat greater focus on affordable price points,” said Xu.
What to expect for the fall ?
Last fall when mortgage rates surged, homebuyers adjusted pretty quickly, noted Bright MLS Chief Economist Lisa Sturtevant. First, they held back a little, only to come roaring back to the market in 2023. However, this time could be different, she said.
Rates above 7% are now coupled with home prices near record highs.
“The desire for homeownership is still strong, but there are going to be more and more prospective buyers for whom the numbers simply don’t pencil out anymore at 7%+ rates,” added Sturtevant.
That said, mortgage applications rose last week in spite of the rates being at a 22-year high. However, economists expect applications will decline significantly in the weeks ahead, bringing a shift in the housing market.
“As demand contracts, supply will still remain low, so the slower market will not necessarily translate into significant price declines,” said Sturtevant.