We sat down with trusted local mortgage lender Marc Spiwak at Advisors Mortgage Group to get his thoughts on the current state of mortgage lending, how to make your offer stand out in a seller’s market crowded with qualified buyers, rising federal interest rates, new condo financing guidelines, and more.
Mark has been originating loans in the Gainesville area for over 20 years. He’s also an avid golfer who went to college on a golf scholarship, but you’ll have to catch him out on the links for tips on your golf game.
Here’s a transcript of our conversation. If you prefer to watch the video, head over to our YouTube channel.
We started off by trading notes on the housing shortage and how it’s affecting hopeful homebuyers.
The housing shortage
Kristen Rabell
What are you guys seeing on your end? Because I know what we’re seeing on our end as realtors.
Marc Spiwak
People ask me every week, Are you busy? and I’m like, I am busy, but that doesn’t necessarily equate to funding. I have a whole list of people who want to buy houses, but we can’t get them any houses.
Kristen Rabell
Right. So you get them pre-approved and ready, but they’re sometimes waiting — usually the turnover after pre-approval is what, a day, a week, a month?
Marc Spiwak
It could be the same day, or it could be, worse case, two months.
Kristen Rabell
But now what are we seeing?
Marc Spiwak
We’re not seeing anything. That’s the problem.
Kristen Rabell
As realtors we’re also really busy, but not always seeing that end result. We’re putting in 5, 6, 7 really strong high offers that would win in any other market, but that aren’t winning because there are so many more high offers.
Marc Spiwak
And I was talking to a realtor yesterday who told me that, if you take out condos, you take out commercial, and you take out vacant land, there were only 300 or so single family detached homes on the market. I couldn’t believe that stat.
Kristen Rabell
That’s actually a great opportunity to bring up this map.
So what do you think Miami, Florida, Boston, New York City, and San Francisco, California, have in common with Gainesville, Florida?
Marc Spiwak
It’s definitely not the weather.
Kristen Rabell
Definitely not the weather. It is a housing shortage. This is from the National Association of Realtors. They have a link for realtors to go in and see where the housing shortages are. It’s based off of every permit pulled to build a single family home in each area, and how many jobs are coming in. So it’s 1 to 5 in Gainesville. In Miami it’s 1 to 11. In the bigger cities it’s about 1 to 10. Ours is 1 to 5. There’s just not a lot of houses out here.
How can homebuyers make their offer stand out in the current market?
KR
So when you do have a buyer that is able to make a winning offer, what do you see that is the most common thing in all of these?
MS
Oh gosh, from the listing agent’s standpoint they’re looking for a couple things. One is the type of loan — is it conventional or is it VA, FHA, USDA? Is there a significant down payment? Something with 20% or more down…
KR
So if you have a conventional with 20% down or more you’re going to beat out the conventional with just 5%.
MS
Correct. I also think when the seller knows the name of the lender and knows the person, I think that that preapproval letter, depending on where it comes from, is carrying a lot of weight. That’s what I’ve been hearing from agents.
KR
Yes. I mean it’s always the case, but even more so now. We put a house on the market this weekend and Rebecca was the lead on that. It had six offers, and one of the seller’s biggest things was, ‘Is this a local lender that I know that I can call if it gets hard?’ And also sometimes who the realtor on the other side is matters. Is it someone new or potentially difficult to work with, or is it someone who’s easy to work with?
MS
Right. And that exactly is what happened to me yesterday, with the realtor who told me about the shortage. We had five offers and they took our offer because they knew our name and they knew the buyer’s agent’s name, over a cash offer at the same price. So that one worked out well.
KR
Wow! OK, there we go. Good job! So do you know if this cash offer was coming from a realtor outside of the area?
MS
It was a local realtor, but the buyer was out of state.
KR
And they didn’t really see the house. Yeah, I think on the real estate side, if you don’t know this on the lender’s side, we’ve always sold houses to people after just seeing pictures and videos, and it’s even more prevalent now. And although we don’t want to stop these people from coming in and buying, if you have five to ten offers and there’s a local person who has seen the house — again, local agent, local lender that you know, easy to work with — those are going to trump your other offers.
Rising interest rates
MS
So if we back up to the end of last year, 3 to 4 weeks ago, the 3% rate on a 30-year-fixed was in play. Fast-forward to last week, with no points we were hitting around that 3.75%. That’s a 3/4 point spread there. Since then we might have gained an eighth of a point back. So what does that really mean?
If our average loan size in Gainesville has been around $250k and $275k — that’s the loan amount, not the purchase price — that 3/4 of a percent probably adds $125 onto the payment.
KR
It’s not a huge kick, right?
MS
It’s not, it’s not. But everybody’s tolerance level on $125 is different, of course. But that’s what it means to a buyer today.
KR
So $125 more on a $250k/$275k loan. I think that’s a good way to look at it and ask yourself, is it really affecting me? I know that there are buyers that come in and say, ‘I don’t want to pay any different than what I’m paying now.’ And so you have to think about the taxes, the insurance, HOA (which is not in the numbers that you’re giving), plus the difference between the point system before, and the point system now.
MS
Yes. Another way of thinking about it — for every $10k, it’s about another $50 on the payment.
Will rates reach 5% by the end of the year? If yes can buyers lock in rates now?
MS
I keep saying every year that the rates are going to go up. And I was finally right this year! That’s my concern, that they get up in that neighborhood. The answer is: no, I don’t believe that will happen.
KR
You think more like 4%?
MS
Yes. I think we had this initial wave or shock, whatever you want to call it. What we’re seeing now, we’re starting to flatten a little bit, I think that’s going to be the course for some months to come. And then could we see a little bump into the 4s? I think that’s definitely possible. But that’s probably about as high as we’ll get.
KR
I mean, granted, if you compare it to the 1980s, 5% is great! But compared to what we’ve been experiencing the last few years, 5% is high.
MS
So the second part of that question. Can buyers lock in rates now? The answer is: yes.
KR
With money!
MS
With money, yes. And look, every lender is going to have something different. We do have an extended lock policy, and we can extend all the way up to one year. But like you said, that does cost. So you have to weigh paying the upfront cost to extend against just floating the market. And usually if you can float within the 90 day period, then there’s not much extra cost. So that’s the key timeframe. But yes, if you’re looking for, say, a 6-month lock, you’re going to pay a little extra for that.
New guidelines for condo financing
MS
A lot of this stemmed from what happened in South Florida, down there in Miami, where half of the [Surfside] condo collapsed. As you may know, when we go to do a condo loan, we have to submit a condo questionnaire to the condo HOA, and basically they’ve added some more questions about safety and structural engineering.
KR
And who is answering those questions?
MS
The HOA or the insurance agent. So it’s still too new to see what the outcome is going to be. Of course it’s going to kick out some prospective buyers.
KR
Right, and it’s going to be difficult for some condos in general to be able to sell. So as a condo owner who wants to sell in this market, even though it’s a great market to sell in, tons of buyers, you’re going to have more of these issues around safety.
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To hear more of Kristen and Mark’s conversation, and for more insights into the Gainesville real estate market, head on over to our YouTube channel and be sure to subscribe. Kristen Rabell and Rebecca Johnson livestream from Rabell’s offices in the lovely Haile Village every Monday at 2pm.