Archive for the ‘seller news’ Category
Wednesday, March 14th, 2018
The reality of rising mortgage rates is of concern to home buyers and sellers. Normally interest rate increases alone would not be much of a concern but combined with continued low inventory and high prices many wonder if the housing market will be able to sustain itself; there are 3 – 4 expected rate increases remaining this year.
I feel it is safe to say that rising interest rates will have an effect on housing affordability and inventory. Here is how I see it:
1. Higher rates mean many buyers will not be able to afford the house they could afford today (if inventory was not an issue). Many people, especially the would-be first time home buyers, may choose to continue renting or live with parents. If there is less demand for the homes that are on the market, prices will drop.
2. Sellers may continue to withhold homes from the market for the same reason – if there is no inventory for them to move either up or down, selling may not make sense. Especially when you take into consideration the higher rates, plus property tax increases for move up buyers. With less homes hitting the market we will continue to see inventory shortages, BUT combined with higher rates, which could lead to lower demand, prices should start to come down.
3. Luxury markets will face even tougher challenges as rates rise. Combined with the new tax laws, which raise tax on purchases for loans over $750,000, many potential luxury buyers may decide to hold off. Luxury sellers will likely see longer market times and lower prices.
It is important to keep in mind that every market is different. Here in San Diego we have year-round desirable inventory due to weather and location – but the coming changes will affect us and could alter the second/vacation home market purchases as well. It is important to consult a local area real estate agent to understand what is going on in your specific area.
If the inventory rut continues on this path it could lead to a big problem in the real estate market. I feel, and many economists and real estate market watchers agree, that it will stall purchases, keep sellers in homes they would have otherwise sold, and have a deep effect on buyers currently in the market and future buyers. As we head into the Spring and Summer it is a good time to think about selling and purchasing, prior to further rate increases.
Monday, January 29th, 2018
A lot of homeowners have been wondering whether to sell now or wait until Spring. While Spring and early summer are typically the best times to sell, when a large majority of buyers are searching for homes, this year there is no reason to wait if you are a seller…and here is why:
Low Inventory – although picking up in some places, housing inventory is still low. The last year has been challenging for those who are ready, willing and able to buy, since they are unable to find homes that meet their needs or desires. This puts sellers in a great position while it is still a seller’s market.
Mortgage rates will continue to rise – rates have risen once already and will likely do so twice more this year. Combined with low inventory this double whammy will effect homebuyers, effecting their purchasing power and pricing some out of certain markets. If inventory picks up and the rates rise it will start to shift to a buyer’s market, and prices could come down in the long run.
Here is an example I read on a lender’s blog: If rates increase by 1%, from 4% to 5%, a buyer will lose 10% in purchasing power. This means that if a buyer can afford to purchase a $600k home today, but rates increase by 1%, she will only afford $540k using the same monthly payment.
Borrowing is still cheap – from a historical perspective it is still inexpensive to borrow money.
Prices will likely continue to rise – most economists and those who watch the real estate market predict that despite rate increases, prices will continue to rise in 2018. In the last year prices in San Diego County increased 9.1% – this was higher than the yearly increase of 4.2% in 2016. Again, this could impact homebuyers in many areas of the county.
New tax laws will likely effect high-end borrowers – those who are obtaining loans for high end properties will be effected from a tax perspective, as the new laws cap the mortgage interest deduction and the ability to deduct state and local taxes. Therefore the higher end market will be impacted this year, but we will have to wait and see the extent.
Based on the above it is an ideal time to sell. There is a great demand out there – I get emails from agents every week asking about whether I have any upcoming listings in certain neighborhoods. Many homes are selling before they even hit the MLS, and many agents are choosing to put their listings on sites other than the MLS first, in order to try to represent both parties in the sale (so some buyers may not even be aware of listings in neighborhoods they like).
Monday, December 11th, 2017
If you are a future home seller the new tax plan will affect your taxes, so pay attention. Both the House and Senate bills plan to extend the tax benefit that home sellers receive, and this can hurt your bottom line.
The current law allows home owners a tax break upon resale of their property – primary residences only– if they lived in the home for at least 2 of 5 years. Both new plans will increase that to 5 of 8 years. The House and Senate plan to straighten out the differences in their respective plans by the end of the year, and new laws will likely take effect January 1, 2018. Even if the changes are not made until after the first of the year they will likely be retroactive to January 1.
What this means is that sellers who are thinking of selling their primary residence home in 2018, who have not lived there at least 5 years, will not be able to obtain the current tax benefits allowed to those same sellers who have lived in the home at least 2 years.
If you are thinking of selling your primary residence in 2018 and have not lived there at least 5 years, it is advisable to speak with your accountant to find out how much you will need to pay in taxes. Your adviser may need to wait until the plan is approved in order to calculate this number.
Tuesday, January 31st, 2017
The new housing report was released yesterday by Case-Shiller, indicating that U.S. home prices are still rising. Of course this is really area dependent, but if you are a potential buyer or seller you might feel worried, and justifiably so. Keep reading for important information and advice.
The report covers major metropolitan cities and states that prices in these areas rose by 5.27% in November – above expectations of economists, and also up from the previous month of 5.1%. What does this mean for buyers and sellers? Let’s take a look at some important considerations.
Local markets: Of course these studies are general and tend to focus on big cities, so it is important that you contact an experienced real estate agent in your local market to see what is going on in the area. But, the thing to take away from this data is that prices are not easing up. Combine that with the next factor…
Inventory is still very low: Again, your local market must be studied to get an accurate glimpse and set expectations (your real estate agent can help with this), but using my local North San Diego market as an example I know that this is painfully true. I have buyers who simply cannot find homes, and multiple offer situations in some categories – like properties under $600,000 – are still the norm. With low inventory and prices staying put or rising, a buyer does not benefit from waiting to purchase, especially considering the next factor…
Springtime is coming: Traditionally the “hot” season for housing, spring and summer are just around the corner. But in my view we are already in the heat of things. Hopefully more inventory will pop up as we head into that “busy” season, but honestly I think the entire last year and especially this Fall and Winter, can be considered busy in housing – at least here in San Diego. Waiting until Spring could put buyers in even more of a quandry, bringing anÂ increase in the buyer pool: more competition can drive prices up again.
The National Home Price Index also rose by 5.6% annually – up from 5.5% the previous month. High demand is causing these prices to continue on an upward trend. It is important to note, as some doubters or “bubble-talkers” as I call them, may believe, that these trends are NOT similar to those that occurred prior to the last housing crisis in the early 2000s.
How is this market different than that prior to the last crash?
1. Factors driving prices are not the same. Prior to the crash people were driven by speculation and anticipation of growth. Instead, healthy market factors like a strong job market and low mortgage rates are driving this market.
2. Lending is stricter. Lending requirements are not as loose as they were during the time prior to the last housing crash, so not everyone can qualify for a loan.
3. Demand is high but supply is not. Prior to the last market crash, there is a much lower supply of inventory in most areas. It is not so easy to find property to purchase. Many would-be sellers are afraid to sell, as they don’t know where they will move if there is such low supply and so much demand – so it’s a great time to be a seller if you have the time to wait it out on a subsequent purchase.
The moral of all this information is that if you are a potential seller you are in a great position. But if you have to buy after selling you need to have a “plan B” in place – e.g. stay in a furnished month to month apartment or temporarily move in with a relative or friend will put these people in ideal situations to sell and wait for the right home. But buyers have it a bit tougher – the best advice I can give is to BE PREPARED. Get preapproved, start looking at everything in your price range and desired area – even those homes that may not be as upgraded as you like or in the exact neighborhood you wanted. Do your homework and be ready to pounce once you find that “right” home.
Thursday, January 21st, 2016
The real estate business has definitely evolved over the last few decades, with the growth of technology being the main contributor. But when it comes down to it, working with a real estate agent is not just about finding a savvy salesperson, but rather it is about finding someone who truly has your best interests at heart and is willing to work hard to find the right property or sell your home, at the right price, with the best terms. It is not so much a sales relationship as it is a trusted adviser relationship. An agent plays many roles throughout the buying and selling process – researcher, chauffeur, adviser, negotiator, paperwork coordinator, and therapist – to name a few.
As they always will, many people try to come up with ways to find and convert “leads” to clients, from advertising to cold calling to handing out cards to people all day long and asking for referrals from past clients, friends and family members. In the last year I have seen some interesting attempts to woo potential buyers and sellers, and although I am impressed with those who are trying hard, I must say I have been surprised at some of these methods:
1.Â Recorded Calls: I received my first recorded sales call from a real estate agent last year. I was surprised because the agent, who had a lot of enthusiasm, sounded like he was trying to sell me a used car. He went on and on about how he could help me buy or sell a home, and about his strengths as an agent. Now, I must say that selling real estate is not difficult – anyone can do it. BUT not everyone can do a great job at taking care of the PEOPLE, the clients. I have always said that this business is not about houses, it is about people.
2.Â Print Marketing: Marketing via mail and email has always and will continue to be a very strong way for the real estate agent to get business – s/he creates a lovely flyer or brochure and lists skills and past sales and testimonials to make her/him look amazing. S/he even uses words like “Number 1 agent” and “Top agent,” “sold more homes than anyone else.” The trick is that many agents can say these things by putting a spin on the information, and these statements can be true.
Many of these advertisements actually constitute ethical violations in my opinion (and I have been trying to get the rules changed to prevent this, but that is another story). For example, if you are a broker who oversees say 30 buying agents, and among those agents your brokerage or team sold 100 homes last year, how is it ethical for you yourself to claim you sold over 100 homes last year – you did not do that personally, your agents contributed many of those sales. But to the average homeowner who receives your marketing piece, you look like you have done more business than anyone else. Glossy marketing pieces with claims to being “the top producer” do sway the average Jane and Joe many times. Like the political arena, I think that if agents are going to make claims like this they need to explain the truth behind the claims.
3. TV Commercials and movie theater advertising: These types of marketing can also be valuable, but again the time is limited and the agent has only a few moments to convince you of how incredible they are at their job. There is no fine print – but if it gets you to remember their name and call them then the piece has achieved the goal set by the agent. Again, anyone can make a great marketing piece that makes them look like the best agent ever – and of course that is what all salespeople try to do.
4. Broker Calls to Agents About Homes “Coming Soon” to the Market: This newest method is interesting, and is aimed at local area agents. A broker has an agent make calls to other agents’ voicemails, reading from a script about a home that is not yet listed on the open MLS but soon will be – they tell the agents (it seems agents are chosen based on who sells the most in a given area – not all agents receive these calls) that they are giving them a chance to show the property to their buyers before it hits the MLS. Now, if you happen to be an agent working with a buyer and get a call describing the perfect home, this could be a win-win for your client. But if you are an agent and do not get that call, or if you are a buyer looking online and waiting for the perfect home to pop up, you are truly at a disadvantage in such a situation. So this can be a good or poor method of advertising, depending on how you look at it.
5. “Coming Soon” Listings Posted on Third Party Sites: There are some third party sites (such as Zillow and Trulia) that allow agents to post “coming soon” listings. Not all agents can do this – they must pay to become an elite member of these sites, and then they have the “privilege” of posting such properties. It’s great for the agents – they likely get at least some calls from potential buyers – but for those buyers who are not looking on those sites they get the short end of the stick if the home sells before hitting the MLS. Similarly, agents can send out e-flyers or emails about listings that are coming to the market soon, and if this is done fairly (sent to ALL agents in a county), then that is a great advertising tool. It is not fair to the potential buyer who is not working with an agent and who waits for properties to list on the MLS, but of course this is just one of the many benefits of working with an agent (we tend to hear about up and coming listings from many industry sources – agents, appraisers, lenders, sellers, etc.).
From my perspective I believe that all agents should be able to advertise and “sell” their services and skills. But I think there are 2 rules that need to always be adhered to by real estate agents and brokers: 1. Keep it classy. 2. Be honest and ethical. If the local real estate associations who govern agents and make rules set out to make the rules stricter, I think it would be beyond valuable to potential buyers and sellers.
If you are looking for a real estate agent, remember to get the full picture – what can s/he do for you that is different from other agents? Make sure you will not be just a number – some agents have teams of people working for them and they represent many clients – if you like this than great, if not you may want to look for an experienced agent who treats you like you are the only client. Everyone has different needs, so make sure you get all your questions answered and find the person who is best able to help you; shiny materials and boasts about being a “top producer” should play into your decision minimally (although you do want someone who can sell your home with strong marketing and advertising abilities), but you need to feel comfortable with the person and what s/he can offer you.
Thursday, January 1st, 2015
2014 was a positive year for the housing market, with many areas experiencing recovery and more houses selling than previous years. Prices rose quite a bit, and there was a lot of conflicting news about the future of housing. Now, as we head into 2015, many wonder what is in store for the housing market. Of course I do not have a crystal ball, but based on what I see in my local market here is what I think we will see as we head into the new year.
1. Price Increases Will Slow Down
Buyers were out in force on a pretty consistent level in 2014 here in North San Diego. We saw increased competition for listings, multiple offer situations, interest rates remained low, and prices jumped. Heading into the new year I believe prices will continue to rise, however in a much slower (think “normal”) manner. There are two factors that contribute to this: the exit of many investors from the market and lower inventory levels. According to Case-Schiller prices on a national level are near their spring 2005 levels; the 20 cities tracked by the real estate analytic giant are about 15% to 17% off their mid-summer 2006 peaks.
Zillow predicts prices will rise this year about 2.5%, while Relator.com thinks the number will be closer to 4-5%. The California Association of Realtors predicts that single family home prices will appreciate 5.8% in 2015 – that is a lot less than the appreciation this year, which statewide climbed to almost 12% (obviously some areas were higher than others, like San Diego, Orange and Los Angeles counties, and parts of Northern California). Moving forward the market will likely follow a more “normal” growth pattern as predicted.
2.Â Homebuyer Pool will Increase
2014 saw quite a gain in the number of homebuyers – low rates and lower inventory levels had many people determined to purchase before prices jumped too high. Since the majority of investors have left the housing market (due to rising prices and the inability to get a great “deal,”) rates are still low and credit rules have eased, I expect we will continue to see an influx of ready, willing and able buyers to the market. These factors will lead to increased inventory levels, which means that more sellers will list their homes and be able to find replacement properties (one of the biggest challenges for sellers last year was that there was so little inventory that they had nowhere to move to if they sold).
3.Â Affordability will Decrease
Along with more inventory and a stronger market, I think affordability will worsen. Just because housing market prices are rising does not mean that buyers’ income is rising in sync. With rising prices, even though the rise will be slower, buyers whose incomes remain the same will not be able to afford the homes they may wish to purchase. When mortgage rates start to rise that will add to the challenge. Realtor.com thinks that affordability will decrease 5-10% in 2015.
4. Mortgage Rates Will Rise
This is inevitable. Those who are sitting on the fence need to start looking now before rates rise and affordability decreases. Freddie Mac predicts a rise to a 4.5% interest rate this year, while others (like the Mortgage Bankers Association) predict rates will hit 5% by the end of the year.
Market stabilization should generate more inventory as we settle into calmer housing waters, as sellers realize the price frenzy is now over and there is no longer a need to wait and see if prices will continue to jump exponentially. Buyers who have been considering a home purchase will likely jump off the fence to do so before interest rates rise – which they will. The slowing down of price jumps could be a big benefit to the market as a whole, bringing us back to a much more “normal,” thus safer-feeling market.
Tuesday, May 27th, 2014
This is the number one question I get from buyers today…it is Spring/almost Summer, so why are there not more listings available? While I have blogged about this topic several times before, I thought I would discuss the main reason I believe we are not seeing more inventory in many areas right now, including here in San Diego and North San Diego.
There are many potential sellers out there – those who want to move up, downsize, change neighborhoods or move out of area. I know because I have spoken with people who have in the back of their minds that they can move and would like to, but for one reason: there is no inventory. This sounds like a cyclical argument, and it is, so let’s break it down to understand what is happening in many markets.
Sellers are typically not just sellers, they are buyers as well. When they sell their home, they most often need to purchase another replacement property. If the sellers live in an area where inventory is low, they know that while their home may sell quickly, they may have a hard time finding a home to purchase. Rather than step out into the deep unknown – facing the prospect of renting (which is also a difficult market in which to find a property) and moving twice, many sellers decide to just wait it out.
Despite the fact that historically speaking, it is never the best time to BOTH buy and sell, it is easy to see how the above viewpoint, which is completely understandable in today’s market, coupled with buyer competition, might make sellers wait to put out a For Sale sign.
The demand for homes in many areas is still high, and there are buyers waiting for properties to come onto the market, many who understand the need to be aggressive and jump high in order to beat out other interested parties (a topic for another blog). If the demand continues sellers may realize that taking a risk could be positive. If the sellers wait too long they may price themselves out of the market; in other words, if demand remains stable or grows, prices will likewise remain stable or rise. While this is great news for potential sellers, if they are going to be purchasers as well it could mean higher prices on that end.
The bottom line is that sellers need to feel comfortable that they will be able to purchase a home once their home has sold (if that is the plan). They need to do their research and be ready to make an offer when a home meeting their criteria comes up – all the more reason to list their homes now as we head into Summer. If flexibility is an option then it is a good idea to line up a back-up plan, such as a month to month or even weekly rental while the sellers/buyers find a home and close escrow. There are apartments that do rent on a weekly basis, and are available furnished, so that the sellers/buyers would not have to move twice.
Before jumping into the selling market, make sure to have a plan and discuss it with your real estate agent. If you align all the pieces correctly you can sell your home and find a new one in a difficult buyers’ market.
Thursday, May 22nd, 2014
Thursday, January 30th, 2014
With the Spring selling season approaching there are likely sellers considering placing homes on the market. While this is great news, especially since there are still many buyers and low inventory levels, it is important for sellers to understand the current market before listing their homes. To get top dollar, all sellers should consider staging, and there are many different levels of staging – from simple decluttering and rearranging furniture, to heavy staging.
Today’s buyers have changed from the buyers of yesterday. They are more savvy, more on top of what they should expect in certain neighborhoods, and many know the comps and understand them inside and out. They are not likely to jump on something if they feel it does not make financial sense; for example, if a home shows well but has few upgrades, and other homes in the price range have more upgrades, buyers are more comfortable with walking away rather than trying to negotiate the price down. Even more so, they may simply note this after viewing the home online and not even bother to come see it.
Anyone who is considering selling their home should find a listing agent who can help determine the individual needs of the home so that it shows the best it can. Having your agent help you see things from a different perspective is a big help, as often it is hard to step back and view your own home from a potential buyer’s eyes. From adding more light to painting, rearranging furniture or decluttering, there are many things most sellers can do to help their homes show in the best light. Let’s look at different levels of staging.
No Staging. There are some homes that show like models. I just sold one, and I probably could have sold it to at least 10 other buyers. It was so pristine and showed so well that there was nothing that needed to be done. Of course, this is rare because most people do not live this way, but it was sure nice as a listing agent to market such a beautifulÂ home! Many sellers get staging going before they even contact a real estate agent, so by the time one comes the home already has improved on the showing meter. But others need assistance.
Light Staging. Light staging is the easiest kind, and often costs no or very little money and effort. Keeping in mind that every room should be made to feel as spacious as possible, this is where cleaning and decluttering come in. Have your sellers take out stacks of magazines and books, extra furniture that makes the room feel smaller or crowded. Open window treatments and let in the light. Clear off tables and put away knick knacks. In the kitchen, try to get as much off the counters as possible – buyers want to see how much work space there is. Take down pictures if walls are covered with them, and only use a selective few pieces of art in each room.
Moderate staging: This involves a little more work than light staging, but with many of the same concepts. For moderate staging the seller might paint a room or several, plant flowers out front and spruce up the landscaping to heighten curb appeal, or even purchase a few pieces to place strategically around the home (like plants or artwork). If it is necessary to make bigger purchases the seller may want to consider hiring a professional stager.
Heavy Staging: This is where most agents recommend hiring a professional staging company. If the home has an unusual layout or is vacant or not fully furnished, or where the current furniture does not compliment the home (such as big chunky pieces in a small cottage), you may need to bite the bullet and call in reinforcements. It’s a small price to pay to stir up the interest from buyers (and of course your agent will be having professional photos shot once it’s all ready!)
It is important to keep in mind that if you are a seller who wants to get top dollar for your home, and likely sell it more quickly, you should definitely think about staging. Speak with your agent about what you need to do to get your home in tip-top shape.
Monday, December 16th, 2013
It may be a little cooler here in San Diego than we are used to, but the real estate market is definitely heating up. Every year I think that December will be a slow month and that I will get to relax a bit, and every year I am wrong..this year is no exception. There are 1179 pending sales in the county as of December 1. I think this December could end up being one of the busiest in years for homes going into escrow.
Why is the market so hot right now? I think there are a few reasons, but suffice it to say that the buyers who are out there looking are very serious, and they are making very strong offers to boot. Here are a few reasons why I believe the market is on fire this December:
1.Â Market changes: I think the biggest factor in the buyer frenzy is that there have been some significant changes in the market here in San Diego (and in many other places as well). For starters, most listings are priced well, and the multiple offer frenzy seems to have died down. Even though inventory is still on the low side, those homes that are listed tend to show well. Priced right + show well = interested buyers. The buyers who are out there looking are very savvy – most of them have seen multiple properties and know not only what they want, but how much homes are worth. When they find one that meets all their criteria, they are willing to make offers over asking price to prevent multiple offer situations.
For sellers this holiday season is going to turn out to be a great time to list and sell – if their homes are priced right and show well, most sellers will be happy they lived through the hassle of selling during this time of year.
2.Â Loan qualification changes: I have discussed this in several blogs, so it is no surprise to hear that the major lenders have stated that it will be more difficult for people to qualify for loans come the new year. Tougher qualification standards will be put into play, creating the possibility that some buyers may be pushed out of the market. This could have some potential buyers worried, creating more of a sense of urgency to find properties sooner rather than later.
3.Â Interest rate rise: We have been hearing about this one for a while as well, and there is no doubt in my mind that there WILL be rises in interest rates in the new year. How much and how many is a mystery, but this still seems to have an affect on those buyers who are ready to purchase and want to lock in the lowest rates possible.
4.Â The unknown future: Given the status of last year’s Spring inventory (which was very low), it remains to be seen what will happen come Spring 2014. There are many factors that will influence whether we will see an inventory surge – interest rates, loan qualification standards, the economy and job market, etc. There will be a big comfort factor involved in whether sellers choose to list their homes or wait until things stabilize further in the economy. Fear of the unknown future may cause some buyers to buy now rather than wait to see what happens. Many feel that real estate is on the mend, but that it is still a volatile economy. This can go either way, but with the number of serious buyers out there right now I think it is creating the desire to buy now rather than wait it out and see what happens in the Spring.
It definitely is a hot market here in San Diego this December…it will be interesting to see the numbers come out and be able to compare them to the last several Decembers for previous years.