Posts Tagged ‘housing’
Friday, March 10th, 2017
This seems to be the million dollar question right now as home buyers survey the lack of inventory and multiple offer situations present in many markets. A strong seller’s market and high prices make some buyers nervous. So is it better to buy now or wait?
There are a few very good reasons why now is the time to make that home purchase:
Interest rates are rising – We have already seen this happen and word is they will do so again this year, likely several times. This affects mortgage payments and down payments, so jumping in and securing that lower rate now could be smart. It is also important to note that some lenders are charging a lot more for interest rate lock extensions, so that is something to think about if you have a long escrow period or are pursuing a short sale.
Lack of inventory – Inventory in many markets is still very low – San Diego County included. Many buyers cannot find properties to purchase and when they do there are often multiple offers, especially in the $650,000 and under price range. Cash buyers are out in force as well in many lower range markets, making it even harder for first time home buyers. Being picky is getting more and more difficult – right now is a good time to be preapproved and ready to write an offer once you find a home that meets your criteria. See the home as soon as it comes on the market and submit your best offer right away.
Prices are not dropping as we head into the “busy season” – Lack of inventory is making it difficult as demand outpaces supply. Unless this changes we will not likely see price drops in the busy Spring and Summer months to come. The buyer who decides to wait this period out may find herself down the road with still low inventory and higher interest rates.
Here is an example: A house that currently sells for $766,000 with an interest rate of 4.75% and a 20% down payment would yield a payment of a little over $4000 a month. To get that same payment down the road with a home price drop to $727,000, assuming a higher 5.125% interest rate increase, the buyer would be losing $1585 over 3 years. So even if prices drop 5% and rates increase 3/8thÂ of a percent, the buyer who purchases with a lower rate now will be ahead in the long run.
Uncertainty – Worry about the future and economy is still prevalent among home buyers. Uncertainty about taxes and home write offs, as well as the expected rise in interest rates, make some buyers hesitate to make big purchases. The real estate market, like any market, is cyclical. If you are buying a home with a long term commitment then it is a great time to do so, before there are more rate hikes.
Before you decide whether it is best for you to purchase now or wait, it is important to discuss your scenario with you accountant or financial adviser, an experienced real estate agent in your area and your mortgage professional. Information is power.
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.
Monday, January 2nd, 2017
San Diego is definitely a desirable place to live, and as one of the most visited places in the United States it’s no wonder why – we have the best weather, beautifulÂ beaches, great food and nightlife, culture, incredible places to walk and hike, and so much more. There is nowhere else I’d rather live!
As we head into the new year here are some of the happening stories highlighting San Diego and the local real estate market.
San Diego Ranked 5th “Hottest” Real Estate Market in U.S. – Realtor.com ranked San Diego as the 5th “hottest” real estate market in the country. This is great news for the local market. The story pointed out that demand has especially grown since the election, likely due to increasing mortgage interest rates, and that the low supply levels heading into the new year will keep prices high – great news for sellers. Median sales time is 53 days in San Diego county, compared to 88 days nationwide.
San Diego Remains Top Destination for Foreign Buyers – We still rank as one of the top places for foreign buyers, especially those from China and Canada. San Diego is up there with Los Angeles, Orange County and San Francisco as the top places to purchase property in California. Speculation that this trend will continue in 2017 as many feel the US economy and the dollar will strengthen.
San Diego Home Sales Could be Protected by State Supreme Court Ruling – I have blogged about “dual agency” many times, and my position has always been that real estate agents should not be able to represent both the buyer and seller in a real estate transaction. The reason for this is that I feel it is virtually impossible to exercise a fiduciary duty to both parties – it can create too many conflicts of interest. The California Supreme Court seems to be coming closer to agreeing with this sentiment.
In November the court ruled that “a listing broker has a fiduciary responsibility to the buyer and the seller when his brokerage firm is representing both, setting a significant precedent for obtaining and sharing information in residential and commercial transactions.” While there are currently disclosures required which allow such situations, this ruling could be paving the way to no longer discontinuing them in the future…stay tuned for more.
If you need any information about property in the San Diego county area please feel free to contact me. Happy New Year!
Wednesday, December 21st, 2016
If you are like me you are surprised we are at the end of the year already, but the good news is that the real estate market fared well this year, and will likely continue to do so in 2017. Here are my annual predictions for the market, at least here in San Diego County:
1.Â Home inventory will remain low. Due to a combination of factors – rising interest rates, expenses of moving up and difficulty of finding replacement housing, many potential home sellers will likely choose to remain where they are and not sell. This trend defined the market in 2016 and I believe it will continue. Until Americans see how the new President will affect the market I am betting on this.
2.Â Prices will stabilize for the most part. 2016 saw prices still rising slightly in some areas, and higher in others (especially in summer months), but for the most part things seem to be leveling off. I think we will return to “normal” annual price appreciations of 5-7%. Of course this is always area-dependent so check with your local realtor for market statistics and area comparables.
3.Â Market times will decrease or remain low for desirable homes. Due to the continuation of lower inventory levels I believe we will see desirable homes sell quickly. But I also think that buyers are very savvy and will not pay crazy high prices either – although in a multiple offer situation you never know.
4.Â First time buyers could have a difficult time with competition. As interest rates rise, inventory levels decrease (or remain low) and prices remain high, many first time home buyers may find themselves in challenging situations when looking for homes to purchase. Competition will also factor in, especially in areas where there is an influx of repeat homebuyers who are moving up and are well qualified (with large downpayments). My advice is for those first time buyers to get preapproved and start looking now. Click here to read more on how to “win” that home you want.
5.Â Interest rates will rise. This is inevitable and we have already seen the beginning of the end of the lowest interest rates in history. The new administration will also play a role in the interest rate rise as economic goals fluctuate.
The bottom line is that I believe the housing market will do well in the coming year. I do not predict any “bubbles” as some (very few) have done. I think here in San Diego County our market is strong and will continue to be as we head into 2017.
As I always say, if you are thinking of buying or selling in the future you need to do your homework and start early – even a year is not too early. Study the markets, visit homes for sale, get to know inventory, neighborhoods and floorplans. Talk to a mortgage professional and plan ahead. Find a great local real estate agent and let him or her keep you informed so you are ready to go when the time is right. Be prepared and have a wonderful new year!
Monday, December 5th, 2016
I read an interesting fact today: 44% of consumers find the homebuying process scary or intimidating. That is a staggering number of people who are unsure of the process and need guidance. The good news is that today it is easy to make finding your next home a fun and positive experience.
Here is my advice on how to make the process not so scary:
Hire a great agent – Yes, there are many real estate professionals out there, and yes, some will make promises to the moon and back, maybe even tell you they will give you back some of their commission if you choose to work with them. But that does not make one a great agent. Here is what does: experience, local knowledge, intelligence, familiarity with the homebuying process, strong negotiation skills, great referrals.
Find a professional mortgage officer – This is another of those “must haves” when searching for a home that could either make or break a purchase. You need to find a great mortgage officer PRIOR to searching for homes. That person should have all of your data and necessary paperwork so he or she can issue a preapproval – this is important for two reasons: 1. it will tell you how much you can afford, and 2. You will have a higher chance of getting an offer accepted if you are preapproved.
Choosing a mortgage professional is similar to selecting a real estate agent – there are many who will talk the talk and even make promises, but you need to feel comfortable with that person – yes, it’s about getting a great loan but it’s also about making sure the lender can close your loan. If you do not know where to start it is often good to ask those you trust, including that great real estate agent!
Get educated and start your search way early -I tell ALL buyers that it is never too early to start getting ready to purchase a home. If you plan to buy in a year, two years that means you need to get educated and you should start now. Learn about different neighborhoods, their amenities, positives and negatives. If you have children look up local schools and see how they rate – talk to neighbors in potential areas you like and ask about the neighborhood, schools and anything else that may be important.
Most importantly, start looking at homes way before you are ready to buy! Most people hear this and ask me why, so I tell them that you will learn a lot about different areas, floorplans and so much more. When it does come time to buy you will know more about the areas in which you want (and don’t care) to focus, which will make the homebuying process way less scary! So get out there and visit open houses, schedule appointments with your agent and start learning.
It is also important to note that you can learn a lot about homes online – with so many informative real estate sites available at your fingertips you can learn about amenities and so much more.
Stay Organized: Use all the above tools to your advantage and create a folder so you can categorize those areas and even floorplans that have potential. If you are not planning to purchase immediately you will likely forget all the things you learn along the way.
Monday, November 28th, 2016
If you have been looking for a home recently you may realize that doing so has become tougher: there is less inventory out there and when a great home lists there are often multiple offers. So how does a buyer get ahead to secure a home when many others are in the same situation? Here are some tips.
Hire a great real estate agent. This is above all the number one way to find a home in a tough market. Not only can your agent give you advice about what price and terms may get you that house you love, but they are also locally connected, which can make all the difference in the world.
Here is an example – After losing out on a few multiple offer situations I found buyers a home through my connections with other local agents – one that had not gone on the MLS yet. In another situation, I notified buyers of a home that was about to come on the market (they lost out on purchasing my listing in the same neighborhood), and they got into contract prior to the home going on the MLS. Some say this is unfair for the other buyers out there as they never had a chance to see or bid on the home, but many real estate sales work this way. Those of us who work particular areas often stay in touch and know when there is a listing coming up. Having that on your side as you search for a home is priceless.
Be Paperwork Ready: There is no better advice than to be ready to make an offer. This means you need to be preapproved with a lender (the lender should have all your paperwork so s/he is ready to go once you write an offer, and you should have a preapproval letter). Have a copy of your latest bank or investment statement showing proof of funds for your downpayment, in order to submit with your offer. Your offer should be as strong as possible so speak with your agent to determine what needs to be in there and what may be left out in order to avoid a multiple offer situation.
Know what you want: Often this is difficult when one is focusing on multiple areas or neighborhoods, but if you really know those you prefer, including floorplans and other amenities, you will be able to act quickly to see the home and make and offer. Even if multiple offers do come in, being first to present can often be helpful. Start looking at areas and homes before you are ready to purchase – the more information you have the better and more prepared you will be when the time to buy is right.
All in all, buying a home in a low inventory market can be tough. With interest rates rising every day counts – if you can lock in a rate prior to another rate increase that is great – and it just means you need to be ready when that right home becomes available. Of all the above tips, having a great buyer’s agent is the best advice I can provide. Many people think they can find a home without an agent, but a good agent is worth her weight in gold when it comes to finding the right home.
Happy home shopping!
Wednesday, August 31st, 2016
A good real estate agent is golden when it comes to assuring that all your needs are met as a buyer – from searching for the right home to negotiating, to making sure all obligations are met as a buyer and that everything needed from the seller has been provided. It not just about getting to the close of escrow, but also about protecting your legal rights as a buyer and making sure there are no surprises once you do close escrow.
When it comes to the purchase of a new construction home many buyers end up using builder sales representatives, partly because they are there on site and make it easy, and partly because buyers do not know why this can actually be detrimental when it comes to their rights. Here are the top reasons why working with your own real estate agent can help you when purchasing new construction:
1. Dual agency dilemma: When you work with a builder representative, their first allegiance is to the builder. Once they represent you as well then dual agency comes into play. If you are a frequent blog reader you know how I feel about dual agency (click here to read more), and the dangers it brings. In the alternative, it is better if you have your own representation so that the allegiance is only to you – that person can look our for ONLY your best interests.
2. Extra set of eyes and problem solver: Once again, if you have your own representative Realtor to look over the new construction contract then s/he may point some things out to you that you might be able to alter to suit you better. For example, including items that do not come with the home, or extending deposit dates. A good real estate agent is there to assist you and make sure that you benefit. The builder does not care to whom it pays the commission – they just want to get the home sold. Even if you the builder uses its own contract (as opposed to state or local real estate association documents), your agent can still be with you while the documents are presented and help you decipher them.
3. No extra cost to you: Many buyers make the mistake of believing that if they work directly with a builder sales representative, they will save money on the purchase of their new home. This is not true – the builder takes into account the commissions when setting home prices. The builder wants to sell the home, and while it mayÂ (key word – “may”) pay out less commission to an on-site sales rep, most builders do cooperate with brokers and advertise such. A buyer is not going to gain anything by working with an on-site sales rep versus an outside agent. In fact, an outside agent who is a good negotiator may be able to help negotiate perks and price adjustments on your behalf. Either way the builder is going to pay a commission, so why not take advantage of independent representation – someone who has ONLY your interests in mind and not those of the builder. There is no cost to you as a buyer.
When looking at the possibility of purchasing a new construction home, make sure you are well represented. Your interests should be first and foremost.
Tuesday, June 28th, 2016
Attention home buyers and sellers: home inventory is growing. Over the last few years we have seen decreased inventory in many areas, including here in San Diego County. This has made it tricky for many buyers as supply has not met demand, but has been positive for sellers as the seller market picked up speed. But inventory appears to be growing and there are many extenuating circumstances that make now a good time to sell or buy real estate.
Home ownership holding period – Over time most homeowners have tended to occupy their homes on the average for about 6-7 years before selling. But over the last few years this number increased and many sellers were staying in their homes 9-10 years due to economic factors. However, thereÂ has been a trend downward lately due to equity increases and market conditions.
Equity – The last few years have brought equity gains to many homeowners, and low interest rates make it a great time to buy – this combination is positive news for housing. But like any market there will be a correction in time, where equity stops rising as quickly. Here in San Diego County we are starting to see slight slow downs with sales – sales prices are dropping slightly and many homes are sitting on the market longer.
Seller Market – It has been a seller’s market for some time now, due to lack of inventory in many housing markets, combined with a healthyÂ demand. but with external changes on the rise more sellers will likely consider selling due to strong market conditions and other economic factors that may make them question how long the equity rise will continue. As inventory increases it may turn into a buyer market so long as demand is still prevalent and supply increases.
Economy -Â There are several economic factors that may influence a seller or buyer, and moving forward these will likely play a role in decisions to buy or sell. For buyers, low interest rates and international economic conditions that affect our US economy could play into the decision- making process. As markets are cyclical most buyers and sellers know that low rates will not last forever. The looming Presidential election could also factor into housing, as well as international situations like Brexit and terrorism.
The bottom line is that no one has a crystal ball. Many predictions abound and feeding into them can make a buyer or seller crazy. Each individual has to consider their own factors – equity, supply, prices, external and personal economic factors. Talk to your accountant and an experienced real estate professional – but don’t wait too long because the market will change at some point.
Tuesday, April 19th, 2016
A study just released by CoreLogic states that homes sold in San Diego this March had the highest prices in 9 years, with a median home price of $478,000. How is this possible with such low inventory, you may ask? Well, it is likely because of that low inventory that prices have skyrocketed. When levels are low affordability tends to increase as homes sell for higher prices, making it a seller’s market.
Another factor contributing to the current market status is that interest rates have remained exceptionally low, creating a surplus of buyers (some rates are reportedly under 4% for 30 year fixed loans). SpringÂ and Summer – the traditional “big” selling seasons – are in full swing with qualified buyers abound who have few choices. We are seeing multiple offer situations all over the place (I just wrote an offer the other day and there were 6 offers, all at or over asking price). Buyers are ready to buy and when a home in a desirable area is listed it likely will sell quickly – a strong reason to make sure you are preapproved if you are planning to purchase a home soon.
According to the report, home sales increased 5.1% year over year, with new home sales leaping 28.1% last month. All of this makes it a great time to sell, but many sellers do not do so because they are afraid they won’t find replacement property, putting many in a Catch-22 situation. On the other hand, home improvement stores have been doing very well since the start of the year, as many homeowners may be deciding to make improvements rather than chance selling with no where to move – we seem to be stuck in a rut of sorts.
Here in North San Diego I have seen a lot more off-market homes being marketed to real estate agents. In other words, agents list properties and market them without putting them on the MLS (a VERY good reason why all buyers need to have agents!). Many of these homes do not make it to the MLS until they are in escrow, giving buyers no opportunity to view them or make offers. This is frustrating but the early bird gets the worm I suppose. I have received emails and recorded phone calls about property that are not on the market yet but are being marketed to brokers or agents.
The bottom line is that prices have definitely risen and inventory is tight, but if you do your homework and prepare before buying or selling, you should be able to do well. If you are merely selling and have an appealing home in a desirable neighborhood you will be in the driver’s seat. If you are buying make sure to get preapproved, work with a real estate agent, get educated on the market in which you focus your search, and be ready to write the strongest offer you can.
Wednesday, April 13th, 2016
If you have been paying attention to what is going on in the political circus…I mean arena…you may or may not understand how different candidates feel about certain issues. While some have not made clear statements on many issues, and others have literally changed their minds and don’t appear to have opinions (or don’t care to share them with the American people), some have wondered where the candidates stand on housing.
It is a fact that many people in this country were affected by the crash of 2008-2010. Many lost homes, lost jobs, declared bankruptcy. Although the economy has come a long way since then, as has the housing market, there are many who still distrust putting their money into home ownership for fear of another collapse. The number of renters has skyrocketed since the crash (according to the Huffington Post there are 9 million more renters today than existed a mere decade ago), and renting in many areas (including most parts of California) costs more than home ownership – and rents continue to rise in most areas. But of those who would like to purchase, many cannot afford a downpayment.
So you may wonder what will happen to housing once a new President is elected, and whether the choice of candidate will make a difference. Let’s take a look at party philosophies first to get an idea of what might happen depending on whether a democrat or republican is elected.
Hillary Clinton is the only candidate who has authored a specific plan for housing and home ownership attainment. The plan aims to provide better support and credit for those who wish to own homes. Under a Clinton presidency rentals will be more affordable as well, benefitting lower and middle class Americans. The plan details job creation, apprenticeship and investment in American youth, as well as the creation of job programs for convicts re-entering the work force and investment in small businesses. Where will the money for all this come from? Do your research.Â Click here to read her plan in detail.
Bernie Sanders does not have a specific housing plan, but plans to raise taxes across the board – both for individuals and businesses. This would likely mean salaries will decline, as businesses will have to pass the tax increases along to employees. However, other things would be beneficial to Americans under a Sanders presidency, like free colleges and medicare. As for housing, it will of course be affected by lower wages and higher taxes, so one has to weigh the positives and negatives.
Ted Cruz has vocalized his across-the-board tax plan, which would put everyone in the same 10% tax bracket. Sounds good, especially if you pay a lot more, but he also wants to institute a flat tax on business payroll and profits. This could lead to salary cuts for workers, which would be detrimental to the real estate market (lower salaries mean no new home buyers and many owners that could need to sell to heed their new lower income levels). With the promise to end local and state tax deductions as well American homeowners could get hit hard, depending on where they live.
Donald Trump also has no specific housing plan, but has talked about substantial tax cuts and less tax deductions. The big tax cuts could cause interest rates to rise, which will likely affect mortgages – again, this could make homeownership less attainable.
John Kasich plans to cut the tax rate, but there is not much more about his proposal for housing or direct effects on housing due to his plans.
Housing plays a very important part in our lives as Americans, so make sure to do your research and decide whom has the best plan for your needs. Hopefully whomever is elected will keep housing on track so people to afford to become homeowners in the future and the housing market will continue to thrive.