2022 Home Design Trends

March 25, 2022

2022 Home Design Trends

In 2022, home design trends center around flexibility and comfort. With people spending more time at home, homeowners are looking to create spaces that meet a variety of needs. Many of 2022’s home design trends inspire feelings of stability and comfort, while maximizing space for functionality.

Long Banks of Windows

Homeowners everywhere are looking to bring the outside in. Long banks of multiple windows create a space full of light. This has been proven to put homeowners at peace and feel more connected with nature.

It’s not uncommon to see multiple banks of windows spanning two or more walls. Nano Walls and floor to ceiling windows are becoming more common as well.

Kitchen Islands

Most people consider kitchen islands a necessity in the modern home. Over the past few years, these islands have become the hub of the kitchen. When designing an island, flexibility is key. This space is used for multiple purposes including craft projects, homework, and meal prep. In addition to providing extra counter space, it’s not uncommon for kitchen islands to include a dishwasher, prep sink, trash pullout, beverage fridge, and open shelving.

Outdoor Living Space

As people become more conscious of their health and well-being, outdoor living spaces are becoming an essential part of everyday life. Current trends focus around creating an extension of interior spaces. Outdoor living rooms provide a welcome escape from the indoors. A properly designed outdoor living space allows homeowners to relax and unwind, while enjoying the fresh air and natural surroundings.

Space for Pets

According to the ASPCA, approximately one in five households adopted a pet during the pandemic. Many people quickly realized their existing living space didn’t provide what their furry friend needs. Many architects now incorporate a pet bathing area into the laundry room space. Today, Millennial homebuyers are hitting the market looking for homes which provide pet amenities.

Heated Elements

Heated island countertops and heated floors are some of the most sought-after features in new homes this year. Recommended by home design and remodeling professionals, a heated bathroom floor provides a spa-like experience at home. Heated island countertops provide a welcoming place for friends and family to gather.

Shiplap

Shiplap adds character and texture to bathrooms. Depending on how it’s installed, shiplap can effectively accentuate the height, width, or length of bathroom spaces.

Bar Rooms

Another popular addition, homeowners around the country are turning their formal living spaces into bar and entertainment rooms. Bar rooms provide a private and cozy setting for relaxing and entertaining guests.

Strategic Sales and Marketing offers a variety of real estate sales and marketing services. Our team has years of experience working with the real estate industry and understands the steps required to identify and connect with potential buyers. Please contact us for more information about our services.

Interest Rates Rise – Homebuyers Consider Alternative Loan Programs

January 26, 2022

Interest Rates Rise – Homebuyers Consider Alternative Loan Programs

According to Mortgage News Daily, the average rate of a 30-year fixed mortgage increased to 3.7% on January 18^th, 2022. This is 83 base points higher than this time last year and the highest it’s been since early April 2020.

Throughout 2020, mortgage rates set over a dozen record lows. Low mortgage rates increased homebuyer demand, making home prices rise throughout much of the country. Low inventory combined with high demand spurred bidding wars in several states. As a result, many homes sold for well above their sale price in both 2020 and 2021. In November 2021, home prices ballooned by 18.1% year-over-year. Home prices are still up double digits from this time last year.

Since the pandemic began, the Federal Reserve has purchased large amounts of mortgage-backed bonds to keep mortgage rates low. Although many expected this practice to continue through the first quarter of 2022, Feds have started pulling out of the Mortgage-Backed Security (MBS) market. This has caused mortgage rates to rise.

Despite lenders compressing their margins to keep rates low, many are already hitting 3.75%. This has had a major impact on refinancing in 2022. According to a recent survey by Mortgage Bankers Association, applications to refinance in January 2022 were down 50% from the previous year.

How the Recent Interest Rate Increase Impacts House Payments

At 3.7%, homebuyers looking to spend around $350,000 on an existing home will end up paying approximately $125 more each month than if they’d bought before mortgage rates went up. This may make home ownership inaccessible to many first-time homebuyers. If home prices continue to rise and mortgage rates exceed 4%, demand for homes may cool.

Alternative Loan Programs Offer Lower Interest Rates & Fast Loan Processing

Alternative financing and nonbanks provide bank-related lending services to individuals looking to buy or refinance their home. Alternative lenders fund mortgage loans through credit. They sell mortgages to investors, while managing payment collection from consumers. With fewer financial criteria, non-traditional mortgage lenders provide an easier path to securing a loan. This makes home ownership possible for many underserved individuals.

Most nonbank lenders offer similar services to legacy banks with lower down payments, reduced interest rates, and fast loan processing. Home loans offered by alternative lenders include fixed loans, Federal Housing Administration loans, United States Department of Agriculture loans, jumbo loans, and reverse mortgage loans. Nonbank lenders also offer refinancing options focused on lowering monthly mortgage payments.

Alternative funding has been increasing in popularity since the housing market crash in 2008. A recent study found that 40% of consumers believe nonbanks are a better option than traditional banks. As legacy banks raise their rates, it’s likely more homebuyers will turn to alternative financing to obtain a loan. Even with traditional banks attempting to reduce rates and simplify the loan process, it’s unlikely they’ll be able to compete with nonbanks in terms of loan processing time and interest rate reduction.

2021 Year in Review

December 6, 2021

2021 Year in Review

The housing market in California has remained hot for most of the year, with home prices reaching record highs month after month. Fueled by the pandemic, California home prices have increased in every market, with Orange County at 17.1% higher than 2020. Despite higher prices, there are still multiple buyers offering on homes and their search time is increased throughout much of the state.

Fast Paced Market Conditions

Low mortgage rates and low inventory have allowed the California housing market to maintain a healthy pace throughout 2021. Home sales experienced a slight decline in September and October. However, the California housing market has outpaced 2020 home sales and will likely continue to do so through the end of the year.

Home sales in California increased over 13% this year. In an effort to beat out the competition, many buyers offer bids above the asking price. In October, a staggering 60.2% of California homes sold above the asking price.

Home Prices Increase

According to the California Association of Realtors (C.A.R.), the median home price increased in all major regions of the state. Five regions increased by double-digits. Driven by low mortgage rates, buyers seeking more living space, and short supply of available homes on the market, the California housing market remains extremely competitive.

High selling prices are encouraging more sellers to list their homes for sale and a recent survey showed that 70% of Californians believe that now is a good time to sell a home. (can you name the source)

High demand for homes statewide means that fast moving market conditions will likely stick around until next year. C.A.R.’s 2022 California Housing Market Forecast predicts a decrease in existing single-family home sales next year, possibly due to a lack of replacement property. However, supply and demand imbalances and supply line delays due to the pandemic will keep home prices rising.

Home Prices Starting to Level Out

In September, home prices began to level out in California. A second drop in October caused the median home price to fall below the $800,000 threshold. This is the first time that home prices have dipped below $800,000 in seven months. Low mortgage rates are keeping qualified buyers interested; The Pacific West Board of Realtors reports that homes throughout California state are selling at an average of 11 days on market. Orange County is at an average 8 days on market. Based on this data, we are advising home buyers looking to take advantage of low mortgage rates and fix their home price to act fast.

Mortgage Rates Expected to Rise Late 2022 – Early 2023

September 9, 2021

Mortgage Rates Expected to Rise Late 2022 – Early 2023

Home sales in the U.S. are hitting peaks not seen since before the housing bubble burst in 2008. However, the current housing boom is very different than any we’ve seen before, where most analysts determined that there may not be a bubble to burst, although prices may drop slightly by the end of 2022 or early 2023.

Some economists believe that mortgage rates may rise a full percentage point by the end of 2022. Others argue the increase won’t happen until well after that point. Whatever the case, when mortgage rates rise, the housing boom will likely return to pre-pandemic numbers.

Low Mortgage Rates Bring More Buyers Into the Market

During the pandemic, mortgage rates dropped to 3%, reducing monthly payments by 12%. This has allowed more people to buy a home. Young people who would have normally waited are buying now, driving demand and home prices up. In addition to low mortgage rates, remote work is causing buyers to shift from apartment living to single family homes in suburban areas.

The U.S. is currently experiencing a housing shortage. Freddie Mac estimates that 2.5 million homes would need to come on the market to combat the current shortage. Low supply caused home builders to increase production at the end of 2020. Unfortunately, high material costs have made construction difficult. Building permits and new builds are down 30-40% since the mid-2000s.

Despite what some economists say, the current boom is definitely not a housing bubble. Current home prices can be explained by low supply and low mortgage rates. Unlike the housing bubble of the mid-2000s, we’re seeing more credit-worthy borrowers hitting the market. Bank requirements are much stricter than they’ve been in previous years. In order to secure a loan, homebuyers need a high credit score and a sizeable down payment.

Buyers Need to Act Fast to Take Advantage of Low Rates

The current market has led to frantic buying across much of the country. Record-low mortgage rates, remote work, and a shift in housing type demand are driving the boom. As homebuyers compete, bidding wars drive prices up and many U.S. homes are selling above their asking price.

Prospective buyers looking to take advantage of low mortgage rates should act quickly. It is unclear how long the current rates will stick around. Once these rates rise, buyers will ultimately pay more in interest and payments to own a home, even if home prices drop.

Home Prices Continue to Rise in California – Here’s What it Means for Buyers & Sellers

July 19, 2021

Home Prices Continue to Rise in California – Here’s What it Means for Buyers & Sellers

Fueled by strong demand and low inventory, home prices in California continue to rise. According to the California Association of Realtors, the median price for a home in California has risen $182,000 since May of 2019. This breaks down to an increase of over $7500 per month. Although as home prices and costs to build are rising, buyer demand in California grows.

California Home Prices Reached Record Highs in May

In May 2021, Southern California home prices experienced a year-over-year increase of 33.1%. In the Inland Empire, median home prices gained 28.9%.

Fierce competition is leading many prospective buyers to offer above the asking price and potentially the home’s appraised value. In some instances, buyers are including escalation clauses for the home of their dreams, where they will pay higher than whatever the last offer was. Many are offering non-refundable deposits and no loan contingency. Many home builders have started their presales up to 6 months in advance of their sales center opening and model completion, selling completely off virtual tours.

As a comparison, in 2020, an average of 20.3% of California homes sold above their list price. By February of 2021 that number increased to 42.1% of homes in the metropolitan areas of Los Angeles. According to recent data from the California Association of Realtors (C.A.R.), 70% of homes in California sold above their list price this year. Is this sustainable?

No. Although these trends are continuing, in the long run, the market will pivot and change. Many will be priced out of the market and decide to wait for stabilization and if interest rates increase, some will not be able to qualify.

Seller’s Market

We have seen a shift since the first quarter of 2021 eliminating Seller concessions. This coupled with low inventory and high demand translates that California is now a Seller’s market. According to C.A.R.’s monthly Consumer Housing Sentiment Index, 59% of homeowners believe it’s a good time to sell.

Homes are selling at record speed, with many selling in just 7 days. The National Association of Realtors reported that nearly 90% of U.S. homes sold in April were on the market for less than one month. Current homebuyer interest is being fueled by low mortgage rates, shortage of available homes, and an influx of buyers seeking larger living spaces.

The trend to watch will be aging Californian residents will begin selling their homes in favor of moving out of the state. This is due to the potential tax increase proposed by the State to tax equity from a home sale should you invest in property out of state.

Mortgage Interest Rate Trends – Summer Predictions

June 15, 2021

Mortgage Interest Rate Trends – Summer Predictions

For homebuyers, the pandemic brought significant relief in the form of historically low mortgage interest rates. According to Freddie Mac, interest rates fell below 3% in May, 2021. This isn’t surprising, as 30-year mortgage rates have remained in the high 2% to low 3% range for the past few months. On June 10, 2021, 30-year mortgage rates dropped .03 percentage points to 2.96%.

Interest rates for other types of mortgages have dropped as well. The current rate for a 15-year fixed-rate mortgage sits at 2.23% with 0.2 points paid. This is down 0.04 percentage points from last week. The current rate on a 5-year adjustable-rate mortgage is 2.55% with 0.2 points paid, a 0.09 percentage decrease from last week.

Although it’s impossible to predict what mortgage rates will do by the end of summer, there are a few factors that could impact rates. Inflation could drive prices up. So could economic growth, as the economy improves.

While some sources believe mortgage rates will continue to drop, this isn’t likely. Instead, mortgage rates will probably start to rise over the summer.

What Factors Impact Mortgage Rates?

Economic and regulatory factors like ten-year Treasury rates, mortgage-backed securities, and Federal rate cuts can all impact mortgage interest rates. Last March, the Federal Reserve announced their plans to keep mortgage interest rates low through 2023.

While Federal rate cuts don’t necessarily mean lower prices for homebuyers, the Feds do have some influence over mortgage interest rates. Purchases of mortgage-backed securities made by the Federal Reserve helps infuse the market with liquidity. This helps push mortgage interest rates down. Rates could continue to decrease if the Feds increase its purchases of ten-year Treasury notes.

Is It a Good Time to Buy?

Homebuyers looking to lock in a good mortgage rate should act soon. As investors grow concerned over inflation, prices may spike. Also important, mortgage seekers should not wait to lock a loan until immediately after a federal rate cut. 30-year fixed rates can spike temporarily following a cut.

Mortgage rates don’t seem to be reacting to economic reports like they normally do. Experts agree that homebuyers should focus on their own needs and not market movements if they plan to buy in the immediate future. Mortgage rates will probably continue to shift and move unpredictably for quite some time.

No, It’s Not the Same As 2009

March 27, 2020

No, It’s Not the Same As 2009

There’s a saying that the difference between wisdom and knowledge is that knowledge is knowing that the tomato is a fruit and wisdom is not putting it in a fruit salad. An interesting visual of the practical application of wisdom.

With the Covid-19 pandemic in full force in the United States, a younger colleague asked me if it was like this in 2009. My quick response was “No! It was a slower burn in 2009 and today what we are experiencing is more like hitting a wall”. Reflecting on that later, here are three factors that keep my answer the same:

Fear

Everyone will be touched by Covid-19 in one way or another. Some may catch this virus and battle it from a hospital bed. Others may become paralyzed emotionally by the news. Some will see their income negatively affected or the anticipation of that. But this fear will eventually change once this virus is controlled. In 2009, the fear was different, it was really based on the uncertainty of the financial markets but it was the events leading up to that time that created a false market and eventual crash. For those of you in real estate or finance at that time, you know exactly what I mean,. There were transactions closing with no verification loans, income off the application; loans with zero money down which made no sense. Prices were escalating too fast, sometimes mid-phase or within the same week. But since that era, financial overhaul has stabilized our markets and insured that people have substantial qualifications and/or large down payments to insure that the “strategic defaults” would be reduced. Statistically in 2007 there were 8.2 months of inventory to sell and today there is 3.1 months.

Hope

This is not a political statement but I do believe that our leaders have the right mindset that will work towards a faster recovery to this pandemic. Why? To start, the economic stimulus was fast and will provide immediate relief. The delay of the payment of Federal taxes is a second reason; this alone has relieved households nationwide of an April 15th deadline. Many were wondering how they would make that payment if their income was affected. China is back at work, which will open up supply lines on many necessary parts and goods the US depends on. It’s also important to keep in mind that housing construction has not stopped. The financial markets will recover; it may take some time, but they always do. Interest rates are still very low, we just need time for take out lenders to stabilize funding. That adjustment will happen and the housing market will continue to be stimulated. Many families will decide they need a different or larger home, a new lifestyle with more walk-ability and let’s not forget all the babies to be born in 9 months!

Technology

Every sector has advanced since 2009 in this arena; many companies (mine included) were already virtual from that downturn, as they saw no need to spend revenue on brick & mortar offices. Between Microsoft Meetings, Facetime, Zoom, all platforms of virtual meetings, Docusign, Dropbox; you name it, there will be less down time in productivity across the board. The only groups left behind are those that never embraced technology and like the dinosaurs, their time has passed.

Let’s look at this as more of a pause rather than a downturn. A great time to connect with our partners and vendors, a time to be flexible and show creativity in our business. Spending more time with our families is a good thing. Once our shelter in place orders are lifted, I believe we will see an increase in kindness and compassion…there is no virus that can stop those qualities!

New Year, New House – Here’s Everything You Need to Know About 2020 Real Estate Trends

January 3, 2020

New Year, New House – Here’s Everything You Need to Know About 2020 Real Estate Trends

With 2019 in the books, both buyers and sellers are looking toward 2020. This is the time of year when real estate experts begin making predictions of upcoming real estate trends. In order to make these predictions, they must first consider the previous year and its effects on the housing market.

Last year, early forecasts predicted that mortgage lenders would struggle throughout the year amongst rising interest rates. In retrospect, 2019 was the opposite with an unexpected downward trend in interest rates. This created a desirable environment for future home buyers; which caused an increase in home sales throughout much of the year. Refinances have also risen in 2019, as homeowners have taken the opportunity to capture lower interest rates. This has been good news for mortgage lenders, sellers, and buyers, and the real estate market has seen homes in Southern California selling in as little as three weeks of hitting the market.

Although we’ll probably see a few new housing trends emerge this year, we expect many of 2019’s trends to continue into 2020. Increased competition, home technology, and low housing inventory will most likely drive real estate trends throughout much of the year.

Increased Competition

Although low mortgage rates started to revitalize the market last summer, we aren’t expected to see the full impact until next year. Thanks to rising education and low unemployment rates, more people will have the opportunity to buy in the coming year. As more people make the decision to buy, buyers will have less housing inventory to choose from, increasing demand and competition in the housing market throughout much of 2020. Some predictions include the return of bidding wars next year. The supply and demand balance will stabilize by the end of next year, as more homeowners and builders make the decision to sell.

Reduced Recession Risk

Thanks to increased spending, recent data suggests that a U.S. recession is less likely in 2020. As it stands, the chance of a recession is roughly 1 in 4 according to Daryl Fairweather, Chief Economist at RedFin (SOURCE). In order to keep this number low, it’s important that consumers continue spending throughout the year.

Smart Home Technologies

With new technologies emerging almost every day, it’s a fair assumption that technology will continue as a top deciding factor when choosing a home in 2020. Smart technologies such as smart lighting, smart thermostats, and smart security systems use predictive analysis and AI to learn patterns and recognize potential problems. Users can easily control and monitor these devices from any location in the world from a smart phone, tablet, or computer.

Coming up With a Down Payment

December 5, 2019

Coming up With a Down Payment

Despite rising home prices, homes across the United States are selling extremely fast, many within three weeks of hitting the market. Combine this with the fact that most homes sell for close to 99% of their asking price, and it’s clear why an increasing number of homeowners are making the decision to sell.

This creates a challenge for first time home buyers who often struggle to come up with a sizeable down payment. Most mortgage lenders require a down payment of at least 3%. This totals $15,000 on a $500,000 home. While current homeowners can sell their existing property and use the equity as a down payment, first time buyers simply do not have this option. They must come up with the money for a down payment on their own.

Many would-be homeowners are becoming more creative to save for their down payment. Some are reducing their living expenses, or temporarily supplementing their income to regularly contribute to savings. These temporary changes make owning a home a reality.

There are several traditional as well as non-traditional ways to come up with a down payment. First time home buyers should explore their options.

Gifts from Friends and Family

It’s not uncommon for young couples and families to ask friends and family to contribute to their down payment. This benefits both the recipient and the giver. In addition to feeling great about helping someone purchase their first home, the giver may also get a tax write-off depending on the amount of money given. It’s important to note that the IRS only allows individuals to gift up to a certain amount before the recipient must pay taxes. The actual gift amount can change at any time so it’s important to check with the IRS prior to accepting any cash gifts. Please visit https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes) for more information.

Forgo the Expensive Wedding

Many young couples are making the bold decision to forgo the costly $100-150K wedding bash in order to utilize those funds towards a down payment. Many elect to have a modest wedding and their families help them with the goal of home ownership. In some cases, they will set up a GoFundMe account in lieu of gifts so their entire social circle can be part of the process. With help from friends and family, first time home buyers can often make a larger down payment, making it possible to keep their mortgage payments closer to rent.

Keeping Up With Home Security During the Holiday Season

November 15, 2019

Keeping Up With Home Security During the Holiday Season

The holidays are upon us and many of us are looking forward to spending quality time with friends and family. While you’re busy shopping for gifts and planning the perfect family vacation, it’s important to remember that criminals are looking forward to the holiday season as well. As many of us head out to holiday parties, would-be burglars are busy casing our homes, looking for the perfect opportunity for entry.

Burglaries happen all the time during the holiday season. Especially to people that think they’re protected. A top-of-the-line security system simply isn’t enough to keep you safe. This is why it’s so important to learn all you can about home security during the holiday season.

Don’t Make Yourself a Target

Make sure to set your alarm and keep all doors, windows, and gates locked while you are away. Set programmable lights to turn on at dusk and off at dawn, and play music while you’re out. If you plan to go away on vacation, have a neighbor or friend park a vehicle in your driveway so that it looks as though someone is home. It’s also important to make sure to stop your mail and newspapers or have a friend or neighbor pick them up each day. Lock all side gates if you have a yard.

Some law enforcement will suggest you remove any signs stating the brand of your security system or put a different one up that what you actually have. Although many people believe these signs deter thieves, they can also provide information for what to do to circumvent the security system.

Deter Package Thieves

Nothing says “nobody’s home” like packages left on the front porch all day. In addition to letting would-be burglars know you aren’t home, thieves often take these unattended packages which could contain anything from expensive gifts to life-saving medicine.

If possible, have packages dropped off at your office or another location where someone can hold them. Amazon even offers lockers at retail locations where you can pick up the packages at your convenience. If neither of these options work, most shipping companies will allow you to postpone delivery until someone is home.

Be Careful What You Post on Social Media

Smart thieves not only watch your home but also your social media accounts. Never announce on social media that you’re away from home. Wait until you’ve returned to post about parties, events or vacations.

Man’s Best Friend May be The Best Defense

According to law enforcement, a dog loose in your home could be your best defense against burglars gaining access or even trying to break in. Even the friendliest dog will protect its home by barking at strangers. Would-be burglars often see large dogs as too much of a hassle. This could be just what you need to protect your home.

Consider Glass Breaking Sensors

Most criminals won’t bother to open doors, making door sensors useless. Instead, they break the glass of doors and/or windows to gain easy access to your home. Glass breaking sensors sound an alarm when they detect breaking glass, making them an effective part of your home security system.