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!

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.

Tips for First Time Home Buyers

February 15, 2020

Tips for First Time Home Buyers

Most people dream of buying their first home. Until recently, many waited until later in life to make this important purchase. Today, younger adults are purchasing homes at an extremely high rate. In fact, Zillow recently reported that more millennials will buy homes in 2020 than Baby Boomers and Generation X combined.

Regardless of age, buying a new home can feel overwhelming. This is especially true in Southern California where median home price sits around $549,000 and new homes sell in as little as three weeks or less. In this competitive real estate market, it’s important that new homebuyers take care not to make an impulsive decision that hurts their long-term financial goals.

Prepare for the Unexpected

Even if your rent is less expensive than what your monthly mortgage payment will be, it’s important to remember that when you buy a home you are responsible for the upkeep and maintenance of your new home. Before purchasing a home, it’s important to pay off as much debt as possible and build an emergency fund for unexpected maintenance and repairs. Most lenders require two months of payment reserves before they will finance a mortgage.

Determine How Much House You Can Afford

Depending on the type of mortgage you can qualify for, the monthly housing cost (including HOA fees, insurance, and taxes) shouldn’t be any more that 35% of your take home pay. For example, if you make $10,000 per month, your housing costs shouldn’t exceed $3,500 per month.

It’s important to remember that property tax rates and home insurance premiums can vary. A reputable mortgage lender can help you determine how much house you can afford based on local rates and online sources can help you understand payment calculations and interest rates, like bankrate.com.

Down Payment: How Much Will You Need to Save?

Some homebuyers can use their ex-military/Veteran (VA) status to qualify for a zero down mortgage but most homebuyers are not that fortunate. If the home you are considering can qualify for an FHA loan, then you will need to come up with 3% of the price in down payment plus closing costs. All FHA loans require mortgage insurance which is factored into the loan qualifications, but they also allow for higher debt to income ratios to qualify.

If financing conventional, down payments start at 5% down depending on qualifying. Some conventional loans will increase the interest rate to include the Private Mortgage Insurance (PMI) which is typically required for conventional loans less than 20% down.

Many millennials are staying home longer to save the additional down payment to own, even others ask your friends and family for help.

Save for Closing Costs

Closing costs are due at the time of sale and typically cost between 1% and 2% of the purchase price of a home. Many times, the Seller will help a home buyer by offering a closing cost credit or the mortgage lender will offer a no fee loan.

Remember that rent will always increase but once you own a home, the payment if fixed and you are increasing your wealth with both tax deductions and equity. It’s alright to put your retirement savings on hold for a short period while you save to purchase a home.

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.

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.

Market Outlook 2020

October 4, 2019

Market Outlook 2020

So far, 2019 has been an excellent year for both homebuyers and real-estate investors in the U.S. Throughout the year, home prices have risen steadily and mortgage rates have fallen to unexpected lows. The nation’s strong economy and robust job market have made it possible for an increasing number of individuals and families to purchase new homes and investment properties this year. This has left many wondering whether the 2020 housing market will continue to see rising home prices and an increasing number of sales.

Home Prices Expected to Rise at a Slower Rate in 2020

Home prices have risen dramatically over the past few years. The fact that rising home prices have exceeded wage growth in the U.S. has created an affordability problem for homebuyers. Leading housing analysts agree that 2020 will continue to see rising home prices, but at a much slower rate. It is believed that this will give wage growth the opportunity to catch up, easing several of the problems potential homebuyers have experienced over recent years. This is excellent news for sellers, buyers, investors, and the economy as a whole.

It’s important to note that these predictions refer to the entire U.S. housing market. Of course, housing market predictions can vary significantly by region. While some areas of the country will continue to see home prices rise through much of 2020, others will experience slowed or flat pricing.

Southern California Home Prices Slow While Rental Prices Rise

In Orange County, Zillow predicts that home prices will only rise about $1000 by next summer. However, despite lower mortgage rates and steady home prices, it’s estimated that Southern California rental prices will rise again next year. This makes 2020 an excellent time for savvy buyers to purchase investment properties. Another consideration if for renters; owning a home fixes your monthly payment, with rents increasing, 2020 may be the best time to consider purchasing a home.

In San Diego, price growth has slowed and inventory of available homes has increased, suggesting the market is shifting in favor of buyers. Zillow predicts that home prices will continue to level off in San Diego throughout 2020.

Although no one can accurately predict the future of the U.S. housing market, it is possible to make predictions based on intensive research and a thorough understanding of the real estate market. Please keep in mind that these predictions are simply educated guesses based on current market trends and conditions, which can change over time.

Professional Real Estate Sales and Marketing Services

Strategic Sales and Marketing offers 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.

New vs. Used Home – Which is Better?

July 12, 2019

New vs. Used Home – Which is Better?

Purchasing a home is one of the biggest decisions of your life. While location and size are both important factors to consider, it’s also important to think about what type of home is better for your lifestyle. Here are some factors to consider:

Advantages of Purchasing a New Home

New Construction:

New homes are built to today’s stringent construction standards, which have changed dramatically over the past 15 years. They are clean, move-in ready, making them the ideal choice if you want to begin enjoying your move right away or leave your current home quickly.

Warranty and Maintenance costs:

In every case, a new home comes with a one year fit & finish warranty and a 10-year structural warranty. This protects homebuyers from faulty workmanship, but it also translates into less cost and maintenance. For example, a new heating and air systems on a used home averages $20,000 depending on square footage. This would be an out of pocket expense for a used home owner.

Modern design and technology:

Built with the needs of how people live today, new homes have minimal wasted space, like huge entry ways (where no one spends time) and state-of-the-art technology. New homes are wired for today’s internet users and smart appliances, security systems and video doorbells. In real estate, dead spots for internet can hurt a resale home value or the owner will need to invest in updated wiring to make it compatible with technology.

Lower utility bills:

In addition, new homes have higher efficiency appliances and include more green features. In addition to simplifying temperature and lighting control, green technology reduces utility costs, makes homes more energy-efficient, and provides valuable tax incentives.

Purchasing a Used Home

Lower Price:

Occasionally, a used home can be less in price than purchasing a new home. However, there might be existing problems that aren’t easily spotted at the time of purchase. It’s important to consider this factor when deciding on your purchase.

Higher Utility Costs and Maintenance:

Depending on the age of the home, it’s unlikely that used homes will have the same features or amenities as a newer home. Most used homes do not have smart technology or energy-efficient features. These homes can end up costing homeowners a lot of extra money on utility bills and security. Although the used home may come with a privately purchased one year warranty, the fine print proves that collecting on those warranties is very difficult, there are many exclusions and there is a high deductible to be met. So, repair costs are many times out of pocket for you as the new owner.

Financing

Many homebuyers run into problems when trying to finance an existing home due to low appraisals or unpermitted improvements. Unfortunately, many home owners cut corners or don’t realize that they must obtain the proper permits and follow certain rules to complete tasks and upgrades. This can cause a major headache for future buyers.

Real Estate Sales and Marketing Services

Southern California Home Prices Drop for the First Time in Nine Years

June 21, 2019

Southern California Home Prices Drop for the First Time in Nine Years

Over the past few years, the combination of supply and demand issues have had a significant impact on home prices throughout Southern California. In fact, the median home price has risen steadily since 2012. This may change in coming months according to a CoreLogic report released in April.

CoreLogic’s data found the median home price in Southern California dropped 0.1% in March 2019 from the previous year. Southern California home prices currently sit $18,500 less than what they were during the last June’s peak. While this doesn’t sound like much, this price dip may indicate a sustained decline in coming months.

But it is important to note that the recent decrease doesn’t apply to all areas of Southern California. Although gains were smaller than in the past, home prices in Los Angeles County, San Diego County, and the Inland Empire grew over the past year. The median home price only dropped in Orange County, which has some of the highest home prices in Southern California. While Orange County home prices might continue to dip slightly over the next few months, it isn’t likely this trend will last.

Healthy Housing Market in Southern California

Low mortgage rates and a solid economy have made buying a home or investment property more attainable for potential home buyers. As a result, we are still experiencing steady sales.

Although luxury homes are sitting longer on the market, homes under $750,000 are selling fast. To attract buyers, some sellers have begun adjusted prices or increased concessions to make a sale. According to Zillow, 15.5% of listings in Los Angeles and Orange County experienced price cuts in March. Only 11.6% of available Orange County homes experienced price cuts in March of last year. In the Inland Empire, 15.9% of sellers reduced their asking prices in March, compared to 13.6% last year.

This is the trend we are watching closely.

2019 Home Buying Trends

May 3, 2019

2019 Home Buying Trends

Purchasing a home is one of the most important decisions a person can make. While location remains the top deciding factor when searching for a home, it’s the home’s unique features that convert shoppers into buyers.

Size

Ten years ago, everything in planning was larger homes. That trend has now reversed and today there is more focus on developing affordable options for middle-income homebuyers. According to data from the National Association of Home Builders (NAHB), the average new home size fell in 2018 for the third straight year. Homebuyers today are choosing paired homes/duplexes, courtyard apartments, bungalow courts, and multiplexes over larger, more expensive homes.

Open Floor Plan

Open floor plans have been in high demand for quite some time. By removing walls, homeowners can communicate freely with friends and family in areas that might have otherwise been closed off. An open concept design adds to the functional square footage of a home, making it the ideal choice for smaller spaces.

Flexible Living Space

As needs change and families grow, flexible living space becomes more important. Homeowners today want a space they can repurpose later.

Energy Efficiency

Everyone wants to save money. This might be part of the reason why homebuyers find energy efficient features so appealing. Whether its Energy-Star-rated windows, or low-flow toilets, Zillow’s recent Housing Trend Report found that nearly half of all homebuyers find energy efficiency desirable.

Storage

No one likes to see clutter. Homebuyers today are making sure they have enough room to stash their belongings. In addition to closets, homebuyers want storage space in the laundry room and garage as well. We are seeing more builders find a way to utilize the space under the stairs for more storage too!

Smart Home Features

As technology becomes more prevalent in everything we do, homebuyers want more smart features in their home. This is especially true for younger buyers who expect lighting, temperature, and security system smartphone control.

Kitchen Islands

A kitchen island adds surface area and storage while creating a space for family and friends to gather. Kitchen islands work well in every kitchen, even smaller spaces. While it might not be possible to fit a larger island with seating in a small kitchen, a smaller island provides the perfect space to prep and stage food when entertaining.

Amenities

Prospective buyers are looking for amenities that promote recreation and socialization. Top choices include Wifi-friendly lounges and public spaces, community pools, community gardens, hiking trails, and gyms.

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 trends in what buyers want and how our clients can deliver homes to today’s potential buyers. Please contact us for more information about our services.

Making Sense of Conflicting California Housing Market Predictions

April 19, 2019

Making Sense of Conflicting California Housing Market Predictions

There’s a lot of conflicting information regarding the current state of the housing market in California. While some believe that trouble is on the horizon, research suggests that home sales around the state are about to pick up.

Over the past year, we’ve all heard talk of possible housing market crashes and recessions. However, a crash has not occurred and with interest rates hovering around 4%, homes continue to sell in California. Increasing wages throughout the state and seller’s willing to negotiate may also be a contributing factor. However, many potential buyers are still waiting for home prices to drop.

Lack of available housing and the growing population continues to drive home prices up throughout much of California. Whil e new construction of multi-family units has picked-up in several cities, there is still some opposition from neighboring residents which will slow development.

Millennial Home Buyers Increase as Baby Boomers Sell

According to a 2016 Pew Research Center survey, 72% of all renters say they would like to own a home one day. Unfortunately, some millennials – those born between the early 1980s and early 2000s – face an exorbitant amount of student debt. A large portion of this generation also entered the workforce in the shadow of the Great Recession. Despite these challenges, we’re seeing an increasing number of millennials buying as baby boomers sell, many times they will forgo an expensive wedding for a down payment or use GoFundMe for their down payments.

Encouraged by this increase, mortgage lenders are beginning to experiment with new ways to streamline the application process and verify creditworthiness. For example, the new FICO system will enable potential buyers with lower credit scores to improve their score by responsibly managing their checking and savings accounts. These new practices, combined with stabilized interest rates, provide the perfect opportunity for millennials to make the switch from renting to owning.

Quality of Traffic Improves in California

While less people are out looking, those that are out are serious buyers. Homes are selling in California despite the fact that traffic numbers have dropped, in some communities we are experiencing less than 9:1 traffic to sale conversion. The buyers are not interested in fixer uppers either; they’re buying new construction homes worth upwards of $1 million. This is extremely good news for sellers in California. Renters waiting for home prices to drop might change their mind if presented with the right opportunity. This is why knowing the front line experience along with specific market research is so important. 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 understand the steps required to identify and connect with potential buyers. Please contact us for more information about how we can help your community outperform the market.