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Will Home Prices Go Down?

September 14, 2022

Will Home Prices Go Down?

Analysts, home shoppers, renters, homeowners are all wondering whether home prices will reduce at the same margin that costs to build go up.  There are conflicting answers however. Looking closely at housing demand we see the need increasing, not decreasing.   With rent, land and the cost of construction going up, it’s hard to say “no” to owning a home today.  When asked if rent will increase over the next 7 years, you will have a hard time finding someone that would say “the cost to rent will be lower”.

In seven years, home prices will not be lower from today. It’s unlikely anyone believes they will. The price adjustments occurring now will be small and mainly for homes that had unrealistic prices to start with… let’s face it, it should never cost $800,000 to live in Boise!

Instead of waiting for home prices to go down, prospective buyers are weighing the pros and cons and taking action now.  Many sellers are offering attractive financing packages to create a more affordable payment.  The rule is: If you can afford the payment on a 7-to-10-year fixed loan, fix your payment now and take advantage of the tax deductions that you won’t get with renting. Statistically, most homeowners move every 13 years according to the National Association of Realtors.

Take a look at the recent data from the Mortgage Bankers Association (MBA), which proves all of the above to be correct.

Tax Breaks for Homebuyers

High demand for rentals continues to drive rent prices up with zero deduction to the tenant, while building wealth for the property owner.  It is no secret that one of the cornerstones of building wealth is investing in real estate.  Anyone looking for tax breaks should consider buying a home instead of renting.

Homeowners can take advantage of several tax deductions including:

  • Mortgage Interest Deduction
    Homeowners can deduct interest paid on a loan related to building, purchasing, or improving their primary home up to $750,000.
  • Mortgage Points Deduction
    Homebuyers pay “points” to their lender when they take out a mortgage. These points are a form of prepaid interest paid up-front in exchange for a lower interest rate. In most instances, mortgage points are fully deductible the year they’re paid.
  • State and Local Taxes (SALT) Deduction
    The SALT deduction allows property owners to deduct payments made for property taxes and income or sales tax payments up to $10,000.

Housing Affordability

For renters, the choice to buy often comes down to affordability. Average rent for a vacant unit in Orange County jumped to $2,570 per month in 2022, up 18.5% from the spring of 2021. Most Southern California renters are already paying more than they would for a 30-year mortgage. This makes a 7-to-10-year fixed mortgage a feasible option for many renters.

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.

 

 

 

 

Category: BlogTag: california, california home sales, california homes, home prices, home sales, housing affordability, housing market, housing trends, real estate, real estate industry, real estate market, real estate trends, rent

Impact of Solar Energy On New & Used Homes

February 15, 2021

Impact of Solar Energy On New & Used Homes

As Americans are making environmental efforts, alternative forms of renewable energy are becoming more popular. We see this every day with the rise of electric cars on the road. For homeowners looking to reduce their carbon footprint, solar energy provides many benefits. The right solar panel system can fulfill the electricity needs of an entire household while creating around 80% fewer carbon emissions than fossil fuels.

Installing solar panels does much more than reduce energy bills. Unlike fossil fuels, solar energy is a renewable source which require very little maintenance and have no moving parts. Homeowners only need to clean the panels a couple of times each year and replace the inverter every 5-10 years.

Solar energy may soon replace traditional energy systems in several applications. Scientists continue to improve solar power technology to meet the needs of consumers and businesses. It’s expected that solar panels will be even more efficient in the future.

California Solar Mandate

The California Solar Mandate, which went into effect on January 1, 2020, requires new construction multi-family and single-family homes up to three-stories high to have a solar photovalic (PV) system as an electricity source. In order to comply with the mandate, the solar panel system must be large enough to meet the estimated annual electricity needs of the building.

Mortgage Considerations

While most homeowners understand the benefits of installing solar panels, there are a few things to consider before making this purchase. When homeowners purchase solar panels with anything other the cash, the manufacturer can place a Lien or Uniform Commercial Code filing on the property. Designed to create monthly payments, these liens may make it difficult to refinance or sell the property. Fortunately, many solar panel companies will uninstall the system prior to sale. Another factor is the monthly interest cost for leasing the system verses owning the system, which homeowners should consider. That’s why in many cases homeowners will use an equity line or cash reserves to outright buy the system.

Solar Panel Installation – New Home vs. Used Home

When it comes to solar panel installation, the age of the roof makes a big difference. Roofs generally last between 20 and 30 years. Solar systems last at least 25-30 years. Used homes with older roofs may require analysis by a structural engineer. This isn’t a problem when installing solar panels on a newer home.

While new homes will now require solar, buying a used home with solar panels provides benefits as well. Purchasing a used home with a fully owned system provides the greatest benefits. Because the prior owner purchased the solar panels up front, the homeowner avoids problems caused by an existing lease or finance contracts.

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.

 

Category: BlogTag: California real estate, California solar mandate, new construction homes, new homes, real estate, real estate industry, solar energy, solar power

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