With 2016 fast approaching, it’s time to get your game plan together and take hold of your living situation. Whether you need to upsize, downsize, or stop renting, there are few economic indicators that suggest 2016 may be prime time.
Homeownership is exciting, but given the history of the housing market, it’s also understandably nerve-wracking to invest hard-earned money. We always tell people to look to a few key factors: the cost of borrowing, alternative options, and the terms. Luckily a few more policies in the home buying process are helping to make 2016 a good year to buy a home.
The Cost of Borrowing
Most of us will be borrowing money and paying a mortgage on our homes. There’s always going to be a cost associated with borrowing, and right now, borrowing money is pretty affordable. Freddie Mac’s latest survey of lenders shows little change in the 30-year-fixed rate mortgages, which average 3.89%.
Typically, if you don’t own a home, you’re renting. With the ongoing low supply and high demand of rental units, rental rates are continuing to rise and show no signs of dropping. 88% of property managers raised their rents in 2015, while 68% of property managers predict that rental rates will continue to rise in 2016 by an average of 8%. At least with buying, you get the equity on the home, you get the tax deductions when you write off the mortgage interest, and you’re investing toward your own asset.
Clearer Mortgage Terms
The Recent Truth In Lending Disclosure (TRID) implementation has called for crystal clear terms, upfront, at the closing table. First time home buyers won’t be surprised by any fees or costs at the last minute. This allows you to know full well what is expected of you and your financial commitment.
A plan is a plan–whether it’s a 5 month plan or a 5 year plan. Life happens, and the current state of the market suggests that when it does, you won’t be out of luck. As always, let us know how we can help set you up on the right path and come up with a plan that works best for you.
It’s a question we get asked all the time. It’s a question we specifically take time to address before putting any home on the market. Should we fix this or should we not? When you decide to sell your home, it can be tricky which fixes could make your home sell more quickly and boost price and which ones could waste your money. Each home is different, as is each scenario, but we’re sharing a few of the questions we ask ourselves in making that decision. Consider these:
How hot or cold is the current market? Are houses being snatched up after the first open house or sitting on the market for a little while? Are they being sold at list price, or below list? If houses are going quick and close to list price, you could get away with doing a few repairs here and there, though in the latter, expect to do a bit more work to make a positive impression on buyers.
What is the condition of the comparables? Knowing the condition of the other homes buyers are looking at in your area is certainly helpful. Are the kitchens and bathrooms updated? Is there hardwood floors where you have carpet? You don’t need to make your home exactly like the others, just address anything that might give your home a disadvantage.
Does the faulty item give the impression that the home hasn’t been properly built or maintained? Leaky faucets, overgrown lawns, moldy grouts, these are types of items that may send some red flags and turn buyers off. At an open house especially, buyers are going to walk through your home relatively quickly. Any red flags they see are going to stick in their mind.
What is the fix worth? As in, if you don’t fix it, how much will you need to lower the asking price, realistically? If you have a lot of costly repairs, it may be worth it to sell the home as is, and let someone else fix them and make selections according to their tastes and preferences. Keep in mind that buyers looking at properties listed “as-is” or “fixer-uppers” are going to be considering the price of repairs, plus the hassle of doing them. We always suggest sellers put themselves in the shoes of the buyer and look at their home objectively when considering this.
Is it the first thing a buyer will see? First impressions are key, and the same goes in real estate. If it’s something a buyer will notice before they step in the front door, fix it. If it’s something they will notice right when they walk through in the door, consider fixing it.
It’s also helpful to think back to when you first bought your house. What are some of the features that attracted you to the home? The same attractions you had back then, may still hold up even now. Put yourself in the shoes of a buyer and imagine what questions they’ll be asking their realtor about your home. As always, ask us about any specific issues your dealing with before listing your home.
It’s no secret that summer is the season where most transactions on property take place. Both buyers and sellers have been chipping away at their respective goals since the beginning of the year—painting bathrooms, getting pre-approved, getting home valuations from their trusted real estate professional, saving for down payments. But what happens when the summer ends?
There’s still a market—a good one in fact. Consider these 3 reasons why fall may be a good time for you to buy:
Less competition. The fall months are typically associated with a decline in buyer demand that results in a willingness to negotiate among the remaining pool of buyers, according to Housing Wire. However, with a specific inventory, buyers shouldn’t expect big discounts off the asking price. The fall just means there is less competition.
More attention from your realtor. As the client load lessens, homebuyers conducting their searches during the fall months could enjoy additional attention. Similarly, service providers such as mortgage lenders and escrow offices are emerging from the summer sales swamp and are often more available during the fall.
Year end tax breaks. California offers automatic homestead filing that will still lend you benefits for the later part of the year. Remember to take advantage of tax breaks like mortgage interest deductions, PMI and FHA mortgage insurance premium deductions, prepaid interest deductions and property tax deductions.
We like to think the best reasons to buy a home in the fall is to be settled in just in time for the holidays, cooking pumpkin ravioli and wrapping Christmas candy, but that’s just us 🙂
For most people, their home is the biggest investment they’ll make. Aside from the financial investment, your home is just that… your home. We’ve come up with a few “honey’do’s” to get your home ready for the season*:
- Trim the trees and the bushes. The most important thing you can do before fall is trim the dead trees. Trees are beginning to become dormant this time of year, trimming them will help prevent disease. Also, keep an eye out for signs of distress, such as early change in leaf color, spots, etc.
- Clean the gutters and downspouts. We know, this is Southern California, but when the drains are clogged, rainwater can pool and damage your roof or siding.
- Speaking of roofs, take a look at the exterior of your home and address any damage to the roof, siding or foundation. While you’re there, seal any gaps where critters could enter and raid your pantry, along with areas where cold air can come in.
- Clean your dryer vents. We all forget, and the lint backs up, but it’s important to have your dryer running efficiently. Cool, dry fall weather increases static electricity and could spark with the lint to cause fire.
- Schedule a chimney cleaning and heater check. You’re going to use your fireplace at least once this winter, don’t make it the last time you ever can. Make sure your chimney and furnace are cleaned, maintained and working. A chimney cap, if you don’t have one already, might be good too, to help keep the critters out.
*to be enjoyed with Pumpkin Spice latte.
There’s a lot of buzz surrounding speculation that the Federal Reserve will be raising the cost of borrowing money. For nearly 10 years, the Fed has continuously moved to lower interest rates, spurred by the then pending housing bubble. That was back in the summer of 2006. A lot has happened since the summer of 2006: a first grader is now a Freshman in High School and the world didn’t even know the iPhone in 2006.
Meetings amongst the Fed and its policymakers in the past few weeks have traversed the tight rope on a rate increase. The change, should it happen, could jar borrowers, and move to affect markets.
But, why? Why would the Federal Reserve even hold meetings with policymakers to raise rates? High interest rates would discourage business expansions and purchases.
The Fed is typically a reactionary entity. The Federal Reserve leverages its power to lower rates when economic growth is accelerating so quickly that demand outweighs supply, causing inflation amongst prices and wages, on say, for example, big-ticket purchases. When the economy is in trouble, having the nations central bank cut rates can help produce economic growth. If rates are already at extreme lows, the power of lowering rates won’t help–there’s no where to go. Raising interest rates could give the Fed the chance to reload its weapon.
Low mortgages, lead to more housing bubbles. The previous housing crisis taught us many lessons. When housing markets are hot, such as in Manhattan and Silicon Valley, prices shoot to levels so high they could spur another bubble. Raising interest rates combat the impending inflation.
The Fed’s decision hinges on whether inflation is actually, and currently, a symptom of our economy. Federal policymakers meet to weigh whether to systematically begin pushing rates to more normal levels.
Buying a home may be the biggest purchase you ever make. It’s natural to want to try different ways to save some money. You want the best house, in the best neighborhood, at the best price. If you’re bargain hunting, scouring the internet for FSBOs and running the miles on your car , consider a few things:
Low balling doesn’t work. Put yourself in the shoes of a seller. They bought their home with the hope that it will appreciate in value over time, the same hope you have now. They want to net as much as possible, just as you hope to. They took financial risk, just as you will. There’s an art to submitting an offer–you want a seller to know you’re serious, well informed and viable. A low ball offer based on nothing is likely to insult a seller. Keep in mind what they need, and know what you need. Be open to comprise.
If you’re putting wear on your tires, driving neighborhoods and calling sellers when they aren’t home, because you think negotiating out of commissions will help you get a bargain, you aren’t in the game. Ninety-five percent of homebuyers are working with a real estate professional. You’ll notice that homes you’re watching are going under contract with other buyers. Get the help you need and deserve.
Sometimes a distressed home will impact the perceived prices of other homes. These homes are typically discounted about 17 percent. If the home you’re looking at isn’t in distress, don’t expect to negotiate as if it is. Be realistic of what you’re looking at.
If a home has been on the market for a long time, without a price reduction, there’s probably a reason. You’re dealing with an unmotivated, unrealistic, or upside-down seller who will waste your time with no result of a purchased home. Move on to a deal that will be worth your time.
You may come across a home marked “as is” during your search for the ultimate bargain. You could be looking at a money pit. Execute your due diligence. Get a home inspection and then get bids from contractors who can help you bring the home up to date. If the purchase price and repairs come to approximately the same price as an updated home in the same area, then go for it.
We’ve always been taught to look at data with a discerning eye and an eye for the logistics. If an outlet cites an increase in home sales, there are more questions that need to be answered: home sales where? during what period? based on what? homes of what value?
The number of pending home sales has, in fact, been on a steady rise. Logistically, there need not be an increase in the number of homes for sale between the last year and the current data. There could have been 5,000 homes for sale in both years, and of that pool of homes for sale, one year reports more sales.
As is the current similar case. There are actually 11 percent fewer homes listed for sale this year in Southern California, as compared to last year. It is the time period between the start of 2015 and the current time, where reports show 35 percent more homes listed for sale.
Inventory is rising, and over priced homes are sitting on the market with no offers. With 10 percent of the active inventory reducing their asking price, many sellers begin chasing the market.
Price reductions demonstrate motivation, and a commitment to the reality of the market. Talk with one of our agents about how to strategically make these reductions to ensure you don’t end up chasing the market.
When it’s hot out, we’re still inkling for some hot bbq, but this super fresh mango salsa keeps things cool and adds a little sweetness to our dish. Our favorite thing to put this over is grilled chicken, or with grilled mahi. People always ask us for the recipe, and we’ve kept it under pretty tight wraps, until now.
1 1/3 cups diced mango
1/4 cup chopped cilantro
1/4 cup cilantro for garnish
1/4 cup finely diced red onion
2 tablespoons fresh lime juice
2 tablespoons extra virgin olive oil
2 tablespoons grated lime peel (zest)
1 tablespoon chopped serrano chili
Combine ingredients, season with salt and pepper.
You’re welcome 😉