Author: Shannon

If you’re thinking of jumping into the 2022 real estate market, either by buying a home, selling a home or both, understanding what is in store for the market in the future is imperative to making a wise decision.

Since nobody has a crystal ball to help discern the future, we rely on experts in various economic niches for our housing market prognostications every year. Are they always spot on? Nope, but some get awfully close.

So, let’s dive in.

Who are these people and how do they come up with forecasts?

Economic forecasters come in a variety of forms.

“Private sector companies may have in-house economists to focus on forecasts most pertinent to their specific business … Alternatively, they might rely on Wall Street or academic economists, those attached to think tanks or boutique consultants,” explains Daniel Liberto at Investopedia.com.

He goes on to caution us that “… economic forecasting is often described as a flawed science.” Examples include White House economists who will often publish rosy scenarios in an attempt to get the public onboard with certain legislation.

It’s no different in the housing market. Those with a “dog in the fight,” such as certain large real estate websites, rarely forecast discouraging news. In fact, while researching for this blog post, we found evidence of just that. One large real estate-related company’s 2022 forecast is the exact opposite of what other economists are predicting.

At any rate, economic forecasters, in general, rely on “… statistical models with inputs of several key variables,” according to Liberto. The variables are chosen according to the industry being studied. For instance, when forecasting future housing market conditions, economists use:

• Interest rates
• Unemployment/employment rates
• Impacts on income, such as inflation
• Supply and demand of homes
• Housing affordability
• Availability of mortgages
• New housing construction data

Learn more about these variables at economicshelp.org.

Since space prohibits a deep dive into all of these, we’ll concentrate on the ones that our clients seem most concerned about.

Mortgage interest rates

Mortgage interest rates determine the volume of homebuyers in the market. When rates are high, those at the lower end of the affordability scale leave the home-buying process.

Low interest rates, on the other hand, encourage homebuyers and dry up the inventory of available homes.

Danielle Hale, chief economist at realtor.com® forecasts that mortgage interest rates will “Average 3.3% throughout the year, 3.6% by end of year.”

To prove our economy can change quickly, Hale’s forecast was published prior to the latest news from the Fed: they are anticipating three interest rate increases in 2022.

“New projections based on the median forecast by Fed officials see the federal funds rate rising to 0.9% by the end of 2022, to 1.6% by the end of 2023 and to 2.1% by the end of 2024,” according to Greg Robb at marketwatch.com.

While the rates expected are higher than we’ve experienced in the past year, they may still remain at historic lows.

And 2022 home prices?

Attempting to time the market is never a good idea. By the time it corrects, it’s too late to take advantage of the previous market.

“Will next year be a good time to sell?” is a question we field a lot lately. Let’s see what economists have to say about it.

Economists that we follow say that prices will soften in the new year, but slowly. Realtor.com experts claim that over the course of 2022, the median existing home price will rise 2.9%

If that projection comes true, it would represent the slowest rate of growth since 2012, according to Lance Lambert at fortune.com.

So, what could change this scenario? Rising mortgage rates could dry up demand, causing prices to plummet.

What may be more likely to occur are changes in the jobs market. The new Corona variant is still quite mysterious and how our lawmakers respond to it could impact the employment scene.

Best guess? It depends …

The housing market’s strength depends on a number of variables, one of the most important of which is the health of the job market.

“The Great Resignation,” new variants of the coronavirus and other factors have thrown all predictions about 2022’s jobs market to the wind.

California, for instance is expecting “… fewer payroll jobs …” in 2022 “… than previously anticipated,” according mercurynews.com’s George Avalos, citing the Anderson Forecast.

I know this is a lot to consider as you think about timing your home sale or purchase. Our best advice to you is to jump in as soon as you can.

Feel free to reach out for assistance; we’re happy to help.

 

Impulse buying. We’ve all heard the term and many of us have succumbed to the temptation to indulge in the act, especially in a retail setting.

It’s why the chewing gum and candy bars are located where folks line up to pay for their groceries. It’s the lure of the basket of low-priced goodies near the cash register at your favorite bath and body store.

Unfortunately, overspending on a home, especially one that may not fit your wants and needs, is far more traumatic to your finances than impulse buying at the grocery store.

Psychologists say that the best way to avoid impulse buying (and, thus, overspend) is by having a clear idea of how much you can spend, arming yourself with a detailed list of what you need and not allowing yourself to be distracted.

This is good advice for house hunters as well

So, step number one, before you dive into creating a wish list, is to visit a lender to find out how much you can afford to spend on a home. There’s no sense looking for a home with tennis courts if you can only afford a condo, right?

Now, on to the wish list.

Make it realistic

Now that you know your home-buying budget, let’s get real on the wish list. To help you get your thoughts flowing, consider the following:

• What you most deeply value in a home
• What you cannot tolerate in a home

Think about these items in regards to not only where you currently live but other homes you’ve lived in as well.

If another bathroom is something of value to you, put it on the list. If you need a snappy commute, put that on the list. Avid gardener? Ensure the home has the space for you to create the garden of your dreams.

Remember, however, that this isn’t a fantasy list. Each item on the wish list should be possible to find in a home within your budget.

Which neighborhood do you want to live in?

Once you get the home’s details nailed down, it’s time to figure out where you want the home to be located. Here are some things to think about:

• Proximity to preferred school(s)
• Does the area fit your lifestyle? If you have children you’ll want to figure out if there are lots of other kids for them to play with. On the other hand, if you want peace and quiet, you’ll want the opposite in a neighborhood.
• Crime affects everyone and if it’s a concern, you’ll need to do some research. Regulations forbid real estate agents from discussing crime rates with consumers, but there are other ways to sleuth. Check with the local police department and go online to areavibes.com and the US Department of Justice’s National Sex Offender Public Website.
• Any future plans for the area? Check with the city planning office.
• What are the neighbors like? You can get a good idea about this by actually stopping and talking to anyone you see outside. Also pay attention to how well nearby homes are maintained because this will impact the future value of the home.

Don’t forget to bring your list with you when we meet. This way we can find (hopefully) exactly what you’re looking for.

When it comes to choosing a home to buy, there are exterior people and then there are interior people.

Exterior/interior describes what turns them on most about any particular home. It’s the gardener vs. the chef, the spring and summer outdoor entertainer vs. the I-need-a-fireplace-in-my bedroom person.

The latter group is far larger than the former, which is why when it comes to advice online, you’ll find lots of it geared toward what to look for inside a home.

Even the number of MLS photos of a home’s exterior pale in comparison to those of the interior.

Which is why today we turn our attention to the home shopper who jumps out of the care and breezes up the walkway to a home-for-sale’s front door with nary a look at the exterior.

Slow down. Take your time when you get out of the car. If the home is appealing to you, check out the exterior before getting back into the car.

Check out the landscaping

Sure, you can always change a home’s landscaping. It can be pricey, but it’s certainly doable.

It’s most important to check out the number of trees on the property. Trees, large or small, can be considered good or bad.

Let me explain.

Large, older trees can be problematic if they have invasive roots and are grown too close to the home’s foundation, swimming pool or other sensitive areas.

Then there are the big trees that were planted too close to the home and now look as if they’re ready to eat the home’s roof.

On the other hand, large, older trees that aren’t posing a risk to the home’s structure actually add value to the home and may even help you save on home energy costs.

Foundation

See those cracks in the foundation? Before you get nervous about them, keep in mind that they may mean nothing.

Or, they may mean you should run, quickly, back to your car.

Of the five types of foundation cracks, if the one you notice runs vertically on the foundation, there’s nothing to be concerned about, according to the pros at Complete Basement Systems in Colorado.

“… they’re a common sight in many homes and non-threatening.,” they claim. “Vertical cracks tend to slant slightly (within 30 degrees). To seal them, water-resistant epoxy or polyurethane injection is applied to the cracks.”

Diagonal cracks are also among the least dangerous. They are caused by what is known as “differential settlement.”

Although they aren’t among the scariest of foundation cracks, “… cracks that run diagonally at 30 to 75 degrees …” should be checked by a professional.

When buying a home, the most important cracks to have inspected are those that run at a horizontally.

“Several types exist and all indicate serious structural problems,” the folks at Basement Systems warn.

Check out their website for more information.

Ah, a sparkling swimming pool!

Listing descriptions of homes for sale are often tantalizing, right? If the home features a swimming pool, the adjectives come fast and furious.

If you’ve never owned a home with a swimming pool, brush up on their upkeep. From getting the chemicals balanced to skimming leaves and scrubbing the walls, there is a lot that goes into maintaining a clean and hygienic swimming pool.

And how will you know if a pool and its equipment at a home for sale has been properly maintained?

Ask your agent to obtain maintenance records from the seller. At the very least, find out the age of the pool and the equipment.

Look for cracks and, if you find any, have the pool inspected by a professional.

Yes, it’s an additional expense to hire a pool pro. But, consider this:

“A new, energy-efficient heat pump cost $4,500. We bought a pool-cleaning robot for about $800. Just to get the pool running, we spent about $10,000,” Sally Herigstad says of her buying-a-home-with-a-pool experience.

“Last summer, we spent about $500 on repairs, plus another $200 on chemicals,” she continued.

Her advice?

“If you have your heart set on using a pool, consider having a pool expert inspect your property before you buy the house. Be reasonably confident you can afford to fix the pool and maintain it, or no one will be having any fun with it.”

We’re happy to help you find the specialists required to give you peace-of-mind during your home purchase. Reach out anytime.

 

 

Although estimates differ depending on who is asked, 40 to 50 percent of all American marriages end in divorce.

There’s a piece of trivia to take to heart during those long, often confusing nights when you stay awake and wonder “What happened?”

But now is not the time to dwell on the past, but to deal with what’s currently happening. As painful as it may be, separating the marriage assets in preparation for the divorce is one of the uglier aspects of divorce.

There are several options as to what to do with the house when couples split up. The most common among these include:

• One party keeps the home by buying the other’s share.
• One party retains occupancy of the home temporarily (such as to raise the couple’s children in the family home).
• The house is sold and the proceeds split between the parties, according to their agreement.

If you and your soon-to-be-former spouse have decided to sell your home, we’d like to help you learn what to expect from the process.

The listing process

Listing a home is typically a pretty straightforward process but, unless the two of you remain on good terms, the “typical” doesn’t apply during a divorce sale.

Every aspect of the listing must be a joint agreement, from how much work you’ll do to prepare the home for the market to how much to ask for the home.

Easier said than done at this point in the marriage, right?

We understand that it may seem impossible to come to a meeting of the minds so what we do is arm both of you with the information that may help you get there.

We’ll tour the home, making note of what we think should be done to prepare. We’ll work diligently to come up with an attractive yet aggressive list price for the home. From there, it’s up to the two of you.

This is the part of the process where, despite the memories the home holds, despite the dreams that may be dashed at this point, you’ll need to also divorce yourself from your emotions wrapped up in it.

Only then will the two of you be open to advice on what needs to be done to sell the home quickly and for top dollar.

The marketing process

We won’t tell other agents or prospective buyers why you’re selling your home, so if you want them to know about the divorce, you’ll need to give us permission to blab.

It’s truly none of anyone else’s business and, sadly, we’ve learned that news of a divorce sale causes many buyers to submit ridiculously low offers.

While living in a home that’s on the market is challenging to most who sell, when there is rancor in the house it becomes even more difficult. Keeping the house presentable at all times is hard even under the best conditions and last-minute requests to view an already disrupted home life need to be expected, planned for and accommodated.

The offers to purchase

Reviewing offers as they come in is probably the most challenging part of the process. Nothing will happen with an offer unless the two of you are in complete agreement.

This agreement extends to everything that a buyer may want to negotiate, from time limits for the removal of contingencies to price.

Discuss this up front. If you can agree to at least put your differences aside during this aspect of the purchase process it will go a long way toward a successful outcome.

Dividing the proceeds

Both of you will need to meet with your lawyers in advance of the sale to determine how to divide the proceeds from the sale. Once we have a buyer, we’ll submit instructions to the escrow company outlining the distribution agreement and the escrow officer will take it from there.

Distribution needs to be determined before we get an offer to purchase.

We have worked with many clients who are in your exact situation so we understand the challenges you face. It’s our goal to make the process as easy on both of you as possible.

Mortgage insurance, title insurance and homeowners insurance. There’s a lot to learn about insurance if you’re a first-time home buyer.

Once you’re caught up on the differences between the types of insurance involved in the purchase, it’s time to start finding ways to save money on premiums.

There’s nothing you can do to lower your mortgage insurance premiums and yes, you can shop around for title insurance, but the best place to realize significant savings over the long-haul is on homeowners insurance.

The average annual cost for homeowner’s insurance, nationwide, is “… $1,445 per year and $120 per month — but the cost of coverage varies significantly based on state laws, your home’s location and the cost to rebuild,” according to the number crunchers at ValuePenguin.com.

One way to pay less for homeowners insurance is to buy a newly-constructed home. In fact, when it comes to premium discounts, “… more than 35%–goes to new construction owners,” according to CNBC’s Beth Braverman, citing the pros at the Insurance Information Institute.

All that newness, from the wiring and plumbing to the HVAC system and more, gives insurers the peace of mind that existing homes don’t bring.

Braverman goes on to suggest that “… you may be able to shave off more than 19% by bundling your home and auto policies with the same insurer.”

Here are some additional ways to save money on your homeowners insurance when buying a home.

1. Just say “NO!” to a McMansion

Your homeowners insurance premium isn’t based on the value of the home, but on the cost to rebuild it.

Obviously, then, since the cost decreases as the size gets smaller, it will cost more to insure a large home.

Of course, you’ll need to base your size needs on more than just insurance costs. But if you can get what you need in fewer square feet than that huge house you have your eye on, you will save money.

Keep in mind that the savings in this scenario won’t stop with your insurance premium. It costs less to maintain a small home and it costs far less to heat and cool it.

2. Safety features are worth their weight in gold (well, almost!)

Smoke detectors are the most prevalent basic safety feature in all homes, so don’t plan on getting a huge premium discount for them.

Go beyond the basics if you want to save some bigger bucks.

• If replacing the home’s roof, use fire-proof roofing materials (brick, stone and concrete, for instance)
• Add a security system
• Install an in-home fire sprinkler system.
• Add deadbolt locks to all entry doors.
• Update “… your heating, plumbing and electrical systems to reduce the risk of fire and water damage.” (Insurance Information Institute)

Ask your agent how much you can save by performing any of the above upgrades.

3. Brainstorm with your insurance agent

Homeowners should speak with their insurance agents at least once a year to determine if their coverage is still adequate. Since you’re just starting out in home ownership, take the time to have a conversation now with your agent.

Find out what other discounts are available. For instance, will adding storm shutters or re-enforcing the roof lower your premium?

Discounts vary by insurance company and by state. “For example, since retired people stay at home more than working people, they are less likely to be burglarized and may spot fires sooner, too,” according to the Insurance Information Institute.

“Retired people also have more time for maintaining their homes. If you’re at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies,” they continue.

4. Protect your credit rating

Many first-time buyers that we’ve worked with were unaware that their credit rating helps determine their homeowners insurance premium.

The Insurance Information Institute recommends that you keep an eye on your credit information by checking it on a regular basis. Ensure that there aren’t any inaccuracies and dispute any that exist.

Finally, shop around for homeowners insurance. It will pay off in a lower house payment.

When selling a home, homeowners depend on their agents to ensure that the home is sufficiently marketed. And, that’s understandable.

What many home sellers don’t understand, however, is how much knowledge they have about the home – knowledge that, in the hands of the right listing agent – can be transformed into powerful marketing points.

Before the home goes on the market, do yourself a favor and brainstorm all the positive aspects of your home. Here are five to get you started.

1. Why did you buy your current home?

Something powerful attracted you to the home and whatever it is might just be worth mentioning in the home’s marketing materials.

Take a mental walk-through of your life as you were house hunting and happened upon your current home. From location to floor plan, something struck you and made you fall in love with the property.

Share this information with your listing agent.

2. Chemical-free and/or eco-friendly home improvements and maintenance projects.

If the paint on your walls is free of VOCs, your home is tested annually for radon, or your furnace and air conditioner contains allergy-free components, put that on your list.

If you replaced your front door with an energy-efficient model, that’s a selling point.

Anything you’ve done to the interior or exterior that is chemical free or eco-friendly is something your listing agent needs to know about.

3. Nearby amenities that are popular with neighborhood residents

Real estate agents understand that nearby parks and schools are worth mentioning in an MLS listing.

But you live in the neighborhood and are more aware of what your neighbors find valuable. If there is an attraction or amenity nearby that is particularly popular, it’s worth mentioning to your real estate agent.

Think outside of your own preferences. For instance, you may not care that the airport is a quick 10 minute drive from the neighborhood, but it may just snag a potential buyer who takes frequent business trips.

4. Is your home baby boomer bait?

Older Americans aren’t selling their homes as much as the experts thought they would. Yet, they still make up the largest share of home sellers.

They often seek one-story homes with the following attributes:

• Lots of storage space
• Low-maintenance landscaping
• A walkable neighborhood
• Low taxes
• Energy-saving windows and appliances

If your home boasts any of these features, marketing it to baby boomers may just snag the perfect buyer.

5. A dedicated laundry room will help sell your house

If you’re like most Americans, the laundry room is the workhorse of the home. It’s also usually the most neglected room when it comes to deep cleaning and décor.

According to a study by the National Association of Home Builders (NAHB), a laundry room is an essential, according to 76% of the homebuyers they surveyed.

In fact, it took the number one spot on the list of what second-time homebuyers consider “essential.” It’s second to a living room on the list of essentials for first-time homebuyers.

If your home has a dedicated laundry room, make it the star of the home. Clean it until it’s immaculate. Consider a new, light-colored coat of paint and some yummy décor to make it irresistible.

You’ll find inspiration online at pinterest.com, ashleywinndesign.com and thespruce.com.

It’s been said that knowledge is power. And, while poking around in a home seller’s personal papers for knowledge isn’t what the average buyer does, there is always a chance that a bad actor will tour the home.

Even if what is noticed isn’t nefarious, if it gives the buyer knowledge of why you’re selling, or your financial picture, you may lose a bit of negotiating power.

Following is a list of ways to guard your privacy while your home is on the market.

1. See those stacks of mail on the counter?

They need to be put away. Overdue bills, and letters from divorce lawyers can all be a dead giveaway as to why you are selling your home.

Even your mortgage statements contain information that the buyer shouldn’t be privy to.

If you have a safe, lock them up. Otherwise, consider bagging them up and stowing them in the trunk of your car.

2. Clear the walls

It’s no-one’s business that you just graduated from college (and therefore have a lot of debt) or hold an advanced degree (a sign of deep pockets).

Get the diplomas and degrees off the wall and into storage.

Also consider removing anything else that includes family member’s names or achievements.

3. Clean out the closets

Yes, potential buyers open closets. All that mail and those diplomas you removed from the counters and walls?  Don’t put them in the closet.

Do a check of closets to ensure no personal papers are left out.

4. Check the drawers

I hope you didn’t put the stacks of mail in a kitchen drawer. Yes, potential buyers open drawers as well. Box up and remove anything of a personal nature prior to showing your home.

5. What kind of reading material is lying around?

Trade journals and magazines can be a clue to how you make a living. If Single Parent magazine is sitting on the living room coffee table, a buyer may assume you’re in the process of getting a divorce.

The bottom line is: don’t give potential buyers personal information that could put them in a more powerful bargaining position.

6. And don’t give identity thieves the keys to your private life

This is just a short list of items to remove from view and, preferably, from the home:

• Bank statements
• Checkbooks and deposit slips
• Credit card and loan statements
• Anything that includes your driver’s license and/or social security number
• Insurance policies
• Anything to do with your mortgage
• Legal documents
• Anything having to do with taxes
• Anything that lists your passwords and pin

7. How is your Wi-Fi network security?

If you’re unsure how to secure your network plan on disconnecting your Wi-Fi and disabling smart devices during showings and open houses.

Why?

“… without the proper security, someone could easily hop onto your wireless network,” according to Nathan Chandler & Wesley Fenlon at electronics.howstuffworks.com.

This someone could be a savvy identity thief.

As mentioned earlier, the vast majority of home showings and open houses go off without a hitch. But it pays to be prepared for that rare occasion when someone wants your private information.

Please feel free to reach out to us with any questions.