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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.

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.

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.

Moving With Pets – How to Ensure a Smooth Transition

October 15, 2019

Moving With Pets – How to Ensure a Smooth Transition

Most people consider purchasing a new home one of the biggest and most exciting decisions of their life. While the idea of living in a new home probably brings you great joy, getting to that point isn’t always that easy. Moving can be stressful for everyone in your family, especially your pets. It’s important to consider this as you plan your move.

The following tips can help ensure a smooth transition for both you and your pet.

Take Your Time Packing

Many people don’t consider the amount of time and effort that goes into packing. While it’s normal to accumulate a lot of stuff in your home, you’ll need to spend some time deciding what to pack and what to throw away. This can be stressful if you wait until the last minute. Your pet will pick up on your stress, making them anxious as well. Packing over time reduces the amount of stress you and your pet will experience.

Taking your time to pack also reduces the amount of change your pet will notice. This is important, as pets tend to like things the way they are. A sudden change can cause your pet distress.

Talk To Your Veterinarian

Your veterinarian can provide you with valuable advice about moving with your pet. In addition to providing you with a recommendation for a new vet, they can also help make sure your pet meets all vaccination requirements for the area you’re moving to. If your pet suffers from anxiety, your vet can even prescribe medication for them to take during the move.

Update Your Pet’s Identification

Pets can become lost easily in a new neighborhood. It’s important to make sure they find their way back home. Update your pet’s tags prior to your move and make sure your pet cannot slip out of their collar. Take a picture of your pet before the move just in case you need a recent photo later.

Research Laws and Regulations

Many people don’t realize that different areas have different laws and regulations for pets. It’s important to research the laws and make sure you’re compliant before you move. Depending on where you move, you might have to register your pet, pay a fee, and/or have them vaccinated.

Prepare Your New Home

If possible, prepare your new home before your pet arrives. Make sure there are no holes in the fence or other areas your pet might escape. Have their food, water, and other belongings setup and ready for them.

Start Small

It’s a good idea to start small when introducing your pet to their new home. Consider letting them explore a single bedroom before allowing them into the rest of the house. This is especially important for cats who are often more comfortable in smaller spaces.

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.

Renting VS. Buying

August 15, 2019

Renting VS. Buying

Many people struggle with the decision between renting and buying. While renting provides an excellent short-term and flexibility, it simply doesn’t make sense if you want to build wealth and plan to stay in a geographic area for five years or longer. Renting costs more money over time and does not provide the same benefits as owning your own home. Read on to learn some of the main reasons why buying is better than renting.

Cost of Renting VS. Buying

Despite what many people believe, renting is actually more expensive than buying. In addition to higher costs overtime, renting can also cost more on a month to month basis. Even though mortgage payments come with interest, interest payments are usually tax deductible. When you take this into consideration, there are very few situations where renting makes more financial sense than buying.

When you buy your home, your monthly mortgage rate can be fixed. This means it won’t go up based on rising home prices. This isn’t true with renting. When you rent, you’re subject to increasing rental payments as neighborhoods change and housing prices go up. A recent study published by the Orange County Register reported that as of June 2019, rental rates have increased 5.8% in 12 months, the highest increase since January 2008.

Building Equity

When you rent, a portion of your monthly payment goes towards paying for someone else’s loan reduction. Instead of paying to buy someone else a high-priced asset, you could be putting that money towards buying your own. When you buy a home, most of the money you spend on mortgage payments ends up back in your wealth portfolio in the form of home equity.

Building Wealth

Buying a home has been long considered a key element of financial success. One of the main reasons for this is the fact that owning a home is an asset you can use as leverage for other investments or your eventual retirement. Investing in real estate is quickly becoming one of the most popular and successful ways to diversify your investment portfolio and ensure a steady income stream for years to come.

Access to Credit

Owning a home provides you with access to a large line of credit. Even though you shouldn’t use it unless you absolutely need to, you can take out a second mortgage on your home. This allows you to secure a loan payment much larger than what is available to a renter because the home is the collateral. Many homeowners take advantage of this fact when faced with unexpected expenses.

Final Thoughts

These are only a few of the reasons why buying a home makes more sense than renting. If you’re interested in learning more about available homes, we can help. Strategic Sales and Marketing offers real estate sales and marketing services. Our team has years of experience and understands the needs of 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.

Smart Homes – Understanding Your Options

May 27, 2019

Smart Homes – Understanding Your Options

Technology is changing daily. From cell phones, vacuums to watches, an increasing number of devices are connecting to the Internet. In our homes, “smart” devices are used to increase comfort and security while simplifying maintenance and control.

Homebuyers today have several options to consider when it comes to smart technology. While these options may seem confusing, their availability isn’t likely to change and more products will be added to increase smart technology. In fact, current statistics show the smart home market will reach 40 billion USD in the U.S. by the year 2020.

Although the list of potential options continues to grow, there are a few things homebuyers should look for when shopping for a new home.

Smart Lighting

One of the older technologies, smart lighting systems have been shown to increase safety and security, improve mood, and save homeowners a significant amount of money on electric bills. Smart lighting systems are easy to use and provide instant benefits. A lighting control system is a direct retrofit, meaning no additional wiring is required.

Smart Thermostat

Heating and cooling account for almost half of a home’s total energy costs. Smart thermostats make it possible for homeowners to control the temperature of their home from any device that connects to the Internet. Smart thermostats reduce energy costs and increase the overall comfort of the home.

Security Systems

Traditional security systems react to issues detected in and around the home. Smart security systems alert homeowners of potential problems before they occur, allowing issues to be addressed before they escalate. In addition to detecting possible intruders, a smart security system can send an alert directly to a smartphone or other device if children attempt to leave the home. This increases peace of mind and ensures the safety and security of people and property.

Considerations

While several options exist, these features are only as good as the network behind them. Home buyers should consider builders that install a commercial grade of wiring, such as CAT6 or CAT7 or fiber optic cables. Many older homes only have consumer grade cable or insufficient wiring to convert to a smart home. These are questions that should be asked before purchasing a home.