Outlook: The 2018 Real Estate Market

The housing picture is likely to improve in 2018:

• Home prices are expected to climb, but not as fast
• More houses could be for sale toward the end of the year, giving home buyers a greater selection to choose from
• Homeowners will have more equity to borrow from

Yet in other ways, 2018 might continue to be challenging, especially for home buyers. Mortgage rates are likely to rise, reducing affordability.

Here are 10 housing and mortgage trends to expect in 2018.

1. Home prices decelerate

Good news for first-time home buyers: Home-price appreciation is expected to cool down in 2018 after a torrid couple of years.

Home prices rose 6.3% in 2016, according to the Federal Housing Finance Agency. They’re on track to exceed 6% in 2017, too. But for next year, the median forecast among six industry and lender groups is for a 4.1% increase in existing home prices nationwide.

Why the slowdown? One factor is home construction. Economists expect the construction of single-family houses to rise sharply in 2018, based on building permit applications. The median estimate has single-family housing starts rising about 8% in 2018, to roughly 912,500 new houses.

2. More homes for sale

Home buyers are struggling to find houses for sale. The shortages are especially acute for the kinds of homes that first-time buyers tend to get. Among the reasons for the tight supply:

• Many baby boomers are content to age in their homes instead of downsizing
• Investors bought millions of homes after the housing bubble burst, and they’re making too much money as landlords to sell
• Home builders make more profit from expensive houses than entry-level houses, so that’s what they’re constructing

But there’s some hope for 2018: Realtor.com predicts that the housing supply pinch will begin to ease late in the year.

“It looks like we could get to a point where we’re seeing growth in inventory sometime in the fall of 2018,” says Danielle Hale, chief economist for Realtor.com.

3. Home sales could rise

Resales of existing homes are expected to rise modestly in 2018. The median estimate is that existing home sales will rise 2.5%, to 5.6 million units.

Meanwhile, sales of new homes are expected to rise a median of 7%, to 653,500 newly built single-family houses.

According to Realtor.com, cities in the South will show the most sales growth in 2018. Hale says she expects 6% existing home sales growth, particularly in markets such as Dallas; Tulsa, Oklahoma; Little Rock, Arkansas; and Charlotte, North Carolina. She says those places are not as “regulation constrained,” they have strong regional economies and developers have plenty of vacant land to build on.

4. Mortgage rates head up

Mortgage rates are expected to rise in 2018. CoreLogic, a data provider for the real-estate industry, averaged six forecasts of mortgage rates, arriving at a consensus view that the 30-year fixed will average 4.7% in December 2018. In November 2017, the 30-year, fixed-rate mortgage averaged 4.07%.

“Not only are mortgage rates higher, but mortgage rates will be at the highest level since 2011,” Nothaft said at the Urban Institute symposium. “So we’re looking at an environment, going forward, where this era of cheap mortgage rates will largely be behind us.”

Interest rates are notoriously resistant to prediction, though. At the beginning of 2017, most people expected mortgage rates to rise steadily throughout the year. And they did rise — for a few weeks. The average 30-year fixed peaked in mid-March 2017 at 4.58%, according to NerdWallet’s daily survey. Then it declined, dipping slightly below 4% a few times in the summer, before moving upward slightly in the fall.

5. Affordability declines

If, as expected, home prices and mortgage rates go up in 2018, homes will be less affordable.

For example, if mortgage rates rise to 4.7% toward the end of 2018, and the median price of existing homes rises by 4.1%, then monthly mortgage payments for a typical house would rise substantially.

But according to an Urban Institute analysis, middle-class families in much of the country still have some financial wiggle room if rates and prices rise in 2018. Most home buyers don’t appear to stretch to the limits of affordability, the Urban Institute wrote.

6. More equity, more HELOCs

As home values rise, homeowners gain equity. And banks expect millions of homeowners to borrow against that equity.

About 1.6 million homeowners are predicted to get new home equity lines of credit in 2018, a 16% increase over 2017, according to a recent TransUnion study. The credit bureau says 67% of homeowners have enough equity to get HELOCs, and 80% of those borrowers have high credit scores.

TransUnion forecasts that 10 million homeowners will get HELOCs from 2018 through 2022, double the number of new lines of credit in the five years before that.

7. Security headaches continue

Thieves are stealing down payments from home buyers by combining email hacking with wire fraud. And there’s no sign of it slowing.

Complaints of this type of wire fraud skyrocketed by 480% in 2016, according to the 2016 annual report (the latest available) from the FBI’s Internet Crime Complaint Center. Lenders and title companies say the problem worsened in 2017, and that they fend off this form of fraud constantly.

The best way to avoid becoming a victim: When you receive emailed instructions for wiring money, call your agent to verify. The email may be a fake, designed to trick you into wiring money into a thief’s account.

8. More options for people with credit issues

A few specialty lenders are focusing on nontraditional mortgages. For example, Angel Oak Mortgage Solutions in Atlanta targets the borrower “who has had a life event, so they lost their house or had to file bankruptcy or things got really bad, but they’ve now got their feet back on the ground and they’re ready to buy their next house,” says Tom Hutchens, the lender’s senior vice president of sales and marketing.

Several lenders offer interest-only mortgages, and even loans with limited income documentation. These mortgages are dubbed “non-QM” because they don’t meet Fannie Mae’s and Freddie Mac’s plain-vanilla “qualified mortgage” rules. One prominent non-QM lender, Impac Mortgage Holdings, plans to begin securitizing these loans early in 2018.

9. Lenders embracing automation

Mortgage lenders continue to pour money into automating the loan-application process. The best-known example is Rocket Mortgage by Quicken Loans. But Quicken isn’t the only lender that embraces automation. Some lenders, such as loanDepot, cook up their own automation in-house, while software providers such as Blend and Roostify help large and small banks to automate applications. Now a few lenders want to use automation to guide borrowers to loan products that best suit them.

10. Tax reform affects buyers and owners

Tax reform preserves the old capital gains exclusion, but the mortgage interest tax deduction is treated differently. Effective next year, the new law reduces the maximum amount of mortgage debt to acquire a first or second residence for which you can claim itemized interest expense deductions from $1 million (or $500,000 if you use married filing separate status) to $750,000 (or $375,000 if you use married filing separate status). The new tax law limits your deduction for state and local income and property taxes to a combined total of $10,000 ($5,000 if you use married filing separate status).

The Advantages of Selling and Buying a Home During the Holidays

The holiday season is upon us. We know what this means for us personally – festive fun with family and friends. Selling and buying a home during the holidays can offer many advantages. Buyers seeking homes are often more serious and there can be less competition with fewer homes actively marketed, which may benefit both sides. If you’re on the fence about listing your home, you may not realize it can be an opportune time of year to make that move. If you’re a buyer, then consider yourself lucky because you may have less competition for coveted homeownership status. Following are some advantages of holiday home selling and buying:

Motivated Buyers and Sellers:  People who are house hunting this season usually have a good reason, mostly out of necessity or opportunity. Many buyers this time of year have a timeline, like a relocating deadline for a new job or transfer, investors on tax deadlines or simply those looking to downsize or upsize. Buyers and sellers during the holidays are typically focused on moving and moving fast.  

Less Competition: There is a belief that putting your home on the market during the harried holiday season may leave it sitting long after ringing in the New Year. Just as there are sellers seeking to make a move during this time of year, there are buyers looking for a home. With many people on holiday breaks visiting their families and friends, there can also be less competition that may place both home sellers and buyers at an advantage.

Holiday Cheer adds Curb Appeal:  For many, the holidays are a favorite time of year because of the festive lights and decorations. Many homes are looking their best. Celebratory decorations and a decluttered environment is the recommended approach.

Reliable Affiliated Agents:  An experienced and committed agent can relieve much stress and help provide peace of mind to enjoy the holiday season to its fullest. Finding a local agent who will go above and beyond to sell or find your home may be easier than you think.

Five Goal-Setting Tips To Real Estate Investing Success In 2018

As a real estate investor, it’s easy to succumb to the “shiny penny syndrome": We focus on the latest and greatest deal, without seeing how this shiny penny fits into our long-term goals. Many successful real estate investors use the "SMART" goal system to plan their pursuits.

In the SMART system, goals must be specific, measurable, attainable, reasonable and timed. Using the SMART technique can help any investor narrow their focus and get the most out of their real estate investments.

Goals Must Be Specific

The term real estate investing covers a wide range of investing styles (fix and flip, wholesale, turnkey investing) and real estate types (single-family, multi-family, commercial). Creating specific goals can help an investor stay on course among myriad potential pathways. Here are some specific ways to go about real estate goal-setting:

Non-specific goal: "I want to make money investing in real estate." This goal provides no direction about how or where money will be made.

Specific goal: "I want to purchase 10 single-family rental properties in the next 36 months that generate enough cash flow to replace my current annual income." This goal is specific, and it provides a timeline of when it will be achieved.

Goals Must Be Measurable

It goes without saying: Everyone wants to make money on an investment. Investors don't invest to lose money. A measurable goal is something that can be quantified, like a specific number of properties that will be purchased or the return on investment that an investor expects.

Unmeasurable goal: “I want to be the top real estate investor in my area.” This goal is unmeasurable because it doesn’t really mean anything. A top investor could be the one who closes the most deals or the one who has the most monthly income.

Measurable goal: “I want to purchase four investment properties with a 6% or higher annual rate of return on investment.” While this may seem so simple, that is the beauty of a measurable goal. The point is to have a benchmark to measure against. When an investor sets their goals, they can easily check to see if they are on track or not.

If goals aren’t measurable, they simply can’t be met. Setting a goal that can’t be measured is just like setting an unreasonable and unattainable goal: It does more harm than good.

Goals Must Be Attainable

Ambition is every real estate investor's friend. It’s the trait that drives an entrepreneur to be successful. But real estate investors need to remember to keep their goals within reach. Creating unattainable goals only sets an investor up for certain failure that may hinder their desire to try again in the future.

Unattainable goal: "I want to make $100,000 on my first real estate deal." While it is possible to make $100,000 on a real estate transaction, it’s not always attainable — especially for a first-time investor. Factors like market demand or properties available can impact this goal. Focusing simply on “the big number” should not be a part of real estate goal-setting.

Attainable goal: "I want to secure a property with positive cash flow and potential for appreciation." This is an attainable goal because an investor can control where they buy and the price they pay.

Goals Must Be Realistic

Goals can hurt an investor when they aren't realistic. Unrealistic goals are a lot like unattainable goals. However, an unrealistic goal goes beyond “out of reach” and into “impossible” territory.

Unrealistic goal: “I want to manage all my rental properties and fix-and-flips to cut down on costs, all while working a full-time day job.” No matter how motivated a real estate investor is, they can’t add more hours to the day. This goal — attempting to build a real estate investing business with no outside support — simply isn't realistic.

Realistic goal: “I want to maximize my profits through partnering with the best team of property managers.” It is still possible to achieve positive cash flow while working with a property manager. If the numbers add up, an investor can still realize positive cash flow while outsourcing the day-to-day work to a property manager.

When taking part in real estate goal-setting, a reasonable investor should take inventory of their resources and set goals that correspond to the time and money they have on hand.

Goals Must Be Timed

Many real estate investors work for themselves, so timing goals is critical. By setting timed check-ins, investors can ensure they are meeting their goals.

Untimed goal: “I want to call as many leads as possible.” This goal isn’t timed because there is no end date. Is this a daily goal, a weekly goal, a lifetime goal? In addition to not being timed, this goal is also unmeasurable.

Timed goal: “By the end of the month I want to call 20 leads.” This goal gets points for being both timed and measurable. Setting a monthly quota for leads is an excellent way to parcel out all the work that goes along with investing in real estate.

Timed goals are especially important for investors who work in teams. They add structure to the dynamic world of real estate investing. Many investors jump into real estate investing with the long-term goal of financial stability and independence, and timed goals offer a roadmap to achieve that goal.

Goal-Setting For Real Estate Investing Success

Taking the time for real estate goal-setting can feel tedious, but it is crucial to being successful. The process of goal-setting is only the first step for a real estate investor to begin making headway. Once goals are set, investors need to develop a strategy to accomplish their goals. Build on from here with the next step of creating a business plan to keep your investment goals on track.

How to Find Real Estate Deals In A Hot Market

If you’re having difficulties with finding on-market deals at the price points that meet your investment goals, you aren’t alone. In today’s competitive market, relying on available listings as your sole source of new deals is not viable or effective, as an investment strategy.

As of September 2017, the median list price of homes is up 10% year-over-year, while the number of days on market and inventory are down 10% and 9%, respectively, according to research by Realtor.com. In hot markets, these numbers soar far higher. Fewer deals are available, and they are selling faster and at higher prices than just a short year ago. It’s a trend that shows no signs of waning soon. In fact, CNBC recently reported that 2017 will likely turn out to be the fastest housing market on record.

The inability to find on-market deals is a frequent concern of my clients and the listeners of my podcast, Best Real Estate Investing Advice Ever. It was also the number one challenge identified at the annual real estate conference I host, the Best Ever Conference, where I survey each attendee to find out the most difficult investment challenge they’re facing and aim to solve specific investment challenges.

Finding deals in a hot market is a challenge I have faced and overcome, and now I’m able to help others do the same. Here’s my secret:

For every on-market deal an investor comes across, they should reach out to the owner of the surrounding properties and attempt to purchase two properties: the on-market property and an off-market property. More specifically, they should pursue off-market properties that naturally complement the on-market deal.

I was sent an on-market opportunity in a Dallas sub-market: an apartment building with more than 300 primarily one-bedroom units. The property’s characteristics fit perfectly into our business plan. However, due to its high publicity and it being marketed by a broker, the building price inched higher and higher. We were not confident in our ability to manage the project in a way that would achieve our investor’s goals.

We found that there was another complex directly across the street from this on-market deal: a 200-plus unit building of primarily two-and-three bedroom apartments. Our broker contacted the owner of this off-market building, and after a brief negotiation, we secured a contract to purchase the property at a significantly discounted sale price. We were concurrently in negotiations to purchase the on-market deal and felt secure in offering a higher bid than we otherwise would have if it weren’t for the complementary off-market property across the street. As a result, we were awarded the on-market deal.

3 Reasons You Should Hire a Professional Real Estate Agent

When people consider selling or purchasing a property, they want the best guidance – especially in this hot real estate market. A great way to navigate selling or buying a home is by working with an experienced real estate agent. A local agent has the expertise, marketing know-how and familiarity with transaction requirements to help you. Following are just some of the benefits of hiring an experienced local agent for your home sale or purchase:

• An agent will carefully guide and assist you through the transaction and can negotiate on your behalf. Selling or buying a home involves dealing with multiple contacts and contracts including the buyer or seller, their agent, home inspection company, the appraiser, banks and sometimes attorneys. Your agent can help you navigate all the hoops in a timely and efficient manner so that you can experience a smooth and seamless transaction.
• There’s no substitute for a professional agent who has local expertise. Agents typically specialize in specific areas and neighborhoods, giving them a clear understanding of factors, like trending and emerging neighborhoods. Additionally, experienced agents are often familiar with unlisted homes for sale and those about to come on the market, giving their clients a clear advantage.
• An agent can provide you with a competitive market analysis (CMA) that shows comparable properties for sale, days on market, price trends and much more. This can help you price your home right the first time, an important factor that minimizes the chances of price reductions or having your home sit on the market for too long.

Do you need a real estate agent? Contact us today!

Southern California home prices jump again. Lots of residents worry about affordability

The Southern California real estate market continued to sizzle in August as home prices jumped 7.5% from a year earlier, reinforcing new poll results showing widespread concern about the state’s housing affordability.

Across the six-county region, the median price increased to $500,000 from $465,000 a year earlier, though down slightly from $502,000 in July, according to a report Tuesday from data firm CoreLogic.

In Los Angeles County, the median price surged 9.4% to a record $580,000. The previous record of $575,000 was set in July.

It was the best August for home sales since 2006. Total sales in Southern California were up 3.2% year over year and surged 13.3% from a sluggish July, CoreLogic said.

The August home price for the six-county region was just below the all-time high of $505,000 reached in 2007 at the height of the housing bubble. The market began collapsing soon thereafter.

But it’s been rebounding for the last six years, fueled by a slowly improving economy, historically low mortgage rates and a shortage of homes for sale.

“The market’s just chugging along,” said Tregg Rustad, estates director for Rodeo Realty in Beverly Hills. He and his partner sold 10 houses in August — half were at or above the list price and the rest were very close to it.

“Buyers are taking advantage of some of the lowest interest rates we’ve had in the last year. The economy is continuing to improve and the stock market and financial sector is up, so confidence is up,” Rustad said. “And I think sellers are taking advantage of record prices and low inventory.”

Home prices in the region can’t keep rising 7% a year and will probably moderate to between 3% and 5% annually for the foreseeable future, said Richard Green, director of the USC Lusk Center for Real Estate.

“Unless there’s some existential event like a nuclear missile hurled in our direction,” he said, “I don’t know why prices are going to fall any time soon.”

Los Angeles County is short about 100,000 housing units right now and needs to be adding between 30,000 and 35,000 a year to keep up with growing demand, Green said. But only about 25,000 units are being built annually, meaning the county is falling further behind, he said.

This is different than the housing bubble, which was fueled by real estate speculation, Green said. Now it’s a simple case of low supply and high demand in an area that is attracting more upper-income workers, he said.

Andrew LePage, a research analyst at CoreLogic, said inventory is particularly tight for homes in the lower price ranges and demand for those more affordable units remains strong.

“The result is somewhat higher price gains in many of the region’s more affordable communities,” LePage said.

The median price — the point where half the homes and condos sold for more and half for less — rose 12.5% in San Bernardino County to $315,000, the report said.

Median prices rose 7.7% in Riverside County to $365,000; 7.4% in San Diego County to $535,000; 6% in Ventura County to $567,000; and 5.5% in Orange County to $685,000.

The report came as a new statewide poll showed nearly half of the state’s voters — 48% — described housing affordability in their area as “extremely serious.”

The figure was 42% for respondents from Los Angeles County and 65% for those in the San Francisco Bay Area.

The survey of 1,200 registered voters this summer by the Institute of Governmental Studies at UC Berkeley also found that 56% of voters considered moving to find more affordable housing, with 25% saying that they would most likely choose to leave the state.

Nearly six in 10 Los Angeles County voters — 59% — said they considered moving out of the area because of rising housing costs, the poll found. In the Bay Area, the figure was 51%.

The poll showed 51% of registered voters support a measure on the 2018 state ballot to spend more money on affordable housing.

Last month, Gov. Jerry Brown and legislative leaders agreed to a $4-billion bond proposal to be put on next year’s ballot that would fund low-income housing developments and subsidize mortgages for California veterans.

When Is the Perfect Time To Buy Your First Home?

As a busy human, I have recently embraced the philosophy that “Perfection is the Enemy of Execution”. Every so often, when the self-doubt starts to creep up, I have to remind myself that everything doesn’t have to be perfect in order to embark on a new adventure. This was particularly true when I quit my Wall Street job to become a financial advisor. It was true when my husband and I decided to have kids. In both those cases, there was never going to be the most perfect amazing time ever to quit or have kids. But I did it anyway. Recently, when a client of mine called to ask about buying his first home, we discussed the pros and cons of his timing. When is a good time to buy a home? Was this his most perfect amazing time ever to buy a house? The short answer is "maybe" but here is a good outline of things to think about before jumping head first into home ownership.

I though we would start with discussing the first component of home purchasing—the down payment. The reason I want to start with the down payment instead of the pre-qualification phase is because you can do your own work on this part of the process without resorting to experts. Understanding if you can afford a home is the number one step in taking the plunge to home ownership. Let’s explore:

Do You Have Enough Money For The Down Payment? This seems like a glaringly obvious question but you would be surprised by how few people spend enough time on this. The down payment is the chunk of money you lay out up front when you close on your home. The standard down payment is 20 percent of the price you are paying for the home. For our sake, your home price is $500,000 so you will owe $100,000 when you close on your home. Of course, you can pay a higher down payment if you wish. However, things get more complicated if you decide to pay less than 20 percent. In addition to the down payment, you need to make sure you have cash to pay for things like appraisals, inspections and closing costs. These additional costs can be shockingly high and can add thousands of dollars to your tab at closing. The most important thing to consider is in the aftermath of the down payment. What will be left to pay your other bills? Sometimes, first time home buyers get so excited over the prospect of their new home, that they forget that they will have a slew of additional costs on the back end to contend with. And they still need to pay for life. Can you still pay for your life after you buy a home?

Paying Less Than Twenty Percent For A Down Payment: In order to make the dream happen, some choose to put down less money when they buy their home. Is most cases, if you put down less than 20 percent, you will be required to buy mortgage insurance (sometimes referred to as Private Mortgage Insurance if the loan is private, or PMI). The insurance policy protects the lender if you default on your mortgage. Mortgage insurance fees vary, depending on factors like the size of your down payment and your credit score. The range is usually 0.3-1.5% of the original loan per year. If your mortgage insurance fee is 0.5% and your loan amount is $50,000 (half the value of your down payment of $100,000), you will owe about $250 per year in interest. In many cases, your mortgage insurance can be canceled by the lender once your loan balance drops to 78% of the home’s value.

There are plenty of options to explore if you want to pay less than 20 percent in your down payment. VA loans are a great option if you are an active duty or honorably discharged service member. VA loans require 0% down and no mortgage insurance. There are also USDA loans (rural housing loans, aimed at helping low- to moderate-income households), FHA loans (more lenient approval requirements but mortgage insurance will have to paid for the life of the loan), or conventional loans that you can get from a bank or mortgage lender.

Reasons For Putting Down A Lower Down Payment: 1) You don't have enough cash to put down (let’s discuss that in a bit) 2) Perhaps you don’t have long-term plans to stay in the house (are you flipping the home or expect to get transferred in a year?) 3) Do you want to hold onto your liquidity for something else?

Things To Consider: If you put down a 20 percent down payment, you immediately own 20 percent of your home. That is called “equity”. The more you pay with your cash money, the more you own outright and will get back if you ever sell it. However, if you put less than 20 percent down, you will likely have a higher interest rate on your mortgage and higher closing costs. Having a higher mortgage interest rate can translate into higher monthly mortgage payments and more money spent during the life of the loan (remember compound interest). Also, as previously mentioned, you will have to pay the additional costs of mortgage insurance in addition to the mortgage. Finally, if you put down less than 20 percent, your interest on your loan will be higher, your monthly payment will be higher and you will inevitably have to buy a less expensive home. This is where it might make sense to consider waiting a year or so to save a bit more money.

By returning to my initial question, “how do I know if it’s the right time to buy a home?”, first we need to address the most fundamental question. Can you afford the down payment? This is a huge cash outlay and something that needs to be heavily weighed. If you put all of your money down to buy a home, will you have any cushion left for emergency savings, home improvements, food? Are you prepared for the extra expenses involved in putting less than 20 percent down? In my next segment, I will discuss the pre-qualification process and the extra costs involved in home ownership. Stay tuned!

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment Advisory Services are offered through Raymond James Financial Services Advisors, Inc.  Views expressed are the current opinion of the author. Information obtained from sources considered reliable, but Raymond James does not guarantee the material is accurate or complete.

Why Now is a Great Time to Sell Your Home

As the sun sets on the summer season, some homeowners may mistakenly assume that the window of opportunity to sell their home has closed. In this extra hot real estate market, nothing can be further from the truth because there are still opportunities to be had for sellers.

What many people don’t realize is that homes listed during the summer are now off the market leaving little to no inventory in many communities. According to the National Association of Realtors (NAR), 51 percent of homes sold in July were on the market for less than a month.

NAR additionally reported that this summer’s historically low inventory sent record homebuyers into packed open houses and created bidding wars because of the exceptional demand. “Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace, and the prevalence of multiple offers in some markets are pushing prices higher,” said Lawrence Yun, NAR’s chief economist.

In the month of July, NAR reported that total housing inventory declined 1 percent and is now 9 percent lower than a year ago, and has fallen year-over-year for 26 consecutive months. With so many homebuyers left sitting on the sidelines, it could be the perfect season for home sellers to make their move.

So, is it an opportune time to sell your home? The answer is yes if the time is right for you. However, there is no need to hold off on selling your home just because summer is over.  Today, there are buyers looking to move in, just as you are looking to move out.

So, how much is your home worth? CLICK HERE

Should You Invest In Rental Real Estate?

Are you considering investing directly in rental real estate? With many people increasingly concerned about both stock and bond market valuations, you’re not alone. First, let’s take a look at some of the benefits of becoming a landlord:

Income: With stocks and bonds both yielding about 2%, one of the main benefits of real estate is the ability to generate significant income without having to sell your investment. It’s possible to generate high single to low double digit returns on your cash even with a mortgage.

Inflation protection: Not only can real estate provide good income, it’s income that naturally keeps pace with inflation. Inflation can also increase the value of real estate and reduce the real burden of mortgage debt over time. For these reasons, it can be a great way to hedge against the possibility of rising inflation, which generally hurts both stocks and bonds.

Leverage: Historically, real estate appreciation plus rental income has underperformed stock appreciation plus dividend income. What gives real estate an advantage is the ability to benefit from the leverage of purchasing it with borrowed money at relatively low interest rates. For example, if you put down 20% on a $100k property and it appreciates 3%, you actually earn a 15% return ($3k of appreciation divided by the $20k you put down). Of course, you can buy stocks on margin but margin rates are higher and are not tax deductible. You could also be forced to sell your stocks while they’re low to satisfy a margin call.

Tax advantages: Real estate also comes with a lot of tax advantages. First, you can deduct costs such as the mortgage interest, property taxes, and depreciation from your taxes and even use excess “losses” to reduce your other taxes. If you sell a property, you can defer the capital gains tax by reinvesting the proceeds in another one. When you pass away, your heirs can inherit the property and sell it without having to pay any tax on all the appreciation during your lifetime.

Control: You can add additional value to real estate by purchasing a property you believe will appreciate faster than the overall market (the real estate market is much less efficient than the stock market so there are more opportunities to profit from superior knowledge), making improvements, and managing it yourself.

However, real estate is not for everyone. There are some important challenges to be aware of too. Before taking the plunge, here are some questions to ask yourself:

Source: Should You Invest In Rental Real Estate?

5 Simple Steps To Ace Your Next Loan

Whether it’s student loan refinancing, a personal loan or a mortgage, getting approved is not always that easy.

These 5 steps will help you ace your next loan.Here’s what you need to know.

Step 1: Check your credit report

Your credit report is a blueprint of your financial life.

If you are not regularly monitoring your credit report, it should be your first stop when you are declined for a loan.

Check your credit report for accuracy to ensure that an error is not the reason for the decline.

Under federal law, you are entitled to view your credit report every 12 months from each of the three credit bureaus: Experian, TransUnion and Equifax. You can view your credit report for free at AnnualCreditReport.com once every 12 months.

If you find an error, you should report it to the relevant credit bureau(s) immediately so that it can be corrected.

Your credit score will not improve over night, but the sooner you take action, the better.

Step 2: Diagnose the problem

After checking your credit report, diagnose the reason why you were declined for a loan.

Each lender has its own eligibility criteria, underwriting requirements and approval processes.

For example, with student loan refinancing, some common reasons for denial may be insufficient income, high debt-to-income ratio, low credit score or poor financial track record.

Lenders want you to demonstrate a history of financial responsibility.

Lenders are in the risk mitigation business. They want borrowers who will repay their loans in full, on-time and with no issues.

Your credit score is one tool to measure your financial health. If your credit score is too low, it may be one reason for the denial.

So what can you do improve to strengthen your credit profile?

Step 3: Improve your credit score

If your credit profile needs improvement, take proactive steps to improve your financial track record.

Your credit score is critical because it may determine whether you qualify for a student loan, mortgage, auto loan or credit card.

Your credit score also may be used when you apply for insurance, rent an apartment or purchase a cell phone.

To demonstrate financial responsibility, pay your bills in full and on-time.

If you have a delinquent payment, pay off the balance. To avoid a late or missing payment each month, enroll in autopay with your service provider.

Do not open or close multiple credit cards at once, since they can result in several hard inquiries on your credit score, which can adversely impact your credit score.

Keep your credit utilization – which is the proportion of your credit card balance as a percentage of your credit line – low.

A good rule of thumb is 30% credit utilization; the lower the utilization, the better.

Step 4: Apply to other lenders.

One mistake that many consumers make is to apply to one lender and hope for the best.

If you were applying to college, would you apply to only one school?

If you were applying for a job, would you apply to only one employer?

Loans are no different.

A rejection from one lender does not preclude you from receiving approval from another lender.

Since each lender has its own eligibility and underwriting criteria, you should apply to multiple lenders to increase your chances for approval.

 If you apply to multiple lenders within 30 days, typically this is treated as a single inquiry on your credit report.

Step 5: Consider a co-signer

If you are unable to qualify for a loan on your own, consider a co-signer.

There is no shame if you can’t qualify for a loan.

You may be a college student. (Limited financial history)

You may be paying off student loans, but also need a mortgage to buy a home. (High debt-to-income ratio).

Who can you ask to serve as your co-signer? It needs to be someone who also will be financially responsible for your loan.

A spouse, parent, grandparent or someone else close to you may be good candidates to act as a co-signer.

However, choose a co-signer with a strong credit profile and income who could qualify independently for the loan for which you are applying.

How To Buy A House In An Expensive Area

Owning a home is a financial goal for many Americans. For those who live in the most expensive real estate markets, like the New York City area, the D.C. area, the Boston area and pretty much the entire states of California and Hawaii, that goal may appear hopelessly out of reach. Median housing prices in these regions are astronomically high compared to the U.S. median home price ($252,800 as of May 2017). How do you save enough for a home down payment when you are already paying very high rent as a percentage of your income? It can be done, but it’s not likely to happen the traditional way.

Make sure it makes sense to buy.

Buying a home is likely to be the largest financial commitment you make in your life. Make sure that it really makes sense to buy instead of continuing to rent. As I mentioned in a recent post about saving for a down payment on a first home:

“Real estate is like marriage. The wrong choice can really mess up your life. Renting, on the other hand, is like dating. It’s something you should keep doing until you are sure you want to settle down and are ready for a committed relationship. Many people are happy dating – and renting – for a long time before they decide to commit.”

If you are ready to commit to a geographic location (and school district, if you have kids), the next step is to evaluate if it makes sense in your geographic market. Is it cheaper to rent or buy? Use this tool from the New York Times to run the numbers.

Calculate your home budget from your rent.

If you are renting, you may already be paying a mortgage, interest and property taxes – your landlord’s.  Use your monthly rent as a starting point for how much you can realistically afford to pay every month in total housing costs. Last week, I spoke to an employee on our Financial Helpline who wanted to buy her first home in Southern California. She and her husband paid rent, not including utilities, of $2,800 per month. We ran some numbers (see the calculation here) and determined that if their housing costs were similar, they could support a mortgage of $460,000 to $510,000.

You can run your own assessment with this calculator. Make sure you include assumptions about down payment, mortgage term, mortgage interest rate, private mortgage insurance (mandatory with a low down payment mortgage), homeowner’s insurance and property taxes. Don’t forget:

• If your current rent includes utilities, make sure you back out the average cost since you’ll be paying those directly as a homeowner. Keep in mind that if you’re increasing your home size (e.g., from a 2-bedroom apartment to a 3-bedroom single family home) your energy costs will probably increase.
• If you’re looking to buy a condo or home, your current rent must support a mortgage, interest, insurance, taxes – and possibly HOA fees.
• Home maintenance will be extra. Be prepared to budget an additional 1 to 4 percent of your purchase price annually for the care and upkeep of your home.

Don’t fixate on one neighborhood.

You may love where you are living now, but there is more than one neighborhood for everyone. You may find that looking outside of your current area opens the possibility of lower home prices, better schools or a more spacious home. I suggest you house hunt in a minimum of three different neighborhoods before you settle on your top target location.

Look at your trade-offs.

For example, if you live closer to your workplace so you can walk to work and to the grocery store, you might be able to give up one car. Conversely, it may be worth paying more to keep your child in their school. Consider the commute time and the effect on family life. As the saying goes, you can have anything you want but not everything you want.

Explore first time homebuyer programs.

Lenders typically require that home buyers pay at least 20 percent of the home’s purchase price and will offer a mortgage of up to 80 percent of the appraised value of the home. In an insanely expensive real estate market like Southern CA or the NYC region, where median home prices are very high, a 20 percent down payment could amount to several years’ salary. Accumulating that large of a down payment may not be realistic while you are paying high rent each month, but that does not mean you can’t buy a home. You could be eligible for a low down payment mortgage backed by the FHA, VA, USDA, or Freddie Mac, with some as low as 3 percent of the purchase price. Explore all the first-time home buying programs summarized in this article.

City, county, and state governments may also offer down payment assistance programs, so check and see if you qualify. For example, I encouraged the helpline caller I mentioned to check out the CA Housing Finance Agencyfor down payment assistance as it appeared that she might qualify based on her household size and income. A similar family in NYC could check out their Home First Down Payment Assistance Program.

Downsize your lifestyle while saving for a down payment.

During the 1-3 years prior to your home purchase, consider downsizing your lifestyle to save as much as possible for your home down payment, closing costs, and moving expenses. If you can shave off just $10 per day by eating at home more and put that money away in a savings account or money market fund, you will have $10,800 after three years. (See calculation here.)

Let’s say you downsize from your 2 bedroom to a studio apartment and save $600 per month. After 3 years, you’d have $21,600. (See calculation here.)

Do both? That’s $32,400 after 3 years. (See calculation here.)

Perhaps you have kids and it’s not realistic to move into a smaller space? Consider downsizing other areas of your financial life, such as going from two cars to one. I gave up my car in my thirties when I lived in an urban area and our Forbes blog editor Erik Carter went carless last year. We both saved thousands in transportation costs. If you’ve got kids, it may be impractical to get around everywhere without a car, but do you really need two?

Even if you can’t downsize your housing or your transportation, you may be able to downsize other areas of your lifestyle, such as cooking more at home, managing the high costs of your children’s sports, and foregoing some small luxuries while you prioritize home savings. Need more ideas? Check out my post on 11 Easy Ways to Save Money Without Changing Your Lifestyle.

Maximize your credit score.

The higher your credit score up to a certain point (about 760), the better the mortgage interest rate you will receive. Those homebuyers with better credit will be more likely to be eligible for a lower down payment program than those with poor scores (although programs are available for both). A lower mortgage interest rate also means you’ll be able to buy more home for what you can afford every month. While it can take 5-7 years to dramatically improve your credit score if it’s very low right now, you may be able to improve your credit score incrementally and quickly by using these tips.

Consider multi-family housing.

Are you interested in also being a landlord? Both conventional (20% down) and flexible down paymentFHA or Freddie Mac backed loans are available for owner-occupant duplexes and small (up to 4 units) buildings so you and your family could live in one unit, and you could rent out the remaining units. If you have long term leases in place before purchase on the other units, you may be able to use the projected rental income to help qualify you for the loan. If you think you have landlord potential (take this quiz to find out), a multi-family home may help you get in your own home and build a portfolio of investment properties.

Homes with this color bathroom sell for $5,400 more

Study shows blues and grays are the way to go for interiors and doors, ‘greige’ for exteriors

A $50 gallon of blue paint can result in a huge return on investment for homeowners, according to Zillow‘s 2017 Paint Color Analysis study.

Homes with bathrooms painted in a powder blue or periwinkle shade sold for an average of $5,400 more — the highest sales premium of all colors analyzed.

When it comes to a home’s exterior, neutral tones, such as ‘greige,’ sold for $3,496 more than comparable homes in a different color.

Furthermore, homes with front doors painted in shades of dark navy blue to slate gray sold for an extra $1,514.

On the other hand, buyers seem to be put off by style-specific features such as terracotta walls, which resulted in a $2,031 dip in sales prices. But even more than that, prospective owners seem to hate white walls: Homes that had no color whatsoever sold for an average of $4,035 less. Ouch!

“Color can be a powerful tool for attracting buyers to a home, especially in listing photos and videos,” said Zillow chief economist Svenja Gudell. “Painting walls in fresh, natural-looking colors, particularly in shades of blue and pale gray not only make a home feel larger, but also are neutral enough to help future buyers envision themselves living in the space.

“Incorporating light blue in kitchens and bathrooms may pay off especially well as the color complements white countertops and cabinets, a growing trend in both rooms,” she added.

If a seller is adamant about keeping color in the home, have them consider a pop of color on an accent wall using Pantone’s Color of The Year, Greenery, or have them incorporate jewel-toned decor pieces throughout the home.

Leaving on Summer Vacation? Be House-Smart

Vacation is a time to leave your worries behind, but a nagging thought that you forgot something at home can ruin the best of vacations. Take these simple steps to prevent things from going awry while you’re away from home.

Two weeks before heading out, homesite.com says you should:

• Arrange for lawn service and pet care.
• Check your outdoor sprinkler system.
• Stop all routine delivery services and arrange for final trash pickup.
• Check your alarm system.

Also, remember to make arrangements for your mail. The U.S. Postal Service can hold mail safely at your local branch until you return. You can notify the USPS as many as 30 days in advance or as early as the next scheduled delivery day by signing up for Hold Mail Service.

Trust a friend, safety.com advises, by giving them a key and contact information in case of an emergency. Also, many police departments offer vacation house checks, so check with your local precinct for details.

So, the suitcases are packed, the gas tank is full and you are heading out for that long-awaited respite! The day you leave, don’t forget to set your thermostats. If you have a manual one, set your air conditioning system to 80 degrees for homes and townhouses; 77 degrees for condos and apartments. For a programmable thermostat, set it at 72 degrees for two hours each morning before sunrise and at 88 degrees the rest of the time. This will help prevent mold by removing moisture from the air during the cooler hours.

Other last-day checklist items:

• Run the dishwasher
• Unplug nonessential appliances
• Turn off water to washing machine and toilets
• Set timers and lights
• Check window locks
• Throw away food that might spoil
• Get rid of the trash
• Set the alarm

Finally, give the house a last once-over before you lock the doors. Remember what happened to eight-year-old Macaulay Culkin in “Home Alone.”

Source: Leaving on Summer Vacation? Be House-Smart.

7 home fixes you must complete before selling

Prioritize the projects that will bring the most value

Key Takeaways

• Fix it to sell.
• Structural is just as important as cosmetic.
• Give the buyers what they want — create the “wow” factor.

The process of getting a property ready to put on the market can seem daunting enough. There’s clearing the clutter, endless amounts of cleaning, organizing and scrutinizing your property with a fine-tooth comb. What needs attention and what can you leave alone?

Welcome to the new world of “fixing to sell.” Gone are the days of throwing it on the market and seeing what happens. Prepping for sale is a highly choreographed dance of repair along with a bit of renovation and presentation.

Don’t ignore these seven areas.

1. Structural and mechanical

It might not be glamorous, but buyers are looking at big-ticket items like the age and condition of the roof, air conditioning and heating systems, water heater, electrical panel and pipes.

Now, I’m not saying all have to be replaced, but if any of these components are on their last leg, you might seriously need to consider replacing them as these items could factor into the kind of financing the buyer is able to obtain as well as insurability of the property.

Appraisers are notorious for requiring a roof to be replaced, for example, as a condition of a loan when it comes to FHA and VA financing.

Replacing a roof that is at the end of its life before putting your home on the market will go a long way to solidifying buyer confidence in deciding to make an offer.

The buyer (and you) won’t have to sweat what an inspector says, deal with a potential renegotiation before closing or face a price reduction. The last thing you want to be doing is putting on a new roof in the midst of trying to pack.

If you lack the budget to replace these items, get estimates on the cost involved to replace. You can always offer to contribute to the replacement cost in the form of a credit to the buyer’s closing costs and offer a home warranty that can provide some coverage should something fail or need repair.

2. Exterior

How does the exterior of your home look? Is there any wood rot? When was the last time it was painted? Are there any stucco cracks that need attention?

First impressions start from the outside, and the exterior will show up in photos across a multitude of websites, etc. This is definitely an area worth spending the money.

3. Landscaping

Speaking of the exterior, how does your landscaping look? Are the plantings overgrown, worn and wilted? What about the ground cover?

Are the planting beds in need of some fresh mulch, pine straw, rock, etc.? Are there any overgrown tree limbs hanging over the house or blocking the home’s view? For a relatively inexpensive investment, you can transform how your exterior looks by trimming back and freshening things up with new plants and landscaping.

4. Cosmetic

Let’s face it: buyers buy with their eyes, so now is the time to go through the interior in detail. Are there dents and dings on the walls, scratched moldings or worn paint? Now is the time to spruce up the inside with a fresh coat of paint.

Pick light, neutral and on-trend colors. Choose a neutral palette that will transition well with any buyer’s furniture.

Look at your light fixtures, ceiling fans and light switches — these are relatively inexpensive things to update and replace, yet they go a long way toward creating value.

The front door? This is critical! Does it need a fresh coat of paint or new hardware? Consider adding a glass panel to create light that evokes a sunny and warm space.

5. Kitchen

This area is always huge with buyers. Even if the buyers barely know how to boil water, they always envision themselves in the kitchen cooking and entertaining or perhaps auditioning to be the next Food Network TV star surrounded by sleek appliances and cabinetry.

Here’s where you need to give them the look for less. Think new hardware on cabinets, adding or changing out a dated tile backsplash and updating appliances. Also, consider changing out counters — you might be able to find a reasonably price remnant of a granite slab.

6. Bathrooms

Simple and clean rules the day. Sprucing up your bathrooms to sell can be as simple as having the grout on the existing tile steam cleaned or regrouting where needed. Caulking, new plumbing and light fixtures along with mirrors can create value.

7. Flooring

What you walk on creates value. If you can only afford to make the investment in one significant part of your home, consider updating the flooring. There are a ton of low-cost options to choose from that include wood plank tiles and highly upgraded laminate flooring — think wide plank, light colored or hand-scraped styles.

New flooring can totally transform the look of your space and give it the “wow” factor that buyers desire.

In undertaking for sale preparation, strike a delicate balance between what to fix and what to leave alone, but in the end, make the right improvements that will result in a faster sale for top dollar.

View Source: 7 home fixes you must complete before selling

What You Need To Know About Buying A Home This Spring

Blooming flowers and warmer temperatures don’t just mark the start of allergy season. Spring is also peak season for real estate sales. If you’re thinking of buying a home this year, you’re probably wondering what the current market is like and how to navigate it. The 2017 spring real estate season differs from past spring markets in some big ways. Here’s what you need to know, whether you’re shopping in Fort Lauderdale, FL, or Des Moines, IA.

1. Inventory is low

Home inventory has dropped for eight consecutive quarters, making it harder to find a home, according to Trulia’s research. “In 2017, homebuyers are up against a very competitive market, where there are fewer homes for sale that cost more than they did last year,” says Trulia Senior Economist Cheryl Young. “The Trulia Inventory and Price Watch found that housing inventory hit its lowest level on record, having fallen by 5.1% from a year ago.”

Hit hardest? First-time homebuyers. There’s a larger inventory of trade-up homes and luxury homes than starter homes. As prices rise, people who might have been looking for a luxury home may now be in the trade-up market. Those who would have been in the trade-up market are buying starter homes or hanging on to the homes they already have. This means first-time buyers have to put in extra effort to land a home.

2. Homes are selling fast

Understanding the current real estate market can keep you from being blindsided. “Short supply is the dominant issue this spring,” says Bruce Ailion, an Atlanta, GA, real estate agent and attorney. “Homes that are priced at market and are in attractive condition sell in days.” Act quickly when you find something you like, and be flexible with seller requests, he advises — two tactics that can help you buy a home in a competitive market.

3. Interest rates are rising

Rising interest rates could price some buyers out of the market. “The Federal Reserve announced in March that interest rates would be increased by a quarter point based on the growing confidence on the economy,” says Young.

But interest rates are still historically low and affordable. “Higher rates will likely decrease one’s home-buying power, but it’s unlikely to deter serious buyers who are actively looking for a new home,” says Young. What’s likelier to happen, at least in the short term, is that more people will enter the market before rates get even higher. “I will note that anecdotally, many are concerned and lock in rates before the inevitable increases,” says Michael Kelczewski, a Pennsylvania and Delaware real estate agent.

4. Timing is everything

“The hardest part of buying a starter home is saving the down payment,” says Tyler Whitman, a New York, NY, real estate agent. “Once you have that in place, there are great options.” But should you wait to save 20% for a down payment (to avoid private mortgage insurance, or PMI), or should you buy now with only, say, 5% to put down before interest rates rise? “In most cases, it becomes more expensive to wait. If it’s going to take you two years to save 20% and prices and rates rise, it’ll usually be better to go ahead at 5% and pay PMI,” says Josh Moffitt, president of Silverton Mortgage Specialists in Atlanta, GA.

But don’t feel as if you have to rush to beat the interest rate clock if you’re not quite ready to buy. “We have a long way to go before interest rates reach a level that puts prospective buyers out of the market,” says Moffitt.

5. Consumer confidence is high

Rising interest rates signal a strong economy, and consumers, with renewed confidence in this strongest job market in 15 years, are buying homes. This is what most people call a comeback. People who found themselves underwater on their homes are now starting to see those homes gain value. They can now make — instead of lose — money on a home sale.

But as home values increase, we’re not seeing a glut of homes listed for sale. In fact, Trulia research has determined that in markets with the biggest home value gains, supply is tightest. The reason for this isn’t clear. One theory is that while homes are easy to sell in this environment, they are still difficult to buy. So even if people can sell for a good price, they would then be thrown into the same buyer pool as everyone else. A tactic that can improve your chances of success as a buyer this spring? Cast a wide net in your search, increasing your opportunities to land a home.

6. Being able to overlook the little things can help

If your ultimate goal is to become a homeowner this spring, you may wish to circle back to that older home with no upgrades that didn’t initially excite you. “Many available properties lack modern layouts and amenities,” says Kelczewski. “One solution I suggest is to pursue distressed properties.” It’s always good advice to ignore cosmetic issues like bad paint colors or poorly placed furniture. But in a competitive real estate market with low inventory, being able to overlook simpler flaws could be the difference between getting a good deal on a home and not getting a home at all.

7. Preapproval is more important than ever

You may need to offer more money to buy a home in this busy real estate season. First, figure out what you can comfortably afford. Don’t stretch yourself financially. “A typical starter-home buyer would need to dedicate 38.3% of their monthly income to buy a starter home — a 2.9 point increase from last year,” says Young.

Once your budget is set, focus on prepping your finances for a home purchase. “The more prepared in preapproval you are, the more value you add to yourself and your buying appearance,” says Moffitt. “This means having all documentation in line so you can move fast.”

Are you planning to buy a home this spring? Tell us why in the comments!

Source: What You Need To Know About Buying A Home This Spring

How-To: Get Your Home Ready for Spring Buying Season in a Hot Market

The first day of spring was yesterday—and you know what that means.  It’s the official start of the home-buying season! (Technically the season came early this year — California had 12 out of 20 of the hottest markets during the month of February, according to the Realtor.com Hotness Index).

If you’re thinking of putting your home on the market, now is the time. But before you do, you might want to start a mental checklist of pre-listing to-dos. De-clutter your office. Check. Clean out your garage. Check. Repaint your hot pink bedroom a tasteful neutral. Eh….check. Hire a listing agent. No question. (You better get on that, stat!)

To help you get your house in tip-top shape for open houses and showings, here are 12 simple and relatively inexpensive tips from stagers that will make your house stand out to buyers (and may ultimately help you sell it quicker and for more money in a hot, highly competitive market).

1. Pump Up Your Curb Appeal

The old saying is true: you only get once chance to make a good first impression. Make sure that the outside of your home looks as appealing as possible. Water and mow the lawn, trim the trees, cut back overgrowth and plant colorful flowers in the front and back. Even paint your front door an unexpected color—to give buyers a hint at what awaits them inside.

2. Clear the Clutter

When it comes to staging, any stager will tell you: less is more. Having fewer things filling the rooms makes your home look both neater and roomier. It allows buyers to more easily visualize their own furnishings there. Be sure to store bicycles, gardening equipment, and children’s and pet’s toys. Also move any cars from the driveway and along the curb in front of your home.

3. Focus on the Living Areas First

A living room is an area in which potential buyers should be able to envision themselves entertaining friends or gathering with their family. With that in mind, consider making the area appear as large and functional as possible by removing any unnecessary furniture and decorations.

4. Go Light and Airy in the Bedrooms

To make bedrooms appear bigger, try painting walls a light color and bringing in a neutral rug. Since beds will be the largest piece in the room, consider linens that don’t stand out too much.

5. Give Your Bath a Makeover

Another area buyers will typically look is the bathroom. Some stagers suggest replacing standard bathroom tub or doing tile surface refinishing at a cost of about $1,900. You can add a new vanity, a medicine cabinet and hardware for an additional charge. New floor tiles can be laid on top of existing tile. A little goes a long way.

6. Make Your Home Anonymous

Of course you’re proud of your family, but now is not the time to show their pictures and mementos. Stow away family photos, trophies, collectibles and any other personal items. You want buyers to imagine their families in the house, and that’s hard to do with constant reminders of your family. This process can also help you declutter.

7. Make Necessary Repairs

Look at your house with a critical eye. The last thing you want potential buyers to see are chipped tiles in the bathroom, a faucet that doesn’t work, or burned out bulbs in light fixtures. All systems and appliances should be in good working condition.

8. Consider Cosmetic Improvements

Simple, cosmetic touch-ups like painting, wallpapering, adding new light fixtures, and minor landscaping, can really help a home show better. If you paint, make sure it’s in a neutral color. You don’t need to spend a lot of money on these projects to help make your home look its best but remember that if there are any problems these must be disclosed to potential buyers whether or not the problems have been remediated.

9. Give Your Home a Good Spring Cleaning

This can be the most cost-effective thing you do in prepping your home for sale. Potential buyers will want to inspect every part of your home, from the kitchen to the bathrooms to the garage. After removing any clutter, clean the inside of the house from top to bottom. Clean carpets, spotless kitchens and bathrooms, and tidy bedrooms can help make a positive impression.

10. Go Green

An easy way to breathe new life into your rooms is by adding plants, whether succulents, ferns or rosemary topiaries. Place a floral arrangement on tabletops for a lush touch.

11. Mix and Match Your Furniture

Sure, you may be proud of your matching Pottery Barn sofas and loveseats in the living room. But you can give the space a quick refreshed look by separating those pieces. Replace a bulky piece of furniture with a chair that takes up less space and makes the room seem larger.

12. Add the Finishing Touches

When stagers are through decluttering a home they finish by adding a few carefully selected items for beauty—a painting in the living room, fresh flowers in the kitchen, an accent pillow for the sofa, or maybe an area rug for the bedroom.

Preparing your home for sale doesn’t have to be an overwhelming, costly endeavor. By making a few simple changes you can help make a difference when it comes time to sell.

Source: How-To: Get Your Home Ready for Spring Buying Season in a Hot Market

California’s First Quarter Foreshadows Strong Sellers’ Market

 

As the first quarter of 2017 comes to a close, California continues to show an abundance of active buyers throughout its markets while dealing with consistently low inventory. Reasonably priced homes spend minimal days on the market, often having received multiple offers, while overpriced homes are taking longer to sell.

According to the National Association of Realtors® (NAR) Pending Home Sales Index, in February there was a 3.1 percent increase in the pending home sales index in the West, rising to 97.5, which is a 0.2 percent hike from last year.

“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” said Lawrence Yun, NAR chief economist. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.”

A healing economy continues to increase the number of new buyers nationally and locally, while low inventory decreases many buyers’ options and increases their competition.

“While it’s encouraging to kick off the year with back-to-back yearly sales increases, moving forward, California’s housing market could lose steam in the long term as the Fed begins to adjust the federal funds rate,” said C.A.R. President Geoff McIntosh. “In the short term, however, the specter of higher interest rates may push buyers off the fence to purchase a home before mortgage rates move even higher.”

Moving into the rest of 2017, the number of buyers will continue to rise at a faster rate than new listings. Cash offers will continue to be more successful and popular because they stand apart from the abundant offers most listings receive.

Source: California’s First Quarter Foreshadows Strong Sellers’ Market

How To Ride The Tide Of California Home Prices

 

For decades, California has been one of the best places to invest in real estate. A lot of people want to live there. And, unlike the problem with Florida – another real estate favorite –  demand for housing isn’t complicated by speculation in future retirement property. That said, strong demand in California tends to create boom-and-bust cycles driven by the fortunes of different industries.

Aircraft in Los Angeles, the navy in San Diego, finance and the Internet in San Francisco, computers and then biotechnology in Santa Clara county – all graft their rise and fall on top of a steady stream of in-migration from other states and abroad.

Homes in many California markets were high-priced well before a surge of sub-prime lending produced the great crash of 2008, so it’s no surprise that prices dropped sharply at that time, but – and this is the important point – not nearly as much as in other boom markets like Arizona and Florida. The underlying appeal of living in California always produces a fast recovery.

In the past three years home prices have risen again – 25 percent in the LA area, 33 percent in San Francisco, similar amounts throughout California. And Local Market Monitor forecasts that increases of the same magnitude should be expected over the next three years.

When home prices rise like that, they eventually become unsustainable. That’s the situation now in LA and San Francisco. That doesn’t mean they’ll fall any time soon – we do expect them to go higher for several years – but it does mean they have less room before eventually topping out. In such over-priced markets, it’s difficult to buy rental property at a reasonable price – the ratio of home price to annual rent is too high. In LA that ratio is 26, in the city of San Francisco it’s 44; a ratio of 20 is usually the highest you want to go.

In these markets, therefore, it’s difficult to buy and rent out single-family homes; investment in rentals means apartment buildings. Or you can flip homes.

In other California markets, prices have risen briskly off the bottom but – because the crash was harder in these places – there’s still plenty of room before prices get too high. These markets are of two types. Some, like Stockton and Modesto, were built out as cheaper alternatives to the near-by larger, expensive centers. Some, like Redding and Bakersfield, are currently mired in a poor local economy that may or may not recover anytime soon.

The investment strategy differs according to the kind of market you’re dealing with. In the Stockton type, close to the larger centers, demand is almost certain to return – both for single-family homes and for rentals. Your main concern is that the physical structure you buy, probably put up in a hurry ten years ago, is in good shape.

In the Redding type, you’ll need to spend more time assessing the economic prospects, how long before things turn around? – in California, markets don’t die, they just transform – and in such markets it’s best to invest at the higher end.

There are always investment opportunities. And in California there always seems to be another chance.

Contact your local Wish Sotheby’s International Realty office or visit www.wishsir.com for expert assistance with all of your real estate needs.

Source: How To Ride The Tide Of California Home Prices

How Much Of My Monthly Income Should I Spend On A Mortgage?

 

According to the latest data from Trulia, the median selling price for a home is $192,000. That’s far more than most of us could afford to pay in cash, and why most of us take out a mortgage. But don’t rely on a lender to tell you how much of your monthly income you can comfortably spend on your home. They may let you borrow the maximum possible amount, but that doesn’t mean you should — or must — take them up on the offer. Crunch your own numbers first to determine how much money you can put toward your mortgage each month before you start searching for homes for sale in Alexandria, VA, or Boston, MA.

1. Calculate your true monthly cost

If you want an in-depth look at your potential mortgage payment, look for a mortgage calculator that includes costs like homeowners insurance or property taxes. (You want more than just a sales price and loan interest rate.) To figure this out, head to Trulia’s mortgage calculator and click “advanced.” Homeowners insurance and property taxes will be part of the mortgage costs you pay each month. You may also need to add in PMI, or private mortgage insurance, if you put less than 10% down on the purchase.

Your monthly insurance premiums and your property taxes will depend on what you buy and where you live. When determining how much of your monthly income you can spend on a mortgage payment, you need to add in both these costs. To get an accurate estimate, call insurance providers for a quote and look up property tax rates in the city or county you plan to buy in.

2. Know the legal limits on lenders

According to the Mortgage Reform and Anti-Predatory Lending Act, a section of the Dodd-Frank Act of 2010, any entity lending money for a mortgage cannot underwrite the loan unless they determine you can reasonably repay it. That determination is based on your credit, job history (and stability), and your income. By law, lenders can’t approve mortgages that would take up more than 35% of your monthly income. And most lenders stick with even more stringent requirements, limiting a mortgage payment to 28% of a borrower’s monthly income.

3. Your mortgage should take up no more than 28% of your monthly income

You can use 28% as your rule of thumb too when making a budget for buying a home. Here’s an easy formula: Multiply your monthly income by 28, then divide that by 100. The answer is 28% of your monthly income. The median income in the U.S. is $55,775. If this were your income, you’d make about $4,648 per month; 28% of that monthly income comes out to about $1,301.

That means you could spend $1,301 on a mortgage, maximum. Remember, 28% is the top of the spectrum when it comes to how much of your monthly income you should spend on your mortgage. Paying less means a smaller strain on your budget.

It’s a good benchmark, but this number doesn’t necessarily take your full financial picture into consideration. Consider subtracting other essential expenses (such as child care or transportation costs) from your monthly income total. In addition, your lender will also consider student loans, a car loan, and credit card debt. If that debt that represents more than about 7% of your income, you may not qualify for a mortgage that costs 28% of your income. Your total debt-to-income ratio can’t exceed 35%, so you either need to pay off existing debts first or borrow less money to buy a home.

What percentage of your income do you plan to spend on your mortgage? Did you borrow the maximum amount from your lender? Share your budgeting tips and experiences in the comments below!

Source: How Much Of My Monthly Income Should I Spend On A Mortgage?

8 Proven Ways To Increase the Resale Value of Your Home

Little things mean a lot when it comes to selling your home and getting a great price for it. But if everything counts and you have only so much time and money to invest, how do you know where to start to get your home for-sale ready and to fetch the best price?

The good folks at Consumer Reports National Research Center set out to answer just that, with an online survey of 303 real estate professionals from around the country.

As we head into the hottest selling season and with 5.3 million homes expected to change hands this year, use some or all of these strategies to help you leverage all you can against the competition.

1. Stage and declutter your home

One of the panel members Consumer Reports consulted was the former executive producer for This Old House, Massachusetts realtor and renovation consultant, Bruce Irving. Bruce was previously interviewed by Oprah protégé, Nate Berkus, and The New York Times called him “the house whisperer.”

“Do all the work necessary to make your property look good, not through expensive changes but through excellent staging,” says Irving. “Your agent should be able to provide proper advice and even bring in a professional.”

That means clearing out your clutter.

“I have a gal who I send into listings to declutter and depersonalize for sellers and just tidy things up using the sellers’ own possessions for the most part,” says Karen Wallace, an agent with Lyon Real Estate, located in Auburn, CA.

Tara Miller of Tarabell’s Designs in Portland, OR, does just that: she helps homeowners and agents stage their houses for maximum sales appeal.

Miller points out that people who don’t keep up on needed repairs end up spending the most when it comes time to prepare a home for sale.

“It’s remarkable what regular home maintenance, cleanliness, and minimizing clutter in your everyday life can do for you when it comes time to sell.”

She also notes that staging a home is very different from designing or decorating. “It’s a tough thought, but not everyone likes your pets, hobbies, sports teams, or religion.”

1. Clean it up!

“If it’s dirty, it will not sell — even if it’s a great place,” says Kathy Partak, a realtor with Select Estate Properties in Auburn, CA.

In fact, most of the agents we spoke to focused on overall cleanliness and space as the biggest factor in selling your home.

And cleanliness pays off, according to Consumer Reports: cleaning can deliver a 3% to 5% return on investment, and this is something you can do yourself.

When showing your home, Irving adds, “Raise window blinds, lower toilet seats — make sure the place looks at least as good as it would if you were having your boss over for dinner.”

1. Enhance your curb appeal

First impressions sell your home. As soon as a potential buyer drives up to your house, they’re making judgments — and a messy yard or a broken mailbox could cost you.

“Exterior space is ‘free’ extra square footage and is so appealing to buyers,” says Wallace. “It pays to enhance it.”

But if your staging budget doesn’t include the outdoors, Partak suggests making the most of the walk from the car to the entry.

“Make it look nice from the curb with some easy potted or planted flowers to trim the walkway.”

1. Pay attention to details

The details that you may believe are insignificant can turn out to be major selling points for your home. For Irving that includes everything from paint touch-ups throughout the house to a full redo of public rooms.

“Wash your windows, replace compact fluorescent bulbs with incandescent or halogen, and remove or minimize personal photographs,” he says.

If you have a small budget, Partak suggests upgrading to energy-efficient windows, and adding new appliances in the kitchen. “These are always the things that bring in more money.”

1. Refresh your kitchen and bath

Don’t forget two of the the most important rooms in your home: the kitchen and bathroom. Consumer Reports estimates that you can increase your home’s value by as much as 7% through renovation.

If you don’t have renovations in your budget, Kristen Kohnstamm, principal broker and co-owner of Dunthorpe Properties, a luxury real estate firm in Portland, OR, recommends fresh paint, a low-hanging opportunity to freshen up your space and potentially boost your asking price.

Choose a neutral palette to increase the appeal to as many tastes as possible; buyers need to be able to easily visualize themselves living in the home, and bright colors might turn them off.

“The worst thing you can do is put lots of money into things like carpet, paint, and other aesthetics that a new homeowner will likely want to change,” says Kohnstamm.

1. Invest in good photos

Make sure your real estate agent offers great photos that show your home in its best light when it comes time to list. Home buyers seeking a new place to live will see the pictures online before ever making a decision to visit.

And when it comes to open houses and showings, Irving suggests you “absent yourself” because sellers can sometimes get in the way of a sale by taking things too personally.

1. Don’t DIY everything

Irving’s top tip includes a good finger-wagging at people who think they can DIY a home sale and still come out ahead.

“First and foremost, for correct pricing, widest and best marketing, and the highest price, hire a real estate agent,” says Irving.

1. Try not to take it personally

Kohnstamm cautions first-time sellers to temper their emotions when it comes to the sale of their home. This won’t necessarily increase the value, but will speed up the sale.

“Whatever comments are [made] about your home, they’re never intended as a personal affront. Remember, everyone has different tastes, but clean and well-maintained never goes out of style.”

Source: 8 Proven Ways To Increase the Resale Value of Your Home