According to the American Housing Council, the average home price in the United States has risen by more than 200% since 2000. Many potential homebuyers are wondering if they’ll be priced out of the housing market forever. To make matters worse, recent data from the U.S. Bureau of Economic Analysis shows that inflation in California is currently on the rise — with a Consumer Price Index (CPI) of 2%. In fact, California is one of nine states where prices have increased at an above-average rate during this period. 

In California, things have gone a bit haywire. In fact, housing is so unaffordable for many residents that some are calling it a crisis. For example, the median sale price of homes in California increased from $305,000 in 2011 to over $615,000 in 2017—a 136% increase in just six years! During this same period, nationwide home prices only rose by 33%. With all this information in mind, you may be wondering: Is it even possible to buy a house in California right now? And how much will that process cost you? Do you need to buy soon before prices increase further? 

In this article, we’ll examine these questions and more as we explore some of the facts about inflation and house prices in California.

What is Inflation and How Does It Generally Affect Home Prices?

First and foremost, inflation is the general rise in prices of commodities and services that happens when there is an excess of money in circulation. This excess money drives up the prices of goods and services, thus increasing the overall price level of an economy. When it comes to housing, the relationship between CPI and home prices is not that complex. For instance, consider an economy with only $20 as the total money supply and five identical houses throughout the economy. Each house would be priced at $4 (assuming there are no other goods in the economy). Suppose the central bank decides to print more money, increasing the total money supply to $40. Each house would now cost $8. In this simple illustration, increasing the money supply creates inflation and an increase in price of each house.

Why Are House Prices So High in California?

A big part of the reason that house prices are so high in California is due to the fact that housing construction has been below the norm for many years. No one knows this better than the state’s real estate agents. According to the California Association of Realtors, the construction of new homes has been below the state’s long-term average since the year 2000. As a result, there has been a significant shortage in the number of new homes available for sale. This shortage, combined with increased demand, has led to higher prices for existing homes.

A lot of things contribute to the state’s housing deficit. The lack of arable land, however, is still the most significant obstacle. While California is a massive state—the third largest in the United States in terms of land area—the largest part of its acres are hills and mountains that spread across a harsh desert. Almost every part of the usable land has been taken up, and this is especially true as you go nearer the coast.

Another notable factor contributing to the high prices of houses in California is the rising demand for housing in urban parts of the state. Asides the fact that there is not enough housing, many California residents are rushing into urban areas. For example, the Bay Area, which includes San Francisco, Oakland, and their nearest suburbs, is one of fastest-growing areas in California. While the Bay Area used to contribute to only 4% of California’s growth between 2000 and 2007, it is now responsible for about 20% of the state’s growth.

Housing Price Trends in California

The housing market in California is one of the most competitive markets in the U.S. The latest report by Zillow, a real estate company, claims that the median home value in California is $543,400. The housing price trend in California is a complicated issue. It’s not just a matter of supply and demand. There are many other factors at play, such as the increasing population, the limited land availability, and the changing demographics.

In the past few years, California has seen some of the highest home price increases in the country. In 2017 alone, home prices increased by 11% from 2016-2017 which is a significant jump from previous years (Zillow). Housing prices in California are still on a rise. The median home price in the state is currently around $500,000 which is 3.2% higher than the average of the last 5 years. This means that it costs now more than ever to purchase a home in California. The median list price to sale price ratio stands at 98% which means that for every 100 listings on Zillow, 98 are asking for more than they are worth and 2 are asking for less than they are worth.

With these numbers and trends, it’s almost certain that house prices in California will keep going higher. Unless the house supply deficit will be met somehow soon, the ideal time to buy a house in California still remains NOW (once you have the money for it).

In short, house prices are high in California because the demand for real estate is high.

The state is one of the most desirable places to live in the world, and many people want to live in California. Unfortunately, supply lags demand; there are not enough homes to meet the needs of the population in California right now. Because of this, the price of housing will probably remain high for the foreseeable future. If you’re a first-time homebuyer in California, it’s important to understand that buying a house is likely to be more expensive than ever before. That’s because the state’s high demand and low supply have resulted in high prices. Fortunately, there are few things you can do to combat high prices and ensure you find a great house at a price you can afford. You can research price trends in your area, shop around for the best deals, and get pre-approved for a mortgage before you even start your search for a house.

Are you a first-time home buyer wondering how to improve your credit score? If you need a mortgage, a good credit score, also called a FICO score, is essential—and it’s within your control.

In a nutshell, a credit score is a simplified calculation of your history of paying back debts and making regular payments on loans. If you’re borrowing money to buy a home, lenders want to know you’ll pay them back in a timely manner, and a credit score is an easy estimate of those odds.

Here’s your crash course from Realtor.com on this all-important little number, and how to whip it into the best home-buying shape possible.

Pull your credit report

There are three major U.S. credit bureaus (Experian, Equifax, and TransUnion), and each releases its own credit scores and reports (a more detailed history that’s used to determine your score). Their scores should be roughly equivalent, although they do pull from different sources. For example, Experian considers on-time rent payments while TransUnion has detailed information about previous employers.

To access these scores and reports, financial planner Bob Forrest of Mutual of Omaha recommends using AnnualCreditReport.com, where you can get a free copy of your report every 12 months from each credit-reporting company. It doesn’t include your credit score, though—you’ll have to go to each company for that, and pay a small fee.

Or check with your credit card company: Some offer free access to scores and reports. Once you’ve got your report, thoroughly review it page by page, particularly the “adverse accounts” section that details late payments and other slip-ups.

Assess where you stand

It’s simple: The better your credit history, the higher your score—and the better your opportunities for a home loan. The Federal Housing Administration requires a minimum credit score of 580 to permit a 3.5% down payment, and major lenders often require at least 620, if not more. So what can you do if your credit report is in less than shipshape? Don’t panic, there are ways to clean it up.

How to improve your credit score with error disputes

A 2013 Federal Trade Commission study found that 5% of credit reports contain errors that can erroneously ding your score. So if you spot any, start by sending a dispute letter to the bureau, providing as much documentation as possible, per FTC guidelines. You’ll also need to contact the organization that provided the bad intel, such as a bank or medical provider, and ask it to update the info with the bureau. This may take a while, and you may need documentation to make your case. But once the bad info is removed, you should see a bump in your score.

Erase one-time mistakes

So you’ve made a late payment or two—who hasn’t? Call the company that registered the late payment and ask that it be removed from your record. “If you had an oopsy and missed just a payment or two, most companies will indeed tell their reporting division to remove this from your credit report,” says Forrest. Granted, this won’t work if you have a history of late payments, but for accidents and small errors, it’s an easy way to improve your credit score.

Increase your limits

One no-brainer way to increase your credit score is to simply pay off your debt. Not an option right now?  Here’s a cool loophole: Ask your credit card companies to increase your credit limit instead. This improves your debt-to-credit ratio, which compares how much you owe to how much you can borrow.

“Having $1,000 of credit card debt is bad if you have a limit of $1,500. It isn’t nearly as bad if your limit is $5,000,” Forrest says. The simple math: Although you owe the same amount, you’re using a much smaller percentage of your available credit, which shines well on your borrowing practices.

Pay on time

If you’re often late with payments, now’s the time to change. You have the power to improve your credit score yourself. Commit to always paying your bills on time; consider signing up for automatic payments so it’s guaranteed to get done.

Give yourself time

Unfortunately, negative items (such as those habitually late or nonexistent payments) can stay on your report for up to seven years. The good news? Changing your habits makes a big difference in the “payment history” segment of your report, which accounts for 35% of your score. That’s why it’s essential to start early so that you’re sitting pretty once you’re shopping for homes and find one that makes you swoon.

Once you’ve set your credit on a better path, it’s time to tackle the next major hurdle: saving for a down payment.

Source: July 17, 2022. https://www.realtor.com/advice/buy/how-to-boost-your-credit-score-first-time-home-buyer-advice/

Nearly every part of the U.S. experiences periods of reduced rainfall. Planning in advance for a drought can protect us in dry years. Here are some tips from Ready.gov.

Before a Drought

The best way to prepare for a drought is to conserve water. Make conserving water a part of your daily life.

Indoor Water Conservation Tips Before a Drought

GENERAL

• Never pour water down the drain when there may be another use for it. For example, use it to water your indoor plants or garden.
• Fix dripping faucets by replacing washers. One drop per second wastes 2,700 gallons of water a year.
• Check all plumbing for leaks and have any leaks repaired by a plumber.
• Retrofit all household faucets by installing aerators with flow restrictors.
• Install an instant hot water heater on your sink.
• Insulate your water pipes to reduce heat loss and prevent them from breaking.
• Install a water-softening system only when the minerals in the water would damage your pipes. Turn the softener off while on vacation.
• Choose appliances that are more energy and water efficient.

BATHROOM

• Consider purchasing a low-volume toilet that uses less than half the water of older models.
• Install a toilet displacement device to cut down on the amount of water needed to flush. Place a one-gallon plastic jug of water into the tank to displace toilet flow. Make sure it does not interfere with the operating parts.
• Replace your showerhead with an ultra-low-flow version.

KITCHEN

• Instead of using the garbage disposal, throw food in the garbage or start a compost pile to dispose it.

Outdoor Water Conservation Tips Before a Drought

GENERAL

• If you have a well pump, check it periodically. If the automatic pump turns on and off while water is not being used, you have a leak.
• Plant native and/or drought-tolerant grasses, ground covers, shrubs and trees. Once established, your plants won’t need as much watering. Group plants together based on similar water needs.
• Don’t install ornamental water features (such as fountains) unless they use re-circulated water.
• Consider rainwater harvesting where practical.
• Contact your local water provider for information and assistance.

LAWN CARE

• Position sprinklers so water lands on the lawn and shrubs and not on paved areas.
• Repair sprinklers that spray a fine mist.
• Check sprinkler systems and timing devices regularly to be sure they operate properly.
• Raise the lawn mower blade to at least three inches or to its highest level. A higher cut encourages grass roots to grow deeper and holds soil moisture.
• Plant drought-resistant lawn seed. Reduce or eliminate lawn areas that are not used frequently.
• Don’t over-fertilize your lawn. Applying fertilizer increases the need for water. Apply fertilizers that contain slow-release, water-insoluble forms of nitrogen.
• Choose a water-efficient irrigation system such as drip irrigation for your trees, shrubs and flowers.
• Water manually in fall and winter only if needed.
• Use mulch around trees and plants to retain moisture in the soil. Mulch also helps control weeds that compete with plants for water.
• Invest in a weather-based irrigation controller – or a smart controller. These devices will automatically adjust the watering time and frequency based on soil moisture, rain, wind, and evaporation and transpiration rates. Check with your local water agency to see if there is a rebate available for the purchase of a smart controller.

POOL

• Install a water-saving pool filter. A single back flushing with a traditional filter uses 180 to 250 gallons of water.
• Cover pools and spats to reduce water evaporation.

During a Drought

Always observe state and local restrictions on water use during a drought. Contact your state or local government for current information and suggestions.

Indoor Water Conservation Tips During a Drought

BATHROOM

• Avoid flushing the toilet unnecessarily. Dispose of tissues, insects and other similar waste in the trash rather than the toilet.
• Take short showers instead of baths. Turn on the water only to get wet and lather and then again to rinse off.
• Avoid letting the water run while brushing your teeth, washing your face, or shaving.

LAUNDRY

• Operate clothes washers only when they are fully loaded or set the water level for the size of your load.

KITCHEN

• Operate automatic dishwashers only when they are fully loaded. Use the “light wash” feature to use less water.
• Hand wash dishes by filling two containers – one with soapy water and the other with rinse water containing a small amount of chlorine bleach.
• Clean vegetables in a pan filled with water rather than running water from the tap.
• Avoid wasting water waiting for it to get hot. Capture it for other uses such as plant watering or heat it on the stove or in a microwave.
• Don’t rinse dishes before placing them in the dishwasher, just remove large particles of food.
• Avoid using running water to thaw meat or other frozen foods. Defrost food overnight in the refrigerator or use the defrost setting on your microwave.

Outdoor Water Conservation Tips During a Drought

LAWN CARE

• A heavy rain eliminates the need for watering for up to two weeks. Most of the year, lawns only need one inch of water per week.
• Check the soil moisture levels with a soil probe, spade, or large screwdriver. You don’t need to water if the soil is still moist. If your grass springs back when you step on it, it doesn’t need water yet.
• If your lawn does require watering, do so early in the morning or later in the evening, when temperatures are cooler.
• Water in several short sessions rather than one long one, in order for your lawn to better absorb moisture and avoid runoff.
• Use a broom or blower instead of a hose to clean leaves and other debris from your driveway or sidewalk.
• Avoid leaving sprinklers or hoses unattended. A garden hose can pour out 600 gallons or more in only a few hours.
• In extreme drought, allow lawns to die in favor of preserving tress and large shrubs.

CAR WASHING

• Use a commercial car wash that recycles water.
• If you wash your own car, use a shut-off nozzle that can be adjusted down to a fine spray on. your hose.

Source: May 5, 2022, https://www.ready.gov/drought

Mortgage rates on 30-year fixed rate loans have climbed from about 3.5% earlier this year to upwards of 5.6%, and pros say they may go higher. Home prices too have made a steady climb upwards, growing about 20% from March 2021 to March 2022, according to CoreLogic.

That news, no doubt, is met with a groan among aspiring home buyers. But we do have some good news for you: There are signs that competition in the housing market may be cooling off, pros say.

Redfin reported that for the first time in six months, homebuyer competition dropped slightly in March of 2022. Sixty-five percent of homes sold by Redfin agents faced competition — or multiple offers — in March of 2022, down from 67% in February. “I do expect competition to continue to decline,” says Taylor Marr, the deputy chief economist at Redfin.

Marr cites multiple reasons for the change, including rising interest rates — the current average for a 30-year, fixed-rate mortgage is over 5.6% — the Federal Reserves’ policy moves to reduce inflation, baby boomers staying in houses rather than moving to retirement communities and the conflict in Ukraine. “Homes are still selling over asking price, but the market is shifting,” Marr says. “When you change the thermostat, it takes time for it to cool down.”

For his part, Lawrence Yun, chief economist at the National Association of Realtors, shared with MarketWatch Picks recently that he too sees competition declining soon:  “The combination of rising interest rates and rising house prices will push some would-be buyers out of the market, which may result in reduced competition after the summer buying season is over.”

Marr agrees that by the end of summer, there will be lower competition among buyers on listings, as well as more housing on the market. He warns, however, that certain areas that have become hot migration destinations, including cities such as Tampa, Phoenix, Nashville and Atlanta, may continue to see high rates of competition on listings. “There are still a lot of people moving to these places … even in the face of really high interest rates,” he says.

Declining competition at the end of summer is also when Skylar Olsen, the chief economist at Tomo, predicts a cooling of the market. “We’re in a transition period,” she says of what’s happening now.

Even despite signs that the housing market will cool in the coming months, buyers should not expect to suddenly get great deals. As MarketWatch Picks recently reported — after talking to five economists — it it unlikely that home prices will fall significantly. “Home prices will keep going up because there aren’t enough houses available to meet demand, but the combination of rising home prices and elevated mortgage rates means fewer people will be able to afford to buy,” Holden Lewis, home and mortgage expert at Nerdwallet, told us.

But just because economists predict that interest rates will go higher, this doesn’t mean buyers should force themselves into a bidding war just because they’re panicked about interest rates. “If you find a unit that’s right for you, and you know it’s a place you’re going to stay for an extended period of time, then you should move forward,” she says. “But you don’t need to hurry to lock down a rate.”

Source: https://www.msn.com/en-us/money/realestate/the-market-is-shifting-heres-exactly-when-3-economists-predict-competition-in-the-housing-market-will-decline/ar-AAXgGNV?li=BBnb7Kz

So, can you buy your dream house if you have student loan debt?

The common wisdom is bleak: student loans are preventing borrowers everywhere from living The American Dream. It doesn’t have to be that way, however. Here are 8 ways to maximize your chance of buying your dream home — even if you have student loan debt.

Student Loan Debt Statistics

If you have student loan debt, you’re not alone. There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt, according to personal finance site Make Lemonade.

House hunters will likely wonder about the age and upkeep of certain big-ticket features in a home like the roof and HVAC system. But they will also likely be interested in just how move-in ready the home is. Sellers can take on some prep work to get their house move-in ready to appeal to the largest buyer pool.

HomeLight, a real estate referral company, recently interviewed real estate agents to list some of the top remodeling projects before selling a home. Some of the projects that topped their list:

1. Painting

• Average project cost: $954 to $2,893 (depending on location, paint type, and labor)

Stick with neutral colors throughout, like whites, beiges, or soft grays. “It’s fine when there’s an accent wall or whatever; that’s different,” MaryBeth Harrison, a real estate professional in Dallas, told HomeLight. “But when every room’s a different color …  that’s cheap to fix with paint.” More than half of real estate professionals surveyed by HomeLight said they advise sellers to paint their interiors before listing. Some of the most popular colors: Sherwin-Williams Agreeable Gray and Benjamin Moore’s Revere Pewter.

2. Keep flooring consistent

• To install carpet: $789 to $2,794
• To install hardwood floors: $2,493 to $6,754
• To install vinyl floors: $800 to $2,900

Real estate pros may be more likely to recommend this house project if the home has several different kinds of flooring throughout. A more uniform flooring look—one or two types—can be more appealing to buyers. Real estate pros say that many buyers may expect hardwood floors or premium vinyl. But not all carpeting has to go. However, many real estate pros do suggest removing any dated carpet, like those in bright colors, as well as any stained or worn carpet.

3. Brighten the kitchen

• Average project cost: $382 to $1,064 (depending on equipment and labor); $2 to $20 per piece of hardware

White-colored kitchens remain the most popular. They can brighten the look of the space. “What the buyers are looking for today is white and clean—they just want clean,” Harrison told HomeLight. “It doesn’t have to be stark white. But they just want a clean palette.”

Dated kitchen cabinets can be painted by a pro for a quick fix. If the kitchen has other colors throughout, real estate pros recommend painting the walls white to try to brighten the space. Also, kitchen cabinets can get an upgrade with new hardware, such as hand pulls.

4. Replace dated countertops and appliances

• Average project cost: $40 to $100 per square foot for new countertops (depending on material); $1,360 to $19,050 for appliances

Dated appliances and countertops can turn off buyers. If replacing the countertop, Harrison suggests a bright, monochromatic look, such as a gray or white countertop made of granite, marble, or quartz. Butcher block countertops could be a more cost-effective option. Harrison advises against brown or multicolored granite, which she says can date a home. She also recommends not replacing a countertop if the rest of the kitchen has not been upgraded and is dated. New countertops will look out of place.

5. Hire a professional cleaner for your bathroom

• Average project cost: $70 to $85 per hour for a professional

A thorough cleaning of the bathroom can make a big difference, and often a professional cleaner can do the most thorough job. Pay attention to tile grout lines and any signs of mildew.

Zillow Group’s ambitious tech-fueled bid to shake up how people buy and sell homes is coming to a surprising end.

The Seattle online real estate giant said today it will shut down Zillow Offers, its iBuying program that aims to digitize and accelerate how people sell their home.

Approximately 25%, or about 2,000 people, will be laid off as a result of Zillow Offers closing. The company will take a write-down of more than $500 million related to the shutdown.

The decision is a remarkable reversal from the company’s home sales operation that represented a fundamental shift away from Zillow’s core business when it began rolling out in 2018. Zillow was pinning its future on Zillow Offers, beyond its bread-and-butter money-maker as a home price estimate platform and lead generator for agents. It originally projected annual revenue of $20 billion by 2024 off 5,000 home sales per month from the home-flipping program, which was billed as a way for consumers to avoid the hassle, time commitment and uncertainty of a traditional sale. To read full blog: https://www.geekwire.com/2021/zillow-shutter-home-buying-business-lay-off-2k-employees-big-real-estate-bet-falters/