Property values fluctuate as a result of many factors, and as a homeowner, it’s important to be aware of factors that can drive home value down. Some of these factors are out of your control, such as market conditions, interest rates, and the economy, while others are very much in your control. From unappealing renovations to neglecting maintenance on your home, some projects, or lack thereof, can negatively impact your property value. It’s best to be aware of what hurts property value so you can protect your home and get the most ROI when it comes time to sell.
1) DIY projects gone wrong
Many homeowners take on home improvement projects to not only make their space more livable and enjoyable but to also add value to their greatest investment. Whether it be a bathroom addition, adding a deck, or purchasing a fixer-upper with the promise of profit for flipping it – most people start a project with the idea that it will increase the value of the home. As exciting as the projects may be, they can sometimes turn out not as expected and hurt your property value.
Are you wanting to build a deck, extend the kitchen, or remodel the bathroom? Even if you’re an expert at smaller DIY projects, it’s better to leave the bigger remodels and renovations to a professional. If not executed properly, they can hurt your property value.
2) Lack of curb appeal
First impressions make a difference when selling a home. So, your curb appeal should entice prospective buyers and help your home sell faster. If you’ve noticed the exterior paint is chipping off or your trees and shrubs have seen better days, chances are potential buyers will notice too. Luckily, you can achieve great curb appeal with some minor adjustments.
- Update the exterior paint. The color of your home is oftentimes one of the first things a buyer will notice. Faded, chipped, and flaking paint can dramatically decrease your curb appeal and hurt your property value. Hire a professional painter and try to stick with a neutral color for the exterior of your home. A fresh coat of paint will do wonders for your home’s appearance.
- Update the exterior lighting. If the pathway leading to your front door is dimly lit or your fixtures are outdated, now is the time to update the exterior lighting. Exterior lighting helps your home feel more inviting and complements your landscaping. From post lights, LED lights, solar lights, and wall mounts, the options are endless.
- Switch out your old fence. Worn fences are an eye-sore and can take the attention away from your home and hurt your property value. Replacing your fence for a new one can give your yard the boost it needs by enhancing the greenery, and showing prospective buyers that you care. Fencing comes in a variety of different options such as wood, vinyl, aluminum, wrought iron, and composite. Consult with professionals to determine what material is best for you.
- Hire a professional landscaper. When selling your home, it’s best to go with an easy-to-care-for and clean landscape design to appeal to buyers, and increase the property value of your house. Simply edging the beds, mulching the garden, and pruning the trees and hedges can transform any landscape. Consider working with a professional landscaper to maximize your curb appeal.
- Wash the windows and the siding. It doesn’t take long for your house and windows to form a layer of dust, dirt, fingerprints, or even algae. This can leave your house looking dingy and gray and hurting your property value. Hire a professional for regular cleaning to avoid paint stripping, splinters, and mold and mildew problems.
- Replace your front door. It’s no surprise that front doors quickly begin to look worn and tired with daily use and harsh weather. Replacing your front door is a quick and cost-effective way to add curb appeal or add a pop of color to your home.
3) Unsightly interior wall paint
Just like exterior house paint, streaky, chipped, or low-quality paint could discourage potential homebuyers and hurt your property value. A fresh coat of neutral paint on the cabinets, walls, and trim can make all the difference. Consider leaving the painting to the professionals. This way, you’ll avoid the chances of buying the wrong brush or roller, using too much, or not enough paint, or any other common painting mistakes homeowners can make.
Busy and bright wallpaper, tiles, or flooring can also divert the attention of the buyers away from your home. The best rule of thumb is to always choose neutral options for permanent items. Then incorporate color with your decor and furnishings.
4) Lack of upkeep
It’s important and necessary to keep your home in great condition and regularly perform general home maintenance chores. Letting your home fall into disarray and neglecting it will hurt your property value and could have dire consequences on your list price. Buyers will want to negotiate repairs to avoid any major expenses following the sale. This is why most buyers require an inspection contingency in their contract.
If something breaks, be sure to fix it. And if you don’t know how to fix it, hire someone who does. This will prevent any issues from getting out of hand. It’s often more expensive to remedy any problems the longer you wait. Keep an eye out for any problems with your roof, foundation, HVAC system, gutters, and if a rodent or pest infestation emerges. If you develop any of these issues it’s important to hire a professional immediately.
5) Wall to wall carpeting
Your carpet will be in great condition during the first few years of owning your home, but will quickly begin to show signs of use, start retaining odors, and can be difficult to keep clean. Not only will buyers be wary of wall to wall carpeting because it can be expensive to replace, but it can also collect indoor allergens. If possible, it’s best to stray away from carpet and opt for hardwood, laminate, or tile flooring.
If your home does have carpet, be sure to get it professionally cleaned periodically to prolong the life of it. It’s also a good idea to have it deep cleaned before listing your home for sale.
6) Excessive clutter can hurt property value
Every home manages to accumulate belongings throughout the years, and you usually don’t realize just how much clutter you’ve collected until you’re about to list your home. Just as dirt and grime build-up, so can clutter. If your room is overcrowded with stuff, it’s a good idea to clear some of your belongings out. Donate items you no longer need or want, and find hidden, permanent homes for the items you use just once in a while.
Decluttering is an inexpensive way to add value. It can, however, be a big job for just one person. Consider hiring a professional organizer and tackle the project together. After you’ve donated what you can, research a local junk removal company and hauling service to collect the rest of your stuff – anything from mattresses and old appliances to electronics and unwanted furniture.
7) Unpleasant smells
Not only do offensive smells leave a bad and lasting impression, but they can also hurt your property value. Whether the lingering odor is cigarette smoke, pet odor, or mold, it’s best to identify the root of the smell and eliminate it. Avoid masking the smell with a strong perfume or fragrance.
To avoid unpleasant smells altogether, it’s best to keep your home clean. Routine cleaning includes vacuuming and dusting regularly, wiping down countertops and surfaces, and cleaning the bathroom and kitchen. Consider having your home professionally cleaned as you see fit. Most services allow you to choose the frequency of visits to suit your needs.
8) Unnecessary upgrades
Most of the time, home renovations and projects will increase the property value of a home. However, there are certain upgrades that can actually make your home less attractive at resale and can backfire. For example, if you live somewhere where the climate is generally cooler, perhaps Portland, OR or Twin Cities, MN, adding a backyard pool could make your home less desirable and hurt the property value. Or, ripping out a closet or bathroom to create a larger bedroom is generally unappealing to a lot of buyers and could be a costly mistake.
Other updates such as installing a new roof, adding insulation, and replacing windows will generally increase property value because you’re improving the efficiency and safety of the home. Updating your home’s electrical and refinishing hardwood floors can also add to your home appraisal value.
As a homeowner, keeping your home in optimal condition and making necessary updates over the years is key to getting top dollar when it comes time to sell.
Source: April 16th, 2021 | https://www.redfin.com/blog/what-hurts-property-value/
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
- 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.
- 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.
- 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
- 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.
- 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.
- 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
- 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.
- Operate clothes washers only when they are fully loaded or set the water level for the size of your load.
- 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
- 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.
- 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.”
Rising interest rates bring a lot of expectations, and assumptions, about how they’ll impact the housing market. The biggest assumption is, “When rates go up, housing prices tumble,” creating a Buyers’ market overnight.
But is that what happens?
Well, no. Many factors affect the housing market at the same time. Interest rates are just one of those things. Others include a mixture of standard economic factors (like Jobs) and historical events (like a global pandemic.)
If you’re convinced that higher interest rates surely impact housing, you’re right. They’re just not the one thing. So when interest rates rise, the effect can be subtle depending on the other factors in the market.
This article will explain how we see the rising rates impacting the housing market for buyers and sellers – and you.
What’s Impacting Housing Market
There’s been a lot going on in the economy over the last couple of years. Most notably, the giant elephant: the Pandemic. This unprecedented global event created economic chaos, but the Federal Reserve stepped in to soften the impact as much as possible.
One deviation from the Feds’ standard policy was keeping a steady flow of money to help the housing market. They did this by buying up Mortgage-Backed Securities.
The Federal Reserve acts to control the impact of inflation on the U.S. market. The actions they take to do this eventually move interest rates up and down. Low interest rates are an added benefit to the housing market. They make buying a home more attractive, and buyers can flood the market searching for their piece of the American dream.
When there are a lot of buyers competing for the available homes for sale, the effect of Supply and Demand forces is obvious. Home prices increase when demand increases.
But does the opposite effect occur when rates increase? Do housing prices come down, and competition go away?
Like we said before – no, not exactly. Even rapidly increasing interest rates won’t immediately result in home prices tumbling and buyers fleeing the market. And that’s because of all the other factors impacting home prices and buyers.
Historically low interest rates are only one of the factors bringing more buyers into the housing market. But there are other factors to consider, including the number of millennials currently turning 40 – approximately 10,000 a day for the next nine years.
Not every Millennial is looking to buy a home. Still, many of them do want to purchase, and they have an unprecedented opportunity to find a home outside of commuting distance, thanks to the Pandemic’s effect on work-from-home options. It allows Millennials and other buyers to look for homes in more affordable areas.
This influx of buyers from outside areas keeps pressure on the supply-and-demand valve. Yes, rising interest rates do eliminate a portion of those buyers. But when faced with sharply rising rental prices, higher interest rates are seen as the lesser of the two evils.
Buyers may drop down to a lower price point in homes. They may pause their house hunting while saving more to borrow less. Those are two ways to mitigate higher mortgage rates’ effect on monthly payments.
Other, long-term forces are at play working to keep the supply-and-demand pressure on home prices.
According to a report by the National Association of Realtors, the U.S. has been under-building houses for almost the entire 21st century. They conclude that 2.1million homes need to be built annually for a decade to catch up to demand.
And that is not happening. For various reasons, many sourced back to the far-reaching effects of the Pandemic, home building is not on track to catch up with the backlog and increasing demand.
The shortage of new homes puts more pressure on the inventory of existing homes for sale. That’s where most buyers in the market for a home are shopping. Competition led to multiple buyers making offers on the same house, which led to those homes selling for more than the seller’s list price.
And home prices skyrocketed.
How will higher interest rates change this? It “might” reduce the number of buyers competing for every home. The remaining buyers might all go after the houses in the best condition in the best areas. Or, there may be buyers for most homes for sale – but less competition overall.
Any of these scenarios can result in a slowing in rising home prices. But, as you can see, the supply-and-demand imbalance will still be here while interest rates increase. So, the housing market may lose a bit of its headline-grabbing craziness, but it likely will not crash.
Don’t Forget About Jobs
Historically, jobs directly impact a local housing market. In a geographic area where the available jobs are steady, but no significant growth happens, housing prices remain relatively stable.
Buyers know how much they can expect to pay for a home, and they save with an end goal in mind.
What happens when there is a significant increase in new jobs? When the demand for workers to fill new roles is greater than the local population can supply, employers look out of the area for people to fill those roles. And these new neighbors need someplace to live.
If the new jobs provide adequate income, the workers look for homes to buy and compete for available housing with long-term residents. This causes the price of houses to increase.
Another way the Pandemic has impacted the housing market, as mentioned, is the influx of work-from-home buyers. New workers moved to more affordable areas without needing a new job. Over the long term, this availability of talented workers may cause large companies to create more jobs. But what if new workers move to a more affordable area without the need for a new job?
Understanding all the factors influencing the housing market on a local and national level is essential. When interest rates increase, there is an impact on the housing market, but not necessarily in the way many frustrated buyers hope for – falling home prices.
Every city, area and neighborhood has its own varying degree of factors affecting the market. Demand, inventory and price range vary in differing areas, therefore, affects of interest rates may or may not affect a specific area as much. Ask your Realtor if they are experienced with the area your property is in, or where you want to purchase. He or she should be able to discuss all the factors listed above and more that will impact your decisions.
As we enter year three of working from home, that makeshift office doesn’t cut it anymore. Here’s how to upgrade your WFH space to make it feel productive — and more permanent.
More than two years into the COVID-19 pandemic, a whole lot of us are still working from home.
What we thought would be a temporary setup in 2020 has, for many, turned into the way we’ll be working for the foreseeable future. Experts say that even when the pandemic is a memory, many of us will work in a hybrid arrangement where we split our time between our home office and the company office. Some of us will never go back. One survey found a quarter of companies plan to move at least 20% of their on-site employees to permanent work-from-home positions.
As we enter year three of the work-from-home era, it’s time to upgrade our home workspaces to make them more functional, more professional and more comfortable. If you’ve spent months at your kitchen island, perched on a barstool and hunched over your laptop and a pile of papers, it might be time for a change. Here’s how to make your workspace work for you.
1. Designate a specific space
Not everyone has a separate room in their home they can turn into an office. If you’re in that camp, pick a space in your house and declare it your work area. Maybe it’s a counter in your kitchen, a corner in your bedroom or a spot in the living room. Wherever you choose, commit to it. Work there every day. (No hopping from spot to spot!)
Set up your chosen space to provide the environment you need to succeed, paying attention to everything from the lighting to the accessories.
2. Go for layers of lighting
The right lighting is crucial in a home workspace. Lighting affects your mood, your productivity and how you look during Zoom meetings. Don’t settle for a single overhead light. You need an array of lighting for specific purposes. Get an adjustable desk lamp for task lighting, so you can point a beam of light exactly where you need it. Add ambient light with a desktop or floor lamp that diffuses light through a shade or bounces it off a wall or ceiling. The goal: To bathe the entire space in soft light.
To help you look better on conference calls, consider investing in a ring light. This isn’t just vanity; it’s a matter of professionalism. When so much of our communication happens on a video conference instead of across a conference table, the people we are talking to need to see our faces clearly on screen. If you’re lucky enough to have natural light in your home workspace, great! Not only does natural light help your Zoom lighting (just be sure to sit facing a window), but it also can improve your mood and work accuracy and reduces drowsiness, headaches and eyestrain.
3. Declutter and organize
This seems obvious, but let’s be honest: When was the last time you cleaned your desk? Yeah, that’s what we thought. Well, now’s the time. Toss anything that needs to be thrown out, put those stray pens in one decorative container and file the piles of paper. Make sure you have all your workday essentials close at hand, and move all non-essentials elsewhere. Clutter can be a distraction, and dirty coffee cups and piles of dog-eared folders won’t look good on Zoom either. Cleaning up your workspace is not just about appearances, though. Research has shown that cluttered spaces can negatively affect our stress levels and hinder our ability to focus.
4. Mind your background
One of the early diversions of the pandemic was Room Rater, a Twitter account that praised and ridiculed the home setups of pundits who appeared on cable news channels on Zoom and Skype calls from their makeshift offices. Messy shelves and bad lighting received a 5 out of 10; nice art or styled bookshelves got a 9 out of 10. We all know the drill now — keep the background in your home workspace clean and uncluttered. If you have room, show off your style. Hang your favorite piece of art, or arrange a collection of interesting books and objects on your bookshelves. If you’re unable to change your backdrop, consider adding a filter to create a virtual one instead, or blur out your background so it’s not a distraction.
5. Get serious about your office furniture
It used to be that an office manager worried about ergonomics, the science of fitting the equipment to the worker. Now that’s your job. Make sure you have what you need to stay healthy and comfortable while working. Instead of slouching on the sofa hunched over your laptop, choose an office chair that supports your back and a desk that’s the right height for your frame. Try a standing desk, so you’re not sitting all day, and consider getting a monitor stand to elevate your screen for the most comfortable viewing. If you’re looking for a DIY solution, create your own monitor stand by using a few large hardcover books to raise your monitor. Investing in ergonomic furniture can keep you healthy by preventing carpal tunnel syndrome, muscle strains and lower back injury.
6. Divide a room for privacy
If you don’t have a separate room to dedicate to a home office, a room divider is an easy way to carve out a bit of privacy for your workspace in a larger room. Use a folding-style divider that you can pack up and stash at the end of the workday or curtains to create privacy. For a more permanent divider, use large, freestanding bookshelves to divide a room while giving you storage for your supplies. Dividers will screen out distractions, block some background noise and even provide a backdrop for Zoom calls. Consider adding a white noise machine or using noise canceling headphones to help block out even more background distractions.
7. Make your space your own
The best thing about working from home? This is your space. You don’t need to get approval from your boss or facilities to make the place you work reflect your personality. Hang art on the wall that matters to you. Surround yourself with tropical plants. Put your dog’s bed near your desk, so your best friend can snooze at your feet while you work. Set up an aromatherapy diffuser, and paint the walls your favorite color. Create an inspiration board and fill it with things that make you happy, like images of your family, friends and pets or pictures of your dream vacation spot. This is your space. If an object makes you happy, calm and productive, put it in your line of sight.
Blog written by: February 15, 2022, via zillow.com/resources/stay-informed/upgrade-your-home-office/ , all rights reserved.
The process of buying or selling a home can be many things: exciting, stressful, overwhelming. But there’s no denying that the real estate process takes time – and a home purchase agreement can play a key role in helping speed things along during this unpredictable period.
In this guide we’ll explore what a real estate purchase agreement is, how it works and how it can help prepare you for your future.
What Is A Purchase Agreement?
A purchase agreement in real estate – also commonly referred to as a house purchase agreement, a home purchase agreement, a property purchase agreement or a real estate purchase contract – is a legally binding document detailing the terms of a real estate transaction. The interested buyer presents their proposed purchase agreement to the seller, and the seller has the ability to accept or negotiate with the buyer until both parties are satisfied.
This contract outlines everything from the offer, financing and settled-upon purchasing price, to details as small as which appliances or pieces of furniture may be included with the home. A real estate purchase agreement defines the terms and conditions under which a sale will take place, which can help govern the sale and expedite the overall purchasing process.
Although it may seem like a lot of work upfront, sorting out the details early on can help you should any unexpected obstacles pop up down the road. Real estate purchase agreements serve to protect the interest of both the home buyer and seller. They can help you keep track of the many factors that go into buying a home.
How Do Purchase Agreements Work?
Firstly, a real estate purchase agreement is typically drawn up by the buyer’s real estate agent. To ensure that the contract is legally sound, however, most agents are likely to fill out preexisting documents created by a law firm with the relevant contingencies and specifications requested by their client.
One of these specifications that is included in a purchase agreement is the “legal description.” This is the written articulation of the property or home’s boundaries and geography. A legal description will specify the precise borders of the home for sale and its exact location.
Purchase agreements are a part of what agents allude to when they talk about negotiating throughout the home buying process. They can be volleyed between the buyer and seller by using offers and counteroffers until all details are sorted and agreed upon by both parties. But once the buyer and seller are satisfied and agree upon the conditions stated in the purchase agreement, they are officially placed under contract in the eyes of the law.
What’s Included In A Purchase Agreement For A Home?
A real estate purchase agreement can seem like a lofty and intimidating piece of paperwork. But with the right agent and an understanding of what a real estate purchase agreement should look like, you’ll be well equipped for future negotiations.
Buyer And Seller Information
This is the most straightforward part of the contract for both parties involved in a transaction, as the buyer and seller information simply includes the full names and contact information of the buyer and seller.
Property information is also a cut-and-dried portion of a real estate contract. This section should include a detailed description of the condition of the property being transferred along with its official address, and any other relevant details regarding the land and home.
That legal description we discussed earlier may pop up in this section and this is also the area of a real estate contract where disclosures, details regarding past completed home inspections and home warranty information is included. By law, homes built before 1978 are required to disclose information regarding any use of lead-based paint, as it’s been proven to be a safety and health hazard.
If there have been any previous home inspections conducted their findings will be placed here. Home inspections are a great tool to learn more about a property’s physical structure and foundation, the age of a home’s appliances and fixtures throughout the house – such as HVAC and plumbing. In addition, you’ll learn about the condition of flooring, doors, windows and other interior characteristics.
If the home includes a home warranty, information about it may be included in the real estate contract. A home warranty is a short-term service contract that will provide repairs or replacements for major appliances and systems in a home.
Home warranties typically only serve 1 – 2-year terms. Even if it’s expired, the details of a home warranty can help give the buyer a better sense of what work has been done.
Closing And Possession Dates
A real estate purchase agreement should also include the closing and possession dates. These are the exact specifications regarding when the sale’s closing has taken place and when the official transfer of a property’s title will occur, down to the hour. Any changes made to closing a sale should be written and documented.
The possession date marks when the buyer will receive the keys to the home and officially call it theirs. Outlining an exact date helps keep both parties organized and creates a deadline for the seller to move out by.
Pricing And Financing
This is where the meat and potatoes of a real estate contract is: the purchasing price and the buyer’s financing information. Here you’ll find the agreed-upon selling price for the home or property, along with any deposits that have already been made and additional costs associated with the sale.
The financing section will outline in detail how the buyer intends to finance their purchase of the property, whether with a third-party lender or by taking on the seller’s existing mortgage. Since most home sales that fall through do so due to financing, spelling out these terms exactly is a great way to expedite the home buying process and ensure that neither party will be taken by surprise.
Other Transaction Expenses
A purchase agreement can also include many other costs – a down payment, closing costs, earnest money, escrow details, and insurance or tax information. Let’s take a quick look at what these factors mean:
- Down payment: The lump sum of money that goes toward closing or purchasing the home; the more money that is paid upfront, the less the buyer will have to borrow from a lender
- Closing costs: Fees that come with the transfer of a property; can include real estate agent’s commissions, appraisal or home inspection fees, lenders fees, insurance and taxes. Closing costs typically make up 3 – 6% of the purchase price.
- Earnest money: Also called a “good faith deposit,” earnest money is a deposit made by a buyer to show that they’re interested in a property and serious about buying. Earnest money is basically financial insurance for the seller. Should the buyer pull out of the contract before closing without a contingency being met, the seller will get to pocket the money. Should the contract go through, the deposit typically goes toward closing costs or the buyer’s down payment.
- Escrow: Escrow is the withholding of money by a third party until a transaction goes through. In terms of a purchase agreement, the earnest money is typically held in an escrow account until the home sale is final or terminated.
An addendum is an amendment made to the final purchase agreement – things that both parties agree upon, but were not included in the original copy of the contract. Adding these documents help keep the purchase agreement organized and easy to read and understand.
How To Prepare Your Purchase Agreement
A real estate purchase agreement is prepared by the buyer’s agent and we recommend enlisting this professional help. Although real estate agents cannot by law create a legal contract (something only practicing attorneys can do) they typically work with a law firm or have the contract drawn up and ready to be filled in.
Enlisting the help of a professional agent can be immensely helpful for negotiations or even just understanding what information to include or investigate further. Since it’s a legally binding contract, you don’t want to find yourself lost or floundering. Working with an expert along the way can help you avoid such situations.
The Bottom Line
A real estate purchase agreement is more than just the offer and final price. It’s a legally binding document that holds the buyer and seller under contract. In addition, it streamlines and organizes the home buying process while protecting and holding both parties accountable.
Blog written by: Holly Shuffett, August 16, 2021, via https://www.rockethomes.com/blog/home-buying/real-estate-purchase-agreement, all rights reserved.
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.
The same student loan debt statistics report also found that:
- Nearly 2.2 million student loan borrowers have a student loan balance of at least $100,000
- There is $31 billion of student loan debt that is 90 or more days overdue.
- There is nearly $850 billion of student loan debt outstanding for borrowers age 40 or younger
With student loan debt statistics like these, it’s no wonder some think it’s impossible to own a home when you are burdened with student loan debt.
Here are 8 action steps you can take right now:
1. Focus on your credit score
FICO credit scores are among the most frequently used credit scores, and range from 350-800 (the higher, the better). A consumer with a credit score of 750 or higher is considered to have excellent credit, while a consumer with a credit score below 600 is considered to have poor credit.
To qualify for a mortgage and get a low mortgage rate, your credit score matters.
Each credit bureau collects information on your credit history and develops a credit score that lenders use to assess your riskiness as a borrower. If you find an error, you should report it to the credit bureau immediately so that it can be corrected.
2. Manage your debt-to-income ratio
Many lenders evaluate your debt-to-income ratio when making credit decisions, which could impact the interest rate you receive.
A debt-to-income ratio is your monthly debt payments as a percentage of your monthly income. Lenders focus on this ratio to determine whether you have enough excess cash to cover your living expenses plus your debt obligations.
Since a debt-to-income ratio has two components (debt and income), the best way to lower your debt-to-income ratio is to:
- repay existing debt;
- earn more income; or
- do both
3. Pay attention to your payments
Simply put, lenders want to lend to financially responsible borrowers.
Your payment history is one of the largest components of your credit score. To ensure on-time payments, set up autopay for all your accounts so the funds are directly debited each month.
FICO scores are weighted more heavily by recent payments so your future matters more than your past.
In particular, make sure to:
- Pay off the balance if you have a delinquent payment
- Don’t skip any payments
- Make all payments on time
4. Get pre-approved for a mortgage
Too many people find their home and then get a mortgage.
Get pre-approved with a lender first. Then, you’ll know how much home you can afford.
To get pre-approved, lenders will look at your income, assets, credit profile and employment, among other documents.
5. Keep credit utilization low
Lenders also evaluate your credit card utilization, or your monthly credit card spending as a percentage of your credit limit.
Ideally, your credit utilization should be less than 30%. If you can keep it less than 10%, even better.
For example, if you have a $10,000 credit limit on your credit card and spent $3,000 this month, your credit utilization is 30%.
Here are some ways to manage your credit card utilization:
- set up automatic balance alerts to monitor credit utilization
- ask your lender to raise your credit limit (this may involve a hard credit pull so check with your lender first)
- pay off your balance multiple times a month to reduce your credit utilization
6. Look for down payment assistance
There are various types of down payment assistance, even if you have student loans.
Here are a few:
- FHA loans – federal loan through the Federal Housing Authority
- USDA loans – zero down mortgages for rural and suburban homeowners
- VA loans – if military service
There are federal, state and local assistance programs as well so be on the look out.
7. Consolidate credit card debt with a personal loan
Option 1: pay off your credit card balance before applying for a mortgage.
Option 2: if that’s not possible, consolidate your credit card debt into a single personal loan at a lower interest rate than your current credit card interest rate.
A personal loan therefore can save you interest expense over the repayment term, which is typically 3-7 years depending on your lender.
A personal loan also can improve your credit score because a personal loan is an installment loan, carries a fixed repayment term. Credit cards, however, are revolving loans and have no fixed repayment term. Therefore, when you swap credit card debt for a personal loan, you can lower your credit utilization and also diversify your debt types.
8. Refinance your student loans
When lenders look at your debt-to-income ratio, they are also looking at your monthly student loan payments.
The most effective way to lower your monthly payments is through student loan refinancing. With a lower interest rate, you can signal to lenders that you are on track to pay off student loans faster. There are student loan refinance lenders who offer interest rates as low as 2.50% – 3.00%, which is substantially lower than federal student loans and in-school private loan interest rates.
Each lender has its own eligibility requirements and underwriting criteria, which may include your credit profile, minimum income, debt-to-income and monthly free cash flow.
Student loan refinancing works with federal student loans, private student loans or both.
If you make these 8 moves, you’ll be better positioned to manage your student loans and still buy your dream home.
Source: “Here’s How To Buy A House When You Have Student Loan Debt,” https://magazine.realtor/daily-news () © 2022 Forbes. All rights reserved.