 With mortgage rates rising, low inventory, and intense buyer competition, you may be wondering if it makes sense to wait and see if the market shifts in your favor before buying.
It certainly hasn’t been fun or ideal for buyers, so if there’s a chance you could have more houses to choose from at a better price, who could fault you for wanting to wait? The problem is, there’s no crystal ball you can look into and see if and when the market will change, and in what way, so the only thing you can truly do is weigh the pros and cons of waiting. So let’s look take a look at both sides of the coin for 3 things you might be thinking about to help you decide: Interest rates are getting highInterest rates are certainly higher than they’ve been in years. That’s causing your monthly payment on a house (which you could’ve bought for the same price a few weeks ago) to be higher — or worse, even causing you to have to look at houses in a lower price range. Pro for waiting: If you wait, interest rates may come back down. Con for waiting: On the other hand, they may just continue to go up further. Keep in mind interest rates are still at historically low levels. If rates go back down substantially, you can always refinance at some point. Home prices may come downThere’s buzz (and maybe even some hope) that we might see a crash or bubble burst, much like we did back in 2006, causing prices to come down and allowing you to get a better deal on a house. Pro for waiting: If the market crashes and you’re in good financial shape to buy a house in those market conditions, then you could get yourself a house for a better price than you could right now. Con for waiting: According to this Time article, and many other sources, the current market differs considerably from the ‘06 market, and a crash isn’t as likely. Prices may just level off, or go down slightly, but the increase in interest rates may end up costing you more. While the real estate market always fluctuates, and home prices will at some point take a dip, it’s hard to say how much of a dip or when they’ll bottom out. It’s an age-old gamble every buyer wrestles with no matter when they’re buying. Buyer competition may cool downThere’s been some hints that buyers are “cooling off” due to the intense competition, low inventory, and rising rates. If that’s the case, then it stands to argue that waiting a while may lead to even more buyers taking a step back. Pro for waiting: If enough buyers leave the market, it could cause prices to go down due to lower demand and competition. It could also give you a chance at buying a house without getting into a bidding war. Con for waiting: There’s been so much demand for the amount of houses for sale, and there’s not a lot of projections that listing inventory is going to increase. So it will likely take a lot of buyers taking a break for there to be a significant change in the market. Another way of thinking about it is that if you’re “waiting”, you’re essentially part of the group of buyers who are stepping back, so you aren’t even in the mix to buy a house if things do change. The Takeaway:There’s no clear cut answer for whether or not it makes sense for you to wait for the market to shift in your favor. For every reason to wait, there’s as much of a reason not to wait. So go by how you feel when weighing the above pros and cons. Which one worries you more? That’s a good sign as to what you should do. But since real estate markets vary on a local level, you should also chat with your local real estate agent to get a sense of where the market is heading in your area. And if you share your thoughts and concerns with them, he or she can also be a great sounding board and help you weigh the pros and cons for your personal situation.
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The COVID-19 pandemic changed a lot of things—including what buyers are looking for in homes.
So, as we navigate this new stage of the pandemic, what, exactly, are buyers looking for in their ideal properties? A recent article from realtor.com outlined the home upgrades buyers are looking for in the wake of the COVID-19 pandemic, including:
If you’re planning on selling your home, it’s important to know what buyers are looking for. That way, you can position your home in a way that’s going to appeal to the most buyers—and (hopefully!) sell your home quickly and profitably as a result. Sooner or later, all children need to be warned about the fallacy of something for nothing. It’s an important lesson and a milestone. Very little ones are too young to be exposed to the idea that when they grow up, they should automatically examine the motives behind anything that seems to be offered for free. Until then, it’s one of the joys of parenthood to enjoy shielding the innocence of their kids for as long as possible. But sooner or later, for their own good, the basic lesson from the adult world has to be learned: outside the family, there’s no such thing as a free lunch.
That could be why first time home buyers can be forgiven for having a degree of skepticism when they learn that the San Clemente real estate agent who is offering to help them is willing to do so at no cost to them! Hold it, they automatically think; where’s the catch? It only sounds like “something for nothing.” When we make that offer, we San Clemente real estate agents aren’t, in fact, giving away our professional services as a charitable enterprise. The work we do (and the expenses we encounter in the course of doing it) will be compensated, but the bill will be presented elsewhere. It’s only sort of like a free lunch. The way it works is not just straightforward—it’s also logical. When homeowners decide to sell San Clemente homes, the popular choice is to call upon the resources of a licensed San Clemente agent. The commission for doing so (often 5% or 6% of the sale price) is considered when arriving at the asking price—and since most of the other homes listed for sale have made similar arrangements, that amount should not put the property at a competitive disadvantage. Something like nine out of ten homeowners make that same decision, if for no other reason than the powerful marketing resources that can then go into the sales effort. On the other side of the transaction-to-be, potential buyers can be offered the professional assistance of a real estate agent at no cost because of the traditional practice in the industry—the agreement between buying and selling brokerages to share in the selling agent’s commission. It’s a bit like what you run into when you use some cities’ toll bridges, where a toll equal to the value of two passages is charged coming into the city, but none as you leave. It’s doubly efficient that way. In fact, I suspect the efficiency argument in American real estate practice isn’t the entire reason that this ancient system developed. Since a seller hopes to reap the proceeds of the sale, it’s fair to assume that he or she is the party who is better able to justify an expense—especially if it will only be paid when a successful sale is concluded. For the buyer, receiving the benefits of a professional’s services with no bill presented. Come to think of it—it does seem a little bit like free lunch, doesn’t it? San Clemente listings are usually less numerous this time of year—which makes it an attractive time for sellers to put their homes up for sale. If you are thinking of selling or buying, there’s less competition than will be the case come springtime—ample reason to give me a call! Showing a home in bad weather might seem to be a blueprint for disappointment, but sometimes that’s not what happens. Of course, prospective buyers do find that house hunting in San Clemente is easiest when the sun is shining, but homes continue to be bought and sold in every season, and sometimes bad weather can even prove to be advantageous.
Now, it’s true that when you stick the word “bad” in front of anything, you can bet it will stifle enthusiasm. If you’re trying to promote something, it’s hardly the go-to adjective. “Let’s try out that new Chinese restaurant—I hear it’s bad” isn’t a quorum-builder. That’s why “let’s schedule some serious house hunting; it looks like the weather will be really bad,” isn’t likely to spur a lot of enthusiasm—even if a deadline looms and people need to find a house. When the wind is howling, and Mother Nature lets loose with one of the many ways she has of transforming water into a treacherous adversary, any showings that aren’t canceled can become unique opportunities for both the hunters and homeowners. For the house hunters, there’s a chance to see how impressively the property holds up in less than ideal conditions. In that sense, it’s an opportunity to go “backstage” to experience how solidly built the place comes across in the midst of a storm. That experience can’t be duplicated on a mild spring day—and it can result in a valuable insight, no matter what the verdict. For the seller whose property stands up well to the challenge, this is an opportunity to demonstrate that convincingly. Remember how great it is to feel the warmth and comfort of home as you curl up on the couch with a good book? Anything a seller can do to amplify that kind of welcoming feeling—from lighting a crackling fireplace to setting out cups of hot cocoa—can make it that much easier for visitors to see themselves as the safe and secure owners of the property. If the showing goes well, the buyers will be certain to return when the sun shines and the protective qualities of the structure are less prominent. But experience shows that if they do request a second visit, that stormy first look will have set the table for a positive outcome. House hunting in San Clemente—which is often a truly pleasurable outing in spring, summer, or fall—takes on a different aura during the rainy season. But even when the weather behaves the way it has been recently, don’t think that San Clemente house hunting expeditions are out of the question until spring arrives. They are happening—and winter sales are the frequent result. I’m here to help no matter what the season. Rain or shine, I hope you’ll give me a call! For more than a year, it’s been the happy trend across the nation for the average DOM (days on market) for residential properties to have been declining. It’s a “speed of sale” measure—one that most San Clemente home sellers hope will reflect that it won’t be long before they are handing the keys to happy new owners.
There are some ruling considerations that go into establishing a winning San Clemente asking price. One is psychological: thinking of a buyer’s frame of mind, most people don’t want to be the only ones who are interested in a house. When a slightly lower-than-comparable asking price is part of the marketing message, it draws a crowd. Another consideration is the search bracket. Knowing how buyers tend to bracket price range parameters for similar San Clemente homes is something I can help with. If comparable homes have been selling in a range that tops out at $400,000, asking $410,000 (so you can discount it in later negotiations) is a mistake: your property won’t even appear on search results you’re aiming for. It is said that pricing is an ongoing discussion—something that holds true if the activity level is less than expected. In every dissertation, oration, article, comment, FAQ, and essay about successful house sales, the dictum is the same: if the place doesn’t sell, first check the asking price. Sometimes that truism can seem indisputable. If the property in question has been listed at an asking price that’s higher than comparable San Clemente houses—other homes that have sold—unless outside factors have slowed all area sales, the asking price is probably the stumbling block. A homeowner can quite reasonably object that their property has unusual qualities that make direct comparisons with other San Clemente homes inexact, but that logic may not be powerful enough to counter the market figures that buyers can see (remember that they don’t want to be the only ones who are interested). Sometimes even for a home that shows spectacularly, lowering the asking price can be the simplest and quickest route to a “sold” sign on the front lawn. In the case of those San Clemente homes where San Clemente asking price conformity isn’t the issue—as when there simply are no other properties that are at all similar—if lowering the asking price is not indicated, it will simply become a waiting game: waiting for the buyer who appreciates the special character of the property. The good news is that there IS a buyer out there for every property; the bad news is that unique properties attract unique buyers—as in, there are fewer of them. But there is some second good news: when they do show up, they are apt to fall in love with the place! Pricing is part math and part skill, and since the market is constantly changing, it’s a skill that rewards experience tempered by consistent monitoring. I monitor San Clemente real estate full time so I can provide the most timely assistance and advice in all phases of selling and buying. I hope you’ll give me a call! Marketers for any San Clemente business want to know as much as possible about their “customer base”—the population of potential buyers who might be attracted to their product. If you are in the process of selling your San Clemente home, the speed at which you succeed and the amount of profit that results will greatly depend on how effectively you appeal to your offering’s customer base: the folks who might be interested in your San Clemente property.
When you take me on as your selling agent (a good idea, for sure!), you’ve relieved yourself of the vast majority of the burden of marketing. It’s what I and the resource partners I use do as a full-time job—and we’re successful at it. You can certainly let your friends and family know that you are selling your home (and what a great place it is) if you choose, but the lion’s share of marketing to the public at large will be well and energetically handled by your San Clemente Realtor®. Yet there is one step you can take that might be extremely beneficial to your marketing campaign. It has to do with that customer base we were aiming for: specifically, it has to do with widening it. It’s where the FHA comes in. The Federal Housing Administration was created back during the Great Depression to spur home construction. By offering government-backed insurance that encouraged banks to offer home loans, it created jobs, helped families find proper housing, and spawned a host of other beneficial side effects. The FHA doesn’t actually make any loans itself—but it does assume most of the risk. Today, due to a variety of economic factors that have made qualifying for a home loan somewhat difficult, it’s fair to say that the size of the customer base has not grown even as fast as the slow-motion economic recovery. Along with other factors, banks have been timid about lending due to the potential penalties for not following strict guidelines. The customer base—measured by how many potential homebuyers can easily get mortgage loans—has lagged. This situation has improved lately, but some still complain that home loan resurgence remains sluggish. Likewise, growth in the customer base. For anyone selling their San Clemente home, one way to expand the customer base is to make your property what you might call “FHA-Friendly”—that is, transparently a good candidate to qualify for an FHA loan guarantee. This isn’t the place to go over all the details about how that can be accomplished, but if your asking price is within FHA guidelines for our region of California and you are confident no serious defects will be found during the home inspection, much of the goal will have been attained. If you will be selling your San Clemente home this fall or winter, now is a very good time to give me a call. FHA-friendly or not, we’ll make sure your customer base is primed and ready! First, a word about these Things to Avoid when you’re in the process of buying a San Clemente house: it’s a short list.
The reason it’s so short is because of who you are—since you’re reading this, it means you’re someone who is taking the time to delve into what’s happening with San Clemente real estate. That makes it unlikely that you will fall into any of the common-sense pitfalls that populate typical Top 10 Pitfalls lists. Most of them are pretty obvious to anyone who pays attention. Less obvious are these three. These touch on areas which can be overlooked when time is short, or emotions are high—or the San Clemente house is just so darned attractive you can’t wait to pull the trigger:
If you try to predict what San Clemente real estate activity is likely to be based on only our local activity, you soon find what causes statisticians to turn up their noses: the sample size is simply too small to project reliable trends. That’s why serious San Clemente observers look to the incoming real estate activity stats from California and the nation as a whole: and the latest numbers gave them at least two interesting clues.
At the start of the month, the National Association of Realtors® weighed in with a “sizable jump” in some of the pending home sales numbers. Pending home sales are especially interesting in a predictive sense because they are forward-looking indicators—they measure contract signings that will be finalized in coming weeks or months. The NAR’s Pending Home Sales Index for July notched the second highest reading in over a decade…exceeded only by April’s reading. The NAR’s economists continued to fret about the affordability of the listings currently on the market, reflected in the continuing difficulty first-time homebuyers are having being able to find affordable homes in most parts of the country. The “robust demand for single-family starter homes” is as high as it is because many young buyers can’t find what they are looking for at a price point that’s affordable. Not all real estate news is as relevant to San Clemente home or apartment shoppers, though. Last Friday’s news from the New York Times is a good example. It ran the story of one young musician whose quest for an affordable apartment led him to his current digs, which is a closet. Actually, according to the news item, it’s more like a “crawlspace” at 9 feet by 4½ feet. Affordable rent? Yes, for today’s Manhattan—just $450/month. The second, more relevant finding came from the researchers at CoreLogic, who dug into the national statistics with enough gusto to emerge with a seldom-mentioned measure: price stability. San Clemente real estate watchers often read about residential real estate volatility—the gyrations sales and prices go through when financial or political turmoil causes notable fluctuations. Real estate price stability, however, since it’s the exact opposite, is seldom mentioned (probably because it sounds like nothing is happening, which journalists don’t like to write about). But the latest finding is news. As CoreLogic’s Sam Khater writes about the year-over-year change in monthly home prices, “the last narrow band of years” that exhibited such stable home prices came “between 1994 and 1997.” The good news is that this period presaged a housing market that was so healthy it helped anchor the whole economy—probably a key reason why 2001’s economic downturn became the mildest post-war recession. Here in San Clemente, the real estate scene continues to reward home shoppers with a host of listings that offer good value—especially with mortgage interest rates still hovering at bargain basement levels. If you decide that now is the right time to find the right house at the right price, it’s also the right time to call me! Ever tried to pin down the most popular house style in the U.S.? Turns out—you can’t.
Last week it almost seemed as if the answer was at hand. San Clemente readers could have come across the ad link that promised to reveal “The Most Popular House Styles.” The come-hither promise read, “Browse our photo gallery for the most popular housing styles and types in America.” The most likely reason for clicking would have been for San Clemente homeowners to find out how popular their own home’s style is considered to be. If it’s the Most Popular of all, when it came time to sell, herds of popularity-seeking American buyers could come rushing over for a showing! If that were the goal, the first mouse click would have dashed the hope, for it showed a photo of an unadorned two-windowed center-chimneyed home that couldn’t have been larger than 400 square feet. This first style—Number 1—was the “Cape Cod Style” home. Since few could be persuaded that Capes are the runaway #1 Most Popular homes in the U.S., it seemed probable that the author wasn’t going to let us in on the order of popularity. That suspicion was confirmed by #2 of the Most Popular House Styles: “New England Colonial.” Pictured was a 1720 model that looked remarkably well-preserved (but not particularly popular-looking). If you grew impatient and scanned down the page, you found “Dutch Colonial,” then “German Colonial” (a brooding hand-made brick and stone structure). Despite what the ad had promised, this was more like an Every Conceivable House Style list rather than a true Most Popular one. It was a very long page, ultimately chronicling no fewer than 57 different house styles. This was clearly not going to deliver on its promise—but the question it raised was nonetheless an interesting one. What are the Most Popular house styles in the U.S.? Actually, what is the Most Popular? You’d think that the answer would be most likely to come from the National Association of Realtors®—but it was not to be. At least the NAR has pared the Most Popular list down to its Top 20, but heading the list is “Tudor.” I can agree that in San Clemente (or in any town in California), Tudors may be greatly admired. But across the whole country, they’re not likely to rank as Most Popular. Down there at the bottom of the NAR list are three that could be serious contenders: “Midcentury Modern,” “Traditional Ranch” and “Contemporary Style.” They could be Most Popular since all three are architecturally vague—so more homes could fit the categories. An example was “Traditional Ranch,” which can have either brick, wood, or stucco siding. Even vaguer was the Huffington Post’s top pick: “Craftsman style.” Quite a few San Clemente homes could qualify, since Craftsman style homes are “often bungalows but may be of any shape so long as they emphasize a relationship with nature and the craft of construction.” If you’re thinking that every house in San Clemente is “of any shape” and “has a relationship with the craft of construction,” I’m with you. Ultimately, there doesn’t seem to be a proven Most Popular house style—which may be just as well, since any style can sell quickly or slowly due to many other factors. The most popular style for any home buyer is, after all, the home that happens to appeal to him or her. Putting that buyer together with that home is how I help—and a fine reason to call me! “Time is of the essence!” is the kind of everyday phrase you might hear any time in San Clemente. Most often it’s tossed off casually—as when someone gets impatient, waiting for a friend who’s been dillydallying. That’s when it means “we’re gonna be late!”
In California legal contract phraseology, it has a more precise (and serious) meaning. To lawyers, including that phrase means that the parties must perform X by date Y or else! It means that missing a deadline will cause material harm. “Time is of the essence” in that connection is literal: the time element has value—it’s essential to the deal. When you examine an investment in San Clemente real estate, the actual phrase doesn’t have to appear in any agreement docs for time to play an important part “of the essence” of the investment. This isn’t just some abstract philosophical notion—integrating it into your buying, selling and management decisions will certainly affect the concrete dollars-and-cents results. Most basic is a concept common to all investment avenues: the time value of money. The basic principle is that, provided money can earn interest, any given amount of money is worth more the sooner it is received. Most people are painfully aware of the inflationary effect of time on the money they earn—they know darn well that $1-a-gallon gasoline has become a distant memory (the same way great-grandparents used to describe 5¢ hamburgers). The importance of having not just a nodding-your-head understanding, but of having a believing-it-deep-down kind of understanding of this may be why mature investors can be more stubborn about sticking to spending limits. They’ve experienced the rate at which San Clemente properties grow in value over time—which means that if they were to pay 8% or 9% over what they truly believe a home’s value to be, it could take a couple of years before its resale value would reach even a breakeven point. Thinking in terms of its time value—picturing it just lying there, inert, for a couple of years—makes for a less appealing proposition. For typical San Clemente homeowners whose major reason for their real estate investment is as a residence, the time element works on many channels at the same time. The residence may lose some value as daily living’s wear and tear takes a toll, but at the same time, it’s all but sure to gain value through inflation. It might lose or gain as the immediate neighborhood changes for good or ill—although it could gain considerable value through wise decorating initiatives. About those decorating initiatives: it’s a canny homeowner whose first efforts at home improvement come in the garden: the right trees planted today can become hugely beneficial a decade or two from now—and hugely expensive to try to duplicate later. If you’ve ever discussed the cost of craning in a 25-foot shade tree, you understand the reality of “time is of the essence!” The hot spring-summer selling season is set to start cooling down, but there are loads of great South Orange County properties on the market right now. Call me, because time is of…well, you know! |
