Mortgage Bankers Association October 2020 Rate Forecast

Waning Mortgage Forecast

The October 2020 forecast is consistent with the August 2020 forecast as the waning effects of the pandemic on the mortgage market and real estate market continue to hold except we now get a more long term glimpse at what the market may hold in the years ahead.  Before we jump into 2021 and 2022, the final quarter of 2020 has the forecasted average down one tenth of a point from the August 2020 forecast suggesting that the mortgage rates are expected to hold steady as we close out 2020.  Earlier in October, long term mortgage rates fell as the key 30-year loan reached a new all-time record low at 2.81 percent.  Of note, in 2020 the 30-year fixed rate mortgage reached all time lows on 10 separate occasions and the rate tumbled downward  from the 3.69 percent rate of October 2019.

As we look forward, the forecast suggests some optimism for the mortgage market and real estate market.  A steady decline is forecast in 2021 with the average annual rate forecasted at a reasonable 3.3 percent.  The steady rise in mortgage rates is forecasted to persist through 2022 as the annual average rate increases to 3.6.

At the moment, the mortgage rates remain favorable with intentions to stimulate demand by prospective homebuyers. However demand has remained constrained due to the economic hardship brought on by the pandemic and with a Presidential election looming, we can speculate a high degree of uncertainty with the forecast for 2021 and 2022. 

Historical Perspective

The mortgage rate graph depicts a steady decline during the past 40 years. The graph was from a housing and economic recovery webinar presentation prepared for the Hawaii Association of Realtors by Dr. Paul Brewbaker, a respected and renown local economist. Click Here if you would like to view a full recording of the webinar.

Stay Informed

Register on www.invest808.com  to receive the Housing Inventory Snapshot to follow the market trends.  The Housing Inventory Snapshot is also posted to our blog however in order to receive the monthly trends you must register on the website.

Check out how much your home is worth based on local home values in your neighborhood. Simply enter your address and see what is available in your neighborhood.

See available Just Listed Honolulu, Hawaii homes that are for sale right now.

VA Home Loans

So what do these rates mean if you are seeking a Veteran’s Assistance or VA home loan? VA home loan is a home loan guaranty program offered to Veterans, military service members and eligible surviving spouses. The rates one actually qualifies is based on several factors including the loan program, credit score and credit worthiness. The forecast rates are only intended to provide you with insight into what the market considers as the overall average rate for the given period. You must check with your financial institution to find out what rate you qualify and in some cases that rate may be lower than what you see forecast by Mortgage Bankers Association.

October 2020 Hawaii Featured Honolulu Real Estate For Sale

Aloha! Our advertisement for the October 2020 Estates & Homes publication featuring Honolulu real estate listings from Hawaii Dream Realty LLC.  Our company is proud to have partnered with Homes & Land to market properties for sale. Homes & Lands print media compliments our online sales and marketing provided through our own www.Invest808.com website in addition to Realtor.com, Trulia, Zillow, and other third party listing providers. In addition, our listings can be found on The Wall Street Journal real estate portal, The Washington Post real estate portal, The New York Times and The International Herald Tribune real estate portals as well as other established luxury lifestyle real estate portals.

Homes & Land is not just a magazine, it is a fully integrated marketing program including a printed magazine distributed locally and worldwide and online giving our listings increased local exposure beyond the Multiple Listing Services. With Homes & Land our listings get exposure with more than 2,700 targeted, quality publications mailed to Oahu homes; exposure through 101 street magazine boxes all over the island; direct distribution to industry professionals including mortgage companies, title companies, banks, coffee houses, airport lounges, golf courses, hotels, and real estate offices; and reaches over 200 MILLION unique visitors worldwide through Internet marketing campaigns and online syndication that target Asia, China, Korea, Europe, Japan, Canada and Latin America.

You can find our advertisements on the back cover in the current issue as well as past issues. Contact your Realtor if you have any questions about any of the properties appearing in any issue of the Estates & Homes publication.

Honolulu Star-Advertiser Home of the Week for October 11th 2020

Hawaii Kai 3-bedroom, 3 bathroom with large boat dock is Honolulu Star Advertiser’s Home of the Week.  Click on image for listing details.

Hawaii Homes | Honolulu Star-Advertiser | October 11, 2020 Edition

Honolulu is the capital of Hawaii and is located on the island of Oahu, and is comprised of many smaller communities including  Hawaii Kai.  Nearly one third of the islands population resides in Honolulu. Honolulu offers a variety of housing options such as residential homes, town home and condominium complexes many are used as rentals and or income investments. The Honolulu metropolitan area experiences heavy traffic congestion particularly during rush hours. Honolulu is accessible by mass transit and major highways and is the major financial center of the islands. There are many options for, entertainment, restaurants, museums, hospitals, and shopping. For schooling information visit www.gradeschool.com  World famous Waikiki Beach is located in Honolulu.

On the Peninsula at Hawaii Kai is the Honolulu Star-Advertiser’s Home of the week for October 11th 2020. This fully renovated and tastefully, 2-story, upgraded 3 bedroom with den and 3-bathroom, marina front home ,is ideal for the most discriminating buyers. This pristine residence boosts 2,494 square feet of living areas and was remodeled in 2019 with impeccable craftsmanship and features “smart” home technology allowing you to remotely control the home’s LED lighting, central air conditioning, built-in indoor and outdoor speakers, and security cameras. The home features include a new gourmet kitchen with Sub-Zero and GE Monogram stainless steel appliances, 29 owned photovoltaic solar panels with existing net metering agreement, heated salt water pool, spa, built-in BBQ, QuietCool whole house fan system, and a spacious boat dock. Exquisite details can be seen in custom built-in TV cabinets, double crown molding, chair rails, wainscoting, porcelain tile flooring, and so much more. The Peninsula at Hawaii Kai is a gated community with amenities including a pool, park and exercise room. The location is convenient to nearby beaches, restaurants and shopping. The home was listed for sale on May 25, 2020, and has a list price of $3,200,000 and is offered fee simple.

We would be happy to answer any questions you may have on this property. If this property is not quite what you are looking for, Hawaii Dream Realty specializes in investment properties and has the tools and resources you need to make your search less time consuming. Contact us at anytime or use our mobile app, available for both iPhone and Android devices, to quickly obtain information on any Honolulu listing.  The app uses your GPS location and map-based search to efficiently retrieve listing information.  For a more personal experience, contact our licensed, board certified, sales associates.

Oahu September 2020 Housing Inventory Snapshot

I hope you will find the following snapshot of local Real Estate inventory interesting. Click on the inventory category to see current listings. The table represents aggregated values based on MLS data for the specified date. Housing Inventory Snapshot  September 30, 2020 Average List Price Average Sold Price Average DOM: active/sold listings Number of Listings Honolulu County, HI Click to Search Single Family under $1M [MLS Data Base on SFH] $1,245,676 $957,378 88 / 34 456 Click to Search Single Family over $1M [MLS Data Based on Luxury SFH] $5,001,013 $3,877,875 134 / 77 137 Click to Search Condo/Townhome under $500K [MLS Data based on Condo/Townhome] $378,117 $433,844 111 / 50 1,379 Click to Search Condo/Townhome over $500K [MLS Data Based on Luxury Condo/Townhome] $1,831,074 $1,619,867 155 / 69 466

If you know someone who is considering buying or selling a home, please give me a call. While open houses are eliminated due to COVID-19 precautions, our digital marketing strategy and distributed print media ensures that your listing gets exposure. I provide professional and courteous service along with knowledgeable guidance through the process. If you want to know what your home is worth in the current market Click Here or for more personalized service contact me directly at 808-223-0429.

Honolulu Star-Advertiser Home of the Week for October 4th 2020

Pālolo Valley 4-bedroom, 2.5 bathroom with enclosed 2-car garage is Honolulu Star Advertiser’s Home of the Week. Click on image for listing details. 

Hawaii Homes | Honolulu Star-Advertiser | October 4, 2020 Edition

Pālolo is the name of a valley, stream, and residential neighborhood with modest single family homes in Honolulu, Hawaii. The area lies approximately four miles east and inland from downtown Honolulu, less than a mile from Diamond Head, and between Manoa Valley and Kaimuki. Like many of Hawaii’s neighborhoods, Pālolo consists of an entire valley with a District Park nestled on the backside of the valley and boasts ample street parking. Located in close vicinity to the University of Hawaii makes a home in the valley an ideal rental for aspiring university students.  

According to the 2016 census data, approximately 13,720 people make the valley home. The valley is home to a diverse cultural mix with Buddhist Temples and churches located throughout the community.  The neighborhood is loaded with amenities including restaurants, grocery stores, shops, parks, and medical facilities.

Nestled within the valley, is the Honolulu Star-Advertiser’s Home of the Week for October 4th 2020. This wonderful, 1,880 square-feet, family home is just minutes from the vibrant Waialae Avenue. Featuring a large open living room and spacious kitchen  and dining area, this single family, fee simple, home has 4-bedrooms and 2.5 bathrooms. A 5,062 square-feet, fenced yard, and enclosed 2-car garage provides a secure place and ample storage space. The home is well maintained with fresh paint and 18 Krocera photovoltaic panels, solar heating and a split air conditioner to keep this energy efficient home cool in the summer.   The home was listed for sale on May 25, 2020, and has a list price of $1,088,000.

We would be happy to answer any questions you may have on this property. If this property is not quite what you are looking for, Hawaii Dream Realty specializes in investment properties and has the tools and resources you need to make your search less time consuming. Contact us at anytime or use our mobile app, available for both iPhone and Android devices, to quickly obtain information on any Honolulu listing.  The app uses your GPS location and map-based search to efficiently retrieve listing information.  For a more personal experience, contact our licensed, board certified, sales associates.

Hawaii Re-opening to Tourism on October 15th

Hawaii Welcomes Visitors

As the main hub of the Hawaiian Islands, it is no wonder Oahu is the most visited island. Hawaii serves up big city fun in a small island setting.  The Hawaii re-opening is just in time for the winter surf season. In other words, visitors can once again enjoy the best tropical venue the Unites States has to offer.

Winter Surf Session

Hawaii may be synonymous with surfing, but Oahu’s North Shore has earned special bragging rights as a hang 10 mecca. Whether guests head there to watch the waves or carve a few of their own, the destination offers unparalleled surfing thrills.  The North Shore is just a one-hour drive from the world famous Waikiki Beach.

The North Shore of Oahu comes to life in the fall and Oahu is opening its doors to tourism after seven months of lock down.  This seven mile miracle offers country living at its finest with tons of shops in historical Haleiwa town, outdoor activities, and beaches. Above all, in the wintertime, the North Shore is known for its picture perfect waves.

Hawaii Re-opening Test Program

Of course, the Hawaii re-opening still has concerns over COVID. Albeit the percentage of positive cases in Hawaii remains in the lower single digits. Similarly, Hawaii ranks in the lower percentile relative to the other states. Therefore to mitigate this concern, the Governor has implemented a testing program. The program allows visitors to arrive and test out of the 14-day mandatory quarantine period.  Travelers must taken a Food and Drug Administration-approved COVID-19 test from a CLIA lab.  The test result must be negative and within 72 hours of traveling to Hawaii in order to bypass a mandatory 14-day self-quarantine.

For the Hawaii re-opening, an accepted pre-arrival test is required of all arriving passengers who want to bypass the quarantine. The testing includes children of all ages. However, travelers who do not receive the results of their pre-arrivals test in time must stay in quarantine until they get their results back. The program is expected to expand the locations where travelers can get tested. Initially testing is available through CVS Pharmacy and through Kaiser Permanente.

Hawaii Re-opening Promotion

Hawaii is also actively working to safely open hiking trails, parks, attractions, restaurants and retail.  To promote the re-opening, we are offering a discount available through bookings on WaikikiStay.com.  Use promo code SAVE10 and get our low price guarantee. We offer a great selection of Waikiki vacation rentals for all budgets and family sizes. Our rentals are all right in the heart of Waikiki and all within walking distance to the world famous Waikiki Beach. Our vacation rental properties are privately owned and vary by amenities, building, square feet, number of guests, improvements, and views.

Oahu Real Estate Market Summary for August 2020

A four-bedroom home at 4005 Black Point Road was listed at $7.5 million Sunday.

Oahu single-family homes hit record-median price of $839,000 in August
Schaefers, Allison | Honolulu Star Advertiser | September 9, 2020

Oahu’s single-family home market hit a new record median price in August, and the median condominium price rose slightly, but once the results are seasonally adjusted, they aren’t as rosy as they first appear.

The Honolulu Board of Realtors reported Tuesday that the median price of an Oahu single-family home climbed 6.2% to $839,000 from $790,000 in August 2019. Residential sales also held steady, rising 2.8% to 370 from 360 sales the year before.

The median price for a condominium in August grew but at a lesser acceleration, increasing only 2.5% to $430,000 from $419,500 in August 2019. However, condominium sales fell a steep 20.1% to 409 from the 512 condominiums that changed hands during the same month last year.

The median price results were good considering the toll the coronavirus is exacting on Oahu, where Honolulu Mayor Kirk Caldwell ordered another two-week lockdown Tuesday to combat a second wave of COVID-19 cases that began in July.

Single-family home and condo sales also are returning to the previous year’s levels after a coronavirus- related dip between April and June.

Still, Paul Brewbaker, principal of TZ Economics, says the seasonally adjusted trend line for Oahu shows that the single-family home median price is at the upper end of flat and that the condominium market already is experiencing downward price pressure.

“The headline is that the single-family home median price is higher than it’s ever been as long as you don’t seasonally adjust the data,” Brewbaker said. “It’s right up there with the highest median prices that we’ve ever observed, but if you go over the last 24 months, it kind of looks like it’s flattening out.”

Brewbaker said that over the last 24 months, seasonally adjusted single-family home median prices have ranged from about $760,000 to $830,000. The seasonally adjusted median price for a single-family home last month was $820,000, he said. According to Brew­baker’s records, the highest median price for Oahu on a seasonally adjusted basis was $833,678 in July 2019.

“We are at the upper end of the zone, and the fact that it is happening six months out from the pandemic is somewhat more encouraging than if we were at the lower end of the range,” Brewbaker said. “But it is within the zone that we’ve observed over the last 24 months and is suggestive of neither a strong upward push or catastrophic conditions. Bottom line, we’ve been in a holding pattern for 24 months, not just the last six months.”

Brewbaker said the median price for a condominium on Oahu has been soft since April. He said the seasonally adjusted median price for a condominium on Oahu was $425,000 in August, placing it in the middle of an arc. The highest seasonally adjusted median condominium price was $450,175 in October, Brewbaker said.

“It just looks like more of a downward bend for condos, but that could simply be the vacation rental ban enforcement piled on with the cessation of travel and tourism, a one-two punch for small investors in vacation rental condos in Honolulu,” he said.

On a more positive note, the pace of sales quickened in August despite ongoing coronavirus-related industry restrictions such as bans on open houses and a requirement that properties be shown by appointment only to masked and registered guests.

The Honolulu Board of Realtors reported that single-family homes sold 44.4% faster in August than in the same month last year, with properties spending a median of just 15 days on the market.

During the past three months, 43% of single-family home sellers received their full asking price or higher compared with 35% during the same period last year.

Part of the reason is that there were 20% fewer single-family home listings than last year, said Margaret Murchie, vice president of Coldwell Banker Pacific Properties’ Diamond Head- Kahala office.

New listings for condominiums remained 19% below last year. However, year-over-year median days on the market remained steady with condominiums spending an average of 23 days on the market.

“A lack of inventory coupled with high demand from buyers looking to capitalize on historically low interest rates is driving a very competitive market for single-family homes on Oahu,” Tricia Nekota, president of the Honolulu Board of Realtors, said in a statement.

Hawaii real estate analyst Stephany Sofos said some of August’s single-family home sales were likely fueled by a coronavirus- related desire on the part of some condominium owners to seek properties where they were better able to socially distance.

“The suburbs are becoming more attractive as more buyers look for homes where they can socially distance,” Sofos said. “The pandemic has made people less likely to want to share public spaces and elevators.”

Jason Lazzerini, president and CEO of Locations, noted in the company’s Oahu Residential Real Estate Report that COVID-19 lockdowns have meant more people are spending more time at home, causing “many Oahu residents to re-evaluate their needs for outdoor space, a home office or other amenities.”

Lazzerini said the rise in remote work also has led some workers to consider neighborhoods outside of the urban core they had previously excluded due to longer commute times.

Murchie said even some high-end luxury properties are starting to move again — but for how long, no one knows.

“Inventory in town is really depleted in the price point of $1.5 million to $2 million. Even properties that have been on the market for a substantial amount of time are going into escrow these days. The condo market, not so much,” Murchie said. “Military are buying and selling mostly west end, which is incredibly hot.”

Murchie said she does have concerns about “all of the layoffs at Hawaiian Air and all of the hotel people thinning their management ranks,” which could lead to a glut of inventory.

“I tell people who are thinking of selling their homes that now is the time to do it,” she said. “Prices are still high and it’s better to be first.”

Stock Tank Pools

The Hot Trend of the Summer: Stock Tank Pools

For many of us, summer means pool time. But if you usually visit a community pool or recreation center, that might not be an option right now. Building a traditional pool at your home is a big and expensive project. That’s where the stock tank pool comes in.

“These inexpensive farm staples were originally designed as water troughs for livestock,” said Country Living “but that’s part of their country-chic appeal. Nowadays, stock tank swimming pools have been popping up in backyards across the country.”

Here’s how to make a splash with a stock tank pool in your own backyard.

Pick your size
Round stock tanks come in 10ft, 8ft, and 6ft diameters. As popularity has grown, the larger sizes have become more challenging to secure. There are also oval options, but they don’t necessarily provide the same kind of swimming experience.

Pick your spot
Where you’re going to put your stock tank pool is just as important as the pool itself. Without a level foundation, you’ll have leaks. “Job one is obviously selecting the site for your stock tank pool. You’ll need to prepare the area by creating a solid, level base,” said Tractor Supply. “You could use compacted sand, or even crushed granite. But, it’s very important to ensure that it’s a smooth surface, free of any rocks or sharp edges.”

Add your accessories
And by accessories, we mean design and function.

Function first. A stock tank pool isn’t as easy to set up as a kiddie pool. You could just fill it with water and call it a day, but you’ll end up swimming in gunk. Take a cue (and detailed instructions) from the Hey Wanderer blog, and keep your pool clean all summer long with proper pumps and chlorine.

Once you’ve got your stock tank set up, it’s time to make it fancy. While the tank alone has its own distinct vibe, it can be dressed up in any number of ways. Paint the metal, build deck seating around it, hang lights, and incorporate tikis to create a tropical getaway feel—the sky’s the limit!

Home Design Trends

What Will Homes Look Like In A Post-pandemic World?

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A lot has changed in just a few months, and for many that includes the idea of what a ‘dream home’ looks like. Not long ago, buyers were showing preference toward smaller homes and open concept spaces conducive to gathering. After a few months cooped up inside, those features don’t seem so appealing – and developers have taken note.

“While the coronavirus still rages on, it’s hard to predict what post-pandemic abodes might look like,” according to Barrons. “Yet, developers around the U.S. are already rethinking projects, anticipating residents’ needs and preferences that Covid-19 would spur. In doing so, they are re-evaluating current in-unit aesthetics and in-demand amenities.”

Here are just a few areas of home design where trends may shift in the coming years:

Home size
Homes had been trending smaller, but that may be over. With so many families spending (way) more time around the home lately, there’s never been more need for personal space. Expect homes to grow in size accordingly.

Prioritizing the home office
As more and more businesses relax work-from-home policies, or shift to full-time remote work entirely, the home office will become a near-essential for many buyers. A space that was once an after-thought now will need to offer privacy, good lighting and be pre-wired for telecommuting.

Return to the closed-floor plan
For some buyers, the appeal of the open-floor plan was already trending down prior to 2020, and the past few months have only made the reasons why more evident. Sharing more time and space at home demands privacy for school work, hobbies, and entertainment. With more meals being cooked at home, an open concept kitchen becomes noisy epicenter practically all day long. Builders expect a rise in demand for closed floor plans, where rooms are partitioned for purpose.

Smart technology
This is already one of the fastest growing trends in home design, but smart home technology will soon move from a ‘plus’ to a ‘must’. Temperature and lighting control can now be voice or motion-activated. Touchless faucets, once thought superfluous, are now an inexpensive and health-conscious upgrade. Systems that filter air and monitor air quality will become more common and affordable.

Oahu August 2020 Housing Inventory Snapshot

I hope you will find the following snapshot of local Real Estate inventory interesting. Click on the inventory category to see current listings. The table represents aggregated values based on MLS data for the specified date. Housing Inventory Snapshot  August 31, 2020 Average List Price Average Sold Price Average DOM: active/sold listings Number of Listings Honolulu County, HI Click to Search Single Family under $1M [MLS Data Base on SFH] $1,198,676 $900,479 93 / 42 473 Click to Search Single Family over $1M [MLS Data Based on Luxury SFH] $4,710,580 $4,223,889 136 / 147 145 Click to Search Condo/Townhome under $500K [MLS Data based on Condo/Townhome] $380,717 $419,918 112 / 56 1,399 Click to Search Condo/Townhome over $500K [MLS Data Based on Luxury Condo/Townhome] $1,729,656 $1,637,886 155 / 69 473

If you know someone who is considering buying or selling a home, please give me a call. While open houses are eliminated due to COVID-19 precautions, our digital marketing strategy and distributed print media ensures that your listing gets exposure. I provide professional and courteous service along with knowledgeable guidance through the process. If you want to know what your home is worth in the current market Click Here or for more personalized service contact me directly at 808-223-0429.

Mortgage Bankers Association August 2020 Rate Forecast

The last forecast we reviewed was June 2020 at which point we were already experiencing the negative effects of the pandemic on the real estate market. The August 2020 forecast continues to show the waning effects of the pandemic as the forecasted average for the 30-year fixed rate mortgage dropped three tenths of a point to 3.1 percent.  As we look forward at the potential average rate for 2022, we find that the average rate steadily climbs a mere half a point keeping the rate at historic lows even in the out years.  No significant change in the forecasted rate is predicted for the next four quarters however with a Presidential election looming on the horizon, we can speculate a high degree of uncertainty with the forecast beginning with the fourth quarter of 2020.

While the average is the result of rates above and below forecasted value, the 30-year fixed rate has reached an all-time low at 3.13 percent for this past week which last hit bottom in the November 2012 Presidential election year!

The mortgage rate graph depicting a steady decline during the past 40 years was from a housing and economic recovery webinar presentation prepared for the Hawaii Association of Realtors by Dr. Paul Brewbaker, a respected and renown local economist. Click Here if you would like to view a full recording of the webinar.

Register on www.invest808.com  to receive the Housing Inventory Snapshot to follow the market trends.  The Housing Inventory Snapshot is also posted to our blog however in order to receive the monthly trends you must register on the website.

Check out how much your home is worth based on local home values in your neighborhood. Simply enter your address and see what is available in your neighborhood.

See available Just Listed Honolulu, Hawaii homes that are for sale right now.

So what do these rates mean if you are seeking a Veteran’s Assistance or VA home loan? VA home loan is a home loan guaranty program offered to Veterans, military service members and eligible surviving spouses. The rates one actually qualifies is based on several factors including the loan program, credit score and credit worthiness. The forecast rates are only intended to provide you with insight into what the market considers as the overall average rate for the given period. You must check with your financial institution to find out what rate you qualify and in some cases that rate may be lower than what you see forecast by Mortgage Bankers Association.

Hawaii Governor and Honolulu Mayor Crush Small Business and Short Term Vacation Owners

Two Honolulu business owners taking part in the COVID-19 shutdown protest rally in front of the Hawaii state capitol describe the swift and devastating effect Hawaii Governor David Ige and Honolulu Mayor Kirk Caldwell’s COVID-19 actions have had on their businesses. Bill Comerford, owner of four bars, and Theresa Harden, owner of a real estate and property management business, tell us about it from their insider’s perspective.

Independence Day Greetings

While you’re enjoying the 4th of July weekend with family and friends, please take a moment to remember our brave men and women serving overseas who are unable to spend Independence Day with their family and friends!

Please celebrate safely and have a very patriotic holiday.

Thank you from our entire team at Hawaii Dream Realty LLC!

Inspections vs. Appraisals vs. AVMs

Inspections, appraisals, and automated valuation models, while related, all have different functions but can be easily confused. Let’s take a closer look. Before You Buy, Inspect! Buying a home is one of the most important purchases you will make in your lifetime, so you should be sure that the home you want to buy is in good condition. A home inspection is an evaluation of a home’s condition by a trained expert. During a home inspection, a qualified inspector takes an in-depth and impartial look at the property you plan to buy. The inspector will review the readily accessible exposed portions of the structure of the home for potential problems.  Inspections: A property inspection is ordered by the buyer and is meant to be an unbiased look at the condition of the property. While not necessarily required by a lender, an inspection protects the buyer from purchasing a home that requires expensive repairs or otherwise doesn’t live up to its list price. A property inspector will examine the condition of the property inside and out, running through a checklist of areas including, but not limited to, the roof, electrical panels, wiring, plumbing, appliances, doors and windows. If any issues pop up, the inspector makes note and provides the buyer with a report. Many reported issues will need some attention but won’t affect financing. If major repairs are needed however, the lender might want to have those issues addressed before they provide any funding. When you make a written offer on a home, you should insist that the contract state that the offer is contingent on a home inspection conducted by a qualified inspector. You will have to pay for the inspection yourself, but it could keep you from buying a house that will cost you far more in repairs down the road. If you are satisfied with the results of the inspection, then your offer can proceed. During the Home Inspection While not necessary, it is recommended that the buyer be present for the inspection. This allows the buyer to observe the inspector, ask questions directly, and obtain a better understanding of the condition of the home, how its systems work, and how to maintain it. The written report may be easier to understand if the buyer was present during the inspection. It is important that safe access and sufficient lighting is provided so that the inspector can inspect the property. Appraisals: Once the inspection has been completed and reviewed, the lender can order an appraisal. The appraisal will consider comparable homes in the area as well as other factors such as lot size, nearby schools and crime rates. The goal of the appraisal is to determine the true value of the property for the sake of the lender. The key difference between an inspection and an appraisal is that an inspection aims to assess the physical condition of a home itself, while an appraisal solely determines the market value of the real estate. AVMs: An automated valuation model is a digital evaluation of the value of a home. An AVM will quickly research the database of similar homes in the area and compare them with the value of the subject property. AVMs are often used to assess the value of a property portfolio, and have the advantage of saving time and money since no one physically visits the property. However, AVMs can’t take into account the true condition of a property, are only as good as the data the model selects for valuation, and often aren’t enough to secure a conventional loan for a home buyer. AVM’s are notorious for misinforming the public so be sure to follow up with a Realtor to affirm the information you are receiving from an AVM.

Why an Investment Property Should Be Your First Real Estate Purchase

REAL ESTATE NEWS
Brought to you by Theresa Harden, SFR ePro Realtor

Not ready to buy a home for yourself but want to take advantage of great market conditions? Consider buying an investment property! It’s a trend that’s taking over real estate, as savvy investors look to put their money in an appreciating asset. Here are five reasons to consider it.

1. Rates are crazy low. Lower rates mean more affordable lending, or more for your money if you choose to reach higher.

2. Because it will appreciate. According to CoreLogic, “The overall home price index (HPI) has increased on a year-over-year basis every month for seven years.” The long-term price appreciation of real estate can provide one of the safest investments out there.

3. Because passive income is good. Yes, it’s nice to know there will likely be appreciation over time, but the real key to success with investment properties is passive income.

“The best part about rental properties is that they provide a stable income,” said Mashvisor. “What would be better than having a check sent to you every month? In order to have positive cash flow, you have to make sure you invest in a profitable rental property.”

4. To turn it into a short-term rental. The short-term rental market has opened up a new world of opportunity for investors. By buying in the right location—by the beach, near a university, or in close proximity to a popular annual event, you have the potential of making a significant return in a short period of time. Just be sure to check the local laws, as Honolulu has been cracking down on Airbnb and other services.

5. Because it can help you buy the home of your dreams down the line. “Buying an investment property before your first home does not imply that you won’t have the funds to purchase your actual home at some point,” said Mashvisor. “In fact, investment properties that have been purchased wisely and have grown in value can offer you a sizable amount of wealth and equity.”

Know Before You Go – Red Flags Before Buying a Home

Starting the home buying process means navigating many stumbling blocks; it means saving every cent, finding the right real estate agent, and scouring homes online in your free time. You might not mind a property within your budget needing a little TLC to make it your own, or maybe you want something completely move in ready. Fortunately for you, your real estate agent has helped you narrow down your choices and can help guide you toward what’s best for you.

During the house hunting experience, you may come across a property or two that pique your interest but also give you some cause for concern. Your agent knows the right questions to pose to the seller’s agent, and even before you view the property you can review the seller’s disclosure documents together (when available). Your agent has an expansive knowledge of the industry and is connected to other industry professionals to help you along the way. Unfortunately, there can be a few more hurdles to overcome. Since two heads are usually better than one, before you sign on the dotted line, let’s look at a few common red flags.

Odors– If something doesn’t quite smell right, ask about the source of the odor. In older homes, especially in the country, there may be animals living in the walls. If you walk into a basement and get assaulted by a musty odor, it could be a sign of costly water damage. Alternately, if it smells excessively fragrant, many candles are lit or air fresheners used, the pleasant smell could be an attempt at masking something far worse.

Pests– Like animals in the walls, there can also be insects or rodents in the home. Pests can be a significant issue not only for the damage they cause, but also because they aren’t easily spotted. Look for droppings in or around the kitchen or bathroom floor, as well as signs of nesting like scraps of paper or bits of string or ribbon.

Paint– Seeing new paint in a home is not necessarily a red flag, however, if you notice one painted wall or area amidst others which have not been painted you may want to bring that up with your agent. Sometimes paint is used to cover water marks or other damage for a quick sale, and the buyer is left facing a bigger issue down the line.

Shoddy Repairs – In some cases homeowners may feel they have the experience to do home repairs themselves when they should have called a professional. Bringing along a trusted professional (such as a contractor, plumber or electrician) to a showing can make all the difference. They can point out an amateur fix and give you a good idea of what else might need fixing.

Electrical Issues– Check all plugs and switches. If lights flicker, the switches or outlets are warm to the touch, or the outlets look original to a home older than you, those can end up being costly updates to make.

Now that you have an idea of some things to look for during this process, hopefully you feel a little more at ease. Once you’ve found a home that meets your expectations, your agent will work with you on next steps like submitting an offer and arranging for a home inspection.  A thorough home inspection by a qualified professional may confirm your worries or dispel them so be sure to review his or her report before making a decision. The bottom line is that buying a home should be an accomplishment to look forward to with transparency and far less stress. Luckily for you it can be with the right representation.

Do I Dare? The Truth About Foreclosures, Short Sales, and REOs

The terms “foreclosure,” “short sale,” and the acronym “REO” tend to get a bad rap in real estate. Be it inexperience or misunderstanding, because people aren’t sure what each stand for, a great deal of agents and homebuyers steer clear of these kinds of sales. Since it isn’t uncommon for misunderstandings to lead to unnecessary fears, let’s remove some of the taboo, and shed some light on these terms so you can decide whether one of these types of properties is for you.

Let’s face it, when many people hear one of these terms, thoughts of a home in complete disrepair with a big red X on the door come to mind, or assumptions about an undesirable neighborhood arise. That’s not always the case. These types of sales are all based on seller circumstances but as we know, misfortune doesn’t discriminate. Sure, you may find a small home in need of new plumbing throughout, but you might also find a gorgeous home with little to no work needed, for which you wouldn’t otherwise qualify. In some cases, if the homeowner can’t afford the mortgage, they may not have maintained the property for years, on the other hand there are also many cases of hardship, where a homeowner becomes ill or loses a job and can no longer pay their mortgage for the home in which they’ve done nothing but take pride.

Foreclosure – When a homeowner is no longer paying their mortgage, and the loan becomes delinquent, the bank or lender will contact the owner to see if they’re able to pay it off in full. If they cannot, the process starts with a Notice of Foreclosure where the lender will take possession of the property to sell it and recoup as much of the debt as possible. A foreclosure dramatically affects the borrower’s credit score and stays on their credit report for seven years. Foreclosures are sold at auction, of which the procedure and laws vary by state and country. For example, in Massachusetts the auction is held at the property location, while in Florida they’re usually held at the county courthouse. Foreclosure homes are typically sold “as-is” or “sight unseen,” meaning that the mortgager will not be paying for any updates or repairs and the buyer will not be able to inspect the property prior to purchase. Foreclosures are also typically paid in cash to avoid financing contingencies and hasten the process. To get a better idea of what the laws are where you live, check here if you live in the U.S. In Canada foreclosures are less common due to stricter lending requirements, and the preferred process that keeps the lender from involving the court system is called Power of Sale.

Short Sale – With a short sale, if a homeowner is having trouble paying their mortgage and they owe more than what they can get for it through a sale in the current market they, or a representative for the borrower, contact the lender to see if they qualify for this option. The lender will ask for information to begin a short sale package which includes financial statements and a hardship letter from the seller. This process is less damaging to the seller’s credit score and usually shows that the seller took responsibility by trying their best to get the lender’s money back. If they haven’t already done so, the seller will find a real estate professional to list the property. The real estate agent must disclose that “the terms are subject to the mortgage lender’s approval” and usually the property is sold “as-is” due to the seller not having the ability to pay for repairs and the lender not wanting to lose any more money on the property. Contrary to its name, when looking to purchase a short sale property keep in mind that it’s not called a short sale due to the length of time it takes. In fact, it’s the opposite. The term means that the sale price will likely fall “short” of the debt owed on the property. Though purchasing a short sale can be similar to a regular home buying experience, some major differences are the length of time to close, the amount of paperwork involved, and the fact that you’re dealing more with the lender than the seller as they need to be the ones approving the offer.

Real Estate Owned (REO) – This type of property is not sold at a foreclosure auction; the bank already owns it. Often during a foreclosure auction the lender sets the price trying to recuperate not only what is owing on the home, but also the interest and legal fees that have accrued, which can take the price far over fair market value. This can sometimes deter bids, so the property remains in the bank’s possession. The bank will then hire a broker to help sell the property, which could come to market at a discounted price or with incentives like a reduced down payment or faster approval.

REOs are not always a bargain, as the banks are looking to make money. If you’re purchasing one, use the services of an experienced real estate agent who will check the title or deed that serves as evidence of ownership, and recommend you get a home appraisal and inspection.

Now that you know there isn’t a condemned property behind every door with these types of sales, there might be a little less trepidation, right? Whether you want to purchase one of these property options or you’re still on the fence, know that these types of sales come with baggage and are not for everyone. Some are the stuff of dreams for home flippers or investors who can budget for worst case scenarios based on square footage, others can be the perfect financial opportunity needed for first-time homebuyers to break into the market. Either way, with the right, experienced real estate professional working on your behalf, a foreclosure, short sale, or REO property might be perfect for you.

What Size Home is the Right Size?

Whether you are on the market for your first home or you’re an empty nester ready to make a change, an important question to ask yourself is, “How much home do I really need?” The answer can lead to finding exactly the right property for the next chapter of your life. Here are a few points to consider before starting your search.

Lifestyle – Does your life revolve around working at the office and spending nights out with friends or are you more of a home body? If you don’t spend much time there, does it make sense to buy a large home? Maybe you are somewhere in between. Think about how you spend your time and what you like to do. If you have a large extended family and would love to invite them to your home regularly, maybe a little more space makes sense.

Number & Use of Rooms – This point may seem simple, but consider your current circumstances as well as what the future may hold. Maybe there are only two of you now, but if you’re looking to start a family, that could impact the number of bedrooms and bathrooms you might need down the road. Also, would you use all of the bedrooms as such, or do you work from home and need a space where you can shut out the rest of the hustle and bustle?

Affordability – Typically the larger the home you purchase, the more expensive it will be. That isn’t only true initially, but also when maintaining, furnishing, heating and cooling it. The size of your home impacts the property tax you’ll pay as well.

Be Realistic – Sure, it might be nice to have a personal gym or a designated play room, but how often will that space be used? Also, think of what you are willing to do around the house. Do you want to clean every square foot or will you resent some of this extra space? Likewise, if you are constantly bumping shoulders while brushing your teeth with your partner you might not be thrilled you opted for less space. Create a list of priorities and make sure they are reasonable for you and your family or circumstances.

If you constantly entertain, already have a large family, or you like room to spread out then a big home is probably right for you. If you spend a lot of time away from home or prefer a more minimalistic way of life, maybe a small home is where you belong.

Understanding Downpayments

April 2019

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REAL ESTATE NEWS

Brought to you by Theresa Harden, R

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Down Payment Dilemma: How Do You Know How Much to Put Down on a Home?

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For many prospective home buyers, the down payment is the most daunting hurdle in the race to buy a home. Even for people with decent credit and a healthy paycheck, the down payment can be the great home ownership killer.

The big question for all prospective buyers is: how much should my down payment be? Most lenders will tell you that 20 percent is the standard, but is that really necessary?

The short answer is no, but of course there are some caveats.

“It’s a myth that all home buyers must have a 20 percent down payment to buy a home,” says Nancy Herrera-Siples, a Riverside, CA, branch manager at Primary Residential Mortgage. So why all the fuss over having 20 percent to put down? “Because if you don’t, it usually means you’ll have to shell out money for either private mortgage insurance (PMI) or government insurance, which is usually financed by the Federal Housing Administration,” according to Herrera-Siples.

Still, when a low down-payment is your only option to buy a home, PMI might literally be a small price to pay. Remember that PMI goes away eventually when your loan balance is 80 percent or less of the home’s value. If you’re in an area where homes are rising in value, this could happen sooner than you think.

Here are a few reasons to go high… or low.

When to make a substantial down payment:

• When you’re looking to keep your monthly payment as low as possible and have cash to spare.
• When you’re approaching retirement age and can envision a reverse mortgage sometime down the line.
• When the interest rate is lower with a higher down payment. “The more you put down, the better position you are in for negotiating a lower interest rate,” says Credit.com.
• If you’re worried about being underwater. If the market should drop in your area, you run the risk of owing more than your home is worth.

When to go low:

• When you don’t have the funds for a higher down payment and can’t earn or borrow them quickly enough.
• When the rate on your FHA or Fannie or Freddie loan is comparable to that you’d get with a higher down payment.
• When you need to escape a high-rent situation and the monthly payment on a house is lower than what you’re currently paying, even with the PMI factored in.
• When you’re confident your home will appreciate quickly, allowing you to refinance and get rid of PMI quickly.

To Fix or Not to Fix

Photo by Bidvine on Pexels.com

You’ve been looking at homes to buy and think it might be a good idea to find one in need of a little TLC. You’re handy, the place has great bones, and those shows on television make the process look so simple. Whether you are on the market for a home that you can make your own or you’re looking to invest or flip, here are some points to keep in mind before getting fitted for a hard hat.

• Be Honest – Know what you can do and delegate the rest. If your idea of being handy is hanging pictures that are “almost” level, you might be better off working on the design aspect of the process. You’re spending your own time and money so you can be as adventurous as you want, but at least opt for a professional to do the electrical and plumbing work otherwise you might face very dangerous and expensive learning experiences.

• Do Your Research – If there is a property that stands out to you and you already know what needs to be done (maybe the kitchen needs new cabinets and appliances and the bathroom needs to be re-tiled) start pricing out project items at local retailers. If you are looking to stay on the lower side of the budget, big box stores may be the way to go. You may also want to view homes with your contractor so he or she can give you an idea of the cost of things you might have overlooked. Make sure you are working with someone you know and trust, or someone reliable who has been recommended by a friend, family member, or trusted third party.

• Set a Budget – Some people set an all-inclusive budget while others may have a specific purchase price in mind for the property with another amount set aside for labor and materials to fix it up. Remember that surprises happen, sometimes more often than you’d like, so be prepared and set a buffer of 10% to 20% aside in your budget for just that.

• Know When to Compromise – After setting a budget it’s a good idea to make a list of the things you know you want for the home and another list of the things you can live without. Maybe you’ve always wanted a farmhouse sink in the kitchen and in order to get it, you can compromise on the center island. If you are renovating your own home, do what means the most to you. If it’s an investment property research which improvements could increase the property’s resale value. This article on The Balance’s website entitled The Best Home Improvements to Add Resale Value is a good place to start.

• Timing is Important, Not Definite – You’ve set a schedule and you want to stick to it, although it may not always be realistic. Whether you’ve bought the home for yourself and are living in the chaos of a remodel or you’ve invested and every month another mortgage payment is chipping away at your proposed profit, any delay can be daunting but it’s something for which you should be prepared. Sometimes the work can take longer than you’d think or maybe something completely out of your control arises like obtaining a license or permit. Either way be sure to set aside extra time and patience because things don’t always go as planned.

Renovating a property may not be as simple as it looks on those remodeling shows but if tearing down walls and creating something beautiful is what you love, you should do it. With a little help, a lot of hard work, and some realistic goals, your reno project could rival anything you see on TV.