Happy October everyone!
Today, I had so many conversations already with people that are surprised at how quickly this year has moved along. Already, we are into our 4th quarter, and undoubtedly, we are all having thoughts about Thanksgiving and Christmas and then New Years. It’s unbelievable that 2022 is right around the corner.
Given that, I have many thoughts to share with you about the real estate market.
So today, instead of sharing with you a new listing or a new sale, or an open house, I’m just going to share freely my observations about the real estate market, and what’s happening these days, and how we can best take advantage of the current environment.
Since I have many thoughts on a variety of topics, I’m going to separate each thought into a nice category.
The Market Has Shifted….
You may or may not have heard or noticed that the real estate market has shifted. This has been one of the most interesting years in the real estate market. Earlier this year, we had a 23% increase in average home prices in our area compared to the year before. Properties on the market were getting 20, 30 or over 40 offers. Bidding wars were sending properties at $50,000, $100,000 or more over the asking price, depending on what part of Southern California you were in. While it was great fun to be a seller, it was a really stressful time for our buyers. Many Triple A buyers with good sized down payment and good incomes kept losing out on properties they were bidding on only because there was so little inventory on the market and so many buyers going after the same property. It was quite a skewed market.
During this time, my team and I were able to assist buyer purchase their dream home in a very challenging market, but using communication techniques, our relationships with agents and lenders in this area, and to keep our buyers’ mindsets strong so they could withstand the pressures being buyers in a seller’s market. We also equipped our buyers with market knowledge and understanding from our experience in difficult markets.
On the other side, we were able to help sellers navigate multiple offers and how to handle bidding wars, which, while good for sellers, can be overwhelming and confusing at times.
That was going on basically from February all the way till July. Then in about August, inventory started to build up, buyers started to slow down, and buyers started to pull back, and now we have a significant market shift, where the buyers are more in the driver’s seat then they ever have been before this year, with the ability to negotiate one-on-one with sellers, instead of being just a bidder in a huge bidding war.
In this new market we are in, properties are staying on the market for longer, and buyers have more property to choose from, and more bargaining power. Some of our buyers have left the market, when actually this is an excellent time for buyers to be in the market! In fact, a few years ago, my husband and I bought our house in Long Beach at this very time of the year – October. In my mind, this is the best time for buyers to buy, instead of competing with everyone and their sister in the Spring market. Take advantage of this time to look at homes when there is good inventory to look at and not such a rushed pace.
On the flip side, for sellers, this is also a good time, because prices are still strong, there are great comparable sales data in your neighborhood to support strong values, and there are buyers that need to buy before the end of the year. In truth, as a seller, you don’t need 40 offers on your house. You need a great buyer that appreciates your property for what it is, and a strong offer that is a win-win for both parties. Investors that need to do a 1031 exchange may find themselves in a situation where they need to buy now. And some buyers are those who move into the area at year end to begin new career positions in January and need to be situated in a new home before or during the holiday season.
Bottom line: don’t ignore the 4th quarter as a great time for real estate moves in Southern California. Remember: we don’t have snow, so any time is a good time to move if it works with your personal timelines.
Solar Panels – or, There’s no such thing as a free lunch
I may get hate mail from solar panel companies as a result of what I’m about to say, but please be careful about putting solar panels on your house. Solar panel companies will offer to install solar panels on your house for absolutely FREE and promise that your electric bills will go from $400 to $13 a month. All sounds great right? Free! Wow, these guys must be amazing.
No, not amazing. When you go to sell your house, you discover that they put a $100,000 lien on your house. And you need to pay it, or it gets transferred to your buyer, who may not want to have a $100,000 lien on their house or in their name. These go by many names – “leased” solar panels, or “financed” solar panels. The problem is that they are not paid off and they are not free, while who knows what they are saying to homeowners. We have had several escrows lately where solar panels are involved and they are not cheap.
Bottom Line: If you want to install solar panels, please be aware of what kind of lease or financing or lien you are agreeing to when you sign on the dotted line. Best is to pay for the solar panels up front so they are paid for solar panels. Or, keep using electricity. If we are going toward electric cars, surely we can keep using electricity in our houses too?
Key Times to Consider Buying a Home – or, Time is of the Essence
So, you saw how quickly this year flew by, and how last year was a blur, and how many of things you wanted to do and maybe did was 2 years ago, and yes, a lot of things were not 3 years ago if you did them in 2018. My point is, time marches on.
Which is why I feel that sometimes, it isn’t the best to put things off. I know, it is easy to say, I’m going to do that next year. Forget this year, let’s do it next year. Who hasn’t said that? I’m putting off going to Italy and Spain. I’ve said I wanted to go since I was 40 and now I’m 50 and still haven’t gone, and I’m likely not going this year and maybe not next year. So, I understand putting things off. But, at the same time, I’m not getting younger, so someday, I need to do these things I want to do.
Same with everyone. And same applies to real estate. If you have wanted a bigger home, or your first home, or a different home, it’s easy to put off, to wait for when the prices are going to go down, or wait for the next biggest recession, or wait till you make more money, or wait for when you have saved enough.
Or, you can consider, that time is of the essence.
There are 2 time periods in a person’s life where I believe it’s a really good time to buy real estate. May I share with you about these 2 times?
(1) Between 20 and 30 years old
(2) Between 50 and 65 years old
OK, as you can see, I’m actually pointing out 2 periods where people don’t typically buy real estate. Actually people tend to buy in their 30s and 40s, when they feel comfortable and confident with their careers and income and significant others. 30s and 40s are a great time to buy real estate, agreed. But let’s be contrarian for a few minutes. Let’s think outside the box.
What about your 20s?
I wish I bought real estate in my 20s. That is one of the thoughts I have often. If only I bought in my 20s. Instead I didn’t start buying real estate until my 40s. Which is fine, but starting in your 20s, you have a huge leg up on everyone in your age group. You have time on your side. You have decades to pay this property off and accumulate other property.
Getting yourself a condo or a small house and living there or renting it out as an income property means you have an asset, either something you can live in and pay yourself rent for instead of your landlord, thereby enriching yourself, or something you can rent out and build your equity.
So instead of buying that flashy car or having that huge wedding, maybe a nice piece of real estate is in the cards for you? Yes, I’m talking to that 20 to 30 year old!
Second group – 50s to 65 – did you know these may be your peak earning years! Did you know that you qualify for a mortgage now, at low, low interest rates, that after you retire, will be much more difficult to get, because you aren’t showing as much income?
Did you know that you can position yourself into the house of your dreams and your retirement, a nest egg that will grow and you can use as an asset and a great place to live well into your retirement?
Think about it – do you want to buy that property now, when you are in your 50s or early 60s, and pay down that mortgage comfortably, or do you want to make that move in your 70s or 80s?
Just some food for thought.
Bottom Line: Talk to me if you are having these thoughts that they trigger some happy goals in your mind. I’m here to help you with the nitty gritty of making them a reality. Remember, if your goals don’t scare you a little bit, they aren’t big enough!
Let me know your thoughts, and happy Autumn to you all.