Author: Marlowe Clark

The Potential Benefits of Electronic Locks

Most everyone has had the unfortunate experience of losing their house keys and being locked out of their home at least once. Some people end up having to break into their own home, which can cause some misunderstandings. Otherwise, you’ll have to call a locksmith, or have a spare key hidden somewhere. But you can avoid this entirely with an electronic or smart lock. Not only that, smart locks can also help you keep track of who comes and goes, and it’s much easier to change a smart lock code than a manual lock if it becomes necessary.

Not all electronic locks work the same way, though, and not all of them use smart technology. The most basic electronic locks just require a code to unlock the door. Some use a form of unique identification instead, such as fingerprints, RFID, or Bluetooth recognition. Smart locks have the potential to issue multiple codes to different people, and log which codes have been used when. You also need to make sure that if you plan to connect the lock to your phone, choose a smart lock that is compatible with your model. You should also look into what types of security measures the smart lock has.

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Living With Family is a Stepping Stone to Homeownership

More and more young adults are moving back in with family members after college. The assumption is that this is an economic necessity, as those saddled with debt are unable to buy a home. However, even if this is true at the time, it turns out it could be more temporary than expected. Many are transitioning directly into homeownership right after their stay, rather than having a period of renting as most people do.

About half of those living with parents or other family members are paying rent, but it’s likely less than actual market value, though this hasn’t been confirmed. The other half are staying rent free. In both cases, their expenses are much lower than if they were attempting to live on their own. That could be because they can’t afford it otherwise, but it’s also possible they would be able to afford getting their own place, but saving money helps them pay down debt or save up for a down payment. Of course, the vast majority of people — 73% — are still renters before they are buyers, but the percentage who lived with parents, relatives, or friends before buying their first home has increased from 12% to 21% over the past three decades.

Photo by Amirr Zolfaqari on Unsplash

More: https://www.nar.realtor/blogs/economists-outlook/young-adults-are-returning-to-their-familys-homes-but-for-how-long

Reasons for Pursuing Homeownership Are Shifting Dramatically

Owning a home used to be a large part of the American Dream. Homeownership was considered a point of personal pride, signalling that you’ve achieved something that everyone in the US wants. It still demonstrates the same thing, that you are able to own a home, but nowadays the reasons are far more practical than simply pride.

In 2021, 43% of first-time homebuyers cited pride of ownership as the reason to buy. In 2022, though, this plummetted all the way down to 0%. Instead, investments took the #1 spot at 51%, though this was still important last year at 34%. Replacing that spot is reducing housing costs at 38% in 2022, a similar reason to 2021’s #3 spot, saving money, at 15%. Added to the 2022 list is social pressure at 11%.

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More: https://journal.firsttuesday.us/the-votes-are-in-primary-reason-causing-first-time-homebuyers-to-buy/81787/

Prepare For Another Competitive Spring Market

April 2021 was one of the most fiercely competitive months for real estate in history, in no small part due to the pandemic frenzy. But spring is always one of the more active seasons in the real estate market, being right after the holidays. And this year is not going to be an exception.

What sparked so many bidding wars last year is high demand and low inventory, and neither of those things has changed. Inventory is still 43% below pre-pandemic levels, and there are still plenty of Millennials, as well as some Gen Z, aging into first-time homeownership. Where there is some difference is the current state of interest rates, but it’s still going to result in the same type of market. Last year, interest rates were staying low, so buyers knew it was a good time to buy. Now, interest rates are expected to increase throughout 2022. In the long term, this will reduce demand, but as long as the increases are expected and not already here, demand will go up as buyers want to take advantage of the rates before they increase.

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More: https://fortune.com/2022/01/18/homebuyers-brutal-spring-housing-market-inventory-interest-rates/

Buyers Making Purchasing Decisions Faster than Ever

There’s a statistic that you may not have ever heard of, but it’s definitely being tracked, and that is the number of homes a buyer views before purchasing. The average has been decreasing, and sits at 8 — a record low — as of last year, compared to a peak of 12 a decade ago. It was holding steady around 10 between 2014 and 2019. As far as length of search time, it’s only ever been lower in the early 2000s.

Part of the recent dropoff is due to low inventory and the heavy competition that followed lockdowns. After all, you can’t look at many homes if there aren’t many to look at and you’re being encouraged to make quick decisions. That’s not the entire story, though. What has enabled buyers to make such quick decisions is technology. Internet-based methods of home viewing are becoming increasingly popular, such as virtual tours and highly detailed photography and videography.

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More: https://www.nar.realtor/blogs/economists-outlook/home-buyers-narrow-home-search-with-technology

Project Homekey to Expand Homeless Housing Conversions

In response to the pandemic, California launched a program to help a segment of the homeless population acquire temporary housing via hotel conversions. This initial project, called Project Roomkey, applied only to those 65 or older or who had underlying conditions, and would only be active during the pandemic. Seeing its success, California has launched a new, more expansive project, which they’ve called Project Homekey.

Project Homekey seeks to expand conversions to include several different types of properties, not just hotels. In addition, the project is designed to create both temporary and permanent homeless housing. This is made possible by the recent changes to zoning and land use laws, and currently has an $846 million acquisition budget. Unfortunately, managing such large projects requires specialized knowledge that isn’t in large supply. In addition, there has been pushback from local opposition that doesn’t want to see low-density housing converted into high-density homeless housing.

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More: https://journal.firsttuesday.us/californias-homelessness-crisis-vacant-hotels-can-house-the-unhoused/81717/

Homeowner’s Exemption Deadline is Approaching

The Homeowner’s Exemption is a method of property tax savings that has been in place since 1974. It allows any homeowner who has owned their home since January 1st of the year to apply a reduction of up to $7000 to their home’s assessed value for property tax purposes. The full $7000 reduction will only be applied if the homeowner applies for the Homeowner’s Exemption between January 1st and February 15th, otherwise the amount will be prorated. In addition, parent-to-child transfer benefits from Prop 19 also require the child to apply for a Homeowner’s Exemption within 12 months of the transfer.

Despite the fact that the majority of homeowners qualify for the Homeowner’s Exemption, almost a third of homeowners in Los Angeles County don’t apply for it. This accounts for about $30 million in unclaimed exemptions each year. If you are in LA county, in order to apply, fill out the application at www.assessor.lacounty.gov/hox. It can be printed and mailed to the LA County Assessor’s Office, or emailed to  HOX@assessor.lacounty.gov. Currently, there is no fully online application, but there are plans for one soon.

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Newsom Focusing on Urban Areas for Construction Goals

California Governor Gavin Newsom has shifted his priorities for affordable housing development. Previously, Newsom was looking at open rural areas as the setting for new projects. The logic is obvious — rural areas boast a large quantity of land to build on, so you won’t run out of space. Unfortunately, there are other problems. Rural areas are more prone to wildfires and have weak infrastructure, and building there negatively affects the ecosystem.

In light of this, Newsom now plans to focus his efforts and budget on urban projects. The downtown areas already have infrastructure in place, and the land is already in use so the ecosystem won’t be affected as much. Of course, there are also cons to the shift. Urban areas are already high density, and increased affordable housing will only increase the density. Newsom hopes that getting more people into urban areas will reduce vehicle traffic, but in order for that to happen, California would need significant improvements to its public transportation system, which is relatively lacking. In addition, California’s urban areas already have a high vacancy rate. We’re not actually lacking housing; people just can’t afford it.

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More: https://www.latimes.com/california/story/2022-01-13/newsoms-latest-housing-fix-more-californians-living-downtown

When Staging Just Isn’t Enough

Staging can be very helpful in highlighting the best aspects of your home. Decluttering and rearranging furniture can make your home look bigger or more airy. In some cases, it can even hide some minor flaws with clever placement of furniture. But there are some things mere staging can’t hide.

Buyers aren’t going to move your furniture around, but they may check under rugs. Cracked tiles are easily noticeable, and if you try to hide them, buyers will think you’re hiding an even bigger problem. Every buyer is going to look at the windows, even if its just to check out the view. Broken or cracked windows are very obvious. Same with torn screens, which are easy to replace. The most important issue to fix is any roof problems. Having a roof over your head is the reason to live in a home. Buyers will expect you to take care of it.

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Are Energy Efficiency Improvements Cost Effective?

Utilities generally cost around $2200 annually, but energy efficiency improvements can reduce this number by approximately 25%. This comes with a high up-front cost, but it definitely pays for itself over time. What’s more, even simply assessing the energy efficiency of your home can improve the sales value — homes with an energy efficiency rating sell for 2.7% more on average, even if the rating isn’t great. All this requires is ordering an energy audit, regardless of the results. If you are improving your home, consider solar panels, which can increase the sales price by about 2-4% depending on the area.

If you’re worried about the up-front cost, there are a few financing options. The FHA has an Energy Efficient Mortgage that allows you to exceed your loan limit by an amount dependent on your energy efficiency. This program requires an energy assessment, unlike the simple program version of Fannie Mae’s HomeStyle Energy Mortgage. This program allows you to borrow up to $3500 to pay for either energy improvements or an existing Property Assessed Clean Energy (PACE) loan, though PACE loans have had mixed results against more traditional forms of financing.

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More: https://journal.firsttuesday.us/the-positive-costs-of-energy-efficient-improvements/81512/

Renting May Soon Become Cheaper Than Owning

The primary obstacle to homeownership has always been the large up-front cost and necessity to get a loan. But the monthly cost of homeownership has generally been lower than rent prices, making homeownership significantly cheaper in the long term. And in 58% of counties right now, homeownership is actually more affordable than renting for the median priced home.

That’s still the case now, but things are trending in the other direction. While home prices, rent prices, and wages are all going up, rent prices are increasing the slowest of the three. There may come a time when home prices have outpaced rent prices enough that renting is a more affordable option, even if you have the up-front cost of homeownership covered. However, it’s important to note that changes in rent prices can sometimes lag behind changes in home prices. Renters usually aren’t able to capitalize on swiftly changing markets because they need to wait for their lease to expire, and in rent controlled areas, landlords can’t raise rents directly to market value for tenant-occupied homes.

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More: https://nationalmortgageprofessional.com/news/home-ownership-more-affordable-renting-attom-reports

How Do I Know When I’m Ready to Buy a Home?

For many people, buying a home — especially a first home — is a stress-inducing endeavor. It’s common to worry about whether you’re actually making the right decisions. While no one can tell you which home is right for you, it’s surprisingly simple to figure out whether homeownership is right for you. Chances are, if you can, it’s a good idea.

The most important factor is whether or not you can afford it. Most homebuyers don’t have the money to pay cash for a home, which means you’re probably going to get a loan. That requires two things: a down payment and a high enough credit score. While it’s possible to qualify for a loan with a down payment as low as 3.5%, it’s probably not a sound financial choice. Higher down payments translate to lower mortgage interest rates, and they are also more appealing to sellers. Qualifying for a loan also requires a minimum credit score, as determined by individual lenders. If your credit score is low, it may be difficult to find a lender who will give you a loan.

There is one scenario in which buying may not be the correct plan, even if you can afford it. While renting is certainly more expensive than buying in the long term, and less stable, it could still be cheaper if you don’t plan to stay in one place for long. If you get transferred frequently for your job, it may be better to stick to renting.

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DIY Maintenance Skills Lacking in Millennials

Most Millennials know how to unclog their toilet without calling a plumber, but there are still a lot of things they simply don’t know how to fix themselves. Three-fifths of them wouldn’t have any idea how to fix a leaky faucet. Roughly half don’t know how to caulk tile, fix a garbage disposal, or clean the dishwasher filter.

Part of this is because of the advent of self-cleaning appliances. When the self-cleaning fails, or their replacement model doesn’t have it, Millennials simply never learned how to deal with it. It’s also the case that the Millennial generation has taken longer to move out on their own, which means they’ve had the help of parents or roommates to cover their gaps in knowledge. In other cases, they simply don’t bother. 36% don’t feel the need to clean the showerhead, even though only 29% don’t know how.

It’s not necessarily even a problem of the proper equipment. The vast majority own some of the most common tools, though a tenth don’t know the difference between a Phillips and flat-head screwdriver, even if they own both. Still, 27% don’t own a level, 30% don’t own a ladder, and 54% don’t own a stud finder.

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Space-Saving Tips for Kitchens

Kitchens are generally a relatively small space. Unfortunately, they need to fit a lot of things — refrigerator and freezer, pantry, oven, dishwasher, sink, counter space, pots and pans. How do people find room for all these things in such a small area? Your kitchen space is probably already cramped, but you may be able to maximize the capacity even further.

Fridge magnets aren’t uncommon, but what is uncommon is that they’re used for any useful purpose. Knife blocks and spice racks can be magnetized and stuck unto your refrigerator. Just make sure the magnet is strong enough; these are not things you want falling. Speaking of racks, overhead racks utilize ceiling space rather than floor space, expanding the effective size of the room. In addition, wine racks don’t necessarily need to be used for wine. They can hold many kinds of bottles. Your cutting board may not actually need to be stored. It’s possible that it fits neatly over your sink. Another thing is drawer inserts. It may seem like they reduce your available space, and they do, by a small amount. But they increase the usability of your space by ensuring that you don’t need to dig through things you don’t need to get to what you do need.

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Should You Buy a Tankless Water Heater?

Traditional water heaters are generally not visually appealing, and are often hidden as much as possible. But a water heater is a pretty important appliance, so no one wants to go without one. There is one potential solution: a tankless water heater. This choice isn’t for everyone, though. Going tankless has pros and cons.

You aren’t going to be worried about someone seeing your tankless water heater. They’re much smaller — about 20 in by 28 in, rather than 24 in by 60 in — and feature more appealing designs. This also means they free up more space, which always impresses buyers. Tankless water heaters also are significantly more energy efficient. This is because they heat the water only when needed, rather than constantly. It also leads to them lasting about twice as long as traditional water heaters, about twenty years rather than ten.

The big drawback? Well, they don’t have a tank, which means they can’t store large quantities of water. Their effectiveness is limited to a few gallons at a time, so running the dishwasher and washing machine at the same time, or two people taking a hot shower simply won’t work. The other con to tankless water heaters is that they’re more expensive, at approximately $1000 compared to $300-400 for a traditional water heater. Given the higher energy efficiency and longer lifespan, you’ll likely save money in the long run, but the upfront cost difference is significant.

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Market Stability Anticipated In 2024

With government support having ended, this may prompt people to think the economy has stabilized and recovery is imminent. But this is just the precursor to a stable market. The market needs time to adapt under normal conditions, and probably won’t become stable again until 2024. The main factor in overall recovery is the job market, which has yet to fully recover, and a stable real estate market requires construction to catch up to demand.

Some policies remain from government actions during the recession, though. Three laws — SB 10, AB 345, and AB 571 — will help out in construction efforts. SB 10 allows more areas to be zoned for up to 10 units, AB 345 allows ADUs to be sold separately from the primary residence, and AB 571 prohibits impact fees on affordable housing. Two more laws, SB 263 and AB 948, reformed bias training for real estate professionals. This legislation should have lasting impact in making the recovery more comfortable.

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More: https://journal.firsttuesday.us/2021-in-review-and-a-forecast-for-2022-and-beyond/81281/

Personal Savings Rate Returns to Pre-Pandemic Levels

The percent of income put into savings on average fluctuates rapidly, but for the most part tends not to be subject to sudden large shifts. There have been a few notable spikes or dips across the decades, but nothing like the pandemic spike. April 2020 saw a record-breaking 34% savings rate, attributed to lower spending during lockdowns in tandem with stimulus payments. There was a second less major spike after the second round of stimulus payments.

The 34% rate was approximately double the record in prior years, which was back in the 1970s. That prior record was still only a 2% difference from the prior year. By contrast, in October of 2019, the personal savings rate was 7.2%, a 26.8% difference. The most recently calculated rate, in October 2021, was nearly identical to the pre-pandemic rate, at 7.3%. The savings rate has still been trending upward in the past couple of decades, though, after a relatively steady decline since the 70s, bottoming out in 2005.

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More: https://journal.firsttuesday.us/the-20-solution-personal-savings-rates-and-homeownership-2/

Renters Optimistic About Homeownership in 2022

Increased demand following the lockdowns meant that many people were eager to buy in 2021, especially first-time homebuyers, 85% of whom were renting at the time. Unfortunately, many of them weren’t able to because of heavy competition, with over 25% making an unsuccessful attempt. That hasn’t deterred most of them, though, with 72% of prospective first-time homebuyers expecting 2022 to be their year.

However, it’s important to note that less than 15% of those now looking to buy in 2022 were already looking in the beginning of 2021. That means it’s unclear whether they’re only recently planning a move to homeownership, or they deliberately avoided the highly competitive phase. It’s possible that they’ve only recently acquired the means to purchase, but it’s also possible they’ve had the money lined up and held off for a better time. In any case, optimism is strong among the current group of prospective first-time homebuyers.

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More: https://www.realtor.com/research/first-time-home-buyers-2021/

Homeowners Underestimating Monthly Ownership Costs

Two-thirds of homeowners feel they spend a large portion of their annual income just on their house. For 54% of homeowners, it’s their single largest financial burden. Most homeowners are well aware that homeownership is costly, yet still worth the price. Nevertheless, just over a third are struggling more than they expected with the annual cost of things such as mortgages, property taxes, and maintenance.

Housing costs are also increasing over time, which is contributing to the unexpected struggles. Single-income households are certainly worse off, but even dual-income households are having financial woes. But the most significant contributor to unexpected costs is repairs and maintenance. It seems most homeowners simply don’t consider how much it could cost to maintain their home. However, even costs that are laid out ahead of time are causing more strain than people realize. Almost half of homeowners didn’t think HOA costs would be such a big deal.

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More: https://www.consumeraffairs.com/finance/what-is-house-poor.html

Fed Intends to Speed Up Interest Rate Growth

Interest rates are by no means high right now, but they’ve been steadily rising and can no longer be considered low. Prices have also been high, but they’re predicted to drop dramatically, for a couple of reasons. First, inventory is opening up as foreclosure moratoriums and forbearance programs are ending. The other reason is that the Fed has been reducing their mortgage-backed bond (MBB) purchases. Tapering back MBB purchases will both lower prices and increase interest rates.

The Fed had previously announced plans to keep the Federal Funds Rate at its current value of zero through 2023. However, they’ve now decided that 2022 the year to begin returning to normalcy. With scaled back MBB purchases, the zero benchmark rate is the only remaining factor in economic stability that isn’t transitory. Increasing the benchmark rate will further increase interest rates, though, so 2022 is going to be a year of higher interest rates, but lower home prices.

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More: https://journal.firsttuesday.us/fed-announces-a-quicker-increase-to-interest-rates/81216/