Nearly a quarter century ago, back when I was a newish homeowner, and my mortgage payment seemed daunting to me, an older coworker, Mike, relayed a story that has stuck with me for life. He talked about when he first came back from Vietnam in 1973, and married his high school sweetheart. The first thing they did was buy a house with his VA loan in the San Fernando Valley. His mortgage payment was $171 a month, back then that was a significant sum. The first year, Mike struggled adjusting to that bill, but over time it got easier. “I laugh when I write that check now,” he told me. Despite the fact that he had a 30 year mortgage, had never refinanced, and was still making a payment, his living expense was a humorously small fraction of his income a few years later. Mike now had more disposable income on hand to use as he pleased, to invest, travel, and spoil his kids.
One of the greatest benefits of homeownership is derived from fixing your monthly housing costs. A fixed mortgage payment never changes for the life of the loan, and once paid off, you own it. Your costs on the property are maintenance and taxes. Even better, this advantage can be passed down to heirs. This is in stark contrast to renting, where market demand and inflation are constantly pushing an increase in rents, and in the process renters often find themselves paying market value in perpetuity.
Homeowners like Mike don’t necessarily start out in a different position from renters. I purchased my first property with the assistance of an FHA loan and paid 5% down. These loans were created for buyers who may not necessarily have a large down payment, but are capable of handling a monthly mortgage payment as well as mortgage insurance in the event of a default. These loans can be done with as little as 3.5% down. This can be a huge help for younger buyers or people who don’t have a windfall or generational wealth to rely on for a traditional down payment.
Becoming a homeowner confers a number of additional advantages. There are tax deductions for mortgage interest and property taxes. These perks are built into our tax code as a way of encouraging home ownership. Being able to profit from them while covering a critical need, shelter, is a massive boon. There is also the forced savings aspect of the mortgage itself, where each payment confers a portion of the value, or equity, of the property to the owner. There is also the potential for the appreciation of value on the property over time, all of which goes to the homeowner, if the property increases in value over time, as my first place did, from $184,000 to $290,000 in five years, the owner realizes that entire value despite the small initial down payment, and the existing remaining mortgage. This leveraged gain can be massive over long periods of time, and is one that a renter does not get (however their landlord does).
Debates about the value of homeownership as a wealth building tool often spring up from time to time, so here is something important to consider: in 2015, the US Census Bureau discovered that the two largest determinants of household wealth are homeownership and retirement accounts. This fact is not particularly surprising, owning things is an indicator of wealth. What may surprise some is how stark the wealth divide is. Homeowners have a median net worth of 80 times that of the median renter, even after removing the top one percent of net worth households from the study. That gap is massive, and so it is critical not to be stuck on the wrong side of it. But it’s important to understand why it is true.
Helping you to plan for the future, and understanding how owning your home is a critical element for future financial success, is one of the most enjoyable aspects of my work. If you have questions about how to make homeownership work for you, contact me today.
We made it to 2021. For many of us, the past year presented us with a series of unexpected challenges. Some of us lost work, or had to figure out how to work from home. Those of us with children, dealt with the school from home, sports and other activities cancelled, our children isolated from their friends. Others dealt with health concerns, or concern for others who were ill, and being unable to help them the way we were accustomed. Many of these issues are still presenting challenges going into the new year.
Many of these changes in the dynamics of our daily life are impacting how we feel about our homes. Home office space has become a premium commodity as both adults and school age children vie for quiet spaces to get their remote work done. Family members and friends impacted by the fallout of economic challenges are looking for places to stay till the economy improves again. Some of us are seeing our cozy homes as confining and restrictive when faced with the prospect of rarely leaving them. All of these motivations and more have led to the most active real estate market in the last five years.
As a result of so many people reevaluating their living accommodations, prices are climbing ever higher in our region, and greater Southern California as a whole is seeing sales volumes greater than any time in the last five years. Prices are reaching ever higher, but are balanced by the lowest mortgage rates ever. This is creating historic opportunities for buyers and sellers.
If you are considering making changes in your living situation and want to know how I can help you through that process, please contact me today.
This year has brought a significant number of shocks to us all socially and economically. Uncertainty reigns as we look to create familiarity in a changed landscape. As we grapple with social distancing, changed norms for social interaction, and changes in how we actually get work and play done, many of us are finding that the spaces we live in no longer fit the lifestyle we are evolving to.
After a quiet spring selling season, the summer of 2020 is shaping up to be a busy market. Mortgage rates below 3% are now being advertised regularly. Buyers are able to get more for their money than in any time in history. We are also experiencing a smaller refinancing boom among people homeowners who are reducing their monthly overhead.
Low rates and changing household needs combined with tight inventory are signaling a strong summer real estate market. And one where everyone is winning. Prices have remained strong buoyed by low inventory and low interest rates, a boon for sellers. Buyers are enjoying the greater affordability presented by low interest rates.
The real estate industry has been active in staying ahead of the curve in safety and marketing during the pandemic. Mandating safety precautions including masks early on, and limiting contact, while expanding the use of virtual and video tour technology. Open houses may not be back for a while, but virtual tours allow you to see homes from your couch.
If you have decided your current property no longer meets all of your needs, and would like to make a change, please contact me so we can talk about how to get you in a home that works best for you.
Owning property is a great way to fix your housing expenses, maintain personal geographic stability, and build wealth through appreciation. The last decade has given these benefits to homeowners across the nation, courtesy of one of the longest continuous periods of economic growth in history. But it is important for us all to remember that there is always a potential for an economic slow down. Experts have pointed at consumer debt, student loans, federal debt loads, trade wars, and most recently the coronavirus as harbingers of the next recession. Regardless of whether they prove to be right or not, it would be wise to take stock of your real estate holdings and consider if you are in the position you want to be to weather the next economic storm. Here are a few of the questions that are good to ask yourself.
Is your current property one that is meeting all your needs both now, and for the next 3 to 5 years? You want to be in a property that meets your needs, as well as any future needs you may be considering, such as a new baby, or caring for an aging parent at home. Perhaps you are considering retiring, and are ready to downsize pocketing some of that equity you have built up over the past decade. Addressing issues like these now is much easier while you are in a stronger financial position, and your property is at its most valuable.
Is your mortgage a fixed interest loan at the current market rate or lower? Staying in place during bad economic times can be easier if you make sure you have the lowest possible payment. A fixed rate means you know your payment won’t change regardless of any local or global financial instability. After a few years of incredibly low interest rates, I still occasionally encounter clients who have mortgages at 5% or higher rates. Locking in a lower rate is a great way to reduce your monthly expense and have more cash on hand in the event you need it.
Are your investment properties in locations less prone to volatility? Make sure that any rental property you own is located in a location with historically low vacancy rates, and a diverse local economy. Having a long term tenant in an area like this isn’t necessarily as exciting as a vacation rental in a popular vacation spot, but during times of economic upheaval, it will be more likely to continue producing income with less effort and volatility, and will hold its value better.
These are just a few examples of what to consider as a property owner, pondering the tea leaves of economic uncertainty. I encourage you to ask yourself these questions and more. If you want to go over your personal real estate position with a professional and evaluate your options, please contact me.
Looking back to 2019, the year in real estate proved to be a near replica of 2018. Virtually the same number of transactions, with 2223 escrows closed, but they sold at the blistering pace of 53 days on market average, ten days lower than 2018. The median price rose again, scampering up 6% to $785,000. This push was largely due to an over 20% year over year sales increase at the $750,000 to $1,500,000 price point.
We start 2020 with less than a month’s inventory at the below $750,000 price point, ensuring heavy competition among first time buyers. Mortgage rates are tumbling in the first quarter as a result of alarming news headlines both over political challenges and health pandemic scares. After three rate cuts in 2019, the Fed may be reluctant to cut further, but their willingness to do so if necessity dictates, should bode well for buyers, as well as anyone looking to refinance or take out money for home improvements. The SALT deduction cap has not served as a significant deterrent to home ownership in our market, as the statewide housing shortage, is still felt acutely in our community.
Changes at the state level in how accessory dwelling units will be approved are still being sorted out both in Sacramento and at the local level. Properties with lot sizes and configurations that work well for ADUs will likely become popular sellers over the next few years, both for families with multi-generational members, as well as investors looking to maximize their investment return potential.
The Conejo Valley itself continues to be a highly desirable community, and with a negligible number of new construction options available, our resale market is expected to continue to see increasing prices, growing at roughly the same rate as last year. The inventory crunch at the lower end of the market shows no sign of easing, and the pace of sales will remain brisk at lower price levels.
For details on how to help you in your home ownership goals in 2020, whether buying or selling, contact us today!
Tradition dictates that spring is the time of year to bring your home to the market to get it sold. With everyone occupied by holiday celebrations, Black Friday isn’t a day that is associated with home showings. However, there are a number of reasons why listing your home for the holidays can actually work in your favor.
With traditionalists listing in the spring, this leaves the winter season lighter in inventory than most times of the year. With less competition on the market, you can be sure qualified buyers aren’t losing your property in the shuffle. A correctly priced and marketed property is guaranteed to attract qualified buyers.
Speaking of qualified buyers, during this time of year, many buyers are out shopping because of transfers or job changes that coincide with the changing calendar year. If someone is using valuable holiday shopping time to purchase a home, you know they are serious. So, even with fewer buyers active, during the holidays, they're highly motivated.
Staging your home for sale during the holiday season is actually simplified. Traditional trees, holiday lights, and lots of red and white accents are easy answers to the question of how to spruce up the home. Peppermint and cinnamon scents through the house make every buyer feel right at home. And the best part is, oftentimes, even your neighbors get in on the action, which can improve the appearance of the entire street.
The holidays are not often thought of as a great time to sell. But with the right approach, a holiday listing will face less competition and encounter more serious buyers, resulting in a quicker sale. If you have additional questions about the current real estate market and how it impacts your property, your neighborhood, or even in general, please feel free to contact me at NelsonBussRE@gmail.com or call (805) 368-3419.
With great excitement we wish to tell you about our recent and bold step as The Buss Lampert Group. We were invited to join Aviara Real Estate as part of the ownership group this fall, and we have agreed to do so. By taking an ownership stake in the company that we work for, we are increasing our ability to make sure our clients get the best possible professional service.
Now that we have joined Aviara, we look forward to showing you the advantages we bring to the table for all of your real estate needs. Whether you are looking to buy, sell, or both, our move to an independent brokerage as shareholding partners, allows us the flexibility to conduct our transactions with the supporting entities that we know give us exceptional customer service and efficiency. We can tailor our processes to our clients and have the flexibility to do what works the best for your specific transaction.
Our goal is being the team you can count on for your real estate needs, and to ensure our clients are making the most savvy financial decisions possible. Our mission is to provide an unparalleled experience for our clients. As an ownership group, we now have the ability to take your experience to the next level. We look forward to helping you achieve your real estate goals now and in the future.
I met some amazing people today while out in Shadow Oaks, and I wanted to share their story with you.
I knocked a door that was opened by a small, kindly man, who listened to my sales pitch, and then told me, "I have to give you a cake. I bake friendship cakes for all my friends." He invited me in, and while wrapping up a cake for me to take, he began to tell me a story of his youth, culminating in a flight on a B-25 over the Arizona desert when he was a twelve year old boy. He then told me about life as a foster parent to over 127 children who had spent time in his and his wife's care over their 64 years together. They showed me newspaper clippings of their story as once captured in a newspaper years ago. I had to know what would prompt such dedication to help so many young lives, so I asked why.
The wife told me who she was born in Paris, France, and when she was six, the world was thrown into war. As the Germans began to bomb Paris, children were evacuated by trains in the dark, scattering them out of the countryside. They were loaded into trucks and distributed into villages in groups of 15. She spent the next two years living in a house located next to a Gestapo headquarters. In the basement the family hid downed Allied pilots to smuggle back to Allied positions, and she was taught never to speak, for fear of attracting the attention of their frightful neighbors.
When the war ended, the children were returned to Paris. Only 3 of those fifteen children in her village had parents to return to, and she returned to find only her mother. Her mother soon after married an American serviceman and they moved to California where she grew up dreaming of becoming a nun. She fell in love with a boy instead as sometimes happens to aspiring clergy, but she always knew that her destiny was to help children who had no one else. Now in their 80's, their child rearing days are long behind them, but she still knits gifts for orphans and great-grandchildren that are part of their legacy.
When it was time for me to leave, she gave me two teddy bears for my daughters. They were wrapped in hand knit blankets, and tucked into hand knit drawstring bags. She mentioned how a great-grandchild who visited recently used the bag as a hat.
When I got home, I gave the bags to my daughters, and found that wearing them as a hat is quite the latest in toddler fashion. As my accompanying picture illustrates.
Running into two people who lived through some of the worst the world can dish out, and living with such incredible generosity and kindness was truly a gift from the universe for me today. And so I wanted to share it with you.
(Originally posted in 2017 on Nelson Buss, Realtor on Facebook.)
After dropping for seven of the last nine weeks, mortgage rates have hit their lowest point since November of 2016. International uncertainties are proving to be a benefit for consumers at home. But the real question is, how do you take advantage of this?
If you are looking to relocate, this presents itself as an ideal time to list your home, lower rates give buyers greater purchasing power, which expands the number of people qualified to purchase your home than at any other time in the last two and a half years. This can translate to a quicker sale and a smoother escrow.
That greater buying power is also beneficial to you if you are in the market for a home, as it increases the number of prospective properties you can afford. It also translates to the lowest possible payment after you close the deal. For those of you staying put, this is an ideal time to refinance, as it may translate to a reduction in your monthly payment if you purchased recently. If you are looking to take cash out for improvements, this is an opportune moment to look into whether that makes financial sense to do.
If you have more questions on how interest rates are impacting you, or if you have additional questions about the current real estate market and how it impacts your property, your neighborhood, or even in general, please feel free to contact me at NelsonBussRE@gmail.com or call (805) 368-3419.
For active homebuyers, new construction can be a draw for a multitude of reasons, most notably because these homes are low-maintenance and technologically modern. Their desirability is on the rise: a recent Home Shopper & Buyer Insights Study found that 59 percent of active home shoppers strongly consider a brand-new home offered by a builder - a 20 percent increase from just three years ago. When you walk into a model home, you’re greeted by a number of professionals that are highly capable and experienced in closing transactions; these salespeople work for the builder. If you are looking at new construction, it is imperative to bring a Realtor you trust when you visit any development. There are number of reasons you should have someone on your side who is capable and experienced to represent you.
You want to make sure that you are getting the full picture of the development, and a clear perspective on what makes various plans and locations within a development more, or less, likely to appeal to buyers if you choose to sell in the future. A home is an investment, and knowing what makes that investment more or less attractive to future buyers can be tough to know, especially if you are staring at a parcel map in an office in a development in its early stages. This is where a professional can help you to understand what the differences can be in houses with similar floor plans and amenities.
Once you have decided on a property, there are still a number of variables that go into negotiating the transaction. The price of the property is typically not negotiable, however, the builder will often offer incentive packages on design upgrades, such as flooring, lighting, tile work, or appliances. Often the builder is working with a preferred lender who streamlines their escrows and gives priority to their deals. In exchange for using the in-house lender, the builder will offer other incentives and discounts on the loan. Discounts and incentives are often packaged into A or B type options; it is important to have a professional explain them to you, and help you decide which options make the most sense for your specific needs. In other cases, your Realtor may be able to connect you to a lender that offers superior programs to the ones offered by the builder’s mortgage company.
The most important reason for bringing in a Realtor to represent you in the transaction is that the sales people working for the builder, work for that builder. They have a fiduciary responsibility to represent the builder to the best of their ability in the transaction. You want a representative on your side doing the same for you. Builders understand that having agents on both sides of a transaction is important, and build a commission into the cost of each home to pay for this. They will pay the agent you choose to represent you. If you forego an agent, they don’t credit that money to you in the transaction, it merely goes into their pocket. The builder will pay for you to get professional advice, but they won’t tell you to do so openly.
All of these elements make it clear that having a Realtor represent you in every real estate transaction, including new construction, is a very good idea. If you or someone you know needs help with their transaction please contact me, and I will be happy to assist.