As the first month of the new year closes, we are starting to see the 2018 market take shape, and getting a clear look back at the 2017 year. Last year was a strong one for sellers – interest rates remained low, but are now rising, and refinancing plummeted. So, what’s next for 2018?
Take a look at the summaries of Summit Funding’s Top 5 Housing Predictions for 2018, with commentary from yours truly:
- A rise in cash-out refinance
Low-interest rates have fueled buying, kept inventory low, and likely even helped speed up housing recovery in Miami and Houston after their 2017 hurricanes. Interest rates will continue to rise in 2018, but not high enough to deter interested homebuyers. We should, however, keep an eye on a potential rise in cash-out refinance, as Americans’ home equity wealth is at an all-time high. We are also seeing the rise of all-cash purchases, a high rate of home purchase co-borrowers, and increased buying assistance from family. As home prices become even higher — and overvalued, according to CoreLogic — expect to see more parents cash out their home equity to help their adult children begin building their own housing wealth.
- Return to services
With higher home prices come great risks and more compromises for homebuyers, who will become ever more reliant on experienced and informed housing professionals to make buying and mortgage decisions. Mortgage rates will continue to become a commodity; homebuyers have access to rates on their devices and know mortgage brokers are quoting from the same rate sheets. As homebuyers evaluate their partners, they should look for realtors and mortgage professionals who offer value that protects the clients’ bottom line. Housing professionals who deliver this will be the ones who can truly stand out and have longevity in this crowded market. A great lender and agent can make all the difference in the world. Be careful you are comparing apples to apples when getting rate quotes, as it can’t be locked in until you get an accepted offer so lenders can you give varying rates as they know they will be different the day you get an offer accepted.
- Advancement in housing Fintech
Expect technology to continue to make breakthroughs in housing. The proliferation of information has made everyday consumers more demanding of progress and fairness, which is a good thing. They demand more competition for their business and stronger customer empowerment. New housing financial technology will not just be about faster search results or more photos, it will be expected to serve up more home buyer protection. In 2018, homebuyers will increasingly question why they could sell a home at a loss when realtors still collect their brokerage fees. When they see a pre-closing statement listing fee paid to protect their lenders, they would demand to see the calculation of risks and returns designed to protect their purchase. Getting ahead of these questions and demands will become table stakes in the advancement of housing financial technology. This may be a ways off. There is a lot of buyer protection now as a result of the downturn.
- Millennials may continue to prolong homeownership
Americans — including millennials — want to own homes; we knew this already. However, millennials may want other things in life more than homeownership, or they don’t want to be “house poor.” Affordability is definitely the top barrier to home buying, no doubt. However, there are increasing indications that millennials are not pulling out all the stops to buy a home even if they could afford one. In ValueInsured’s latest Modern Homebuyer Survey, 36% of millennials who want to buy a home say they are delaying buying in order to keep their options open. Nearly half (47%) of millennials also say they worry their job future is uncertain and want to figure that out first. Instead of paying high home prices, millennials have proven unafraid to give up buying and go back to renting. A generation known for defying conventions and expectations may change the housing market forever in 2018 if they say “enough” to high home prices and decide to do their own thing.
- The next Seattle or San Jose
In the future, scorching-hot real estate markets will give rise to more calm and cool emerging markets. Places like Provo, UT, Athens, OH and Aberdeen, SD may be hot spots in 2018. More Americans will telecommute to their jobs or shop from their devices instead of at malls. This is simply a fact of life. So, as real estate prices and commercial rents increase, more Asian fusion restaurants, CrossFit studios and organic micro-breweries will open in previously ‘B’ or ‘C’ designated counties. Once upon a time, Portland, OR and Chattanooga, TN were seen as hidden real estate gems, and now they are cities millennials are leaving behind in search of more affordable homes. Millennials’ tendencies to be nomadic and to reject established institutions (or markets), and their sophistication in forming their own community, could prove to be very interesting in challenging traditional housing cycles and expectations.
Stay tuned for December to see if these things panned out or were just a pie in the sky.
For the record, it was me who was lucky in this situation! I had reserved a seat to Walnut Creek Yacht Club’s January lobsterfest but had to cancel when my son couldn’t get out of bed for lunch. Then, my friend Laura invited me with her reservation when a friend canceled.
This has been a yearly event that I have enjoyed many times. They used to charge the price of the year (i.e. $20.18), but this year they had to raise it to $25. If you’ve been to the Yacht Club before, you know that its cuisine is well-respected and the atmosphere is slightly upscale but inviting. “Lobster Month” is available for lunch or dinner, it includes 1.25 pounds of Maine Lobster either grilled or boiled, drawn butter, lemon, Regatta fries, and their WC Yacht Club coleslaw.
You do have to be a Loyalty Member (free!) to take part in the special deal, or even hear about them in their scuttlebutt newsletter and they can only accept in-restaurant reservations of 10 or fewer people, but it’s well worth it. One of the best-kept secrets in downtown Walnut Creek, especially since you have an entire MONTH to take advantage!
For this year, the lobster boil is almost over (unless you can snag a ticket last-minute for tomorrow), otherwise, you will have to wait until January 2019!
John Solaegui, a realtor in San Francisco (ironically, I went to high school with his sister!), shared a blog about five Bay Area hikes that end with a reward – in this case, a drink! I know we typically talk about actual road trips here, but hiking is just as much a way of life in the Bay Area as driving, so we can make an exception this time around, plus you most likely will have to drive to the destination!
See below for a summary of the 5 in the initial blog, as well as two I’ve added myself!
Hike #1: Grape Stomp Trail (2.4 miles) in Sonoma
The best part of this hike is that you start AND end at Bartholomew Park Winery. So, if you lose motivation at the beginning, you can just sit down with a bottle and enjoy the sunshine anyway. But, for the purpose of respecting the hike, let’s talk about Grape Stomp Trail – it is a 2.4-mile loop that starts and finishes at the winery, just to the left of the tasting room. You can see views of San Pablo Bay and cross Arroyo Seco Creek twice. If you stay left on the You-Walk Miwok Trail, you can “summit” the trail at 640 ft.
Hike #2: Zinfandel Trail (2.9 miles) in Cupertino
A beautiful hike that starts from the southern end of Picchetti Winery’s parking lot and loops back a few miles later. The winery itself is a sight to behold – more than 100 years old, shaded by oak trees, and home to a brood of peacocks! On the hike, you’ll walk past wild roses, small ponds, and a creek. At the end, you’ll end your day with a nice glass of Picchetti’s famous red wine.
Hike #3: Dipsea Trail or Sun Trail (1.5-4 miles) in Mill Valley
You may have heard of this one. A hike through part of the Dipsea Trail in Mill Valley will take you to the Nature Friends Tourist Club. The German lodge, buried within the trees of Mt. Tam and erected in 1917, is a local favorite. But you either have to be a member, or plan your hike on a day that they open to non-members. You can hike straight from Panoramic Highway down the Sun Trail, or start in Mill Valley and climb all the steps for the first part of the Dipsea Trail to get there and enjoy some German lagers, food and music!
Hike #4: Muir Beach to Tennessee Valley Trail to Green Gulch Trail (9.7 miles) in Mill Valley
Wow, that’s a mouthful. But so is the meal and drink at the Pelican Inn when you arrive. If you’ve hiked the entirety of the Dipsea Trail, you’ve probably seen the Pelican Inn at some point. This is a little bit longer, more difficult route that will start you at Muir Beach, take you through the Tennessee Valley Trail (can’t-miss views of the ocean!) in Mill Valley, and eventually out onto the Green Gulch Trail. That will bring you back close to the Muir Beach parking lot, where you’ll be ready to gorge and splurge at the Inn.
Hike #5: Coastal Trail/Lands End Trail (3.3-6.6 miles) in San Francisco
Ah, a Bay Area classic! For being a big city, San Francisco has an enormous amount of beautiful, natural hiking spots within it. One of the best, and most popular, is the Lands End trail that gives you unobstructed views of the Golden Gate Bridge. If you take this trail down the coast, past the Sutro Baths, you’ll end up at one of the most iconic restaurants (with a surprisingly affordable bar), Cliff House. You can’t beat this one!
Now, for a few of my more local favorites…
Hike #6: Danville Fire Trail in Las Trampas
Las Trampas Regional Wilderness towers over Danville on the West side of 680, and most people don’t seem to bother with it. There are so many hiking spots in the Bay Area (and the East Bay specifically), that it might not seem worth the trouble. But the Danville Fire Trail loops back onto itself, and spits you out just a few blocks from the cute downtown area of Danville, where you can do anything from grab a beer at any restaurant or taste wine at Auburn James.
Hike #7: Lafayette Reservoir Loop
No list like this would be complete without a local favorite like the Lafayette Reservoir. You can take your fur baby up for a short loop around the reservoir, or take a friend on the long loop for spectacular views of the East Bay. Once you’ve looped back to the start, tack on another half hour walk, or jump back in your car, to get to downtown Lafayette. Once there, you have no shortage of drink options, but I’d highly recommend Rustic Tavern, Chow, and The Cooperage.
Every year, just like in the fashion industry, there are new styles and trends to consider in real estate design. As told by foodandwine.com, there are going to be some flashy changes to kitchens in 2018. While I personally wouldn’t do some of these things to my kitchen, I can’t deny most look good! Check out a summary of their story below:
Apparently, white, glossy kitchen units were paired with gentle tones of pale pink and blue, with gold accents and a little glitter in late 2017. I don’t get this one, and not sure why it is popular!
Trend #2: Two-tone cabinets
This one I can get behind. While cabinetry is typically a light or dark shade, it seems more and more people are opting for colorful options in their kitchens. And doing two different, complementary tones is a style gaining in popularity. I like the look of a dark blue against a light blue or a bright red against a standard neutral.
Trend #3: Morocco themes?
Consumers are playing with colorful, mosaic backsplashes, pendant lanterns, and other Moroccan-style decors to warm up their kitchens. I think if done properly and in moderation, this trend can look fantastic, but it might only be for people who really like that style.
Trend #4: Statement patterns
Some people are starting to add cabinetry, doors or islands with intricate designs and patterns on them. I don’t personally like the look – it feels like a stretch – but you may be seeing more of this in 2018. For example, you may see zig-zagged cabinet doors or a herringbone pattern on the wall of islands.
Trend #5: Matching living room furniture
This trend is gaining momentum because having an open concept is now so popular. If you have a kitchen that opens up into a family room or dining room, you may see homeowners trying to mesh the two looks in the connected rooms. For example, a TV stand might have colors and patterns that match the kitchen, while also being a storage area for extra dishes.
Trend #6: Eco is in
More people are starting to consider environmentally-friendly options when creating their kitchens. More organic materials are being used, including plywood cabinetry, cork flooring, concrete tiles, walnut worktops and bamboo lighting.
Trend #7: Gold & copper
Even with all the eco-friendliness and experimentation, kitchens can still look glamorous. That may be the case, considering foodandwine.com expects there to be more shimmery metallics this year, especially with gold and copper. From handles to tiles to lighting to small appliances, expect more flash this year!
Trend #8: Water & wine
Hot water taps are quickly overtaking the use of kettles as they become more affordable and more practical to install. Similarly, wine coolers are cheaper and cheaper, as well as smaller, so finding a good, usable model is becoming easier. You’ll see more wine coolers in kitchens and fewer kettles in 2018. (Side note: still love my hot pot!)
Once you’re pre-approved, the last thing you want to do is knock yourself out of qualifying range. My friend Jay Vorhees at JVM Lending is a great source on this issue, as he’s seen hundreds of borrowers in this situation. Now, he sends them a list of “actions to avoid” with every pre-approval letter. Heeding his advice will help you at least prevent delays and extra paperwork. Take a look!
1. Do not make large deposits that can’t be explained. When you are trying to qualify, any large deposit – think $500 for a new mattress, or all-cash payments – must be explained. Otherwise, an entire account can become invalid and unusable for qualifying. Always keep a paper trail to make large deposit explanations easier!
2. Do not take on new debt. If you increase your credit card balances, finance a vehicle, or take on debt in another way, your ratios will be impacted and it will reduce your maximum purchase price.
3. Do not take vacation days if you’re paid hourly. A single day off work can push you out of qualifying range if your debt ratios are high and approaching your limit.
4. Do not spend liquid assets. Pre-approval software relies on specific liquid asset levels. So, pre-approval amounts can change if liquid assets are significantly reduced.
5. Do not miss payments on any debts reporting on a credit report. This one is pretty obvious, and you should avoid missing payments anyway, but missing monthly payments that reduce your credit score may also reduce your qualification amount!
6. Do not co-sign for someone else’s debts. That’s a dangerous maneuver anyway, but even if you’re just a co-signer, the debt will show up on your credit report. That makes you responsible for the debt and the payments.
7. Do not file taxes with a tax liability owing, or with less income than in previous years. This mostly applies to self-employed borrowers (especially during tax season). The most recently filed tax returns will be what the qualifying income is based on, and all tax liabilities must be proven paid. JVM recommends that borrowers file an extension when possible if they are making offers during tax season.
Most of the art we feature here are one-off pieces. This piece, however, is multiple independent parts that come together to form one. And it’s a dazzling recreation of one of the Bay Area’s most treasured jewels: Mt. Diablo. You can check it out by the Century Theaters downtown. Give a quick stroll before or after your next movie to see it!
You can see the cascading art from the top piece (above), to the first part of the next (below). It’s granite in stone, created by Doron Robinson in 2003, and represents the geological transformation of Mt. Diablo. What a cool piece! Follow along as Mt. Diablo is created from top to bottom (or, in geological terms, from bottom to top!).
It’s no secret that rents are extremely high in California. Rents are high in the Bay Area, especially, and Walnut Creek is no exception. For how crazy home rents can be, commercial rent prices are even worse! That’s why we’re seeing so much turnover in bars and restaurants in downtown Walnut Creek.
It seems like we see 10 new restaurants per month popping up downtown which keeps my blog interesting. And when those come in, something must go. Some are so short-lived, we hardly even have time to try them before they disappear!
One especially pricey area is the corner of Locust and Cypress. Sauced has taken over for Pyramid Alehouse, Sunol Ridge came and went incredibly quickly, Lark Creek Cafe is closed, and new places like Urban Alley and Gotts are popping up every time we turn around. Not to mention, the place where Chili’s was a long time ago, which most recently was Caffe Stella, is clearly too expensive for anyone to come in and stay. Not to mention Crogan’s shut down, too, which may be a blessing.
That entire intersection is constantly changing, and it’s happening all over the place in downtown Walnut Creek. I know people who have moved out of Walnut Creek, and every time they come back (even if it’s only been a few months), they say certain parts of downtown are unrecognizable. Even Walnut Creek mainstay Vic Stewart’s is going to be replaced by retail!
This has both good and bad effects for Walnut Creek residents. As more fancy, expensive stores go in downtown, they will raise their prices to afford their own rents. More out-of-town shoppers will clog up downtown, too. But, those of us who do live here will benefit from having more amazing new restaurants and bars to try!
You’ve probably seen endless lists about how to sell your home. Everything from choosing the realtor, to the staging, to the deliberation is under the microscope. But how often do you get told how NOT to do things? RIS Media has put together a good four-step process for how to not get in your own way when selling a home.
First, don’t over-improve the house, the article says. This is good advice. While it’s important to clean up any holes and cracks in the wall, and make sure the lighting is fresh, etc., doing too much can be damaging to your case. But if you go out and make your dream changes to the house right before you sell it, you better hope your potential buyers see it as an awesome improvement, too, and not a large project to fix.
Next, don’t over-decorate. Simple, neutral colors and decorations will be just fine. Similarly to the first point, if you decorate your home with a bunch of lace, lavender and lemon scent because they are things you like, you’ve done too much. What if a buyer walks in and is immediately overwhelmed by it all? Keep it simple. Remember, the buyers are the ones who get to decorate when they move in. This is why I pay for a staging consult; because it tells you what to remove, and then I highly recommend doing some staging as it makes a huge difference in how your home is photographed. The online view of those photos will be the first impression a prospective buyer gets, and will help them decide if they want to see your home in person.
Third, and probably most important: do not BE THERE when the buyers arrive. If your realtor is going to show the house, try to get everyone (pets included) out for a couple hours. Go to a movie. Have lunch at the park. Find a way to get out of the potential buyers’ ways, so they aren’t attacked by a bunch of people upon walking in. Remember, they want to see themselves in the house. Not you!
Lastly, don’t take things too personally. You’ve put a lot of blood, sweat, tears, money and memories into your home. When a buyer lowballs you or requests repairs, don’t be upset. They are trying to afford their newest home, too. And they might tell you the reason they have to offer low is because of something they think needs updating that you disagree with. Bite your tongue, and keep negotiating. Remember, it’s all a business!