15 Home-Buying Myths, Busted

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I stumbled upon this Zillow article a little while back and thought it would make for an interesting rundown of things I sometimes see clients struggling with. Some of these things are simply not true. Others are exaggerated. Either way, buyers and sellers need to unlearn certain things about the real estate process before engaging in it. Read on for more.

MYTH: You need a 20% down payment. This hasn’t been required for decades! In fact, you can put as little as 3% down, depending on the loan or the location of the home.

Credit: Zillow.com

MYTH: Your pre-approval rate is the rate you’ll get when you close. Interest rates adjust every day. So, what you see at pre-approval is based on current market conditions and other factors, and it can’t be “locked in” until you sign a purchase contract with the seller.

MYTH: You should wait to buy a home until prices are lower. Buying a home after prices go up can be risky, but so can waiting. In popular neighborhoods (like many in the Bay Area), it’s often better to go for it and not wait.

MYTH: Buying a home is always cheaper and a better investment than renting. Renting a home can be cheaper than buying in many places! The benefit to owning a home, of course, is that it will appreciate over time and build generational wealth.

MYTH: You should find a home before you apply for a home loan. It’s smart to get pre-qualified for a loan. It will give you more information to shop with.

MYTH: Buying a fixer-upper will save you money. Sure, maybe on the sticker price. But fixer-uppers need a lot more than just a fresh coat of paint. Generally, there are major issues that need to be tackled, not all of which are visible up front.

MYTH: You have to get your loan from the lender who pre-approves you. No, you have no obligation to stay with the lender you start with. Shop competitive offers and find the best fit before you go under contract.

MYTH: You shouldn’t buy until you can afford your ‘forever’ home. Selling a home can be costly, but if you wait to buy until you can afford that dream home rather than invest in a starter home, you may never buy at all.

MYTH: A 30-year, fixed-rate mortgage is always the best choice. Adjustable-rate mortgages (ARMs) can save thousands of dollars of interest over the life of the loan. That’s one example. There are other options!

MYTH: You can’t buy a home if you have student loans. Actually, those loans can hurt OR help your chances of buying a home – it can boost your credit scores but it can also raise your debt-to-income ratio for approvals. Consider every angle.

MYTH: You have to pay the seller’s asking price to buy a home. Definitely not. The seller’s asking price is simply what he or she hopes you’ll pay. Offers and counter-offers will bring you to a point of agreement in the end.

MYTH: You need excellent credit to buy a home. It’s good to have good credit, but there are great home loans and rates available for people with less-than-perfect credit too.

MYTH: Fall and winter are bad times to buy a home. It can actually work to your advantage to buy a home in seasons when most shoppers think it’s “bad.”

MYTH: You cannot buy a home if you are self-employed. The rules for getting a mortgage may be different for those who receive a W-2 from their employers, versus a 1099-NEC for being a gig or freelance worker. But it won’t stop you from buying!

MYTH: All lenders are the same when buying a home. You don’t just shop houses and rates when buying a home. There are also significant differences among lenders and you should find the best fit for you!

Happy House hunting an buying a home you love. We are currently seeing many price reductions, inventory is still low, but rates have come down. Thus if you have been on the fence, now may be a great time to buy with hopefully further rate drops and you can refi at that point. When I bought the home I am currently in, the rate was 8.5%. I ended up refinancing more than 8 times and currently have a 2.75% rate. Call me if you would like to chat about buying a home.

Zillow Quiz: How To Add Value To A Home

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I found this quiz from Zillow a while back and thought the findings were pretty interesting. Even as a professional realtor, I scored 70% on this, so it’s not easy! Fun, but not easy. Can you guess which features add value to a home? Take the quiz here.

Come back when you’re done!

Credit: Zillow

Okay, good job. How did you do? Comment your score below. For me, I didn’t realize beverage fridges were more popular than wine fridges, nor that rounded counters and plant shelves add value. Personally, I don’t care for those things, and don’t see much of that in newer California homes, but of course, Zillow is nationwide and those may be hot in other locales. Personally, I think plants shelves just collect dust!

Luckily for you, I do know my way around homes and home value. It’s my job to help you add value when selling and save money when buying. So, if you want to work with a longtime realtor in the East Bay with a track record of success, I’m your gal. Give me a call next time you are looking to buy or sell!

Comparing The Super Bowl Cities

San Francisco. Our backyard. Kansas City. A Midwest metropolis that many of us likely don’t know much about. The hometown 49ers face off against the defending champion Chiefs in this weekend’s Super Bowl. And Zillow broke it down in my kind of terms: comparing real estate in the two cities!

I was surprised to see that Kansas City actually has more EV charging stations than San Francisco, and almost the same amount of parks! And even though there is a massive difference in typical home value, Zillow actually ranks Kansas City as a much hotter housing market than San Francisco (18th, versus 30th for SF).

The article also delves into the runner-up cities (Baltimore, who lost to the Chiefs in the AFC Championship Game; and Detroit, who the Niners beat in the NFC Championship Game). It’s always amazing to see what $1 million can buy you in other major cities, versus our major city, but it’s well worth a read!

Now, do I think this matters for the Super Bowl itself? Of course not! The Chiefs are defending champions for a reason, but our Niners are stronger than ever. I’ll tell you what – regardless of the outcome, I’m pretty sure stars on both teams can afford to purchase a home in San Francisco, Kansas City, Baltimore, Detroit, or pretty much anywhere in the United States!

I hope you all enjoy the game this weekend and Go Niners!

6 Home Trends For 2024

Zillow’s research team analyzed more than 300 design styles and home feature keywords in for-sale listing descriptions and compared them to a year ago to develop a prediction on six home trends for 2024. Here are the results:

1. Brutalism

Credit: Zillow

Brutalism interiors describe a rough surfaces and utilitarian feel, mixing materials like wood, iron, and brass with plants. In the 1950s, brutalism was commonplace, though homes then were definitely more stark and gloomy than this new wave.

2. Sensory gardens

Sensory gardens are designed to do exactly what they sound like: engage all five senses and help you connect with nature. Many think they have therapeutic benefits, which makes them an obvious fit for being in a personal space. Typically, you might find plants like lavender or water features like a trickling stream in a home’s sensory garden.

3. Cold plunge pools

Credit: Zillow

Hot tubs are so last year. I have seen my fair share of cold plunge pools going into homes in the last 12 months, and I agree with Zillow that this trend will remain hot (ironically). Cold plunges allegedly reduce inflammation and improve circulation, so it’s a big thing in home wellness spaces these days.

4. Pickleball courts

This will surprise nobody, given the pickleball fervor that has swept the nation! I have seen this in high demand, too (and would like one for my home, too, if I could!). More reasonably, home buyers are looking for neighborhoods with pickleball courts listed as a nearby amenity, much like they might have looked for tennis courts in the past.

5. Murano glass chandeliers

Credit: Zillow

Homebuyers are trying to add some big personality to their houses through unique decor choices. Murano glass chandeliers – named for where they are handcrafted (Murano, Italy) – have been around for centuries and their quirkiness and intracy are enticing homebuyers across the country.

6. Murals

Finally, hand-painted murals are speaking to homebuyers who want to make a statement in one or more rooms of their house. Murals can be super personalized to a home owner or their home and are a fun offshoot of typical wallpaper or paint.

My stager Ashley Provost has also shared some design trends for 2024. Wallpaper is making a come back, along with accent walls. Curved furniture and arches will also be in. Grey is out, natural wood floors are in. Then there is color – Pantone’s color of the year is Peach Fuzz – oh no … however I have heard blue is a hot color from our namesake BHG Magazine, but I am seeing a lot of fern/moss in clothings. Color is such a personal thing and hard to stay on trend because it seems to change every year, although grey stayed with us for a long while.

10 Housing Trends for 2020

This time of year, there are a ton of “housing market prediction” pieces flooding the airwaves. Some are crazy, many are measured, and when you put them all together, you get a fairly clear picture of where experts think the industry is headed in 2020.

Below, we’ve gathered the top 10 predictions from a few different sources (Realtor.com, WaPo, and Forbes, to be exact). I’ll add my two cents at the bottom, but here are some possibilities for housing in 2020:

1. Moderate Growth in the Housing Market

New home sales are expected to rise, but existing home sales will remain held down by a lack of supply. Overall, this equals an expectation of moderate growth.

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2. Continued Low Rates

The National Association of Realtors (NAR) expects the 30-year fixed-mortgage rate will remain below 4 percent in the coming year, moving to 3.8 percent by the end of 2020.

3. Hottest Home Appreciation Markets? Not in CA

The NAR expects 10 markets to have home price appreciation that outpaces the rest of the country over the next 3-5 years. None are in California:

  • Ogden, UT
  • Las Vegas, NV
  • Fort Collins, CO
  • Colorado Springs, CO
  • Dallas/Fort Worth, TX
  • Columbus, OH
  • Raleigh/Durham/Chapel Hill, NC
  • Charlotte, NC
  • Charleston, SC
  • Tampa/St. Petersburg, FL

4. Home Prices Will Flatten

Don’t expect to see a surge in home prices – experts at Realtor.com think they will only increase 0.8 percent nationally. They expect prices to decline in some major cities, including San Francisco.

5. Again, Top Markets Shut Out CA

Realtor.com agrees with the NAR in that California won’t have any of the top markets in 2020. Their list:

  • Boise, ID
  • McAllen, TX
  • Tucson, AZ
  • Chattanooga, TN
  • Columbia, SC
  • Rochester, NY
  • Colorado Springs, CO
  • Winston-Salem, NC
  • Charleston, SC
  • Memphis, TN
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Downtown Colorado Springs

6. Competition Will Increase

Redfin thinks that 1 out of 4 offers will face a bidding war. This increased competition might push price growth up to 6 percent higher in the first half of the year, before it evens out to a more moderate 3 percent.

7. Revenue Will Fall

The Morgage Bankers Association expects lenders to chase fewer loans. They say purchase applications will be up slightly, while refinances will be lower.

8. Millennials Will Shape the Market

Realtor.com data shows that Millennials made up a whopping 46 percent of all mortgage originations in September 2019 (meanwhile, that share of Baby Boomer and Gen X mortgage activity declined). And they’re looking to move into smaller, suburban towns on the outskirts of major metros. Forbes says they want places with live-work-play neighborhoods with the safety and affordability of suburbs AND the transit, walkability, and 24-hour amenities of the big city.

9. The Industry Will Continue to Digitize

Manual, paper-laden processes are old news. Tech-savvy Millennials are entering the market at a fast pace, so the real estate industry is adjusting to meet their demands. Get ready for e-signing everything!

10. California’s Market is Changing

According to Realtor.com, three of the top four metro areas seeing the largest decline in inventory are in Northern California (San Jose, Sacramento, and San Francisco-Oakland).

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From what I am seeing and in conversation with other agents the 680/24 corridor will have a robust spring. I had one of the busiest Decembers ever and expect the will continue into the first quarter. The challenge will be finding buyers homes, as I think most will have multiple offers.

Next January, we will have to revisit these prognostications and see which ones were on the money$$$.

How is the housing market changing?

According to a Zillow Senior Economist, the housing market is changing: “The number of homes on the market is hesitantly inching higher — now approaching the highest level in a year and a half. The first quarter of 2019 is shaping up to be more competitive than the lull we saw as 2018 come to a close.”

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I have some thoughts about this! We are seeing the market pick up locally, but I am still seeing price reductions and then some that surprise me. Overall, homes priced right and in turn-key condition will always fare well over the competition.

The number of homes for sale has increased in four of the last five months after years of decreases, but that doesn’t mean there’s suddenly a huge amount of houses available. Don’t get fooled into thinking there is a hot, new market while you’re buying.

Further, mortgage rates are trending downward over the last year, according to Freddie Mac’s Primary Mortgage Market Survey (Feb. 14 week). They cite a “combination of cooling inflation and slower global economic growth” for this drop.

Image result for mortgage rate

My take on this is that we are truly operating in a global economy and the softening of Europe with their various issues has had an impact. The Fed has stated they now have the least amount of control over mortgage rates than in their entire history. I have no crystal ball on rates, so enjoy them while they stay low. That may be why we are having an uptick since the winter of 2018.

Is the housing market shifting, an opportunity for some?

Is the housing market going to start shifting in the direction of price reductions at the higher end of the spectrum? According to Zillow Senior Economist Aaron Terrazas, it could happen. Approximately 14 percent of homes for sale underwent price reductions back in June, and most of them happened at the more expensive levels.

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Over the last two years, the housing market has tilted sharply in favor of sellers. But this might be an early warning sign that the tide is turning a little bit. Although it’s too soon to officially call this a buyer’s market, this data does indicate that the trends in the housing industry may be normalizing. In speaking to my title rep, Jason Webb at Fidelity, I asked what he is seeing in the industry. His response was that there are currently more contingent offers, homes taking longer to close, and more demands to close escrow. I am personally experiencing all that in one escrow and it is not fun!

In my situation, the sellers have already moved and the buyer (who did not have a contingency on selling their condo) is delayed on it closing by three weeks. It was originally supposed to close by tomorrow. The agent representing the seller of the condo and the buyer on my listing is a rookie agent who has not been great at communicating the status. My sellers are frustrated and gave a demand to close escrow, but it was really to get them to push on the buyers of the condo, as I had no control and no authorization to speak to them.

We will now most likely close in another week on my my clients’ home because the buyer decided to go out and buy a new car. That caused his debt-to-income percentage to be too high, and now the car has to be paid off with proceeds from the sale of his condo. That causes further delays in our closing because the lender needs to see it get paid off. Another interesting component to this was that my clients Google’d the buyer and the results were…surprising. We knew it could be a challenging process, but we didn’t think it would be this much of a wild ride!

I believe we will see more of these types of issues as the market softens and reverts to a better balance. We can’t keep increasing, and it is time for the market to come down off this upward trajectory. There are some positive outcomes to a correction, but it is change and change is hard for most people; especially sellers when they still expect a higher price than their neighbor.

Are home values really inflated?

For the 71st month in a row, the housing market experienced year-over-year gains. As of January, the median existing-home price for all housing types was $240,500, which was a 5.8 percent increase from January 2017 ($227,300). According to Bob Schwab from Finance of America, this may lead many to believe that home values are overinflated.

Schwab, and Zillow, disagree with that common opinion. Zillow says: “If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”

I’ve pulled some information and graphs from Schwab’s article to help demonstrate why home prices are exactly where they should be. First, a graph showing actual median home sales prices from 2000 through 2017:

By itself, this graph shows home values rising early in the century, then tumbling down, and now climbing back up. This may give off the impression that a pattern is emerging, and another tumble is coming. But, if you look at this second chart, indicating where prices would naturally go with the market had there not been a boom and bust, you see something different:

The blue bars represent where prices would have been if they increased normally, at an annual appreciation rate of 3.6 percent. By adding that percentage to the actual 2000 price and repeating for each year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit lower than where they should be right now!

All in all, thanks to Bob Schwab for pointing out that we should be comfortable with current home values, and understand that the market actually isn’t overinflated, based on historic appreciation levels.

What is the most expensive zip code in CA?

If you had to guess which California city has the most expensive real estate, what would you say? San Francisco, maybe? Certain parts of Los Angeles – remember the show 90210?

Watkins-Cartan House, 98 Alejandra Ave., Atherton, CA

Nope, the honor goes to the 94027 zip code – Atherton, CA. For those not familiar, Atherton is right above Palo Alto and the average cost of a home there is…wait for it…$6.17 million. According to Zillow, home values in Atherton reached a low point in summer 2009, dipping below $3 million.
I asked my friend Jay Vorhees of JVM Lending what kind of average income would be necessary to afford a home in Atherton at 25 percent and 50 percent down.
Given that the average income in Atherton is about $250,000, I was wondering how exactly a median home price of $6.17 million was affordable there! Here’s his assessment:
Assuming no consumer debt, a 4.0% rate and a 42% debt ratio, with 25% down, PITI would be about $29,000 per month (rounded). This would require $69,000 of monthly income or $828,000 annually.
With 50% down, PITI would be about $22,000 per month (rounded). This would require about $52,500 of monthly income or $630,000 annually.
So how does the average income earner in that area afford Atherton? Most likely people have had these homes for years, thus the lower income. For new purchases, stock options from IPOs are not usually included in your annual income, thus allowing the the nouveau riche of Silicon Valley to buy with cash or put 50% or more down.

The smallest decisions can make your house more valuable

When selling a home, oftentimes the goal is to maximize financial return on the deal. Everybody wants to make as much as they can off their home sale, and even the slightest changes can increase what a home sells for.

Take this article on Inman.com for example. It’s about how homes with blue bathrooms sell for $5,400 more on average than others, according to a Zillow study. Crazy, right? Literally just changing the color you’ve painted a wal or two can add thousands of dollars to your wallet!

The article goes on to list a couple other color choices that can add or subtract from the sale price; for example, grey (and other neutral) exteriors sel die about $3,500 more than homes with other colors.

It really goes to show that small aesthetic decisions can play a huge role in netting you some extra zeroes on your home sale. It’s always wise to cater to the current trends when painting, decorating and remodeling your home to go on market – even if it means just a couple grand more in your pocket.

I try to stay tuned in to what’s popular so I can help you make those decisions. I am committed to maximizing your value as a seller, and on the flip side, getting you the best deal possible as a buyer. Give me a call if you’re interested in a real estate transaction!