New York Times: Homeownership is Best Way To Build Wealth

The New York Times recently published an editorial entitled, "Homeownership and Wealth Creation.” The housing market has made a strong recovery, not only in sales and prices, but also in the confidence of consumers and experts as an investment. The article explains:

“Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.”

Many of the points that were made in the article are on track with the research that the Federal Reserve has also conducted in their Survey of Consumers Finances. The study found that the average net worth of a homeowner ($194,500) is 36x greater than that of a renter ($5,400). One reason for this large discrepancy in net worth is the concept of ‘forced savings’ created by having a mortgage payment and was explained by the Times:

Rent Increases Expected to Continue through 2015

CNBC’s Diana Olick recently reported that rents in the residential housing sector continued to rise in 2014. She interviewed Jed Kolko, Chief Economist at Trulia, who revealed:

"Rents are rising because of strong demand that supply hasn't kept up with. Nearly all the new households are renters, and young people moving out of their parents' homes will keep fueling rental demand."

Where are rents headed in 2015?

The question now is where rents will be heading over the next twelve months. In a press release last week, Zillow chief economist Dr. Stan Humphries predicted residential rental prices will continue to climb in 2015:

"Home value appreciation will continue to cool down, from roughly 6 percent now to around 2.5 percent by the end of 2015. But rents will see no such slowdown, and will continue to grow around 3.5 percent annually throughout 2015. As renters' costs keep going up, I expect the allure of fixed mortgage payments and a more stable housing market will entice many more otherwise content renters into the housing market." However, those potential buyers must make a decision quickly because, as Kolko explains:

“Paying more on rent makes it harder for would-be homebuyers to save for a down payment."

Bottom Line

Ryan Severino, a senior economist at Reis, in Olick’s article stated the obvious:

"Landlords should still be able to push asking rent increases on to their tenants."

If you are thinking about buying a home in 2015 instead of continuing to rent, it probably makes sense. 

Looking to buy, sell or invest? Contact:

David Demangos

858.232.8410
Locally Known, Globally Connected
Luxury Home Marketing Specialist
Global Property Specialist

David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Top 5 Benefits of Using a Professional to Buy a Home

Every year the National Association of REALTORS releases their Profile Home Buyers and Sellers, in which they reveal the results of a yearlong survey of buyers and sellers. The latest profile revealed what actual buyers saw as the benefits of using an agent during the home buying process. 

Here are the Top 5: 

#1: Helped the Buyer Understand the Process

Whether it is your first time purchasing a home, or you’re an experienced buyer, there are over 230 possible actions that need to happen during every successful real estate transaction. Having someone to guide you through the process who can simply explain what is going on at every step of the way was sited as the top benefit by 63% of all buyers (that number jumped to 83% with first time buyers). 

#2: Pointed Out Unnoticed Features/Faults with the Property

When you start the process of buying a home, you may be too excited to see each potential home for what it is, good and bad. An experienced professional can help you realize the potential hidden gems or risks before you make an offer. Nearly 60% of all buyers listed this as a major benefit of hiring a professional.

#3: Improved the Buyer’s Knowledge of Search Areas

Whether you are looking to relocate to a new state, or just across town, having someone who knows the neighborhoods in which you are looking can be an invaluable asset. 

#4: Negotiated Better Sales Contract Terms/Better Price

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes. 

#5: Provided a better list of service providers

A great agent has relationships with mortgage professionals, home inspectors, appraisers and other experts that you will need in securing your dream home.
Bottom Line

If you are considering purchasing a home, whether as a first-time or move up buyer, sit down with a local experienced real estate professional in your area and see what they have to offer. 

David Demangos

858.232.8410
Locally Known, Globally Connected
Luxury Home Marketing Specialist
Global Property Specialist

David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Proof the Real Estate Market is Back

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Looking to buy, sell or invest? David Demangos 858.232.8410 Locally Known, Globally Connected Luxury Home Marketing Specialist Global Property Specialist David@AwesomeSanDiegoRealEstate.com www.AwesomeSanDiegoRealEstate.com Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Why You Should Sell Your House Now!

School is back in session, the holidays are right around the corner, you might not think that now is the best time to sell your house. But with inventory below historic numbers and demand still strong, you could be missing out on a great opportunity for your family.

1. Demand is Strong

Foot traffic refers to the number of people out actually physically looking at home right now. The latest foot traffic numbers show that there are more prospective purchasers currently looking at homes than at any other time in the last twelve months which includes the latest spring buyers’ market. These buyers are ready, willing and able to buy…and are in the market right now!

2. There Is Less Competition Now

Housing supply is still under the historical number of 6 months’ supply. This means that, in many markets, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.

Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

Where Are Home Prices Headed Over the Next 5 Years?

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investors, market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number. The results of their latest survey follow:

• Home values will appreciate by 4.8% in 2014. 
• The cumulative appreciation will be 23.5% by 2019. 
• That means the average annual appreciation will be 3.6% over the next 5 years. 
• Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 15.1% by 2019. 

Individual opinions make headlines. What are your thoughts?

David Demangos
858.232.8410
Locally Known, Globally Connected
Luxury Home Marketing Specialist
Global Property Specialist

David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Either Way, You’re Still Paying a Mortgage

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage - either your mortgage or your landlord’s. A Harvard University Study explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

As an owner, the mortgage payment is a ‘forced savings’ which will allow you to have equity in your home you can tap into later in your life. As a renter, you guarantee the landlord is the person with that equity.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since home values and interest rates are still at bargain prices.

Looking to Sell, Buy or Invest in Real Estate? Contact:
David Demangos
858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist 

Global Property Specialist 

David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Drone Video Directions to Awesome San Diego Real Estate

Hello future clients of AwesomeSanDiegoRealEstate.com. Please watch 38 second video for directions to an exceptional Awesome San Diego Real Estate experience.

Keller Williams Realty
12780 High Bluff Dr. Suite 130
San Diego, CA 92130

David Demangos
858.232.8410
Locally Known, Globally Connected
Luxury Home Marketing Specialist 
Global Property Specialist 

www.AwesomeSanDiegoRealEstate.com 
David@AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Buying a Home Remains 38% Less Expensive than Renting!

In Trulia’s latest Rent vs Buy Report, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage throughout the 100 largest metro areas in the United States. The updated numbers actually show that the range is from an average of 17% in Honolulu, all the way to 63% in Detroit, and 38% Nationwide! This is up from an average of only 5% cheaper in Honolulu in April. The other interesting findings in the report include:

Rents have continued to increase nationally even as home price increases are starting to slow Current low mortgage rates have kept homeownership from becoming more expensive than renting.

Some markets might tip in favor of renting next year if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy. Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.

Bottom Line

Buying a home makes sense. Rental costs have historically increased at a higher rate of inflation. Lock in a mortgage payment now before home prices and mortgage rates rise as experts expect they will.

Looking to sell, buy, or invest in real estate? Contact:

David Demangos
858.232.8410
Locally Known, Globally Connected
Luxury Home Marketing Specialist
Global Property Specialist

www.AwesomeSanDiegoRealEstate.com
David@AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Real Estate and Money-Wise Kids

Kids are never too young to learn the skills of saving, budgeting, and other basics for becoming a money-wise individual.

In fact, a recent survey conducted by T. Rowe Price found that 60 percent of kids whose parents frequently talk to them about budgeting feel they are smart about money, as opposed to just 34 percent of kids whose parents do not.

Financial experts agree that the sooner parents start imparting key money concepts, the more effective they will be in raising financially responsible adults. While it may seem like an involved topic, it's as simple as starting a conversation.

"There is a clear correlation between talking with kids about financial topics and their habits," said Judith Ward, a senior financial planner with T. Rowe Price. "Parents can invest in their kids by talking to them weekly about money matters."

The survey also found that parents are having more financial conversations with boys rather than girls.

"Boys and girls should have the same opportunities to learn about money matters at home so they can grow into financially savvy adults," Ward says. "By talking to kids of either gender about things like saving for college, parents can help kids get involved and excited about their future."

Harvard’s 5 Financial Reasons to Buy a Home

Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. Last year, he released a paper on homeownership - The Dream Lives On: The Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home. Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You're paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

Realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially.

Looking to sell, buy, or invest? Contact:
David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist/Global Property Specialist 

David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

A Home’s Cost vs. Price Explained

COST vs. PRICE is often talked about. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned about price but instead about the ‘long term cost’ of the home.

Explanation:

A nationwide panel of over one hundred economists, real estate experts and investment market strategists projected that home values would appreciate by approximately 4% from now to the end of 2015. Additionally, Freddie Mac’s most recent economic commentary projections table predicts that the 30 year fixed mortgage rate will be 5.0% by the end of next year.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

Who do you know looking to Sell, Buy or Invest in Real Estate? Contact:

David Demangos

Global Property Specialist

858.232.8410
David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

#1 Reason You Should Sell Now

The price of any item (including residential real estate) is determined by ‘supply and demand’.  If the supply of an item is larger than the amount of people looking to purchase that item, the price will decrease. With winter right around the corner, now may be the best time to get the best price. #KCM2014 According to the National Association of Realtors (NAR), historically there is a natural decline in buyers looking to purchase a home (also known as foot traffic) as the winter months approach. Shown in the graph below: NAR goes a step further to say that there is a direct correlation between “foot traffic” and “pending contracts/closed sales one to two months later”.

Home Sales Hit Highest Level of the Year

The National Association of Realtors (NAR) released their existing sales report earlier this week. The report revealed that “sales bounced back in September to their highest annual pace of the year”. As the chart below shows, after a very slow start at the beginning of the year, residential home sales have been increasing consistently.

Looking to buy, sell or invest in Real Estate? Contact:

David Demangos

858.232.8410
Locally Known, Globally Connected
Luxury Home Marketing Specialist
Global Property Specialist

David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Tips to Sell Your Home in the Fall

If you are trying to sell your home this fall, consider making some home improvements to boost the chance of selling.

Check out these ways to keep your landscaping and exterior in top condition.

• Rake leaves frequently; not only does it look better, but keeping loose debris from walkways creates a safer environment for potential buyers.
• Mulch your garden beds. This will provide an added layer of protection for your plants as winter creeps in.
• If your summer flowers are fading or wilting after a long season, create a welcoming experience by replacing them with fresh mums and other fall friendly colorful flowers.
• Draw attention to your front entry by adding a fall wreath to your door.

Fun Halloween Decorations Ideas

Cobweb Cookies

To conjure up a devilish-looking dessert, frost slice-and-bake sugar cookies with white royal icing. Then, starting at the cookie's center, pipe circles of black icing; create cobwebs by alternately dragging a toothpick from the center to the edge, and from the edge to the center.

Creepy Crawlers

Scooped-out mini pumpkins become spidery votives, thanks to tealights and pipe cleaners 

Wicked Window

Use candlelight (the battery operated ones for safety) to create dark shadows in the corners. Here, the ghostly white tapers in a flea market candelabra enhance the creepiness of cobwebs and flying bats.

Super Bowl

Filled with cider, a hollowed-out peach pumpkin becomes an organic punch bowl. Four water-jug gourds act as feet.

Have a Safe Halloween!

David Demangos 

Global Property Specialist 

858.232.8410

www.AwesomeSanDiegoRealEstate.com

Our Team goes to Extremes to Fulfill your Real Estate Dreams

Finding the Right Agent is Crucial

The information delivered by your neighborhood real estate agent in the past is now available on the internet. You no longer need agents for information regarding which homes are for sale or what houses in your neighborhood sell for. You can easily find that information online. This information itself is no longer what you need from your real estate professional. However, you still need someone to deliver a thoughtful analysis of this information.

“There’s a large gap between information and actionable knowledge.”

In other words, information by itself is essentially useless.

What’s truly important is being able to understand, analyze, and use the information for the best outcome. And that’s what a real estate professional’s job has become!

What you really want is someone who can…

The Truth About Buying a Home: You Don't Need 20% Down

In a recent survey, How Americans View Homeownership, it was revealed that 68% of Americans feel that now is a good time to buy a home and 95% said they want to own a home if they don’t already.

Confusion Creates Paralysis

However, the survey also reported that many are afraid to purchase a home because of uncertainty about qualifying for a mortgage or navigating the home buying process. Though 74% said they “now and understand the financial process involved in buying a home, they also gave answers that suggest otherwise. For example:

• 30% of respondents believe that only individuals with high incomes can obtain a mortgage
• 64% of respondents believe they must have a “very good” credit score to buy a home
• 44% believe that a 20% down payment is required

Is Real Estate Heading in the Right Direction?

In a recent Gallup poll, Americans were asked to rate 24 different business sectors and industries on a five-point scale ranging from "very positive" to "very negative." The poll was first conducted in 2001, and has been used as an indicator of “Americans’ overall attitudes toward each industry”.

For the first time since 2006, Americans had an overall positive view of real estate, giving the industry a 12% positive ranking. So, yes real estate is headed in the right direction!

Americans’ view of the real estate industry worsened from 2003 to the -40% plummet of 2008.  Gallup offers some insight into the reason for decline:

Prices Dropped

"In late 2006, real estate prices in the U.S. began falling rapidly, and continued to drop. Many homeowners saw their home values plummet, likely contributing to real estate's image taking a hard hit.”

Housing Bubble

“The large drops in the positive images of banking and real estate in 2008 and 2009 reflect both industries' close ties to the recession, which was precipitated in large part because of the mortgage-related housing bubble.”

Bottom Line

“Although the image of real estate remains below the average of 24 industries Gallup has tracked, the sharp recovery from previous extreme low points suggests it is heading in the right direction.”

Who do you know looking to buy, sell or invest anywhere in the U.S.? Call:

David Demangos

Global Property Specialist

858.232.8410
David@AwesomeSanDiegoRealEstate.com
www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams! 

5 Reasons You Shouldn't For Sale by Owner

Some homeowners consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). We think there are several reasons this might not be a good idea for the vast majority of sellers.

Here are five reasons:

1. There Are Too Many People to Negotiate With...
Here is a list of some of the people with whom you must be prepared to negotiate if you decide to FSBO.
-The buyer who wants the best deal possible
-The buyer’s agent who solely represents the best interest of the buyer
-The buyer’s attorney (in some parts of the country)
-The home inspection companies which work for the buyer and will almost always find some problems with the house
-The appraiser if there is a question of value
-Your bank in the case of a short sale

2. Exposure to Prospective Purchasers
Recent studies have shown that 92% of buyers search online for a home. That is in comparison to only 28% looking at print newspaper ads. Most real estate agents have an extensive internet strategy to promote the sale of your home. Do you?

Future Homeowners Share American Dream

Two recently released reports indicate that both young adults (Millennials) and teenagers (Generation Z) still see homeownership as an important piece of their future success.

A report by The Demand Institute, Millennial and their Homes: Still Seeking the American Dream, revealed that the Millennial Generation is optimistic about their financial future and still believe in homeownership. The findings were based on a survey of millennial households (ages 18 to 29).

The report predicted that:

• 8.3 million new Millennial (Gen Y) households will form in the next five years
• $1.6 trillion will be spent on home purchases by Millennials and $600 billion on rent over the next five years

Millennials optimistic about their finances and homeownership

Of those surveyed:

• 74% expect to move within the next five years
• 79% expect their financial situation to improve
• 75% believe homeownership is an important long-term goal
• 73% believe homeownership is an excellent investment
• 24% already own their home and
• An additional 60% plan to buy a home in the future
• 44% do think it would be difficult to qualify for a mortgage

Don’t Get Caught in the ‘Renter’s Trap’

In a recent press release, Zillow stated that the affordability of the nation’s rental inventory is currently much worse than affordability of the country’s home sale inventory. The release revealed two things:

1.    Nationally, renters signing a lease at the end of the second quarter paid 29.5% of their income to rent

2.    U.S. home buyers at the end of the second quarter could expect to pay 15.3% of their incomes to a mortgage on the typical home

Furthermore, renters pay more than the average of 24.9% that was paid in the pre-bubble period while buyers actually pay far less than the 22.1% share homeowners devoted to mortgages in the pre-bubble days. One of my smart neighbors just sold his boat today, and is using the money for his downbpayment on a new home in Reno. (Smart move)

Don’t Become Trapped

If you are currently renting you could get caught up in a cycle where increasing rents continue to make it impossible for you to save for a necessary down payment. Zillow Chief Economist Dr. Stan Humphries explains:

"The affordability of for-sale homes remains strong, which is encouraging for those buyers that can save for a down payment and capitalize on low mortgage interest rates… As rents keep rising, along with interest rates and home values, saving for a down payment and attaining homeownership becomes that much more difficult for millions of current renters.”

 Know Your Options

Perhaps you already have saved enough to buy your first home. HousingWire recently reported that analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. 

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.”