Hot Tip! Don’t Forget to Budget for Closing Costs!

When buying a home, it’s important to have a budget and make sure you plan ahead for certain home-buying expenses. Saving for a down payment is the main cost that comes to mind for many, buy budgeting for the closing costs required to get a mortgage is just as important.

What are closing Costs?

According to Trulia: “When you close on a home, a number of fees are due, They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees and more.”

For example, for someone buying a $300,000 home, they could potentially have between $6,000 and $15,000 in closing fees. If you’re in the market for a home above this price range, your closing costs could be greater. As mentioned above, closing costs are typically between 2% and 5% of your purchase price.

Trulia gives more great advice, explaining:

“There will be lots of paperwork I front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender and attorney, if you have one, to get all the documents you need ahead of time.

The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll het this form about three days before closing since, once you (the borrower) sign it, there’s a three- day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask- your real estate agent is a great resource for getting you all the answers you need.”

Bottom Line: As home prices are rising and more buyers are finding themselves competing in bidding wars, its more important than ever to make sure your plan includes budgeting for closing costs. Let’s connect to be sure you have everything you need to land your dream home.

Will the Housing Market Maintain Its Momentum?

Last week’s Existing Home Sales Report from the National Association of Realtors (NAR) shows sales have dropped 3.7% compared to the month before. This is the second consecutive month that sales have slumped. Some see this as evidence that the red- hot real estate market may be cooling. However, there could also be a simple explanation as to why existing homes sales have slowed- there are not enough homes to buy. There are currently 410,000 fewer single family homes availed than there were at this time last year.

Lawrence Yun, Chief Economist at NAR, explains in the report:

“The sales for March would have been measurably higher, had there been more inventory, Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

Yun’s insight was supported the next day when the Census Bureau released its Monthly New residential Sales Report. It shows that newly constructed home sales are up by 20.7% over the previous month.

Buyer demand remains strong. With more of the adult population becoming vaccinated and job creation data showing encouraging signs, existing- home inventory is expected to grown in the coming months.

What will this bean for homes sales going forward?

Fannie Mae, Freddie Mac, and the Mortgage Bankers Association (MBA) have all forecasted that total home sales (exist homes and new constriction ) will continue their momentum both this year and next. Here’s a graph showing those projections:

Bottom Line

Living through a pandemic has caused many to re-evaluate the importance of home and the value of homeownership. The residential real estate market will benefit from both as we move forward.

How Much Time do you Need to Save for a Down Payment?

One of the biggest hurdles homebuyers face is saving for a down payment. As you’re budgeting and planning for your home purchase, you’ll want to understand how much you’ll need to put down and how long it will take you to get there. The process may actually move faster than you think.

Using data from the U.S. Department of Housing and Urban Development (HUD) and Apartment List, we can estimate how long it might take someone earning the median income and paying the median rent to save up for a down payment on a median- priced home. Since having a down payment can be a great time to practice budgeting for housing costs, this estate also uses the concept that a household should not pay more than 28% of their total income on monthly housing expenses.

According to the data, the national average for the time it would take to save for a 10% down payment is right around two and a half years (2.53). Residents in Iowa can save for a down payment the fastest, doing so in just over one year (1.31). The map below illustrates this time (in years) for each state:

What if you only need to save 3%?

What if you’re able to take advantage of one of the 3% down payment programs available? It’s a common misconception that you need a 20% down payment to buy a home, but there are actually more affordable options and down payment assistance programs available, especially for first time buyers. The reality is, saving for a 3% down payment may not take several years. In fact, it could take less than a year in most states, as shown in the map below.

Bottom Line:

Wherever you are in the process of saving for a down payment, you may be closer to your dream home than you think. Let’s connect to explore the down payment options available in our area and how they support your plans.

To Renovate or Not to Renovate before you sell?

Wondering if you should renovate your home before you sell it? Here is some advice for you.

When thinking about selling, homeowners often feel they need to get their house ready with some remodeling to make it more appealing to buyers. However, with so many buyers competing for available homes right now, renovations may not be as vital as they would be in a more normal market. Here are two things to keep in mind if you’re thinking of selling this season.

There aren’t enough homes for sale right now.

A normal market has 6- month supply of houses for sale, but today’s housing inventory sits far below that benchmark. According to the National Association of Realtors (NAR), there is only 1.9 month supply of homes available today. As a result, buyer competition is high and homes are only on the market for about 21 days, during which time many receive multiple offers from hopeful buyers.

In a competitive market, that’s moving so quickly, it makes sense to sell your house when buyers are scooping homes up so fast as they’re being listed. Spending costly time and money on renovations before you sell might just mean you’ll miss your key window of opportunity. While certain repairs on your house many be important, your best move right now is to work with a real estate advisor to determine which improvements are truly necessary, and which ones are not likely to be deal-breakers for buyers.

Today, many buyers are more willing to take on home improvement projects themselves in order to get the home they’re after, even if it means putting in a little extra work. Home advisor explains:

“When it comes to the number of home improvement projects completed, Gen Z homeowners are leading the pack, completing an average of 3.5 projects. Millennials closely follow Gen Z, taking on an average of 3.3 projects, followed by Gen X at 2.8 projects. Boomers completed an average of 2 projects, and the Silent Generation completed the fewest projects, on average, at 1.8 per household. Compared to 2019, millennials are spending 60% more on home improvements and doing on average 30% more projects.”

In this market, it may be wise to let future homeowners remodel the bathroom or the kitchen to make design decisions that are best for their specific taste and lifestyle. As a seller, your dollars are time might be better spent working on small cosmetic updates, like refreshing some paint and power washing the exterior. Instead of over- investing in your home with upgrades that the buyers may change anyway, work with a real estate professional to determine the key projects that will maximize your listing without overdoing it.

Focus on getting a good return on your investment

When planning any bigger project to tackle, you and your real estate agent will want to discuss the potential return on your investment and if those projects are worth the cost. Some homes do need a kitchen or a bathroom renovation, roof repairs or other major work, but not all of them. You might be surprises by how well your house could fair in today’s sellers’ market. Hanley Wood states”

“The 2020 Cost v Calue reports shows a predictable increase in costs for all 22 remodeling projects but a consistent dip on the perceived value of those projects at the time of home sale, as estimated by real- estate professions in more than 100 metro areas across the U.S. This results in a slight downturn on the return on investment for nearly all projects relative to the trends we saw in last year’s report.”

Ideally, homeowners getting ready to move should try to avoid over-investing in big renovations if they won’t make that money back when they sell their house. According to the 2020 state of home spending report from home advisor: “The average household spending on home services rose to $13,138, an increase over last years survey results, where homeowners who did projects spend $9,08 on average in 2019.”

Before you renovate, contact a local real estate professional to see if it’s the best course of action. You may find out that putting your house on the market as-is will help you sell quickly, and it may result in the best return on your investment. Every home is different, but a conversation with your agent is mission-critical to make sure you make the right moves when selling this season.

Bottom Line

We’re in a string seller’s market and that means you have the leverage to sell your house on your terms. Let’s connect today to determine if renovating is really the best way to spend your time and money before you sell.

Just Listed For Lease!

For $3,000 per month, this wonderful corner unit located in the heart of downtown can be yours!

Get ready to fall in love with this bright and fun 1Br/1Ba + office at the One Hawthorne. Built in 2010, this coveted corner unit is characterized by a spacious open floor plan, floor to ceiling windows on two sides, lots of wall space for art, and stylish wood floors throughout. Enjoy cooking and entertaining in a sleek open kitchen with high-end Bosch stainless steel appliances,  including gas range, handsome gray quartz counters with breakfast bar, and Studio Becker soft close cabinetry. There is a spacious bedroom, large bathroom, in-unit washer dryer, and additional den space that could be used as a home office or child’s play area. One Hawthorne is a well maintained building with great amenities, including  24-hour staffed lobby, valet parking and on-site management. Offering a fitness center with cooling deck, bicycle storage, and impressive roof deck that has a deluxe barbecue, dining and lounge areas.  Close to wonderful cafes, shopping, theaters and nightlife easily.  Enjoy living in the center of the city near the new SF MOMA, Metreon and Yerba Buena for the Arts. Close to BART, MUNI and freeways.

February 2021 Market Activity

Check out market activity from February!

While there is a decrease from previous years in New Listings, the number of pending sales is up by 51.6% compared to the previous year and sold sales is increased by 35.2%.
Looking at this February compared to past years, the number of condos/TIC/coop on the market has decreased by 16.7%. If you thinking of selling, now could be the time with a decreased number of condos on the market.
The number of pending condo/TIC/coop sales has skyrocketed this February compared to previous years, explained by the current hot real estate market.
The number of sold listings was increased for February, again explainable by the increased market activity in recent months

The real estate market, specifically focusing with condos, tic, and co-ops for February continues to be hot. In the past few months, the market has seen much increased activity with the number of pending and sold sales. If you are considering buying or selling your condo or home, there is no better time than now! Feel free to reach out to discuss the current market, or for any advice!

Sources: San Francisco Association of Realtors

How to Make a Winning Offer on a Home?

Today’s homebuyers are faced with a strong seller’s market, which means there are a lot of active buyers competing for a relatively low number of homes and condos available. As a result, it’s essential to understand how to make a confident and competitive offer on your dream home. Here are five tips for success in this critical stage of the homebuying process.

  1. Listen to your Real Estate Advisor

An Article from Freddie Mac gives direction on making an offer on a home. From the start, it emphasizes how trusted professionals can help you stay focused on the most important things, especially at times when this process can get emotional for buyers:

“Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must- haves and future financial stability.”

2. Understand Your Finances

Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to get pre-approved for a loan early in the homebuying process. Only 44% of today’s prospective homebuyers are planning to apply for pre-approcal, so be sure to take this step so you stand out from the crowd. Doing so make it clear to sellers you’re a serious and qualified buyer, and it can give you a competitive edge in a bidding war.

3. Be Prepared to Move Quickly

According to the latest Realtors Confidence Index from the National Association of Realtors (NAR), the average property sold today receives 3.7 offers and is on the market for just 21 days. These are both results of today’s competitive market, showing how important it is to stay agile and alert in your search. As soon as you find the right home for your needs, be prepared to submit an offer as quickly as possible.

4. Make a Fair Offer

It’s only natural to want the best deal you can get on a home. However, Freddie Mac also warns that submitting an offer that’s too low can be lead sellers to doubt how serious you are as a buyer. Don’t make an offer that will be tossed out as soon as it is received. The expertise your agent brings to this part of the process will help you stay competitive: “Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sales prices in the area.”

5. Stay Flexible in Negotiations

After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, it’s important to stay nimble throughout the negotiation process. You can strengthen your position with an offer that includes flexible move-in dates, a higher prices, or minimals contingencies (conditions you set that the seller must meet for the purchase to be finalized) Freddie Mac explains that there, are, however certain contingencies you don’t want to forego: “Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold as-is which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”

Bottom Line: Today’s competitive market makes it more important than ever to make a strong offer on a home. Let’s connect to make sure you rise to the top along the way.

Market Updates -January 2021

The Condo Market is hot right now! Check out some updates from January

Looking at 2020 compared to 2021, pending sales are up by 77.4% and sold listings are up by 68.4%. The condo market saw a huge increase in activity during the month of January.
Looking at a monthly breakdown of condo pending sales, December 2020 and January 2021 have seen a large increase as condo activity has greatly increased
Looking at a breakdown of condo inventory, over the past year, inventory was incredibly high from June to November 2020, and looks to be decreasing as we are heading into 2021 more, possibly due to the increased sale and pending rates.

If you are considering selling or purchasing a condo now is a great time! Feel free to reach out with any questions as I would love to discus the current market with you!

Is it a Good Time to Sell?

Hint- YES!

Last year, many homeowners thought twice about selling their houses due to the onset of the health crisis. This year, however, homeowners are beginning to regain their confidence when it comes to selling safely. The latest Home Purchase Sentiment Index by Fannie Mae shows that 57% of consumers believe now is a good time to sell.

Doug Duncan, Vice President and Chief Economist at Fannie Mae Explains:

“Overall, the index’s monthly increase was driven largely by a substantial jump in the share of consumers reporting that it’s a good time to sell a home, with many citing favorable mortgages rates, high home prices, and low housing inventory as their primary rationale.”

Normally, spring is the busiest season in the housing market- the time when many homeowners decide to list their houses. While this is obviously not a normal year since the pandemic is still very much upon us, experts are optimistic that consumer positivity around selling will lead to more homeowners making moves this year. Duncan continues to say:

“We will pay close attention to see if this newfound optimism develops into a trend.”

What does this mean if you’re thinking of selling your house?

The fact that there are so few houses available for sale today is one driver that’s encouraging consumers to think more positively about selling. The National Association of Realtors (NAR) states:

“Total housing inventory at the end of the January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million).”

With so few homes available to buy, your house will be more likely to rise to the top of an eager purchaser’s wish list in this competitive market. Today’s high buyer activity is creating upward pressure on home prices and more multiple- offer scenarios. According to the Realtors Confidence Index Survey from NAR, the average home for sale is receiving 3.7 offers today, up from 2.3 offers just one year ago. This makes selling even more enticing.

In this kind of seller’s market, you have a huge advantage in the process. And here’s another win- you can also use your equity toward a down payment on a new home when you move.

Wondering where you’ll go if you try to move while it’s so challenging to find a home to buy? Well, in many areas, there are more homes available at the higher end of the market, so finding a move-up home may be less of an issue if you’re ready to search for your dream home this spring.

Bottom Line

If you pressed pause on selling your house last year, now may be the best time to put your plans back into motion while inventory is so low. Let’s connect today to get the process started.

New Condo Listing!- 199 New Montgomery #1007

Sunny 1-BR/1-BA in Vibrant Yerba Buena

Located in the heart of the vibrant Yerba Buena, this sunny one bedroom corner unit enjoys a rare floor plan and expansive windows that capture views of downtown and bring the space to life. Filled with natural light and high up on the 10th floor facing historic New Montgomery Street, the home features glistening hardwood floors and a flexible open floor plan, ideal for living, working, and entertaining (post covid). The kitchen seamlessly flows into the living and dining space, with handsome wood cabinets, lots of granite counters space along with breakfast bar, stainless steel appliances, and views of downtown. The bedroom has its own set of windows and a large walk in closet great for storage. A large bathroom, in unit washer and dryer as well as parking make the home all that more comfortable. Building amenities include a 24 hour front desk attendant, incredible Roof deck with wrap around views, barbecue and lounge area. Constant activity and entertainment surrounds the building including Michelin rated restaurants, museums and shopping. Near the Financial District, Union Square, Embarcadero. Easy access to Muni, Bart, and highways.