5 Financial Reasons to Buy

What Can You Expect to See in the San Diego Real Estate Market in 2014?

What Can You Expect to See in the San Diego Real Estate Market in 2014?

 Welcome to 2014! People have been frequently asking me about what the San Diego real estate market will do in 2014 and what direction we are heading in. Obviously we know we experienced some big appreciation in 2013 and some parts of San Diego even show 20% increases! However, I don’t think we will see any appreciation like that in 2014. I say this based on trends, what the economists are seeing and what the real estate gods are saying.

Right now, San Diego has 5,766 active listings with 4,184 being detached single family homes and 1,583 accounting for apartments and townhomes. The housing recovery hit high gear in 2013 with solid homes sales and bigger than expected gains. A lot of this was due to very low demand, very low supply and very low interest rates. When you combine all that, it creates a lot of sales and high appreciation.

Economist John Burns has estimated that we see 6% appreciation nationwide in real estate. However, it would be fair to say that you can’t compare San Diego to the rest of the country. Conservatively speaking, we can expect San Diego to achieve 8-12% in 2014 depending on your area.

According to Fannie Mae, the GSE found that less than half of the people polled expect home prices to increase this year in line with trends pointing to a more measured and sustainable recovery the real estate market. This is great news for people who still want to sell their homes and for those who still want to buy, because the market is going up!

One of the reasons we believe that 2014 will follow 2013 trends is due to three major buyers we have to pay attention to. Number one is the first-time buyers. This is due to a report released by the Urban Land Institute saying that over 4 million new households will be formed over the next three years with millennials making up most of them. Number two is the move-up buyers. Because of the return of real estate wealth and appreciation, Zillow reports that $1.9 trillion in equity has been restored to people who’ve had negative equity. This allows people to sell their homes and move up or down. Number three is due to the Immigration Reform Act. If this is passed, it will be bring a tidal wave of buyers into the market.

Thank you for watching! Please give me a call at (619) 562-6800 if there is anything I can do. Make it a great day!

Harvard: 5 Reasons to Buy a Home

Harvard: 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. This year he released a new 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
We realize that home ownership makes sense for many Americans for many social and family reasons. It also makes sense financially.

Know Your Options for the "Fixer Upper"

Knowing Your Options for the "Fixer Upper"

  The fixer-upper properties on the market will give you more purchasing power when shopping for a new home. Bargains can be found in homes that have been foreclosed, seized by the government or just fallen out of repair due to homeowner neglect. While it is true that you will save thousands of dollars on these homes that will need lots of work, there are hidden costs that buyers fail to consider. Ask yourself if it’s worth it and know your options.

Know exactly what you are getting into
Don’t underestimate the cost of renovations and repairs. A home inspection will let you know the fundamental repairs and maintenance that must be done to the home. Without a home inspector, you may end up over paying for the fixer-upper anyway.
The inspector will evaluate any problems with the interior and appliances, roofing, heating and cooling system, plumbing, electrical wiring, insulation and ventilation, and the structural foundation, exterior faults and more. Fixer-uppers may have a lot of problems with these parts of the home, and a realtor can downplay the extent of the issues because of their stake in the outcome of the sale. A home inspector is worth hiring to get an unbiased perspective and uncover problems you can’t see yourself.