When searching for a home, you may end up selecting a property in a community with a Homeowners Association (HOA). Before you buy, it’s important to know how an HOA works and what they mean for you.
According to a recent article on realtor.com,
“In a nutshell, an HOA helps ensure that your community looks its best and functions smoothly…The number of Americans living in homes with HOAs is on the rise, growing from a mere 1% in 1970 to 25% today, according to the Foundation for Community Association Research.”
An HOA is governed by a board nominated by those living in the neighborhood. It is designed to make sure the residents have a support structure to maintain the value of the community while abiding by a set of guidelines called Common Restrictive Covenants (CC&R),
“Simply put, CC&Rs are just the rules you’ll have to follow if you live in that community. Unlike zoning regulations, which are government-imposed requirements on how land can be used, restrictive covenants are established by HOAs to maintain the attractiveness and value of the property.”
It’s important for homeowners to understand that each HOA is a little different, and they usually have monthly or quarterly fees required for homeowners. These fees can vary based on property size, number of residents, amenities, and more. There may be additional fees charged to homeowners if the reserve fund for the HOA cannot cover a major or unexpected cost, like severe storm damage.
The fees, however, also help maintain common areas such as swimming pools, tennis courts, elevators (for high-rise buildings), and regular wear and tear. Although they are an added cost to the homeowner, an HOA can be a major benefit when it comes to maintaining the value of your neighborhood and your property.
The same article continues to say,
“After your offer to buy a home is accepted, you are legally entitled to receive and review the community’s CC&Rs over a certain number of days (typically between three and 10)…If you spot anything in the restrictive covenants you absolutely can’t live with, you can bring it up with the HOA board or just back out of your contract completely (and keep your deposit).”
Most lenders will factor your HOA fees into your loan package, ensuring the amount of the loan is appropriate for what you can truly afford.
There are some great benefits to having an HOA oversee your neighborhood, and it’s important to understand what fees, structures, and regulations will come into play if there is an HOA where you’d like to live.
When you’re looking at a potential property to buy, be sure to work with a professional who can help you understand the neighborhood’s HOA structure and fees. This way, you’ll feel confident and fully informed when buying a home.
If you have any other questions about the buying or selling process please visit my reports page where I have numerous articles and tips that can help.
Homes priced at the top 25% of the price range for a particular area of the country are considered “premium homes.” In today’s real estate market, there are deals to be had at the higher end! This is great news for homeowners wanting to upgrade from their current house.
Much of the demand for housing over the past couple of years has come from first-time buyers looking for their starter home. Many of the more expensive homes listed for sale have not seen as much interest.
According to ILHM’s Luxury Report, this mismatch in demand and inventory of luxury and premium homes has created a Buyer’s Market. For the purpose of the report, a luxury home was defined as one that costs $1 million or more.
“A Buyer’s Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point.”
The authors of the report were quick to point out that current conditions at the higher end of the market are no cause for concern.
“While luxury homes may take longer to sell than in previous years, the slower pace, increased inventory levels and larger differences between list and sold prices, represent a normalization of the market, not a downturn.”
Luxury can mean different things to different people. To one person, luxury is a secluded home with plenty of property and privacy. To another, it could be a penthouse at the center of a bustling city. Knowing what characteristics mean luxury to you will help me find you the home of your dreams.
If you are debating upgrading your current house to a premium or luxury home, now is the time!
California Theatre deal: Largest-ever downtown condo tower planned
By Phillip Molnar
There may be new life for the nearly 100-year-old California Theatre on C Street.
Preservationists have struck a deal with a developer that intends to construct a multi-million dollar 41-story condominium tower on the site of the historic theater. The compromise will preserve more of the building’s exterior and lobby, as well as use original ornamentation.
A dispute between preservation group Save Our Heritage Organisation, or SOHO, and the developer halted the demolition in March 2018. The new plan still calls for tearing down the heavily dilapidated building, but more of its exterior will be saved and a stronger effort will be made to faithfully reconstruct the building. The California Theatre, made up of a 2,200-seat theater and nine-story office building, closed in 1990.
Rising above the former theater, developers have decided on a 474-foot futuristic-style tower designed in partnership with San Diego-based Carrier Johnson + Culture. At 444 units, it would be the largest condominium complex in downtown’s history and rare in the apartment-heavy market.
The new design is expected to be reviewed by downtown planning agency Civic San Diego in July, and then reviewed by the city’s Planning Commission in August or September. The developer’s application said it hopes to start construction in March 2020 and complete it by September 2022.
The theater site at 1122 4th Avenue was purchased by Beverly Hills-based Sloan Capital Partners in 2006. The project is being developed by Caydon Property Group, an Australian company, which is coordinating with SOHO on the preservation of the site.
Bruce Coons, executive director of the preservationist organization, said the plan was a major improvement from the original design that gutted out the theater’s nine-story office building to be used for parking spots, and saved little of the original structure.
Instead, the new plan calls for reconstructing the lobby in its entirety. Much of the exterior will be rebuilt to look exactly like it was, but the interior will be modern. Efforts will be made to reuse ornamentation of the building in the new structure. The western wall with a large yellow Caliente horse racing advertisement cannot survive the reconstruction, but the developer will attempt to recreate it.
Coons said the organization is excited to be a part of the process.
“It will be a good, accurate reconstruction,” he said. “We will be working with the design team until it is completed.”
Caydon principal Joe Russo said in an emailed statement that while the building could not be saved, it has worked hard to rebuild the complex and honor its history.
“Our team is a big fan of the history behind the California Theatre and drawn to the details in the architecture,” he wrote. “We worked diligently on the design of the building to create a landmark destination that captures the essence of the community and celebrates the theater’s history.
Parts of the building have fallen off and are sitting behind a chain-link fence blocking the public from getting too close. Despite being shuttered for decades, plenty of people still sneak inside and post photos and videos online. The outside of the building is also a popular spot for homeless people to congregate with a city-operated bathroom, and portable toilets, nearby.
Plans for the building include a communal area and a dog park on the seventh floor, gym and yoga area on the eighth level, lap pool and sky deck on the ninth floor, and a lounge for residents on the top level. There will be 45 subsidized housing units and 252 underground parking spots. The design calls for an eco-roof on top of the office building and U.S. Green Building Council certifications for environmentally friendly features.
“Our project is both a new urban marker and a historical memory at the same time,” Giuditta De Santis, Caydon architect, said by email. “We were concerned about the site’s inter-connection between the past and the future.”
The design submitted to Civic San Diego proposed studios (average 567 square feet), one bedrooms (averaging 765 to 795 square feet), two bedrooms (averaging 1,081 to 1,129 square feet), three bedrooms (averaging 1,714 square feet) and penthouses averaging 1,71quare feet. The complex will include 7,445 square feet of retail.
The California Theatre opened in 1927 and was the largest movie palace in San Diego County. It started by playing silent, black-and-white films but later moved on to talkies. The space was also used for concerts and a bootleg Patti Smith album was recorded there in 1978.
Save Our Heritage Organisation and its attorneys had argued the city did not do its due diligence in originally approving the project by not considering other options for the building, as required by the California Environmental Quality Act.
C Street, centrally located downtown and on the San Diego Trolley route, may be undergoing a bit of renaissance in the coming years. A $400 million complex made up of mostly apartments has been proposed to replace the former courthouse. The Holland Partner Group project is about four blocks from the California Theatre site and, if both projects go through, could be a major change for one of downtown’s most shunned streets. Aside from governmental buildings and a few new restaurants, much of the street is made of bail bonds businesses and shuttered stores.
California Theatre narrowly becomes the largest-ever condo tower in downtown. The Grande at Santa Fe Place on Pacific Highway has 442 condos. Vantage Pointe on 9th Avenue, with 679 units, was developed as a condo building but ended up as apartments.
It will be interesting to see if it gets approved...Stay Tuned!
In a real estate market where home prices are rising, many have begun to reexamine the idea of buying a home, choosing instead, to rent for a while. But often, there is a dilemma: should you keep paying rent, knowing that rent is rising too, or should you lock in your housing cost and buy a home?
Let’s look at both scenarios and analyze the pros and cons of each:
With the housing market crash in 2008, many homeowners lost their homes and became renters. According to Iproperty Management, “the number of households renting their home … rose from 31.2% of households in 2006 to 36.6% in 2016”.
Some choose to rent because it is more convenient for their lifestyle. Those whose job requires frequent moves need the flexibility that a 6-12 month lease agreement gives them so they can move to their next assignment!
Many renters believe that renting is cheaper because they do not have to pay for maintenance and repairs. (Not true! Landlords work those expenses into your rent and other fees). Another reason many rent is that they feel like they cannot afford the down payment and closing costs required to buy a house, due to their inability to save much after paying their monthly expenses.
That can be true! Nearly 1 in 4 renters spend at least half their household income on rent. In 2017 the “severely” burdened renters’ rate was 24.7% with 24.9% reporting they were “moderately” burdened.
Renting also brings some financial disadvantages. Homeowners can take advantage of tax deductions that let them claim their property taxes and mortgage interest. Additionally, there is a big risk that your rent will go up every time you renew your lease, as we know the median asking rent has been increased steadily since 1988!
One of the major challenges with renting is that you don’t have a space to call your own. When you rent, you are paying your landlord’s mortgage, and therefore they are the beneficiaries of the equity gained from paying that mortgage.
Now let’s explore the other side: Homeownership
In the past, we have mentioned the many financial and non-financial benefits of becoming a homeowner. So, let’s just focus on the one big difference between renting and owning, the ability to lock in your housing cost!
Assuming you will have a fixed-rate mortgage, your costs are predictable! You will know exactly what your mortgage payment will be for the next 15-30 years. The homeownership rate in 2018 was 64.4%, and has been on the rise. Those households locked in their housing cost rather than wait for their landlord to raise their rent again!
What are the disadvantages of owning a home? Well, it is a long-term financial commitment! It is not easy to pack quickly and move. You will need time and good planning to do it in a short amount of time.
You need to save your money! Getting a mortgage requires a down payment, closing costs, and moving expenses. Again, that will require some savings and planning!
Unless you have a homeowner’s association (HOA) (and you pay an HOA fee) or a home warranty, you will be responsible for maintenance and taking care of the home. This may range anywhere from regular landscaping to major repairs.
Like everything in life, there are pros and cons. What is better for you depends on your situation! If you are interested in becoming a homeowner and want to discuss the pros and cons, contact me today and I can help you review your current situation!
During the housing market crash, Gen X homeowners lost more wealth than other generations. However, things are changing now! A strong economy, increasing home prices, and the recovery of the housing market are helping this generation to regain their lost wealth.
According to Pew Research Center,
“Their fortunes have rebounded more than those of other generations during the post-recession economic expansion and as home and stock prices have risen. Since 2010, the median net worth of Gen X households has risen 115%. In fact, in 2016, the most recent year with available data, the net worth of a typical Gen X household had surpassed what it was in 2007 ($84,200 vs. $63,400)”.
The same report also mentioned,
“15% of Gen X’s homeowners were ‘underwater’ on their homes in 2010 (meaning they owed more than they owned). By 2016 only 3% were underwater.”
As a result of homes regaining market value and their increasing net worth, many Gen Xers are presented with the opportunity of selling their current home in order to move up to the house they always dreamed of!
According to the 2019 Home Buyers and Sellers Generational Trends Report by the National Associations of Realtors, in 2018 Gen Xers made up the second largest share of home buyers by generation at 24%.
The report also provided some highlights about their purchase:
- Greatest share that purchased a multi-generational home (16%).
- Largest share that purchased a detached single-family home (88%).
- Highest median household income ($111,100).
- Bought the most expensive homes of all the generations.
- Job-related relocation was identified as the primary reason to buy.
But this generation is not only buying- they are selling too!
- Largest share of home sellers (25%).
- Highest median household income among sellers ($123,6000).
- Tenure in the previous home was a median of 9 years.
- House too small was indicated as the primary reason to sell.
- 91% sold the home using a real estate professional.
If you are a Gen Xer who would like to know exactly how much your house is worth today so that you can move up to the home of your dreams, contact me today 619-997-4241 and I can help you analyze your current circumstances.
A lot is happening in the world, and it’s having a direct impact on the housing market. The reality is this: some of it is positive and some of it may be negative. Some we just don’t know yet.
The following three areas of the housing market are critical to understand: interest rates, building materials, and the outlook for an economic slowdown.
1. Interest Rates
One of the most important things to consider when buying a home is the interest rate you will be charged to borrow the money. The latest information from Freddie Mac makes it appear they are. We are currently at a 21-month low in interest rates.
2. Building Materials
Talk of tariffs could also affect the housing market. According to a recent article, the National Association of Home Builders reports that as much as $10 billion in goods imported from China are used in homebuilding. Depending on the outcome of the tariff and trade discussions between several countries, there could be as much as a 25% boost in the cost of building materials.
3. Economic Slowdown
We began the year with many economic leaders thinking we could expect a recession in late 2019 or early 2020. As spring approached, economists have now started to push that projection past 2020. Now, three leading surveys indicate that it may begin in the next eighteen months.
We are in a strong housing market. Wages are increasing, home prices are appreciating, and mortgage rates are the lowest they have been in 21 months. Whether you are thinking of buying or selling, it’s a great time to be in the market.
If you are a “baby boomer” (born between 1946 and 1964), you may be thinking about selling your current home. Your children may have finally moved out. Your large, four-bedroom house with three bathrooms no longer fits the bill. Taxes are too high. Utilities are too expensive. Cleaning and repair are too difficult. You may be ready to move into a home that better fits your current lifestyle. Many fellow boomers have already made the move you may be considering.
The National Association of Realtors recently released their 2019 Home Buyer and Seller Generational Report. The report revealed many interesting tidbits about both categories of baby boomers: younger boomers (ages 54 to 63) and older boomers (64 to72). Here are a few of the more interesting topics.
Percentage of Buyers who Looked Online First
- All Buyers: 44%
- Younger Boomers: 46%
- Older Boomers: 44%
Where Boomers Found the Home They Purchased
The two major ways buyers found the home they purchased:
- All buyers: 50% on the internet, 28% through a real estate agent
- Younger Boomers: 46% on the internet, 33% through a real estate agent
- Older Boomers: 36% on the internet, 35% through a real estate agent
Distance Seller Moved
The distance between the home they purchased and the home they recently sold was much greater for boomers than the average seller.
- All sellers: 20 miles
- Younger Boomers: 27 miles
- Older Boomers: 50 miles
Tenure in Previous Home of Seller
The percentage of older boomers who lived in their previous home for more than 20 years was almost twice the amount of the average seller.
- All sellers: 16%
- Younger Boomers: 20%
- Older Boomers: 31%
Primary Reason to Sell their Previous Home
- Want to move closer to friends or family
- Home too large
View of Homeownership as a Financial Investment
- 83% of Younger Boomers see homeownership as a good investment
- 82% of Older Boomers see homeownership as a good investment
If you are a boomer and thinking about selling, now might be the time to contact an agent to help determine your options.
Are Millennials The Key To Future Housing Demand?
Housing demand has been taking some hits lately with rising home prices, lack of affordable inventory, and lingering student loan debt, but millennials may be the key to where it goes in the near future.
The tough conditions for buyers in the market that may be slowing demand have mostly been balanced by low unemployment and a strong economy, but recent numbers have shown that a market stalemate between these forces may be developing. CNBC ran a report this week that despite this, we may be on the edge of “an absolute perfect storm for demand” thanks to millenials, and they may be the force that tips the scales of home buying.
I wrote in our last blog about how the percentage of millenials who say they’re actively seeking to purchase a home is now exceeding generation X and the baby boomers, and although those two other generations are key to the housing market, the enormous numbers of the millennial generation represent a huge potential impact. Millennials have broadly been later to marry and have children, and similarly late to home ownership. Student loan debt is a part of that, but as the job market strengthens for them, and as they age and begin families, they’ve become a massive population who are saying loudly that they want to become homeowners too.
Household formation should continue to grow strongly over the next few years, according to the report, and we should be poised to see large numbers of people bolstering demand. It will continue to be a balancing act with the homebuilders though. Whether they can overcome labor shortages, and trade / tariff difficulties with raw materials, enough to keep up with demand remains to be seen.
What do you think? Will millennial demand outweigh any market slow down? How long will it be before we see their big numbers make an impact? Leave me a reply or ask me any questions you have below! And if you’re thinking of whether it’s a good time for you to buy or sell, lets talk about the ins and outs of the current market. Contact me today for any of your real estate needs!
Homeowners Seeing Big Equity Gains
June 21st, 2018
As home values have risen, so has owner equity. For most homeowners, the equity in a property is one of the foundations of building long term wealth, and a major reason Americans seek to own vs. rent. At a time when price appreciation continues to climb, those who own are seeing big equity gains, and those who don’t own yet are motivated to buy and join in reaping the rewards of the market.
Individual owner equity has grown 13.3 % year over year, the highest rate in the last four years. The average homeowner gained $16,300 in equity from the first quarter of 2017 to the first quarter of 2018. And overall owner equity as a percentage of the total national value of all real estate has hit a record high.
While this might worry some, who continue to call the current growth another “bubble”, the fundamentals underlying the numbers are far more positive. With the market crash in 2008, the growth of mortgage debt fell negative, and stayed that way until 2015. Since then, total debt has only risen modestly, while property values have gone up faster. Total equity (the difference between that debt and value) has reached $15 trillion in the first quarter of this year. As a percentage of value, owner equity nationwide has increased to 59.7% this year, from the past high of 58.9% at the end of last year.
Another strong fundamental accompanying equity gains is the fact that a higher percentage of the new mortgages being issued are going to those buyers with the best credit. Since the crash, the share of loans going to households with scores over 759 climbed sharply from 24% in 2007, to 58% this year. So with homeowners sitting on more equity, and holding solid loans, the likelihood of any repeat of the dark days seems slim to none. Instead, homeowners are finally taking advantage of one of the key benefits of owning a home.
Have you built sizable equity and are looking to cash in? First time buyer looking to start your road to building your nest egg? Either way, we can help you. Contact us today for all your real estate needs!