What the Dodd-Frank Rollback Means for Real Estate
On May 22nd, Congress passed reforms to the Dodd-Frank Act, the massive financial reform bill enacted in July of 2010 in the wake of the 2008 US financial crisis.
The current bill could have a big impact on the real estate and mortgage lending. Economists believe the rollback of the Dodd-Frank regulations could lend a hand toward partially solving the industry’s inventory crisis.
“This is a win for the financial industry,” said Chief Economist Nela Richardson, who worked on the bill as an economist for the Commodity Futures Trading Commission. “These are community banks, credit unions, a lot of them are in rural areas. They do a lot of mortgage lending. This will help consumers in that the banks will be able to free up some credit.”
National Association of Realtors Chief Economist Lawrence Yun echoed Richardson, adding that a loosening of Dodd-Frank rules may lead to a rise in regional construction.
“The regulations placed on small-size community banks were terrible because it hindered small-sized homebuilders from obtaining construction loans,” he said. “As the homebuilding industry has become more dominated by large corporations, now we have this relief, which means that, small-time homebuilders will have better access to capital to build homes.”
Economists seem to agree, that the economy is not on track to repeat the financial crisis of 2008, since big banks were at the center of the collapse a decade ago. Richardson explained that the only way to eliminate all risk is to make everything as onerous as possible.
The legislation will also require Fannie Mae and Freddie Mac to consider the use of alternative credit scoring models, which could help borrowers with thin credit files receive a mortgage. But Gardner said he’s concerned, ultimately, we need to remain aware of looser credit restrictions so the country does not repeat the acts of the last financial crisis, where homeowners were given loans they could not pay back.
PALM DESERT VISION SAN PABLO
The City’s newly updated General Plan identifies San Pablo Avenue as a key area for transformational change to facilitate the creation of a downtown/city center. The mile-long corridor connects shopping, restaurants, and other commercial services at El Paseo and Highway 111 with residential neighborhoods and The Civic Center including Civic Center Park, City Hall, College of the Desert, and eventually the CVLink.
Conceptual plans for the corridor call for a “road-diet” that would remove one vehicle lane in each direction on San Pablo and add enhanced walkways and buffered bike and golf cart lanes.
In May of 2016 the city set up a mock Vision San Pablo for 6 weeks. The city striped San Pablo reducing the road by one lane in each direction. They set up golf cart, bike and pedestrian lanes and created a round about at San Pablo and San Gorgonio. They brought in large boxed trees to line the center island and asked the community to use it and give feedback. The responses were overwhelmingly positive and the city adopted Vision San Pablo into their Updated General Plan.
They are currently working on updating the construction plans and surveyors are working now with ground breaking expected this summer.
THE CORRIDOR PLAN
A central goal of the 111 Corridor Plan is to systematically
evolve the physical design and functional characteristics of 111 to a 21st Century City Center Boulevard. The transformed 111 Corridor will provide an aesthetically cohesive, practically connected, safe and welcoming city center that emphasizes pedestrian activity and community life, balanced with and not dominated by high-speed automobile traffic. The 111 Corridor will become the city’s primary gateway as an iconic arrival point and a major hub for civic and commercial life and future developments in the Coachella Valley. In addition to 111 itself, the Corridor is supported by key districts and streetscapes.
The primary focus area
Approximately 1-mile of the 111 corridor between Highway 74 and Portola Ave. and includes seven cross streets, San Luis Rey, Larkspur, San Pablo, Las Palmas, Lupine and Sage. These areas are targeted to implement the city’s new urban design standards designed to increase the flow of vehicular, bike and pedestrian circulation for future development and open spaces.
Second Focus is along San Pablo between El Paseo and Civic Center, with street-scape renovations and traffic calming which will bolster connections to the larger community and Civic Center. In particular, San Pablo Avenue will feature a future roundabout at its intersections with San Gorgonio Way. This will allow the City and future developers to introduce and incorporate active and passive open spaces such as the existing community gardens and other public frontages.
Third Focus is San Alessandro, to incorporate several vacant lots that will be linked and transformed into a “Woonerf” District, which is a walkable flexible-use arts district pioneered to integrate live-work developments with the surrounding community and bolster cultural institutions and businesses.
Want to see more of what’s cook’n in Palm Desert and the New Updated City Plan, drop me a line, I’m happy to provide a copy of the whole report. Cathi@DesertAreaHomeFinder.com.
Market Watch Fall 2017
Here in The Real Estate Corner, we’re keeping an eye on the Desert Real Estate Market.
Leading Economist, Michael McDonald, is one of the principals in Market Watch, LLC. Michael along with his partners, study real estate markets, the US, and International economies and specialize in evaluating all aspects related to the real estate market including outside factors that play into how our market performs with cause and effect.
Twice a year Michael presents his report to the Top Real Estate Agents in the desert with their analysis of the local real estate market, where we’ve been and where we’re headed.
There are really two markets in the Desert; Full-time Residents who make up The Local Market vs The Second Home Market, and the Supply and Demand equation is quite different between the two.
“The health of the Valley housing market in the low, summer period, often indicates its performance in the spring.” Currently, there is a 4.4 month supply of inventory for all property types, which is down from 6.1 months supply one year ago. Indicating tight supply going into the season. There are positive sales and inventory numbers in all price brackets.
The leading measure for how much house you can buy is Median Household Income, it’s been up an average of 4.5% each of the past three years. The inflation-adjusted household income broke above the high of 1999 and is now at all-time highs.
The past six years of the housing recovery has been driven by low-interest rates on mortgage loans; now it’s getting help from higher wages.
Since the peak of the market in 2006, the percentage of people who own a home in the valley declined from 66% to 61.5%. As distressed homeowners who lost their homes in the downturn, move from renting back to homeownership again we will start to see an upswing in home sales over the next four years.
2006 marks the high point of the valley real estate market and 2011 marks the low point. Market Watch, LLC evaluates the market based on “Median” price as opposed to Average price, because average price is biased by a single large high-value sale, skewing the chart for the whole city. In their Median Price analysis by city we see:
La Quinta – Median Price $455,000
Up 85.7% from the low
Down 33% from the high
Indian Wells – Median Price $830,000
Up 53.7% from the low
Down 31% from the high
Palm Desert – Median Price $376,000
Up 31% from the low
Down 31% from the high
Rancho Mirage – Median Price $600,000
Up 41.8% from the low
Down 37% from the high
Palm Springs – Median Price $592,000
Up 76.7% from the low
Down 33% from the high
Indio – Median Price $305,000
Up 92.4% from the low
Down 19.8% from the high
The market continues to improve, gaining strength and momentum each quarter. As we move into our new season, they are projecting an increase in the number of sales and if inventories remain low, we will start to see upward pricing pressure.
3 Negotiating Mistakes Home Sellers Make. So you’ve staged your home beautifully, timed the market perfectly for a quick sale and you’ve priced your home right. Time to start getting full price offers right? The reality is that buyers are full of surprises and nearly all of them are predictable. Here are 3 negotiating mistakes many home sellers make that you can avoid.
Home Buyers, rarely pay list price, they discount or dismiss improvements you’ve made, their inspections usually turn up something for you to fix and their offer may have terms you hadn’t anticipated.
Whether you plan to or not, you’ll need to negotiate, that doesn’t mean you win and the buyer loses or vice versa. It’s simply a way to make smaller concessions so that you don’t lose the buyer and the buyer doesn’t lose your house. Negotiation is designed for both parties to get what they want.
Good News, a potential buyer has indicated they’re going to make an offer on your home, that means you’ve done something right or you wouldn’t have an offer, but a sale isn’t in the bag yet. Don’t blow it. Here are 3 negotiating mistakes to avoid.
NEGOTIATING MISTAKE 1:
DEMANDING TOP DOLLAR FOR AN AGING PROPERTY –
Yes, the market is better than it was during the recession, however, an older home that hasn’t been updated or maintained to perfection can’t compete with refreshed or newer homes.
Taste-makers suggest that interiors need updating every 10 years because color, patterns and textures define each generation.
After living in your home for a few years, you no longer see the dings, scuffs or aging finishes and fixtures that make a home look used. But the Buyer does, even if your home is in good condition, the Buyer sees something that needs to be replaced.
NEGOTIATING MISTAKE 2:
TAKING A LOW OFFER PERSONALLY –
A buyer may make an offer for your home far lower than you feel it’s worth. Don’t take it personally. it’s a negotiating tactic. They rarely are expecting you to take 20% off the list price, but they are telling you something. You, (your agent), needs to find out what the reasoning is behind the low offer. Perhaps they’re using inaccurate comparable, they could be trying to buy above their price range, or they may be investors who use a low-ball formula to acquire properties.
No offers, or extremely low offers could be telling you that your home is over-priced compared to similar homes in your neighborhood. If your agent gave you a price range for what homes similar to yours are selling for and you priced above that range, you need to lower your price. A low offer can also mean the market has slowed or shifted since you originally listed your home. It’s time to re-evaluate your position by taking a new look at the current comps for your neighborhood. The secret to pricing correctly is pricing into the market you’re headed into.
NEGOTIATING MISTAKE 3:
AN ALL OR NOTHING ATTITUDE –
Negotiations keep the dialog going and the buyer interested. That’s why asking questions before you say no is always a good idea. If you know what the buyer really wants, it’s easier for you to draft a counter that can work for both of you.
In a seller’s market, you may expect multiple offers from multiple buyers, and that could happen, but it’s rare. In a soft market, your buyer is more likely to simply walk away and find another home that’s priced better with more features or in better condition.
Avoiding these negotiating mistakes home sellers make and being flexible on the points that count most with the buyer, like move-in dates, may make negotiating repairs easier as you move through the contract timeline.
You want to sell and the buyer wants to buy; Having Skilled Negotiators on Your Team, like Cathi and Ben Walter, will be critical to maximizing what you can ask and receive for your home sale.
Call or email us today to find out how our Skilled Negotiating Strategies Will Work for You. (760) 218 – 5752 Cathi@DesertAreaHomeFinder.com
The Gardens 19th Annual Concert Series kicks off Saturday, January 28th with entertainment by the John Stanley King Band with proceeds benefiting YMCA of the Desert. The 8-week series consists of a 1-hour concert each Saturday night on the Center Lawn of The Gardens on El Paseo from 5-6pm, with ticket sales and wine reception preceding each concert. A $15 ticket purchase helps benefit local charities and includes 2 glasses of wine and lite bites.
- January 28 – John Stanley King Band benefiting YMCA of the Desert
- February 4 – Desert Sol benefiting American Cancer Society
- February 11 – Lao Tizer Band benefiting VNA California
- February 18 – Slim Man Standards benefiting Gilda’s Club Desert Cities
- February 25 – Machin benefiting Women Leaders Forum of the Coachella Valley
- March 4 – Heatwave benefiting Angel View
- March 11 – Patrick Sieben benefiting United Cerebral Palsy
- March 18 – John Stanley King Band benefiting Jewish Family Service of the Desert
Whether you’re an experienced homebuyer or novice, buying a Home can be complicated, with a lot of moving parts. Every home buyer wants to know their purchase was a good investment choice.
There are a few things you will want to think about as you start home shopping.
TAKE YOUR TIME – Make sure you take enough time to look at many homes in a variety of areas. Think about your lifestyle and how each home fits. Look at different times of the day so you understand the rhythm of the neighborhood. Is it quiet during the day but teaming with parked cars and kids playing in the street after work hours? Is it quiet after work hours but used as a main thoroughfare for traffic during the day?
FOCUS ON WHAT MATTERS – Location is one of the keys to a home’s current and future value. Being in a good school district may not be on the top of your list for qualifications, but has been proven to be an important item to many buyers. By focusing on the proven things buyers look for, you can be assured you will be able to sell your home more easily and the value will hold and likely increase.
THINK WITH YOUR HEAD – A home is a place to live, but is also a large expense and investment. Make sure you don’t overpay or buy a home with problems you can’t cope with later because you let your emotions lead the way.
USE YOUR IMAGINATION – Some homes can be a great bargain because homeowners can’t look past the ugly carpet or overgrown lawn. Picture the home for what it could be, ignoring things that are easy to fix such as worn wallpaper, or paint color. You might be able to negotiate a great deal since other buyers weren’t as imaginative as you, and then use the extra money to fix up the home to the showplace you knew it could be.
KNOW WHAT YOU CAN AFFORD – Stretching to get into a house is usually a bad idea; you may be tight on money and not able to pay for repairs or worse, have a turn in your financial situation and face losing your home. Likewise, using creative financing to get into a house you can’t afford can also be the fast track to problems when the mortgage payments rise.
GET PROFESSIONAL HELP – A professional real estate agent will provide you with access to all listings for homes for sale in your area. They also use their connections in the field to keep you up-to-date on new homes coming on the market so you don’t miss a bargain. In addition, as an expert within the market, they will be able to provide guidance on whether a house is a good deal, what to offer, and whether they see any potential problems you may not have noticed.
We are the experienced choice for home buying the desert area. Our skilled screening process will match you with your perfect lifestyle property, we will identify the bargains that fit your criteria and walk you through the home buying process. Call today for your buyer consultation.
During the Holiday Season, you will have potential buyers wanting to preview your home, so let’s talk about how to stage for the occasion. It’s about more than just your personal style and taste when bringing out the festive decorations. Houses do show better when they’re decorated for the holiday but the question is, what kind of decorations?
DON’T OVER DO IT
Decorations can easily become clutter so stick to just a few simple festive touches.
If you are going to put out pumpkins and fall wreaths, put away your everyday style pieces. If you’re going to have a Christmas tree, remove nearby furniture pieces. By keeping just a few simple decor pieces it will help make your home appear bigger and….better.
KEEP IT NEUTRAL & NATURAL
As a multicultural region, the best rule of thumb is to keep holiday decorations neutral and natural
Natural holiday decorations are a great choice because they aren’t overtly religious and they add a subtle, sophisticated style. For fall choose pumpkins, gourds, colored leaves and pinecones as accents. For winter decorate with fresh evergreen wreaths, berries, rosemary branches, and lights.
MAKE A HOLIDAY TREAT
Making a holiday treat to pass out at an open house will make your home smell great and be a big hit with buyers.
For both fall and winter, you can serve hot apple cider, pumpkin bread or special holiday cookies. A big pot of simmering spices or fresh baked cookies will also make your home smell irresistible. Use natural scents, never artificial room fresheners.
DON’T TRY TO HIDE FLAWS
Serious buyers will be looking closely at every nook and cranny, when they spot something that is covered up by a holiday decoration it appears as if you may be trying to hide something and they lose trust. So fix any flaws, don’t cover them up.
No matter what the season, presenting your home the right way to find qualified buyers is crucial. We are here with the experience and market knowledge it takes to position your home so it outshines the competition, call today for more information about how our marketing strategies will get your home sold quickly for top dollar.
Making an offer to buy a home and actually buying a home are generally two different actions, but home buyers sometimes confuse the two. In California the purchase offer, many times will not be the final negotiation due to contingencies in the contract.
Reality of Purchase Offers
When a home seller accepts an offer, the seller is optimistic the buyer will complete the transaction at the price agreed upon and believes there is nothing wrong with the condition of the home. The home buyer, on the other hand, is hoping the transaction will close because the home is in A-1 condition and perfect.
It’s rare that either of those expectations are in line with reality. No home is perfect and many conditions can change once a contract is accepted.
- Buyers often submit repair requests
- Low appraisals can threaten to blow the deal
- Mortgages can be denied in underwriting
Hesitating to Take the Next Step in Buying a Home?
If the home you’re thinking about buying is likely to sell quickly, and if you have a “contingency or subject to clause” which allows you to perform your due diligence and cancel if you find a red flag, you should immediately make a purchase offer. Don’t sleep on it or try to get every single question answered beforehand or you may very well lose the home. Somebody else could beat you to the draw.
If you like the home, odds are several other active home buyers will, too. You’re not the only smart cookie who can spot a great buy.
And no, losing the home doesn’t mean it was “supposed to be that way.” Consider instead that you were supposed to buy it, and you messed up.
Types of Homes That Quickly Sell
In seller’s markets, almost every home sells quickly. In buyer’s market’s, the Days on Market, (DOM), will be longer. There are many inherent characteristics and qualities that determine whether homes are likely to sell fast, but these are the top two combinations:
- Turnkey homes in high-demand neighborhoods, excellent condition and priced right.
- Cosmetic fixers in good locations and priced below comparable sales.
If the home you want to buy falls within those two categories, you should move quickly to make an offer, provided you know you have a contingency period in the contract to perform your due diligence.
Pros to Making Immediate Offers to Purchase
The obvious reason to make an offer right away, you can block another buyer from buying it. When the seller accepts an offer from you, the seller cannot accept another, except as a back-up offer, good only if your contract is canceled by you.
If your offer is first and sole, you can negotiate on price and terms. You can make a lower offer. If there are multiple offers, your negotiation power is minimized.
Even if other buyers are interested, they will generally move on to another property once the seller accepts an offer.
Cons to Making Immediate Offers to Purchase
If you’re unsure between two homes and go into contract on property A, property B might not be available if you should change your mind and cancel the first transaction.
Return of an earnest money deposit is not automatic. Both parties are required to sign cancellation instructions.
Buyers can incur costs that are not refundable such as appraisal, credit report and home inspection fees that are non-refundable. Generally, title policy / escrow and other closing costs are waived upon cancellation.
Given the alternative of losing the home you want, however, take advantage of lessens learned by other Buyers who have lost opportunities because they were hesitant to act with urgency — instead of learning this painful lesson yourself.
Cathi and Ben Walter bring the skills and experience to help you navigate through the home buying process; if you’re thinking about a home purchase in the desert, call Cathi & Ben today for more information (760) 218 – 5752
We frequently hear home sellers say,
“I can always come down but I can’t go up, just bring me an offer!”
An over-priced listing say’s a few things to a home buyer;
- The Seller is not in a hurry to sell
- The Seller is not committed to Selling
- The Seller is unrealistic and demonstrating they will likely be difficult to negotiate with.
Beyond the buyers perception of the seller, an agent who works in the community knows home values, what features, amenities and condition, in a specific price range. They’re working hard to show their client’s the best value properties in the buyers price range. They don’t want to loose credibility with their client by showing an obviously over-priced home.
After searching on-line, the buyer wants to see their selected homes in person, the over-priced home is now competing with homes that are properly priced in that price range and falls short of the competition. Setting up a situation where the over-priced home is dismissed out of hand, or worse, used to show what a great value the home next door is that’s priced correctly.
Buyers enter the home buying process having done a lot of homework in advance, they know the communities they’re interested in, they know what’s on the market, recent sales and they know values. Information is free flowing, before ever entering your home, the buyer likely know’s when you bought it, what you paid, what your taxes are, how much you owe on the mortgage and what it looked like when you bought it.
Unless it’s an investor, looking for the bottom dollar, buyers aren’t interested in wasting their time searching for and previewing multiple homes so they can make a string of low-ball offers in a low percentage play when they believe their offer will be rejected.
So how much over-market is too high, where do we draw the line on over-pricing? A lot depends on the neighborhood, but generally speaking, a list price that exceeds 10% of market value is too high.
Correctly pricing a home to sell is strategic, it’s both an art and a skill. Pricing in to the market you’re headed in to is the best strategy with a plus or minus of 3% depending upon whether it’s a buyer or sellers market.
For more insights on market values in your neighborhood, give us a ring – we’re happy to provide more specific information that applies to your home and values.
Cathi and Ben Walter
(760) 218 – 5752
The Coachella Valley real estate season has been mixed so far; we’ve had what seemed to be a couple of false starts with an increase in sales at the start of the year, then sales slowed.
There is a convergence of factors at play in the desert real estate market. We’ve seen fewer of our Canadian friends this season due in part to the value of the Canadian Dollar vs the US Dollar and the decrease in the price of oil.
The Canadian Dollar is down to about 80 cents. While that’s a change from one year ago, it isn’t that different from the historic range of 2004 – 2005 & 2009. Many experts say the days of 2011 & 2012 when the Canadian Dollar was at par or above the US Dollar are likely behind us.
In addition to the impact of fewer Canadian Home Buyers, we also saw local home prices increase fairly rapidly in the past year; prices got ahead of the market and sales slowed. In the first 2 months of this year, sales are down about 13% overall for the valley and prices have softened, making now a great time for buyer’s to make their move.
Currently Buyer’s can enjoy a nice selection of properties to choose from, we have an increase in inventories and lower prices. Buyer’s can strike their best deals now, an imbalance in any market creates opportunity.