Meet HENRY — “high earners not rich yet” — the term was first coined by Fortune Magazine and describes a niche subset of the population that represents the next generation of wealth. the most important demographic consumer segment that you’ve probably never heard of.
Today, HENRYs are largely millennial’s (and some younger members of Gen X) who earn an annual household income of more than $100,000. These top earners are well on their way to becoming tomorrow’s affluent consumer. HENRYs are the heavy lifters in the consumer economy. If 70 percent of the U.S. GDP is consumer spending, then the HENRYs are the key driver in that figure. They make up only about 18 percent of the total U.S. households, but account for roughly 40 percent of total spending.
Millennials life paths differ from previous generations when it comes to deciding when to get married and start a family. Travel and Experiences are more important to them and they place a premium on both. It should come as no surprise, then, that the way in which millennial HENRYs make their buying decisions, and specifically when it comes to buying a home, also differs from generations past.
Inside the mind of the HENRYs
It’s worth noting that the American dream of home-ownership is still very much alive and well for millennial HENRYs. According our recent study, 97 percent of millennial HENRYs either own a home or plan to buy a home, while nearly three-quarters either already own or plan to own a second home.
However, HENRYs are changing the traditional definitions and attributes associated with luxury, and specifically as it relates to what a luxury home means to them. When asked what makes a brand luxury, 80 percent said superior quality.
Only 47 percent said a premium price.
The top indicator of a luxury home as identified by 68 percent millennial HENRY’s is finishes. Location and amenities were ranked as the second and third most important factors in determining what makes for a luxury property, by millennial HENRYs.
Millennial HENRYs are willing to pay for what they want and value in a home, i.e. finishes, neighborhood, amenities, etc., but that luxury isn’t determined by price tag alone. Rather, for this demographic, luxury means a home that suits their unique preferences and needs, and beyond that, the lifestyle they want to achieve.
Whether that means living in a chalet at the base of a mountain year-round in Aspen, or a beach side bungalow on Hilton Head Island, HENRYs are precisely curating their lifestyles to reflect their unique preferences.
Luxury is more than just a property — it’s the enjoyment of life according to their unique and personal definition of luxury.
For more information about targeting the HENRYs when selling your home, give me a ring (760) 218 – 5752 or drop me a line, Cathi@DesertAreaHomeFinder.com Our strategic marketing positions your home for this niche demographic.
DESERT REAL ESTATE MARKET REPORT
2018 Year in Review
As we start 2019, it’s time to take look back at how the Desert Real Estate Market performed last year and look for developing trends.
In 2018, there were 5,836 single family home sales throughout the Coachella Valley. Those homes sold at an average of $610,300 and an average of $260. / Sq Ft. Homes that were priced correctly for the market, sold on average in 89 days. The highest sale price in 2018 was $12,000,000 for a home located in The Madison in La Quinta.
With those statistics, we compared 2018 sales to the previous year and found that while the number of sales were down slightly overall, (2%), Selling Prices were up 10% and the price / sq ft was up 8%. The time it took to sell was down 10% from the year prior. The highest priced home sale in 2017 was $8,700,000. for a home located in The Vintage Country Club in Indian Wells.
While prices are up, inventories remain low as compared to this time of season in years past. Historically when the inventory of homes for sale is low, prices tend to rise due to the pressures of supply and demand.
Interest rates also play an important role in how markets perform; rates are still low despite the fact that the Fed gave us 4 rate increases in 2018. As rates increase, buyers can afford less house for the same mortgage payment, which ultimately puts downward pressure on home prices.
But good news, rates pulled back a bit this week. Conforming loans, (up to $484,350) for a 30 year fixed rate is still just 4.47%.
The Coachella Valley has long been viewed as a destination for the soon to retire and already retired home buyers looking for an active lifestyle, but with the increase in mobile commuting, people can work from anywhere. We’re also seeing more young home buyers who are looking for a quality lifestyle, moving to the Desert full time. Easy Freeway and International Airport access makes that possible.
Combine the Lifestyle that only the Coachella Valley offers along with affordable home prices – the Valley is and will continue to be a destination for both full time residents, second home buyers and
We have a strong and steady real estate market here in the Coachella Valley.
If you would like more detailed information about your neighborhood specifically, drop me a line – we just finished our 2018 “Year in Review” Market Report, I’m happy to send you a copy.
Broker Associate with Bennion Deville Homes
Paint Colors that Sell.
Did you know that using certain paint colors in specific rooms of your home can statistically increase the value by as much as $10,000? Sounds incredible, but it’s been proven true. According to an exhaustive study done by Zillow, they looked at more than 32,000 photos from sold homes around the country. They compared how certain paint colors impacted the sale price on average, when compared to homes with white walls.
Homes with Blue Bathrooms sell for $5,400 more than expected. Listings with cool, neutral colors sell for more money and homes with white, yellow or red wall colors can sell for less than expected.
Paint Colors that Sell: Blue Bathrooms, found in hues of powder blue or light periwinkle, sold for the highest sales premium of all colors analyzed. Walls painted in other cool, natural tones like pale gray or oatmeal were also among the top performing listings.
They found that some colors may actually deter buyers; the darker more style specific wall colors such as terracotta Dining Room walls sold for $2,000 less than expected.
However, a lack of color may have the biggest negative impact. Homes with white bathrooms sold for an average of $4,000 less than similar homes.
Paint Colors that Sell: Oatmeal, pale taupe or light beige did better in the Living Room, selling for about $1,900 more than expected.
Paint Colors that Sell: The exterior color that garnered the best price premium was
“Greige”, a combination of gray and beige with the front door painted in a contrast color such as dark Gray, Navy Blue or Black.
As a Home Stylist, we are here to help with the latest information on trends that we see in the real estate market. We’ve got our eye on the market so we can help elevate your home above the competition. For more information about how our “Home Styling” will get your home sold for top dollar, give me a ring.
Broker Associate / Home Stylist
The Real Estate Corner Desert Market Update
NUMBER OF SALES
Home sales are up Valley-wide. The total three-month sales are up 2.9%. On a city by city basis, six cities show higher sales, with three; Palm Desert, Desert Hot Springs and Palm Springs showing the largest increase in sales.
The three cities with the largest sales declines are Indio, Indian Wells and Cathedral City.
INVENTORY OF HOMES FOR SALE
While home sales are up, inventories are down. Typically our inventories dip to to their lowest point every year toward the end of September, but this year inventories are even lower.
Low inventory acts as both a positive and negative; it’s positive for sellers and future home sellers as it tends to move home prices higher. But, it’s also a negative in that low inventory puts the brakes on the number of sales. If interest rates continue to increase, that can put a damper on sales as the cost of borrowing money for a mortgage becomes more expensive.
MONTHS SUPPLY OF HOMES FOR SALE BY CITY
The month’s of supply ratio is down valley-wide compared to one year ago in every city. Most have less than 4 month supply except two; La Quinta which currently has a 4.5 month supply and Indian Wells with a 6 month supply of homes to sell.
MONTHS SUPPLY OF HOMES FOR SALE BY PRICE BRACKETS
When we look at the supply of homes by price category, we see the supply is lower across all price brackets compared to one year ago. The biggest change is homes priced above $800,000. Last year the higher price points were taking 7.5 months – 1 year to sell. Now, it’s taking on average 5.3 – 8 months
The tipping point when using this metric is 6 month’s. 6 months is considered a “Balanced Market”, not particularly favoring either Home Buyers or Home Sellers. Less than 6 months, the market is tipped in the Sellers favor, otherwise known as a “Sellers Market”. More than 6 month supply is viewed as a “Buyers Market”.
As home prices or the cost of buying a home, (rising interest rates), increase – sales will start to slow putting downward pressure on pricing. Markets are always in a state of flux, moving from one market to another and rarely stopping at “balanced” for long.
While there is typically a lag period between market shifts, the lag time is shorter as the number of sales are increasing. Home sellers quickly see an improving market and strive to maximize the price they can ask. When prices increase too fast or too far ahead of sales, potential home buyer’s become reluctant to make offers, fearing they could be buying at the peak.
DISCOUNT FROM ASKING PRICE
In 2018, when negotiating a sale price with buyers; home sellers are discounting their listed price an average of 2%. One year ago, sellers needed to discount an average 2.4% off their asking price to close a sale.
For example, this ratio means if a home is listed at $400,000 it’s selling at an average of 98% of their asking price, or $392,000. a discount of $8,000. This metric also shows a strong and improving real estate market here in the Desert.
When we look at the story each of these metrics are showing for the Desert Real Estate Market, we can see an improving but pretty balanced market. In addition, we can see that the market has had and continues to show sustained growth. Making now the right time to be a participant in the market.
The Desert Lifestyle is unlike any other, as we head into our season now is a great time see what the Desert has to offer. Check out these FAB Desert Homes!
10 Staging Tips to Avoid at All Costs!
Home Staging Design can make or break a potential sale. Whether you’re using what you have or starting from scratch, there are some common design mistakes you’ll want to avoid. Here are a few tips to help you make your home look great for the marketing photos and make your potential buyers say WOW!
- Wall Hugger – It may seem like the logical and maybe even the only way to arrange furniture in the room, (especially if you’re working in a small room), but the opposite is actually true, you can harness the flow of a room by centering your pieces, pull them closer to each other instead of crowding your furniture against a wall. You will be amazed how the room takes on a different feel.
- Collection Spread – we’ve heard it before – when selling your home, declutter, and yes that is true. BUT, the truth is we all collect; whether it’s frogs, figurines or forks from the 4th Century AD, and you likely want to have them on display. There is a right way and wrong way to display your collections. First, if you have a lot of items in your collection, trim it down to just a few of your favorites and pack the rest, (you are moving right?). Next, instead of spreading the pieces throughout the room or worse the house, bring them together – the key is small groupings. Arrangements look deliberate and let your pieces speak for themselves. Well laid out arrangements can enhance the staging of your home if you do it right, and let you enjoy your favorite collections while avoiding that cluttered look.
- The Fickle Eye – you’ve lived in your home for years, over those years you’ve probably bought or inherited furniture and incorporated it into your home. Maybe it doesn’t quite match or it’s a little too big for the room or worse, you didn’t have room but still used it since it only partially blocks the walkway. Now, years later you don’t notice it any more, you walk around it every day without a thought. Our eyes can be fickle, they have a way of tricking us. Now that you’re selling your home, it’s time to put on your “Buyer Eyes” and take a good hard look around your house. Are there extra or oversized pieces of furniture that force someone to alter the natural path as they walk through the house? The old saying, “less is more” is absolutely true when staging your home to sell. Don’t set up an obstacle course path with furniture and don’t cram the room full of small décor objects. Make the decisions now whether to store, sell, donate or pitch.
- Dark in Small – Yes dark furniture can make a room feel warm, but they also make a small room feel smaller. If you have a small living room, opt for a lighter color palette.
- Rug Rules – Area rugs are the best way to anchor a room or a setting and they can tie a room together. But used incorrectly, it can also leave your space looking disjointed and cluttered. This is especially true in the living room, your rug should ground all of the seating elements around it. Make sure when looking for the perfect rug, you buy one that is big enough to achieve this affect. If possible, have all legs on the rug with a little rug showing behind the pieces of furniture, creating a frame around the setting. If your living room furniture setting is 6’ x 8’ you should be looking at an 8’ x 10’ rug. Plopping a 5 x 7 in the middle will make the room feel disconnected. Not sure? Get my Rules of the Rug ebook to help bring your rooms together with area rugs.
- Scale – Even designers can get it wrong sometimes; scale is one of the most important, (and sometimes the most difficult) elements of a well put together room. If you have a massive 10’ sectional in the room and put a small 5’ x 7’ area rug in the center or use a small coffee table, it just feels wrong. Maybe you have a large Dining Room space and put a small table in the room, or vice versa you’ve got a small breakfast nook and put a large heavy wood table in the space. Scale is important, think about it when you’re placing furniture or accessorizing a room.
- Balance – Without balance in a room, it can make you feel uncomfortable and even anxious. Balance is as much about emotion as it is about good design and balance gives us a feeling of stability and wellness. Creating a harmonious space depends on a few things; the furniture and the décor placement. Color and texture and the scale of the furnishings and décor. Think about a seesaw, if one side of the room is heavy and weighed down, the room will feel off balance. Example, if one wall has a tall wall unit and wall décor, make sure you balance that wall with something bold on the opposite side of the room. If you have a heavy sofa on one side, balance it with a pair of chairs opposite the sofa or other foundational piece of furniture.
- Matchy – A sure sign of an amateur decorator is where everything including the art matches perfectly. It’s not about perfection, it’s about ambiance. Example, balance a bold color with a large pattern that blends but doesn’t match exactly. Or balance a bright warm color with a textured cool color. Or choose colors that are the same hue but varies in intensity. Homes look professional and well put together when new elements are mixed with old; smooth is contrasted with rough, polished is contrasted with nubby.
- Boring – If you have a boring “beige” room, pick a great color and think about threading a needle, you’ll want to run that thread throughout the room and the house in a variety of different ways with pieces that pick up on that color or color palette.
- Level – Rooms with furniture all the same height are boring. Create interest with changes in elevations through the room. Put tall pieces next to short pieces. If you have a low back sofa, add something like a tall armoire or bookshelf. The reverse is also true with small décor, use the 3:1 ratio. Example, if you have 3 vases of varying heights grouped together, balance them with a single larger décor object on the opposite side of the shelf or mantel. It will make an eye-catching design statement.
These are called common mistakes for a reason and it’s easy to feel overwhelmed. You may not know where to start or the most important detail to focus on. If you would like more information about staging your desert home to sell, give us a call, we’re here to help.
SUMMER STAGING TIPS
Did you know that more than 50% of the desert home sales happen during the summer months? The desert summer real estate market is as hot as it is outside; knowing how to present your home for sale will be an important factor for you to ask and receive top dollar.
Top 6 Summer Staging Tips
Keep it cool as a cucumber. no one wants to walk into a hot house. All of a sudden, they’re thinking how do I get out of here instead of looking at your home. Now is not the time to skimp on energy bills.
Show that the grass is greener. High water costs and water conservation are hard on our summer desert landscape. However, keeping at least the front landscape looking fresh and lush will make your home stand out as the gem. The curb appeal will lure them in.
Set the Mood. set up a refreshing beverage station for your hot and tired home buyer’s and their agents. Place a vase with fresh flowers. Have a pitcher of Ice Tea or Lemonade with lots of ice and pretty glasses set out just before your showing.
Visual Power. Use fresh flowers in as many places througout your house as you can. Make sure your home looks fresh, cheery and refreshing as possible.
Making Scents. Aromatherapy can help make your home more alluring. Scents like Citrus, Eucalyptus or Rosemary say summer. They add a clean refreshing scent to your home.
In the Swing. There is an intimate relationship between music and marketing. Music can evoke an emotional response. The awkward sound of heels on a hard floor is hardly inspiring. Heighten the senses of your buyer with background music, it changes the ambiance and heightens the senses and mood of buyers touring a home. Music has a persuasive impact and can create an illusion of life inside your home for buyers increasing their emotional attachment. The music you play is important, pair the music style to the style of your home and the buyer’s you’re targeting.
Summer Desert Market Report – Median home prices rose for the 8th straight month. Up 9.6% from last year. The hottest cities for sales by volume were Palm Desert (233), Palm Springs (213), La Quinta (156), Indio (131), Rancho Mirage (97). Each city and each community has its own story some communities have seen huge growth, while others are relatively flat. The cities that had the largest price increases, have seen the number of sales flatten, which tells us that prices were getting ahead of the market.
Inventories are down again putting upward pressure on pricing. Overall the desert has seen a decline in the time it’s taking to sell, nicely presented homes in a good location and priced well are selling quickly. Currently there is a 3 month supply of homes for sale in the desert, which puts us in a “Sellers Market” as we head into season.
The Fed has indicated there will likely be two more interest rate increases before the end of the year, which could start to weigh on the market and slow sales until the shock is absorbed.
Southern California and specifically, the Coachella Valley continues to be a sought after destination for a second home get a way.
As we head into our “Season”, we expect to see continued strong home sales and price appreciation valley-wide.
How’s your neighborhood doing? Send me an email, I’ve got the details!
What is a 1031 Exchange and can it work for you?
Thanks to IRC Section 1031, a properly structured 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property, and to defer capital gain taxes.
1031 EXCHANGE FOR REAL ESTATE INVESTORS – THE BENEFITS
Whether an investor’s property is owned free and clear or encumbered, the benefits of a tax deferred exchange can be significant. The tax dollars saved by doing an exchange can be used to buy additional investment property.
An investor who exchanges is able to defer the capital gain tax and buy a replacement property worth more than the investor who simply sells and reinvests with after tax dollars.
1031 Exchange for real estate investors provides one of the best tax strategies for preserving the value of an investment portfolio. By using an exchange, the investor is able to defer the recognition of capital gain taxes that would otherwise be due with the sale of an investment property. To qualify as an exchange the relinquished and replacement properties must be qualified “like-kind” properties and the transaction must be structured as an exchange.
1031 EXCHANGE FOR REAL ESTATE INVESTORS – NON TAX BENEFITS
In addition to deferring the capital gain tax, tax deferred exchanges provide the investor with a wide range of non-tax opportunities that may suit an investor’s portfolio
- Reposition assets
- Change property types
- Increase leverage
- Increase depreciation deduction
- Reduce management obligations
- Provide for estate and retirement planning
- Allow for relocation
- Improve cash flow
- Achieve property consolidation or diversification
- Eliminate or create joint ownership
THE EXCHANGE PROCESS
Most exchanges, involve three parties: the investor, (exchanger), who is doing the exchange, the buyer who is buying the exchanger’s old (relinquished) property, and the seller who is selling the exchanger a new (replacement) property. To create the exchange of assets and to obtain the benefit of the “Safe Harbor” protections of the tax code, it is wise to employ an Exchange Accomodator, or Exchange Facilitator. This qualified intermediary becomes a fourth party principal in both simultaneous and delayed exchanges.
The steps for completing an exchange are relatively simple with qualified intermediary:
- The exchanger signs a contract to sell a relinquished property to the buyer.
- Exchanger enters into an exchange agreement with a Qualified Intermediary and assigns rights in the sale contract to the intermediary, including the right to receive the exchange funds.
- At the closing of the relinquished property, the exchange funds are wired to the intermediary and the intermediary instructs the settlement officer to transfer the deed directly from the exchanger to the buyer.
- The exchanger has a maximum of 180 days in the exchange period to acquire all replacement property.
- Unless the exchanger can acquire all replacement property within the first 45 days from the close of the relinquished property, the exchanger must identify possible replacement properties in writing to the intermediary within the 45 day identification period.
- The exchanger signs a contract to buy the replacement property with the seller and the exchanger assigns the exchanger’s rights in the purchase contract to the intermediary.
- At the closing of the replacement property, the intermediary wires the exchange funds to complete the exchange and the intermediary instructs the settlement officer to transfer the deed directly from the seller to the exchanger.
As a general rule of thumb, to avoid paying capital gain taxes in an exchange, the investor should always attempt to:
- Buy a property of equal or greater value, (net sales price).
- Reinvest all of the net equity in replacement property
- Obtain equal or greater debt on replacement property.
*Exceptions: A reduction in debt can be offset with additional cash from exchanger, but increasing debt cannot offset a reduction in exchange equity.
Do you own an investment property and thinking about selling it to buy another that might have more cash flow or less management headaches? We can help. Give me a call or send me an email, let’s talk about what’s possible for your situation.
Cathi and Ben Walter
(760) 218 – 5752
Ever wonder how much income you need to buy an average home in other areas of the country?
@HowMuch.net just published a map showing How much income you need to buy the average home in each state in the U.S.
They collected average home prices for every state from Zillow and then plugged that information into a mortgage calculator to figure out monthly payments. The interest rates used varied from 4 to 5% depending on the market, a 10% down payment, and total cost of housing not exceeding more than 30% of gross income. Using this rule as the benchmark, they calculated the minimum salary required to afford the average home in each state.
The Top Three Places Where You Need the Highest Salaries to Afford the Average Home 1. Hawaii: $153,520 for a house worth $610,000 2. Washington, DC: $138,440 for a house worth $549,000 3. California: $120,120 for a house worth $499,900 Here’s a quick snapshot of housing affordability across the United States.
Home much income do you need to buy the average home in each state; Check it out!
Add a Hammock!
42 Home Staging Tips to Get Your Home Sold
When it comes to staging your home to sell, there are many subtle ways you can tell your potential home buyer, “This is the right home for you!”, and they don’t necessarily have to be expensive.
Easy Tips for Staging Your Home to Sell
- Swap dim lights for high wattage light bulbs.
- Keep closets, drawers and cabinets as empty as possible to maximize the appearance of space.
- Have a dark corner or hallway? Brighten it with a decorative mirror.
- Make sure every switch plate and outlet cover matches and looks brand new.
- Create a luxury spa look in the Bathrooms with elegant soap dispensers, fluffy white towels, decorative baskets, candles, plants, a white shower curtain an new bath mat.
- Let buyers entertain the idea of….. entertaining, use chic place settings around the table, and a few wine glasses and decanter on the buffet. Strike a balance between overly formal and too casual with an attractive runner and a few fun, decorative elements — think small floral vases or short candle holders.
- Go gender neutral in the Master Bedroom, ditch the dainty floral pillow shams or Sports Memorabilia. The Master Bedroom should appeal to both sexes, create a sense of calm and relaxation.
- When placing anything from accent pillows and table lamps, go for symmetry, which is pleasing to the eye.
- Whatever amount of furniture you have in your living room, remove a few pieces to make the room feel more spacious.
- Help buyers imagine their life in your home. Add a hammock to the backyard to show how fun the lifestyle is in this house. Add a bunch of pink flamingos floats in the pool with beach towels and a lemonade station on the patio table near by.
- Let a slideshow of beautiful images play on your television like a screensaver.
- Arrange furniture in conversational groups to imply this is a space for people to come together.
Want more great tips on the best way to stage your home to sell for top dollar? Get our free guide with all 42 tips to staging your home to sell, send me an email and I’ll send it right over!