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 – Mediam 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!
Home Design Trends for 2018 – Each year Fixr conducts a national survey of home industry influencers in the US; those who are building, designing, manufacturing and publishing content relevant to the field, revealing single family home design and construction trends.
Gen X’ers are the most likely group to buy a single family home with Millennials representing the second largest group in the 2018 Fixr Survey. There are many reports that show Millennials are driving the current market.
In 2018 more home buyers are looking for single story homes with more than 2,000 sq ft with an open floor plan and they want to live in urban areas.
Smart home features and automation are gaining traction at an incredible rate and is the number one choice for popular home design trends going forward.
Green and Energy Efficient Design is important to both Gen X and Millennials, but more so for the Millennials with Smart Thermostats, Home Automation Security, Lighting Control Systems, Smart Appliances.
Artificial intelligence and voice control systems will start showing up in homes in 2018.
The open floor plan has been the most popular layout since 2013 and will continue to grow going forward.
For current homeowners, when it comes to affordable upgrades, energy efficient upgrades and style enhancements were popular.
Dimmable lighting allows the homeowner to influence the mood of a room at all times of the day and night. Wireless hubs and concealed components are considered to be integral in nearly every home.
Adding energy efficient windows were another popular trend for homeowners.
Adding outdoor living spaces will be a popular addition in 2018 with more Millennials looking for indoor / outdoor living.
Home Buyers are beginning to expect both function and aesthetics, while function is the primary goal, aesthetics go a long way toward providing comfort and personal expression.
There is a delicate balancing act for home builders between homes that are aesthetically pleasing to the eye vs energy efficient homes that may feel cold or impersonal.
Most designers agree that form should always follow function and the most successful home design blends the two attributes creating a cohesive design, enhancing the homeowners experience in the space.
Get more information about what today’s home buyers are looking for before you put your home on the market. Give me a ring, I’m happy to share my knowledge and experience to help elevate your home above the competition (760) 218 – 5752.
Home Staging Trends for 2018
Staging can run from full to partial
Home staging trends for 2018 have gone mainstream and is now widely used to make a home more attractive to potential buyers.
Most real estate professionals agree; staging can increase the sale price of a home. But even it doesn’t increase the price, it reduces the amount of time the home sits on the market which is music to any home sellers ears.
Staging can range from Full to Partial
Small efforts like de-cluttering and partial staging can go a long way for homeowners who are still living in their homes while on the market. The challenge is to incorporate the homeowners existing furniture, blending with a few new pieces and keep with the current style and trend for the area.
A Personal Touch
In the past, keeping things neutral was the way stagers appealed to the widest range of home buyers, now the trend is to incorporate more design style and color in the home to add a wow factor. Today’s buyer wants to see personality and what their lifestyle would look and feel like if they lived there. Personal details create an aspirational image and can help reach buyers on an emotional level.
After a few years of all things gray, people are embracing beige and creamy white again with pops of color or an upscale design element to appeal to the design savvy home buyer. Two color trends showing up in 2018 design is dark Teal and Millenial Pink. If you’re in a first time home buyer market, these are two colors that will appeal to this demographic.
Adding pops of color using large colorful artwork and accessories is a good way to create a wow factor.
Hard surface flooring continues to be the trend. Stone, wood, bamboo, and wood look tile are popular trends that will continue.
Quartz is the current trend for high-end and even not so high-end homes for 2018. Granite has become the minimum standard for home buyers in all price categories.
Yes, gold tones are back. Now you’re seeing a lot more shiny metallic’s to add bling to an otherwise neutral palette.
Not all homes need a dramatic make-over, but most will benefit from at least a thorough cleaning, de-cluttering and culling.
For more information about staging your home to sell, we have an easy guide to help. Email Cathi today for your free copy of “It’s Showtime!”
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.