15
Aug
By First Rate Financial Group
Real Estate

Should You Brace For A Potential Market Downturn Next Year?

Should You Brace For A Potential Market Downturn Next YearDon’t panic, a looming recession may be good news for those wanting to sell their homes. The experts say this recession may happen in 2020, so there is still plenty of time to make plans for how to deal with a potential economic downturn.

In many parts of America, especially in popular cities, the real estate markets are super hot for sellers. Home sales are coming in at prices that are record highs. For sellers in these hot markets, it might be time to sell. For buyers, able to wait until next year, the prices may come down.

What The ‘Experts’ Say

A Pulsenomics survey of 100 real estate market experts says that the pressures on the economy, which are negative, are not coming from the housing market this time. In fact, the Federal Reserve announced it will not make any changes until 2021, so the financial market supporting home loans will be coasting along pretty much as it is now.

The damage to the U.S. economy is coming from the delayed effects of the tariffs. Whether one agrees or disagrees with the tariffs is not the issue. The tariff changes that already went into effect, will have an economic impact next year or the year after.

Economists use the analogy of observing a big, slow-moving tidal wave. Scientists can see it coming from miles away. If those potentially affected by the danger pay attention to the warnings soon enough, they may have a chance to get out of the way.

Half the experts see the tariffs having a significant impact in 2020. Most of the other half see it coming in 2021. Nobody thinks the recession will hit before the end of 2019.

Summer 2019 – Selling Time

Home sales toward the end of summer are usually the strongest when compared to other times of the year. After returning from vacation, and before school starts, it is a popular time to look for a home when the weather is still nice outside.

Next Year 2020 – Buying Time

If a recession hits in 2020, then home sales prices may go down due to lowered demand. Again, this may be helpful for buyers who wait until next year to buy a home.

Conclusion

It is interesting to see that any possible recession will not be caused by the housing market this time. Real estate experts think that the housing market will price-in the effect of the recession up to one year ahead of when it hits.

If there are plans to sell a home, such as going into retirement and wanting to downsize or buy an RV for a happy retirement traveling, now may be an opportune time to consider selling.

If there are plans to buy a home and there is no rush, just take the time to work with your real estate agent to get a good deal and wait for a possible overall economic slowdown to get a better price. And be sure to contact your trusted home mortgage professional to discuss your financing options.

14
Aug
By First Rate Financial Group
Real Estate

A $400,000 Profit From Flipping A Single House?

A $400,000 Profit From Flipping A Single House 1Flipping homes is popular once again. It took about eight years after the Great Recession that started in 2006 for home prices to rebound to the levels seen before the recession. Then, by 2016, in many areas, home prices started to rapidly increase.

The increases in home prices caused more flipping activity due to the potential profits. CNN reports the average gross profit on a flipped home sold during the past three years was about 50%.

In 2017, one real estate speculator took nearly one million dollars ($985,00) in cash and bought a home in an “as-is” condition, sight-unseen. That is what Mr. Lin He did, hoping to make some easy profit.

The Math

Flipping properties successfully is math with a bit of luck mixed in. Mr. He had good luck with his purchase in that it was in Malibu, California. He bought the home at a price well below its market value. The home was a foreclosure that listed for sale at $1.39 million. There were no buyers at that price, so the home went up for auction in 2017. Mr. He was the high bidder at $985,000.

That price was irresistible. Simple math meant that there was about $400,000 in potential profits between the purchase price and the value of the home, once the home was back in a nice condition.

Mr. He was very happy to buy the home for that low price. Then, he went to visit the property.

The Mess

The house was a disaster. The previous owner, who lost the house to the bank, was obviously angry about the foreclosure and intentionally broke as much as possible. The condition of this home, made the most-wrecked fixer-upper look like a palace compared to the mess bought by Mr. He.

After he saw the home in person, Mr. He admits the home was in even worse condition than he expected. On top of that, there was an extended delay caused by the local building department, which took six months to issue the building permit needed for the construction. Then, renovations cost $300,000 and the comprehensive remodeling work went on for three full months after it started.

The Result

In early 2019, the home was ready and beautifully prepared for sale with expert staging. It listed with a very successful real estate agent in the Malibu area who marketed the property well as a featured listing.

The listing price was $1.97 million, which was double the price paid by Mr. He to buy the home. In less than three weeks, it sold for the full listing price, giving Mr. He about $400,000 in gross profits after the renovation expenses.

Mr. He was very lucky that the home prices rose so quickly that he got the $400,000 profit he thought was in the deal when he bought the home, even though he had to invest $300,000 in the renovation work.

Summary

With 50% average gross returns potentially possible, flipping is attractive to many; however, as Mr. He says, “It is not as easy as it looks on television.”

If you are interested in investing in a property to flip, be sure to consult with your trusted home mortgage professional to discuss financing options.

13
Aug
By First Rate Financial Group
Real Estate

How Important Is The Land Around A Potential Home?

How Important Is The Land Around A Potential HomeWhen viewing a potential home, how much consideration should you give to the surrounding land?

In many ways, the land should be carefully regarded, since land is the thing that is hardest to alter. You can rip up carpet, paint walls and even knock down walls, but it takes a lot more effort to change land. 

Mature Landscaping 

Mature landscaping is typically cited as a benefit, but what if you’re the type who enjoys looking out at wide open spaces? It could also be that the mature landscaping – older trees – are situated dangerously near the house.

Weakened trees could lose heavy branches in storms and cause damage your roof. Mature trees also have vast root systems that can damage or destroy septic lines.

Downward Slope

It’s charming to stand at the top of the street and look down upon your future home. In the winter, your kids could have a front yard sledding hill. But if torrential rains come, your valley home will likely be prone to flooding. Even if you’re not in a designated flood zone, you should probably carry flood insurance in a case like this.

Upward Slope

Everyone envies the owner who lives atop the hill. Your home will look impressive to anyone passing by. But bear in mind that the lawn mowing will be especially tricky because you’ll be navigating that steep slant in your landscaping. 

Rocky Lawn

If you’re looking forward to starting your own home garden, pay attention to the quality of the soil surrounding your home. If it’s overly rocky, you’ll likely need to have raised beds or potted plants for your garden to thrive. Also, consider if the land around the home is very shady. If it is, you may need to remove some trees in order to capture enough sunlight for your plants.

Poor Quality Lawn

If the lawn isn’t lush green and instead it’s kind of a mottled greenish-brown, just realize that you’ll need to invest time and money to bring it back into good condition. A land treatment company can help you with this, but it will take some time before you see results.

The nature of the land around a potential home is important. But there are always steps you can take to resolve land issues. While it’s important to note the condition of the land, don’t let it stop you from making and offer on a truly awesome new home.

If you are in the market for a new home or interested in refinancing you current property, be sure to contact your trusted home mortgage professional.