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Five signs you’re ready to buy your first home

December 1, 2016




By Greg Smith
Source:  Washington Post

Purchasing a home is one of the biggest decisions of your life. Not just because it’s the place where you’ll lay your head each night, but also because your home is one of the largest purchases you’re likely to make.

As a certified financial planner, I know that purchasing a home, especially for a first-time buyer, can be an extremely stressful, although exciting, time. Over the past few years, as the housing market around Washington has improved, I’ve noticed a few telltale signs that a client is financially prepared to purchase their first home. If you’re thinking about becoming a homeowner, consider these five things.

1. You have positive cash flow.

Positive cash flow means you’re bringing in more income than you’re spending on everyday items and debt payments. The Consumer Financial Protection Bureau puts the debt-to-income ratio at 43 percent. This ratio is one way that lenders measure your ability to repay debt. It can be calculated by dividing your total recurring monthly debt by your gross monthly income. However, just because lenders use this ratio, you may need to take a stricter approach. The debt-to-income ratio uses gross income, which means income before taxes, when really we pay bills with net income after taxes.

If you’re carrying a great deal of consumer debt, paying just the monthly minimums and increasing your balances every month, you need to get your debt in order before taking on additional debt. If you pay off your credit balances monthly and would still have room in your budget after swapping your rent check for a mortgage payment, then you are definitely a candidate for buying a home.

2. You have enough saved for a down payment.

Many home buyers take money out of their 401(k) or Individual Retirement Account to cover the down payment. This is a costly mistake that can negatively impact retirement savings. Taking money from your 401(k) or IRA denies years of compounding interest and has to be paid back with post-tax money. Instead, dedicate a savings account, which is more liquid, to be used for a down payment.

3. You have job security.

Or, you have a steady stream of income with a high degree of predictability. You will need to reliably generate enough income to withstand a monthly mortgage payment.

A monthly rent check in the Washington region may be comparable to the principal and interest payment of a mortgage here, but mortgage payments also include property taxes and higher insurance costs. The upside to a mortgage payment is the tax deduction. As a result of a larger tax deduction, less money may need to be withheld from your paycheck.

4. You’re ready for a commitment.

You’ve probably given a lot of thought to the house itself, but first-time home buyers should also take into account supplementary expenses. Unlike renting, there is no longer a landlord to fix a broken dishwasher. Additional expenses to consider include home maintenance repairs and replacements, and the expense of selling the home if and when you ever do.

You should be prepared to pay these additional expenses, and not be shaken by the possibility that you may eventually have to replace the roof. You should be excited to make the space your own and identify what that means to you. If you want to renovate the kitchen and bathroom on the house, add that cost to your budget.

5. You’re ready to put down roots.

Before you jump into a home or neighborhood, do your due diligence. A home can be viewed as an investment, but that’s not the sole purpose of why you buy. You want the stability it provides and a home that is your own. Depending on how long you plan to live there, your home may or may not appreciate, so you should look at it as more than just a way to build equity.

Greg Smith is a certified financial planner at the Wise Investor Group at Robert W. Baird & Co. in Reston, Va.
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Real Estate @ A Glance: November 2016 Edition

November 16, 2016




Here is the most recent information on the San Diego housing market. For specific information on your neighborhood or a market analysis on your home, please send me an email or call me at 619-888-2117.


As we enter the final quarter of 2016, not much has changed since the year began. Market predictions have been, in a word, predictable. A relatively comfortable pace of activity has been maintained thanks to continuing low unemployment and mortgage rates. The one basic drag on market acceleration has been inventory decline. There is little to indicate that the low inventory situation will resolve anytime soon.

Builder confidence is as high as it has been in more than a decade, yet the pace of economic growth has been slow enough to cause pause. A low number of first-time buyer purchases and a looming demographic shift also seem to be curbing the desire to start new single-family construction projects. As older Americans retire and downsize, single-family listings are expected to rise. The waiting is the hardest part.

Median Sales Price: $518,000
Days on the Market Until Sale: 34
Housing Affordability Index: 2016-Q2: 26%
Months Supply: 2.1

As we just completed the 2016 election season, I thought I would add one additional graphic to show real estate trends during election years. I’ve had clients contact me inquiring how the market has responded in the past, and what may occur in the near future. We can’t know for sure, but here are some interesting statistics.


2016 Election and Real Estate



To view larger image, click here.

Home Smart Home

November 3, 2016

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A surprisingly high number of first-timers now buying homes

October 27, 2016

first time home buyers

From Yahoo, AP

WASHINGTON (AP) — For years, the U.S. housing market looked bleak for young couples hoping to buy their first homes but struggling with high student debt, low pay and meager down-payment savings.

But a new survey by the real estate firm Zillow suggests that first-time buyers may be entering the market in greater numbers than industry watchers had assumed.

Over the past year, the survey found, nearly half of home sales have gone to first-timers. That’s a much higher proportion than some other industry estimates had indicated. And it comes as a surprise in part because ownership rates for adults under 34 are at their lowest levels since the government began tracking the figure in 1994.

Zillow’s survey results suggest that the trend is shifting, and that some of this year’s growth in home sales has come from a wave of college-educated couples in their 30s, who are the most common first-time buyers.

They are people like Natasja Handy, a 32-year-old lawyer and new mother. She and her husband, a doctor, are about to close on their first home in the Northeast section of Washington, D.C. — a row house with about 1,900 square feet that cost $720,000.

The couple worked with brokers at Redfin and made a 5 percent down payment after having lost two bids on other homes.

“We waited a very long time to purchase our first house,” Handy said. “We’ve always felt like we were giving someone else our money, instead of putting it into something we own.”

In suburban Minneapolis, few first-time buyers have enough savings for a down payment, and many rely on gifts or loans from relatives, said Marcus Johannes, an agent with Edina Realty.

“Most of my people, they get funds from family,” he said. “They get creative tapping 401(k)s.”

If the pattern in Zillow’s survey holds, it could raise hopes that today’s vast generation of 18-to-34-year-old millennials will help support the housing market as more of them move into their 30s.

The 168-page report that Seattle-based Zillow released Tuesday also found that home ownership is increasingly the domain of the college-educated. And it reported that older Americans who are looking to downsize are paying premiums for smaller houses.

Here’s a breakdown of Zillow’s key findings:

— Forty-seven percent of purchases in the past year went to first-time buyers. Their median age was 33. By contrast, surveys from the National Association of Realtors have indicated that first-timers account for only about 32 percent of buyers.

The difference between the two surveys may stem from their methodologies. The NAR has used a mail-based survey for its annual figures. Zillow used an online survey that might have generated a greater response rate from younger buyers.

Zillow’s findings might help explain a persistent shortage of homes for sale: Unlike move-up buyers, first-time purchasers don’t have a home to list for sale, thereby depriving the market of supply.

Adam DeSanctis, an NAR spokesman, noted that his organization’s own survey, due out later this month, will show a rising share of first-time buyers, though it will remain below the historical average of 39 percent that’s prevailed since the organization began tracking this figure in 1982.

DeSanctis noted that government figures show home ownership among young adults remain at its lowest level in history, which is why his organization is skeptical that nearly half of sales go to first-time buyers.

— No college? Dwindling chance of homeownership

It’s become harder to realize the dream of home ownership without a college degree. Sixty-two percent of buyers have at least a four-year college degree. Census figures show that just 33 percent of the U.S. adults graduated from college. The gap between the education levels of homebuyers and the broader U.S. population indicates that workers with only a high school degree are becoming less likely to own a home. In 1986, just 12 percent of homeowners were college graduates, according to government figures.

— Millennial home buyers are increasingly Hispanic

Out of the 74 million U.S. households that own their homes, a sizable majority — 77 percent — are white. But these demographics are changing fast. Only 66 percent of millennial homeowners are white. The big gains have come from Latinos, who make up 17 percent of millennial homeowners but just 9 percent of all homeowners.

Asians also make up a greater share of millennials. This means that as today’s millennial generation ages, the housing market may look considerably more diverse than it does now.

— Older Americans aren’t just downsizing; they’re also upgrading.

The so-called “silent generation” — those ages 65 to 75— bought homes in the past year with a median size of just 1,800 square feet, about 220 square feet smaller than the homes they sold. But that smaller new home still cost more. These retirement-age buyers paid a median of $250,000, nearly $30,000 more than the home they sold. In some cases, the higher purchase price likely reflects the profits from the sale of their previous home, in other cases a desire by upscale buyers for luxury finishes and amenities.

— Starter homes are no longer popular.

When millennials buy, they’re leapfrogging past the traditional, smaller starter home. This younger generation paid a median of $217,000 for a 1,800-square-foot house. That median is nearly identical to what older generations buy.

Across the United States, the typical home costs $222,000, has three bedrooms, 2½ baths and 1,900 square feet. For someone with children at home, that figure swells to 2,000 square feet and a median price of $234,000.

AP Business Writer Alex Veiga contributed from Los Angeles.

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Why Use a Realtor When Selling Your Home

October 20, 2016

Lisa Ashkins - Realtor


Selling a house can be a complex process. A Realtor can help you at every stage, from setting a price to marketing the property to closing the sale.

Setting the Price
The selling process generally begins with a determination of a reasonable asking price. Your real estate agent or Realtor can give you up-to-date information on what is happening in your local marketplace, as well as the price, financing, terms and condition of competing properties. These are key factors in marketing your home and selling it at the best price. Often, your agent can recommend repairs or cosmetic work that will significantly enhance the salability of the property.

The next step is a marketing plan. Marketing exposes your property to the public as well as to other real estate agents through a Multiple Listing Service, other cooperative marketing networks, open houses for agents, and so on. In many markets, a substantial portion of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. The Realtor Code of Ethics requires Realtors to use these cooperative relationships when they benefit clients.

An agent will also know when, where and how to advertise — which medium, format and frequency will work best for your home and your market. Though advertising can be valuable, the notion that advertising sells real estate is a misconception. National Association of Realtors studies show that 82 percent of real estate sales are the result of agent contacts from previous clients, referrals, friends, family and personal contacts.

Providing Security
When a property is marketed with an agent’s help, you do not have to allow strangers into your home. Agents will generally prescreen and accompany qualified prospects through your property.

Your agent can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing — a lot of possible pitfalls. Your agent can help you write a legally binding, win-win agreement that will be more likely to make it through the process.

Monitoring, Renegotiating and Closing
Between the initial sales agreement and the closing (or settlement), questions may arise. For example, there are unexpected repairs that require the buyer to obtain financing, or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your agent is the best person to objectively help you resolve these issues and move the transaction to closing.

Getting the Realtor Guarantee
All real estate licensees are not the same. Only real estate agents who are members of the National Association of Realtors are called Realtors. They proudly display the Realtor logo on their business card, website, and marketing. Realtors subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. Realtors are committed to treating all parties to a transaction honestly. An independent survey reports that almost 85 percent of home buyers would use the same Realtor again.

Getting Expert Assistance
Finally, consider the scale of your transaction. Selling your home is one of the biggest financial decisions you’ll make. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to solve it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney? Considering the relatively small cost of hiring a Realtor and the large potential risk of not hiring one, it’s smart to find a professional to sell your home.

By Team – Ron Schmeadick

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The Smart Home Features That Are Really Taking Off

October 13, 2016
Image: Houzz

Image: Houzz

Remote-controlled window shades, voice-activated TVs, and door bells with high-quality video were once limited to sci-fi novels, Hollywood movies, and TV shows like “The Jetsons.” But the future has arrived, and more tech-savvy homeowners are installing smart home technology. Color-changing lightbulbs, anyone?

Nearly half of homeowners renovating their pads are adding new technology while they’re at it, according to a recent report from Houzz, a home remodeling and design website. About 45% of homeowners are putting in at least one new system or device that can be remotely controlled or monitored on a smartphone, tablet, or computer.

Houzz conducted its inaugural survey in August of almost 1,000 homeowners who completed a home renovation project in the past 12 months or are planning a home renovation project in the next 12 months. It partnered with home technology trade association CEDIA for the research.

Folks in the middle of a renovation are more likely to invest in smart home technology because they’ve already set aside the time and money to make improvements on their residences, says Nino Sitchinava, principal economist at Houzz.

Renovators are “thinking about what would make their home comfortable, more convenient,” she says. “And some of them are thinking about the resale values of their homes.”

But homeowners are still reluctant to drop too much dough on these new technologies. About three-quarters of homeowners spent—or planned to shell out—$1,500 or less on these modern-day gizmos. Only 5% were dropping $5,000 or more.

Still, more than half of the home renovators are passing on the glitzy new technology. They aren’t interested (no one really needs a smartphone-controllable slow cooker, we guess), think it’s too expensive, or are worried about being spied on by their own home. Why, hello smart TV! Didn’t see you there.

Those who get on the smart tech bandwagon tend to purchase safety and security systems, such as fire and gas alarms and tricked-out cameras, according to the survey. They make up 25% of the installations, and these buyers are the most likely to hire a professional to set them up.

That’s because owners said they worried about safeguarding their castles against intruders while they’re both home and away, according to the survey. Plus it’s pretty fun to show your co-workers, bank tellers, restaurant servers, and just about everyone else live video feed of your home on your smartphone while you’re out.

Smart entertainment systems, such as smart TVs, speakers, and streaming devices, are the second most popular installations. They make up about 18% of purchases.

That was followed by climate control, at 14%, so homeowners can fine-tune the heating and cooling of their homes and save big on their energy bills. Lighting makes up 12% of the upgrades.

“Homeowners are interested in improving the comfort of their home,” Sitchinava says. “It’s just a matter of time before they adopt the smart technology.”

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117. 

Boomers on the Hunt

October 6, 2016

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Real Estate for Boomers

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