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Week of February 19th-25th
Property Tips and Tricks
Products and middlemen
Before making a significant investment such as purchasing a home, it’s important to fully understand the product. The product is not just the house, or even the house and the lot. As you'll read below, the product extends far beyond the property boundaries.
Many factors influence property value and desirability, including the neighborhood, governance, schools, historic supply of homes, and more. In today's digital age, a few minutes online can provide valuable insights into these important factors. So, what exactly should you look for? Below are just a few recommendations.
Consider the following:
- Neighbors: Are the neighboring homes well-maintained, indicating pride of ownership? Neighbors play a critical role in the overall appeal of the street or neighborhood. Future or continued investment by neighboring properties can significantly influence your property value over time. Also, do you know who your neighbors are?
- Schools: What is the quality of the local schools? For example, Pebble Beach has three public school districts within its boundaries. Spoiler alert - one public school system is far better than another.
- Area Development: Is there significant investment or growth in the area that could positively impact future property values?
- Scarcity: Is the type of home you’re considering in short supply?
Uncovering and evaluating all of this information may seem like a daunting task, but a good real estate agent or broker can help. They act as middlemen, or middlewomen, playing several key roles:
- Bridge: They connect buyers and sellers who might not otherwise find each other, thereby increasing value by reducing physical, social, or other distances.
- Certifier: They provide assurance of the quality or authenticity of a property, helping buyers navigate uncertainty.
- Enforcer: They ensure all parties adhere to agreed-upon terms, keeping everyone accountable.
- Concierge: They offer personalized service to clients by providing expert advice, saving time, and enhancing the overall experience. This allows clients to make better quality decisions and streamlines the process.
- Insulator: They sit between parties who may want to develop a long-term, mutually beneficial relationship, but in the short-term, need to aggressively represent their own interests.
By understanding how to fully evaluate a property, and who to have on your side during a real estate purchase, you can make a more informed and confident decision when purchasing a home.
Real Estate News
Rates high, so is buyer confidence
Despite a recent uptick in interest rates, homebuyers remain active and sellers are still testing the market with high pricing due to tight inventory.
Over the past weekend, an open house in our area attracted nearly 50 visitors each day, a notably high turnout. This surge in interest has a number of factors, but two things standout: the persistently low inventory of homes and the fact that nearly a third of all homes are purchased outright in cash, making interest rates a less important factor in the purchase decision for many buyers.
Nationwide, real estate prices in January saw a year-over-year increase of 5.1%. However, it’s important to remember that these homes were contracted in November/December. As we approach the end of the month, we'll have new data to draw insights from.
Despite the seemingly robust real estate market, lower-income and first-time homebuyers are facing challenges. Currently, only 28% of homes sold are to first-time buyers, a significant drop from the historical average of 40%.
Interestingly, a similar trend is observed in the fast-food industry. With Big Mac meal prices ranging from $12 to $18 across the country, lower-income customers are being priced out of McDonald’s....who would've thought?! The high costs are driving these customers to opt for home-cooked meals instead. Yet, despite the decrease in customer traffic, McDonald’s stock price continues to rise.
The reason? McDonald’s is more than just a food company—it’s a real estate powerhouse. Their business model involves charging franchise fees and rents to franchise owners, and they earn a percentage of revenue/sales, not profits/income.
Moreover, they own the land under almost half of all McDonald’s locations across the country, amounting to over $40 billion in prime real estate...with franchise owners paying rent.
The takeaway from McDonald’s success story? Perhaps the true value lies in the land...after all, they aren't making any more of it.
Worked with me in the past? Share your experience.
Jonathan Balog
DRE# 01980970
Broker
M: 831.747.0310
[email protected]
Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.
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