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Week of January 1st - 7th
Property Tips and Tricks
Logistics overload
In the complex world of real estate, it’s easy to find yourself overwhelmed by the myriad of logistics involved in buying or selling a home. However, it’s crucial to remember that while these details are important, they should not overshadow the bigger picture.
When considering a real estate transaction, many factors come into play - market trends, property values, legal procedures, financial considerations, and more. It’s easy to get lost in this sea of information. However, getting too caught up in these details can lead to analysis paralysis, where the fear of making a wrong decision prevents any decision at all.
Instead, focus on the key aspects that will truly impact your real estate journey. Identify your primary goals, whether it’s finding your dream home, investing for future returns, or selling your property at the best possible price. Keep these objectives at the forefront of your decision-making process.
Remember, you’re not alone in this journey. Real estate professionals, such as agents, brokers, and financial advisors can provide valuable guidance and simplify the process. They can help you navigate the logistics, leaving you free to focus on your goals.
Moreover, you’d be surprised by the sheer number of vendors offering specific services for your homes. Shockingly, many of these vendors may not have a web presence, but your realtor or real estate advisor likely has a direct conduit to them. There are options for just about any specific task that you could think of, you just need to know who to ask.
In conclusion, while the logistics of buying or selling a home are important, they should not be overwhelming. Keep your eyes on the prize, rely on professional advice, and remember that every step brings you closer to your real estate goals.
Real Estate News
Trends and probabilities
The United States is grappling with a shortage of homes, a factor that significantly influences pricing. The country’s housing supply has been unable to meet demand since 2010, and the current deficit exceeds 3 million homes. This issue won’t be resolved quickly. Even if borrowing rates decrease to stimulate construction, the extent of underbuilding over the past decade means it will take time to catch up. This imbalance between supply and demand will continue to put upward pressure on pricing. Looking at the graph above, less people are planning to move, signaling a continued shortage on the supply side.
In terms of affordability, as of 2023, less than 16 percent of homes were within reach for individuals earning the median income, meaning they could afford to buy only 16 out of every 100 homes listed for sale. This is a stark contrast to 2013 and 2019, when 50 percent and 40 percent of homes, respectively, were affordable to those earning the median income.
In California, where living costs are higher, home ownership is even more challenging. In some of the state’s pricier cities and areas, only 3 out of every 1,000 homes for sale are considered “affordable” for the median income earner.
Locally, options for affordable homes are limited. Marina, a coastal town on the Monterey Peninsula, is one of the few areas permitting new construction. Developers are required to build a certain number of affordable housing units alongside their market-rate homes. Several hundred such units have been approved, but demand far outstrips supply, and the last time I checked there were four times as many applicants as affordable homes being built.
East vs. West
My feed has been inundated with articles covering "Top Growth Home Markets" and the like over the past 6-8 months. Homeowners who purchased their homes before 2018 have seen significant increases in home equity and net worth due to home appreciation over the past five years. While the highest appreciating areas of the country over the past year or two have been almost exclusively on the East Coast, the West Coast still narrowly leads in terms of home-price appreciation over the past five years.
Back to Supply and Demand
In last week's newsletter, I predicted an increase in market listings in 2024 compared to 2023. Just a week into the year, new listings are already up 10% nationwide compared to a year ago. This is partly due to the recent decline in mortgage interest rates, which is encouraging for potential buyers. In Monterey County, new listings are up around 25% compared to a year ago. However, these figures may fluctuate as the year progresses and Monterey County is a relatively small sample size to draw a meaningful conclusion from in only seven days.
Reports this past week indicate a robust jobs market, which is generally beneficial for the economy. However, this may not be good news for those hoping for more aggressive rate cuts from the Fed in 2024. If the Fed begins to cut rates aggressively, it could signal economic instability. As a buyer in today’s market, I might take advantage of the recent drop in mortgage interest rates. Despite the Fed not yet lowering the federal funds rate, mortgages with rates below 6% are still attainable with some adjustments, which is an attractive proposition from a historical perspective.
Speaking of attractive propositions, the Monterey Peninsula continues to be a wonderful place to live, and as I overheard one one recent visitor aptly put it, we are blessed with “the best weather in the world if you appreciate a touch of the seasons.” I see a continual flow of people "discovering" our area and realizing how much we have to offer here. Small town feel, beaches, mountains, resorts, clean air, natural beauty - we have a bit of everything - except a lot of homes for sale and residential development. For these reasons, I remain optimistic on the local market here as we move further into 2024.
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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