What’s the Latest?
Week of July 8th-14th
Property Tips and Tricks
Outdoor Furniture: Going Against the Grain
Recently, I was exploring outdoor furniture options for a specific coastal property in the area. When searching for the perfect outdoor furniture for this specific application, I had three main criteria:
- Low maintenance
- Ability to withstand harsh elements
- Attractive appearance
Initially, I explored popular brands and materials, drawing from past experiences. However, I realized that most outdoor furniture still requires significant upkeep:
- Regular maintenance
- Frequent cleaning
- Protective covering
- Constant vigilance
Coastal living presents unique challenges for outdoor furniture due to exposure to the following:
- Strong winds
- Frequent rain/heavy marine layer
- Corrosive salt air
These elements can cause mold growth, weathering, and reduced lifespan, ultimately increasing maintenance needs.
Teak is a prevalent choice in coastal areas, and I still love teak for a variety of reasons, but it's not without drawbacks:
- Requires periodic cleaning
- Needs regular oiling
- Prone to mold buildup and discoloration
After fairly extensive research, I discovered Polywood and Poly Lumber – two similar materials that offer significant advantages.
Key Benefits:
- Made from recycled materials (eco-friendly)
- Highly durable and weather-resistant
- UV stabilizers prevent color fading
- Color distributed throughout, minimizing visible scratches or dings
- Pest-resistant (termites, rodents)
- Moisture-resistant
- Fire-resistant
- Relatively heavy, reducing wind displacement
Maintenance:
- Requires little to no upkeep
While Polywood and Poly Lumber offer numerous benefits, they are not without their drawbacks. Here are some of the key disadvantages:
- Cost: These materials tend to be more expensive than traditional outdoor furniture options.
- Heat Retention: Darker colors of Polywood and Poly Lumber can retain more heat when exposed to direct sunlight, making the furniture uncomfortable to touch or sit on without cushions.
- Weight: The heavy nature of these materials can be both a pro and a con. While the weight adds to their sturdiness and wind resistance, it also makes the furniture difficult to move. This can be a challenge if you frequently rearrange your outdoor space or need to store the furniture during certain seasons.
For coastal homeowners seeking a long-lasting, low-maintenance solution for outdoor furniture, Polywood or Poly Lumber materials are worth considering. These options offer durability, weather resistance, and minimal upkeep, making them ideal for challenging coastal environments.
Real Estate News
Winds of Change
Inflation Dips, Hinting at Potential Interest Rate Cut
In June, the monthly inflation rate decreased for the first time in over four years, with the Consumer Price Index (CPI) falling 0.1% from May. This brought the annual rate to 3%, its lowest in three years. This development suggests the Federal Reserve might lower interest rates later this year.
Housing Costs: A Key Factor in Inflation Measurement
Housing costs account for 45% of the CPI and play a significant role in inflation calculations. However, this percentage may be disproportionate, as the average U.S. household typically spends 25-30% of their income on housing.
Components of Housing Costs in CPI:
- 8% driven by rent growth
- 27% driven by owners' equivalent rent (OER)
- 27% driven by owners' equivalent rent (OER)
OER, a concept some economists find controversial, is based on a quarterly survey of about 5,000 renters. It represents what homeowners would hypothetically pay to rent their own homes.
Challenges with Current Measurement:
- Latency issues due to annual lease cycles
- Potential under or over-reporting of inflation
- Reliance on outdated data for policy decisions
Some economists suggest alternative approaches:
- Eliminating OER could reduce the current CPI inflation rate to about 2.4%
- Using data sources like Zillow could put the rate at 2.6% to 3%
Implications for Real Estate and Federal Policy
The housing component of CPI is expected to continue falling, as apartment rents only increased by 1.2% in the past 12 months. This decline in inflation could potentially lead to rate cuts sooner, rather than later.
As one expert noted, "The Federal Reserve is setting rate policies based in part on old data. They're driving by looking in the rearview mirror."
Insurance Rate Hikes in California
- Allstate has requested a 34.1% average increase in homeowners insurance rates, potentially affecting over 350,000 policyholders.
- This follows State Farm's recent request for a 30% rate hike.
- If approved, Allstate's increase would be significantly larger than their previous rate adjustments over the past five years.
Real Estate Market Dynamics
- Commercial real estate is experiencing far more challenges, and distress, than the residential sector.
- 96% of U.S. homeowners with mortgages have fixed rates, with nearly 80% of those below 5%.
- The percentage of mortgage-free homeowners has increased from 32.1% in 2010 to nearly 39% currently.
Monterey County Population Trends
Below I am sharing a few interesting graphs (scroll down) on population changes in Monterey County, and contrasting them with population changes in San Francisco County. What stands out to you? For me, there are a couple of takeaways:
Monterey County has experienced a notable influx of residents aged 65 and older. This demographic shift brings both opportunities and challenges:
- These retirees and soon-to-be retirees often have substantial financial resources, injecting vitality into the local economy.
- Their strong purchasing power can drive up real estate prices, occasionally resulting in surprisingly high-value sales.
- While beneficial for sellers, this trend may create hurdles for other buyers in the market.
The population trajectories of Monterey and San Francisco counties present a stark contrast:
- San Francisco has witnessed a significant exodus, losing approximately 8% of its population over the past four years.
- In comparison, Monterey County has demonstrated remarkable resilience, with a modest population decline of just 1.7% – one of the smallest drops in the region.
Despite an overall trend of outmigration from this region of California, several factors continue to influence the housing market:
- The exodus has not been substantial enough to alleviate the persistent housing shortages in many communities.
- A "boomerang" effect is emerging, with some pandemic-era movers now returning to the area.
- The burgeoning AI industry has breathed new life into San Francisco and its surrounding areas, potentially fueling a resurgence in the region.
Monterey County
San Francisco County
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.
OUR WEEKLY UPDATE