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Week of October 23rd - October 29th
Property Tips and Tricks
Staying put? Get inspected.
Typically, home inspections primarily occur during property transactions. But why is this the case?
A seller might choose to conduct a proactive home inspection to evaluate the property's condition, identifying any maintenance items or issues worth investigating or repairing before placing their home on the market. On the other hand, a buyer may opt for an inspection during the contingency or escrow period to ensure the property aligns with their requirements. Essentially, both parties undergo home inspections to minimize uncertainties and uncover any potential concerns that could affect the property or its occupants in the future. For similar reasons, I recommend obtaining periodic home inspections for a property you live in or own, and intend to keep. The cost of a home inspection ($500-$1,000) could end up saving you by highlighting any unknown maintenance or condition items and nipping them in the bud.
Two frequently encountered issues during home inspections include moisture in the crawlspace and disconnected HVAC ducting—both often overlooked. Given that not everyone regularly inspects the space beneath their house, problems such as these can easily go unnoticed, potentially resulting in mold problems and energy wastage. While these might be easily visible to a home inspector, they often escape the attention of the average homeowner. Additionally, electrical issues often come up on inspection reports regardless of the age of the home, which should almost always be addressed.
In summary, it can pay in the long run to schedule periodic home inspections on your home. If you ever do decide to sell, your home will have benefited from years of proper and preventative maintenance, and conveying this to potential buyers will certainly instill confidence in the purchase.
Real Estate News
This time, it's different
For the first time ever, you need to make more than $100,000 per year to afford a house in the United States. Specifically, the annual income needed to service the median home price is now $111,000. Trouble is, the median household income in the US is currently around $78,000. Just three years ago, when interest rates were lower, and the median home price was lower, you needed to make just $60,000 to afford a house. Mortgage applications are down 50% since the start of the year, and at their lowest level since 1994. These figures underscore the challenges faced by the average homebuyer, illustrating the demand-side complexities of the real estate market.
On the supply side, housing is still very constrained, which means that even with high interest rates pushing many buyers out of the market, homes are still selling for record high prices. In Monterey County, the current inventory of homes available for sale is merely half of what has been historically observed. It remains difficult to see where more supply could come from in the near term that would lead to a significant uptick in available homes.
I was looking at a house with buyers just this past week who already own a primary home in the area and are planning to buy another home and rent out their existing home, which they bought a few years ago and have secured low, fixed-rate debt on. They bought somewhat below their means a few years back and have since built up a good amount of equity in their existing property. Selling it now would be a great way to cash-out on that equity, but they do not need to sell to buy another property, and could rent out their current home, easily covering their mortgage and property tax expenses. They are worried that if they wait to buy another property, they will end up paying an even higher price, which is an interesting thought. If the Fed would suddenly drop the fed funds rate, which would in-turn drop mortgage rates, I could see that situation putting inflationary pressure on the housing market, all else aside.
Where we go from here is anyone's guess but one thing is clear - this housing cycle has been playing out quite differently than cycles in the past. Opportunities exist today for both buyers and sellers, contingent on the specific submarket that the property aligns with. A good strategy moving forward hinges on making smart financial decisions and not stretching too thin, which can help to endure any phase of the housing market cycle.
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