Updates on Wine and Real Estate in Napa Valley
Buying a home can be intimidating if you’re not familiar with the terms used throughout the process.
To point you in the right direction, here’s a list of some of the most common language you’ll hear along the way.
The best way to ensure your homebuying process is a positive one is to find a real estate professional who will guide you through every aspect of the transaction with ‘the heart of a teacher.’
Rising home prices have been in the news a lot lately, and much of the focus is on whether they’re accelerating too quickly and how sustainable the growth in prices really is. One of the often-overlooked benefits of rising prices, however, is the impact they have on a homeowner’s equity position.
Home equity is defined as the difference between a home’s fair market value and the outstanding balance of all liens on the property. While homeowners pay down their mortgages, the amount of equity they have in their homes climbs each time the value increases.
Today, the number of homeowners that currently have significant equity in their homes is growing. According to the Census Bureau, 38% of all homes in the country are mortgage-free. In a home equity study, ATTOM Data Solutions revealed that of the 54.5 million homes with a mortgage, 26.7% of them have at least 50% equity. That number has been increasing over the last eight years.
CoreLogic also notes:
“…the average homeowner gained approximately $5,300 in equity during the past year.”
The map below shows a breakdown of the increasing equity gain across the country, painting a clear picture that home equity is growing in nearly every state.
Bottom Line
This may be the year to take advantage of your home equity by applying it forward, either as you downsize or as you move up to a new home.
Remodeling any aspect of a home can be a big job and a lot can go wrong when owners aren’t adequately prepared. Houzz, a home remodeling website, asked a panel of renovating experts the most common remodeling blunders they see. Here are a few of their responses.
Not budgeting properly.
Underestimating the costs of a project can be a dire mistake that could leave homeowners either with an unfinished property or having to incur a financial loss. Have a detailed budget so you don’t run out of money. Remodeling experts advise always including a 10% to 20% buffer in the budget for any unexpected costs when tackling a remodel.
Assuming DIY will save you money.
Remodeling experts call it the “DIY trap,” and rookie remodelers are especially prone to it. It’s not always cheaper to do a project yourself. It may not look right and could take triple the amount of time to complete than if you would have just hired a pro. “Limit your DIY tasks to things such as painting and simple landscaping jobs, and dedicate your time to project managing the renovation,” experts told Houzz.
Selecting the cheapest contractor.
Another common pitfall is to go with the cheapest quote from a contractor. You don’t want to have to redo poor work. Don’t just focus on the affordability of a contractor’s quote but evaluate fully what it specifies, experts recommend. Gather quotes from at least three contractors and compare them in detail. Also, evaluate the quality of their work through project photos and professional recommendations.
Failing to describe what you want accurately.
Know exactly what you want before you start and use the right words to describe it. Create idea books; search online for ideas online or in magazines; and have a specific list of layouts and finishes you desire. Become familiar with the proper terminology of those looks and finishes so you communicate them correctly to the pros, the experts recommend.
Not researching the material options.
In the same regard, choosing materials often requires some homework. Builders or contractors may fall back on the same materials they always use, but that doesn’t always mean those are right for the project. “Spend time researching the various materials options available—including looks, price, pros and cons, sustainability, durability, and which ones are best suited to your location, and take this information to your builder,” Houzz notes. “Armed with this knowledge, you can decide together the most suitable materials and finishes for your project.”
View more common remodeling mistakes at Houzz.com.
Source: “10 Biggest Remodeling Regrets and How to Avoid Them,” Houzz.com (March 10, 2020)
Don’t forget to set your clocks forward this Sunday, March 8 at 2:00 AM EST in observance of Daylight Saving Time, unless you’re a resident of Arizona or Hawaii!
Every hour in the United States, 568 homes are sold and median home values rise by $1.92.
As we “spring forward” this year, be sure to reach out to a local real estate professional to see how you can take advantage of every hour in the housing market.
Homes priced in the top 25% of a price range for a particular area of the country are considered “premium homes.” At the start of last year, many of the more expensive homes listed for sale hadn’t seen as much interest, since much of the demand for housing over the past few years has come from first-time buyers looking for starter homes. It looks like buyer activity, however, is starting to show a shift in this segment.
According to the January Luxury Report from the Institute for Luxury Home Marketing (ILHM):
“In a snapshot of 2019, despite pessimism at the start of the year, the last quarter showcased a strengthening, with an upswing in the luxury market for sales in both the single family and condo markets.”
Momentum is growing, and those looking to enter the luxury market are poised for success in 2020 as well. With more inventory available at the upper-end, historically low interest rates, and increasing average wages, the stage is set for buyers with an interest in this tier to embrace the perfect move-up opportunity.
The report highlights the increase in buyer activity in this segment, resulting in growing sales toward the end of 2019:
“According to reports from many luxury real estate professionals, the significant increase in number of properties bought at the end of 2019 versus 2018 is reflective of an early 2019 holding pattern.
Many of early 2019’s prospective luxury buyers held off while waiting to see how prices would react to new tax regulations and other policy changes. Buyer confidence returned in late spring and compared to 2018, above average sales were reported in the final quarter of 2019.”
With evidence of strong buyer confidence, this is great news, as more homeowners are building equity and growing their net worth throughout the country:
“Many homeowners are now diversifying their wealth, owning several properties rather than a single mega mansion. In addition, there have been an increase number of home purchases taking place in smaller cities, reflecting the rising number of people relocating from major metropolises. Their property equity wealth or ability to pay high rental costs have afforded them the opportunity to purchase luxury properties in…secondary cities throughout North America.”
With a strong economy and a backdrop set for moving up this year, it’s a great time to explore the luxury market. Keep in mind, luxury can mean different things to different people, too. To one person, luxury is a secluded home with plenty of property and privacy. To another, it is a penthouse at the center of a bustling city. Knowing what characteristics mean luxury to you will help your agent understand what you’re after as you define the scope and location for the home of your dreams.
If you’re thinking about upgrading your current house to a luxury home, or adding an additional property to your portfolio, reach out to a local real estate professional to determine if you’re ready to make your move.
Existing-home sales have been fluctuating in recent months, but one clear trend is emerging: First-time home buyers are making a move into the housing market as low mortgage rates prove to be an enticing incentive.
Lawrence Yun, chief economist for the National Association of REALTORS®, says he’s encouraged by the upturn in first-time home buyers in NAR’s latest existing-home sales report. First-timers comprised 32% of sales last month, up from 29% a year ago, according to NAR. “It’s good to see first-time buyers slowly stepping into the market,” Yun says. “The rise in the homeownership rate among younger adults under 35 and minority households means an increasing number of Americans can build wealth by owning real estate. Still, in order to further expand opportunities, significantly more inventory and home construction are needed at the affordable price points.”
The national homeownership rate has been rising strongly among people younger than 35, increasing from 35.4% in early 2019 to 37.6% in late 2019, Yun adds. Across age groups, existing-home sales are off to a “strong start” at 5.46 million for 2020, Yun says. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”
However, overall sales in January dipped month over month due mostly to the Western region of the country. Overall, existing-home sales—which include completed transactions for single-family homes, townhomes, condos, and co-ops—fell 1.3% compared to December. Still, home sales are up annually for the second consecutive month, with the latest numbers showing a 9.6% gain year over year in January, NAR’s housing report shows.
Here’s a closer look at key indicators from NAR’s latest housing report:
Home prices: The median existing-home price for all housing types in January was $266,300, up 6.8% from a year ago. Prices rose in every region last month. “Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Yun says.
Inventories: The total housing inventory at the end of January was 1.42 million units, down 10.7% from a year ago. Housing inventories are at the lowest levels for January since 1999. Unsold inventory is at a 3.1-month supply at the current sales pace.
Days on the market: Forty-two percent of homes sold in January were on the market for less than a month. Properties stayed on the market for a median of 43 days in January, down from 49 days a year ago.
All-cash sales: All-cash sales accounted for 21% of transactions in January, down from 23% a year ago. Individual investors and second-home buyers account for the largest bulk of cash sales. They purchased 17% of homes in January, up slightly from 16% a year ago.
Distressed sales: Foreclosures and short sales comprised just 2% of sales in January, down from a year ago.
Midwest: sales rose 2.4% in the region, reaching an annual rate of 1.29 million, up 8.4% from a year ago. Median price: $200,000, up 5.4% from January 2019
South: sales increased 0.4% to an annual rate of 2.38 million in January, up 11.7% from a year ago. Median price: $229,000—a 6.3% increase from a year ago
West: sales decreased 9.4% in January to an annual rate of 10.6 million, still an 8.2% increase compared to a year ago. Median price: $393,800, up 5.2% from a year ago
Northeast: sales saw no major movement in January compared to December, remaining at an annual rate of 730,000. That is up, however, 7.4% from a year ago. Median price: $312,100—up 11.5% from a year ago
Mortgage rates were very slightly higher today after being modestly lower over the weekend, but in general, remain very close to the lowest levels in more than 3 years. They weren't too much higher than current levels even before the coronavirus outbreak took center stage, but the virus definitely deserves credit for the extra downward momentum in recent weeks. Given that Chinese equities markets are already indicating the financial market psyche has shifted, it may only be a matter of time before US bond markets (which dictate mortgage rates) follow suit.
That's not to say that bonds must follow stocks. If that were the case, we wouldn't see bond yields close to all-time lows while stocks are at all-time highs. Rather, it's simply a comment on the fact that Chinese equities serve as a good barometer for how quickly markets are getting over their coronavirus concerns. If we assume that bond yields (aka rates) are only as low as they are because of coronavirus, any additional recovery in Chinese equities would likely coincide with upward pressure for interest rates.
Loan Originator Perspective
Bond yields were largely unchanged Tuesday, with no meaningful economic data or new Wuhan virus drama motivating markets. My pricing mirrored Monday's. We're going to need some serious motivation for rates to drop significantly from here, I am playing it safe and locking loans closing within 45 days. - Ted Rood, Senior Originator
Today's Most Prevalent Rates For Top Tier Scenarios
30YR FIXED - 3.375 - 3.5%
FHA/VA -3.25%
15 YEAR FIXED - 3.125-3.25%
5 YEAR ARMS - 3.25-3.75% depending on the lender
Ongoing Lock/Float Considerations
2019 was the best year for mortgage rates since 2011. Big, long-lasting improvements such as this one are increasingly susceptible to bounces/corrections
Fed policy and the US/China trade war have been key players (and more recently, the coronavirus outbreak). Major updates on either front could cause a volatile reaction in rates.
The Fed and the bond market (which dictates rates) will be watching economic data closely, both at home and abroad, as well as updates on other factors like trade and viral epidemics. The stronger the data the more rates could rise, while weaker data will lead to new long-term lows.
Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.
BY: MATTHEW GRAHAM
I wanted to share this article with you that was in the Napa Valley Register on January 26th. It discusses one possible solution to the lack of affordable housing and construction costs/backlog (due to fires).
“A massive factory that churned out submarines to help win World War II has been retooled to tackle a new crisis: the shortage of low-cost housing.
Based on Mare Island’s Building 680, Factory OS manufactures housing units that can be hoisted by cranes and stacked like Lego blocks, similar to the units manufactured by a different company for Turley Flats on Pope Street.
Last September, Factory OS pre-assembled 110 units for a West Oakland project. A stick-built project of that size would take about a year to build. Factory OS installed the entire five-story complex in 10 days.
“We can build something as good as if not better than anything you can do on site,” Factory OS co-founder Peter Palmisano told a group of St. Helena city officials and housing advocates who toured the 250,000-square-foot factory on Jan. 10.
The start-up requires a minimum order of 50 units, but Palmisano said he’s willing to make an exception for St. Helena, the town where he’s lived since 1979.
The nonprofit Our Town St. Helena has been in talks with a local family about building affordable units on a St. Helena property. The site might be suitable for 25-35 units.
Factory OS is offering to team up with Our Town on the project. Palmisano said he hopes the city offers relief from various permitting fees, cuts some red tape during the entitlement process, and demonstrates the political will to get some units on the ground.
“There’s a can-do spirit in this community,” he said. “There’s money, there’s intelligence. We just need the will.”
Palmisano is even offering to install a Factory OS unit on his own west-side residential property as a test case so people can see it for themselves.
The units have a maximum size of 16 feet wide by 72 feet long. Palmisano said he can build them for about $155 per square foot. That includes washers, dryers, lights, water fixtures and kitchen appliances. Even with the additional cost of land preparation and installation, Factory OS’s process is still vastly cheaper than typical Upvalley residential projects.
Since they are built off site, Factory OS units can be installed in a matter of days, minimizing financing costs and the impact on the surrounding neighborhood, Palmisano said.
Mary Stephenson of Our Town St. Helena said units built off-site could provide infill housing all over St. Helena.
“If the community could see this, they would say ‘Oh, this isn’t bad. We could do this,’” Stephenson said.
In addition to managing the development of Meadowood Resort and other major projects, Palmisano served on the board of Bridge Housing Corporation, which developed Hunt’s Grove Apartments, and was a founding board member Our Town St. Helena, which is developing Brenkle Court and recently acquired a property on Pope Street.
Palmisano said he’s worried about a lack of housing for workers and professionals.
“These are the people who are vital to our community,” Palmisano said. “If we’re going to sustain the feeling of our small town … then affordable housing is key.”
Mayor Geoff Ellsworth, City Manager Mark Prestwich, Planning Commissioner Daniel Hale, Senior Planner Aaron Hecock, and Chief Building Official Philip Henry attended the tour, along with representatives of Our Town and Napa Valley Community Housing.
Ellsworth said that with the current council and staff, “this is the perfect opportunity” to try an innovative approach to affordable housing.
Ellsworth said he likes the idea of showing the community a tangible test case to demonstrate that units like Factory OS’s “fit the character of our town.”
“Let’s have the discussion and see what we can do,” he said.
To join an upcoming tour of Factory OS, email mary@ourtownsthelena.org.”
JESSE DUARTE jduarte@sthelenastar.com Jan 26, 2020 Updated Jan 26, 2020
