Saturday, October 29, 2016

The ABCs of Real Estate: Common Homebuying Terms and Definitions from A to Z

Buying or selling a home comes with a whole lot of terminology, enough to fill its own special Real Estate Dictionary. So we sat down to see if we could find at least one common definition from the world of real estate for every letter of the alphabet!

Appraised value:
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. An appraisal is based primarily on comparable sales.

Backup offer:
When a home seller accepts an offer from a buyer but still takes offers from other buyers, just in case the front-running offer falls through.

A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Down payment:
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

Earnest money deposit:
A deposit made by the potential homebuyer to show that he or she is serious about buying the house.

Federal Housing Agency:
An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

Good Faith Estimate (GFE):
An estimate of the fees and costs due at closing for a mortgage loan. A good faith estimate is required by the Real Estate Settlement Procedures Act (RESPA).

Home inspection:
A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

Interest rate:
The interest rate is the cost of borrowing money from a lender. 

Jumbo mortgage:
A mortgage amount above the threshold stipulated under Fannie Mae (FNMA) regulations for a conforming loan. The jumbo loan limit is $417,000 in most of the United States, or $625,500 in high-cost areas.

The best part of the entire real estate process is handing the buyers the keys to their new home when the transaction closes!

Loan-to-Value (LTV):
The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).

Multiple Listing Service (MLS):
A MLS is a central service for real estate listings available to member brokers. Most home searches online begin with looking at houses for sale on the MLS.

Notice of default:
A formal written notice to a borrower that a default has occurred and that legal action may be taken.

Open house:
A pre-scheduled period of time when a house for sale is opened to the public and potential buyers for marketing purposes.

PITI (principal, interest, taxes, and insurance)
This stands for principal, interest, taxes and insurance.

Real Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Quitclaim Deed:
A deed that transfers interest or title without warranty.

Sweat equity:
Investing in the construction or rehabilitation of a property in the form of labor or services rather than cash.

A legal document evidencing a person's right to or ownership of a property.

In mortgage lending, underwriting is the decision-making process used to determine whether the loan risk is acceptable to the lender, based on reviewing the property appraisal and buyer financials.

VA Loan:
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

The walk-through inspection of a property occurs right before a closing to ensure that the property is being delivered as stipulated in the contract of sale.

Every real estate deal definitely has an abundance of paperwork, and all of those copies need to be xeroxed. Hey – it was hard finding a word that started with “X”!

The yield refers to the return on an investment.

Zoning laws regulate land use as well as what kinds of improvements and alterations can be made to a property.

Friday, October 28, 2016

The Anatomy of Today’s Homebuyer, Part 2

Who exactly is today’s homebuyer? In part one of this blog we outlined facts, statistics and data on today’s homebuyer demographics, as well as what they’re looking for and what’s motivating them.

From square footage (less) to relationship status (more single homebuyers, especially single women), what’s most important (quality of neighborhood above school system and affordability) and which amenities are hottest (walk-in closets, tech and green homes), by knowing what buyers are looking for and how they operate, we can market your home sale with maximum efficiency.

So what do today’s homebuyers really want – part two?

So what are some things that will send potential buyers running for the next listing?

56% of buyers say they’re turned off by bad or strange odors
70% of home shoppers are scared off by damp patches, stained walls and ceilings (as they should be!)
54% of potential homebuyers report that dull lighting or a lack of natural light is unattractive
25% found outdated bathrooms unappealing
15% don’t even want to walk in a cluttered room, and
14% dislike d├ęcor that is in bad taste or over the top

Agent-assisted home purchases are at an all-time high of 87 percent, while only 7 percent purchasing directly from the previous owner and 6 percent buying from the builder.

What are the pain points for homebuyers? Asked to rank the most difficult step in home buying, this is how today’s homebuyers responded:

51% Finding the right property
23% Paperwork
17% No difficult steps
14% Understanding the process
13% Getting a mortgage
13% Saving for the down payment

As we documented in part one of this blog, the vast majority of homebuyers start their search for a property online on websites or the MLS. Here are the features of real estate websites they found most valuable:

84% Found detailed information about properties
87% Found photos very useful
45% Found interactive maps very useful
42% Real estate contact information
42% virtual tours very useful
Homebuyers are increasingly concerned with the location of their neighborhood in proximity to where they work when faced with increasing commute times. According to surveys, how important is a reasonable time and cost of commute to work for today’s homebuyer?
32% Not important
30% Very important
38% Somewhat important
It seems like all single buyers want two things in a home these days: central air conditioning and a house that’s wired. But according to the sex of the homebuyer, their priorities may differ from there.

Single Men:
Stainless steel and granite countertops
Cathedral ceilings
New homes
Walk-in closets

Single Women:
New kitchen appliances
En-suite master bath
Single level homes

Do buyers want condos, single-family homes, or townhouses? Well that may depend on their age group, as their area significant differences by generation.

Gen Y
84% Detached single-family homes
7% Townhouses/PUD
3% Condos

Gen X
89% Detached single-family homes
5% Townhouses/PUD
2% Condos

Younger Baby Boomers
82% Detached single-family homes
9% Townhouses/PUD
3% Condos

Older Baby Boomers
81% Detached single-family homes
5% Townhouses/PUD
5% Condos

Silent Generation
71% Detached single-family homes
8% Townhouses/PUD
10% Condos

Multi-generational housing is growing rapidly:

13% of all homes are purchased by multigenerational households.
57 million people are living in multi-generational households, double the number in 1980.
1 in 5 Younger Boomers purchases a multi-generational home.
Why are multiple generations in the same family buying a home together? Here are the top reported reasons:

24% Cost savings
23% Adult children moving back in
18% Caretaking for aging parents
10% Spending more time with aging parents

First-time buyers are lagging:
The historical norm for first-time buyers is 40%.
However, the percentage for first-time buyers is now 32%, the lowest number since 30% in 1987.

Incomes among homebuyers are rising.
The median income for homebuyers is now:

Repeat buyers $98,700
All buyers $86,100
First-time buyers $69,400

How about luxury homebuyers?

70 percent of luxury and high-end buyers say the location of their home is the most important factor.

Homes near the beach or mountains are still popular, with great views and access to leisure activities paramount, but many younger buyers are purchasing property with acreage in the country or rural settings, too.

And 54% of luxury buyers still put top priority on a chef’s kitchen when they go looking for their next home.

60 percent of affluent customers want hi-tech and wired homes, fully automated so they can control features like lights, security systems, video cameras and intercoms, climate control, TVs and music, window shades, and door locks from an iPad, remotely via a mobile app, or even with voice activation.

In fact, almost 90 percent of this demographic of luxury homebuyer said they wouldn't even consider living in a home that isn't tech-friendly.

Buyers want green and environmentally friendly homes that are also energy efficient. Two thirds of high end buyers looked for Energy Star-rated windows and doors and insulated glass, and 18 percent of those surveyed reporting that they a home's Green-LED certification was very important.

Open floor plans are more important than ever according to 39 percent of high-end buyers.

Media rooms still are in vogue, with 60 percent of respondents looking for homes that contain one, and 19 percent looking for home theaters.

Home gyms and specialty exercise rooms were an important feature for 50 percent of buyers.

28 percent of luxury homebuyers want swimming pools.

Outdoor kitchens are still a red-hot trend, with nearly half of new luxury buyers on the hunt for homes with that feature. But aside from the typical wet bar (desired by 42 percent of respondents), they’re also looking for warming drawers, sinks, and climate controlled wine, beer, and beverage fridges. 

Buyers also are looking for outdoor fireplaces and fire pits in close proximity to the swimming pool and outdoor entertainment area.

Open rooftops are being utilized as spaces for entertainment, exercise, reflection, yoga, and sunset watching, and also to create stunning rooftop gardens and green areas.

Luxury homes appeal to car aficionados with subterranean parking, high-tech automated parking, and even glass ceilings or walls so the autos are on display as you walk through other areas of the house.

They want dedicated wine cellars with precise climate controls and also dining and tasting areas to host their friends for vineyard-quality events and parties.

Super purification systems are one of the biggest new attractions in the luxury market, with filtration systems that include UV lights, humidification systems, and energy-efficient fans run to keep the air purified.

Friday, October 21, 2016

Taking a bite with America's new Farm-to-Fork Capital

You may have seen social media posts proclaiming Sacramento as America’s Farm to Fork Capital, experienced the local food movement at one of your favorite neighborhood restaurants, or even showed up to eat, drink and be merry at the now-annual Sacramento Farm-to-Fork Month celebrations every September.

But the whole idea goes back to 2012 when Josh Nelson of the Selland Family Restaurants came to the Sacramento Convention & Visitors Bureau with an idea that we should highlight all of the incredible fresh, local food being grown and served in Sacramento. The idea took off and not long after, Mayor Kevin Johnson declared the greater Sacramento region the new Farm-to-Fork Capital of America.

No matter if you’re a serious Foodie, the most health-conscious Vegan, or just someone who loves tasty grub, there is something for everyone in America’s new gastronomical mecca. Here are 25 facts about our new designation as the Farm to Fork Capital:

1. The Sacramento region includes about 1.5 million acres of farms growing more than 120 individual crops. In fact, 70 percent of the Sacramento region’s land is agricultural, forest or other open spaces.

2.     California is the largest agricultural producer in the entire U.S., and Sacramento is the capital both for governance and food production, too.

3.     In fact, no other major metropolitan city in the U.S. enjoys such an abundance of farms, ranches and vineyards within such a close radius.

4.     Local restaurants and eateries have long used all of this freshly grown regional food, creating a Farm-to-Fork experience for patrons.

5.     Since everything is fresh and locally sourced, the menu will change with the seasons as different food is grown.

6.     Thanks to a climate that’s dry and hot in the summer but wet in the winter, Sacramento has a year-round growing season and is often compared to the growing conditions in Mediterranean countries.

7.     Aside from supplying amazing food for all of our local restaurants, Sacramento is home to more than 40 farmers markets - including the largest California Certified Farmers’ Market in the entire state.

8.     It also happens to be the most ethnically diverse farmers market in the country, both in the produce and food offered and the customer demographics.

9.     Sacramento produce and agricultural products are shipped all over the world. In fact, if you’re eating sushi anywhere in the U.S there’s a good chance the rice comes from Sacramento. Believe it or not, Japan consumes more Sacramento-grown rice than its own domestically grown rice!

10. Our City of Trees is also a world leader for domestic caviar production, with 80 percent of domestic caviar farmed right here in Sacramento before it ends up at some of the finest restaurants across the globe.

11. California also supplies 80 percent of the world’s almonds, and Blue Diamond right here in Sacramento is the largest almond grower in the world.

12. Where is Sacramento “hiding” all of these great farms? Amador County has 50 wineries, El Dorado Hills has 100 farms, ranches and wineries, Placer County has an astounding 1,200 small farms, Sutter County has more than 300,000 acres of farmland, 60 percent of Yuba County is agricultural land, and Yolo County features UC Davis as an innovator in food production science and many food distribution operations in West Sacramento. 

13. But it’s not just food that is taking off in the region, with countless award-winning local coffee houses and a seriously burgeoning beer scene. Sacramento now has more than 40 craft breweries, many of them featuring locally farmed ingredients.

14. Sacramento celebrates all of this edible excellence with an annual Farm-to-Fork Month celebration every September. For a couple of weeks, there are daily restaurant specials, farm dinners, street fairs, tastings, interactive chef experiences and a host of other great events.

15. It all wraps up with the Farm-to-Fork Festival in late September, a day where local restaurants, coffee houses, food trucks, farmers, wineries, and breweries come together to celebrate, entertain, and especially, feed, Sacramento residents.

16. Last year’s Farm-to-Fork Festival attracted over 50,000 people and its popularity is expected to grow by leaps and bounds every year as the street festival keeps expanding to more and more city blocks. This year, the final gala was held September 25 on the iconic Tower Bridge, where almost 1,000 people sat and enjoyed a meal created by Sacramento’s top farmers and chefs together.

17. But the Farm-to-Fork Monthly Celebration isn’t just about indulging one’s own pallet, but also education, awareness and responsible food practices. In fact, the September celebration included a food drive hosted by the Sacramento Food Bank & Family Services. In all, more than 170,000 lbs. of fresh produce was donated to food-insecure people in Sacramento, generating 142,000 meals that fed 16,000 people for three days.

18. Even though another September has passed, there are still plenty of ways to participate in and enjoy Sacramento’s Farm-to-Fork renaissance.

19. Local Roots Food Tours offers culinary walking trips and a Market-to-Plate Executive Chefs Tour. Sac Brew Bike and Off the Chain is for those that want to pedal as they sip, there’s nonstop wine tasting at vineyards around the region, and visitors can even order off a specialty Farm-to-Fork menu and have it delivered to many area hotels.

20. Or you can just visit one of Sacramento’s many iconic restaurants year-round to sample their locally grown cuisine, like Sellands, Ella Dining Room & Bar, Mulvaney’s B&L, Waterboy, The Kitchen Restaurant, and many others!

Thursday, October 20, 2016

How homebuying and selling has changed over the last 30-40 years.

Thirty years ago in the mid 1980s, our country was embroiled in the Iran-Contra affair, mourning the loss of the Space Shuttle Challenger, following celebrities like Boy George and Mr. T, and Wozniak and Jobs had just rolled out the Apple IIgs. Forty years ago in the 1970s, we were wearing ridiculous clothes as we danced to disco (but not me!), Presiden Nixon resigned after the Watergate scandal, and our country was recovering from the Vietnam War - and yes, we were eating TV Dinners while watching it all on our black and white televisions. 

The housing and real estate market was far different in the 1970s and 1980s, too. Here are 15 trends in real estate over the last 30 and 40 years:

1. First-time buyer rates have dropped
First-time buyers now make up only 32% of the home buying market. That’s the lowest share since 1987 when first-time buyers only reached 30% of buyers (and mortgage interest rates reached 21%!). Just how low is that? For context, the first-time homebuyer rate rates reach a high of 50% by 2010, though the average rate is around 39% over the last several decades. One reason for the low total first-time buyer rate is that Millenials first-time home purchases are only at 34.1%, while younger buyers usually make up the lion’s share of these new buyers.

2. Homeownership rates are also down
Home ownership rates bottomed out at 62.9% in Q2 of 2016, a low since the 1960s. In fact, even with 20% or more down payments, standard 30-year fixed loans and fewer flexible loan and credit options, past generations have owned homes at rates commonly in the 64-67% range. Homeownership did peak at 69.4% in 2004 with ridiculously loose lending standards (i.e. subprime) and booming values, but sunk like a stone after the bubble burst. These days, 37 million households in the U.S. are renting instead of owning their own home, a figure that roughly works out to 1 in every 3 households.

3. Houses are much bigger now (but that trend has slowed)
Just how much has our preference for bigger homes grown over the generations? In 1950 there was an average of 290 sq ft per person in the American household. These days each person has about 924 sq ft in an American household! There’s no doubt that the size of homes has risen precipitously in the past few decades, but that trend started to reverse after peaking with the real estate boom of the mid-2000s, as buyers now prefer a slightly smaller home but with great amenities and features.

4. What’s old is new with multi-generational housing
Back in the 1950s, 60s and 70s, it wasn’t uncommon for several generations of families to live under one roof, with parents and grandparents living with their adult children as they aged, mostly because there were few other living and care options and out of economic necessity. That trend declined in the 90s and 2000s as our economy boomed, homeownership became easier and modernization of our society led to less of an emphasis on traditional family dynamics.

But multi-generational housing is back and in a big way. In fact, these days, 13% of all homes are purchased by multigenerational households. Why are multiple generations in the same family buying a home together? Here are the top reported reasons:

24% Cost savings
23% Adult children moving back in
18% Caretaking for aging parents
10% Spending more time with aging parents

As you can see, there are a host of reasons for multi-generational housing, including the rapidly growing aging population that need more help and care, but also adult children who are saddled with student loan debt so move back in at home until they find a good job and get on their feet.

5. All the single ladies (are now buying homes)
It’s not just married couples buying homes anymore! Forty, thirty and even twenty years ago, it was almost unheard of to see a young single professional woman buy her own home. But we’ve come a long way, baby, and in ’16, unmarried female homebuyers are one of the fastest growing demographics. Now, married couples constitute only 67% of all homebuyers, followed by single females at 15%. That number is especially significant if we look at the fact that their cohort single males make up only 9% of homebuyers, and single women are even buying homes at a rate more than twice as much as unmarried couples (7%).

6. Technology rules
Obviously, in the 1970s and 80s the most technology home buyers and sellers, and real estate agents used was a rotary telephone and a copy machine. Veteran realtors will remember the days not so long ago where real estate books were dropped off weekly instead of home searches taking place online. But these days, just about everything in real estate (as in business) is driven by technology. Consider that as recently as 1995, only 2% of buyers used the internet during their home search, but by 2005 that number jumped up to 75% of buyers, and now sits at 90%.

Consider that:

76% of buyers visit a home after first finding it through an internet search.
43% of buyers looked for properties online as the first step in the process.
89% used the internet throughout their home search.
78% visited more than 3 sites prior to taking action on a real estate site.

Home shoppers aren’t even taking the time to sit down in front of their desktop computers anymore to do these searches, as the majority of online searches take place from a smart phone or mobile device.

7. The role of Realtors has shifted - but is just as important as ever
Despite this increase in technology, both buyers and sellers continue to seek out real estate agents to buy to sell their homes. In fact, the role of realtors has only increased and become more vital in today’s technology and information-crowded world, and increased emphasis on disclosures, excessive paperwork, litigation, insurance, regulations, etc. only make real estate agents more important.

In fact, homebuyers may be looking for homes online now, but they still use agents to set up showings, suggest other homes, and represent them throughout the buying process.

The top six sources for home searches are now:
  1. Online websites
  2. Real estate agent
  3. Mobile website or app
  4. Mobile search engine
  5. Yard sign
  6. Open house

Likewise, sellers are using a realtor to sell their home more than ever. In 1991, about 19 percent of all homes were sold as FSBOs, or For Sale By Owner. But that rate dropped steadily to 13 percent by 2001, 9% by 2010, and now at a 30-year low of 8%.

Look for part two of this blog coming soon!