We need to realize that today’s real estate market is nothing like the 2008 market. Therefore, when a recession occurs, it won’t resemble the last one. Read on to find out why.
No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.
A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.
The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements: home prices, wages, AND MORTGAGE INTEREST RATES. Today, the mortgage rate is about 3.5% versus 6.41% in 2006.
In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets. Look at Manhattan where home prices are in a “near free-fall.”
The only major market showing true depreciation is Seattle, and it looks like home values in that city are about to reverse and start appreciating again. CoreLogic is projecting home price appreciation to reaccelerate across the country over the next twelve months.
Regarding Manhattan, home prices are dropping because the city’s new “mansion tax” is sapping demand. Additionally, the new federal tax code that went into effect last year continues to impact the market, capping deductions for state and local taxes, known as SALT, at $10,000. That had the effect of making it more expensive to own homes in states like New York.
Prices will crash because that is what happened during the last recession.
It is true that home values sank by almost 20% during the 2008 recession. However, it is also true that in the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.
Price is determined by supply and demand. In 2008, there was an overabundance of housing inventory (a 9-month supply). Today, housing inventory is less than half of that (a 4-month supply).
I LOVE SENIORS! HECK ... I AM ONE!!! But even before I was a member of the club, I connected easily with the "over 55" crowd. I love to hear their life stories and learn about their experiences. Maybe that's why nearly 35% of my clients are Seniors I've come to specialize in their unique wants/desires and needs as home buyers and home sellers. If you have a special Senior in your life who needs a friend and Realtor they can trust, I'd love an introduction!! I'm always looking to make new friends while helping them move their lives forward!
Did you know August 21st was National Senior Citizens Day? According to the United States Census, we honor senior citizens today because,
"Throughout our history, older people have achieved much for our families, our communities, and our country. That remains true today and gives us ample reason…to reserve a special day in honor of the senior citizens who mean so much to our land.”
To give proper recognition, I'd like to share some senior-related data in the housing industry.
According to the Population Reference Bureau,
“The number of Americans ages 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, and the 65-and-older age group’s share of the total population will rise from 16 percent to 23 percent.”
In a recent report, Freddie Mac compared the homeownership rates of two groups of seniors: the Good Times Cohort (born from 1931-1941) and the Previous Generations (born in the 1930s). The data shows an increase in the homeownership rate for the Good Times Cohort because seniors are now aging in place, living longer, and maintaining a high quality of life into their later years.
This does not mean, however, that all seniors are staying in place. Some are actively buying and selling homes. In the 2019 Home Buyers and Sellers Generational Trends Report, the National Association of Realtors® (NAR) showed the percentage of seniors buying and selling:
According to NAR’s report, 58% of buyers ages 64 to 72 said they need help from an agent to find the right home. The transition from a current home to a new one is significant to undertake, especially for anyone who has lived in the same house for many years. If you’re a senior thinking about the process, let’s get together to help you make the move as smoothly as possible.
I believe in homeownership. That's why I do what I do. I understand that owning a home is the most probable way most of us will build wealth!
Unless you're a super-tech and one day devise the latest and greatest app or become an Instagram Influencer, you may plan to build your net worth by buying CDs or stocks, or simply by contributing to a savings account. Recently, however, Economist Jonathan Eggleston and Survey Statistician Donald Hays, both of the U.S. Census Bureau, shared the biggest determinants of wealth,
“The biggest determinants of household wealth [are] owning a home and having a retirement account.” (Shown in the graph below):
“Net worth is an important indicator of economic well-being and provides insights into a household’s economic health.”
Having equity in your home can help your family move in that direction, building toward substantial financial growth. According to the report noted above, people are not only creating net worth in the homes they live in, but many are also earning equity in rental property investments too. (See below):
John Paulson said it well,
“If you don’t own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”
If you would like to increase your net worth, let’s get together so you can learn all the benefits of becoming a homeowner! And don't forget my husband is a 30-year seasoned mortgage broker so we can help you finance it too!!
Updating your kitchen is definitely a “thing” these days since many a homeowner is deciding to stay put for a while and invest in what they (and their bank) already own. Painted cabinets are all over Pinterest with intrepid DIYers enamored of the idea of updating their kitchens with a few seemingly effortless coats of a new color.
But is painting cabinetry the no-brainer everyone cracks it up to be? After all, how different can it be from painting a room, apart from a little more sanding? Undertaking this project is actually replete with potential pitfalls, according to Good Housekeeping’s Lisa Friedman.
The first one is your expectations. While painted cabinets look lovely on Pinterest, no one is taking close-ups of the visible open grain and grooves that show through the paint of a DIY job. That natural grain was once part of the beauty of the stained wood it enhanced. Slopping semi-gloss over it will make that grain more evident once the paint dries. While it’s possible to fill the valleys with putty, you have just made your cabinet-painting project even more time and labor-intensive than you originally thought possible.
Another pitfall is how long those dishes, pots, and pans will be piled up on countertops, stay in boxes and grace your dining room table. This is no weekend warrior project, agrees many a cabinet-painting veteran. People often think it's a weekend job, but it takes at least four to seven days when you build in the proper prep time, snack breaks, and interruptions — let alone the time it takes you to rehabilitate your olfactory senses from the intense paint smell.
Even the most fastidious of homeowners can’t fathom how dirty their cabinetry already is before they begin painting. That pickled white oak was helped along to its now ugly-yellow tint by cooking grime. Before even thinking about applying paint, wipe everything down with a grease remover like TSP. If you don’t, when you add a water-based paint to an oil-covered door, the paint won't stick.
Think you can get away with leaving the doors and drawers in place while painting them? Dream on. Your very first step is to remove not only these parts but all the hardware as well. Some people think they are saving time by painting everything — hinges and all — while they're still in place, but this is the best way to demonstrate your amateur status. Paint on metal will start to chip and show signs of wear within a month — or even immediately. Then what? Take them all off and soak them? What a royal pain you can save yourself if you take them off at the beginning. Besides, if you are trying to update your cabinets, old-style hinges and knobs are among the first things to date your cabinets. You’ll want to replace them anyway — perhaps with interior Euro hinges and prettier pulls and handles. But keep that sander and putty handy for all the holes left behind.
Don’t forget that painting a large room full of cabinets is like putting together a jigsaw puzzle or playing a memory game when it comes to putting everything back where it once was. Use numbered labels (mark up pieces of masking tape) to help you remember where everything goes.
Did we mention sanding and then priming? You simply can NOT skip this part, even if your cabinets are in near-perfect condition. Even though your goal is to take the surface from glossy to matte and then to primed, these two steps may be among the most labor-intensive, causing aching arms and hand cramps. Even gym rats recognize their workouts don’t prepare them for this.
Experts who do this day in and day out also advise you to use high-quality paint (which may run you $50-plus a gallon) to get a smoother finish. Most kitchens need fewer than two gallons, so splurging on paint shouldn’t break the budget. As for those visible brush marks, many seasoned DIYers will follow brush strokes with a foam roller to smooth things out. Even more experienced painters might use a spray gun, but this is an art form that takes practice.
Just remember that preparation is key when painting your cabinets and you may well become overwhelmed with the number of steps it takes before that golden day when you can put it all back together. Degreasing, sanding, vacuuming, wiping, sanding some more, vacuuming some more, and wiping some more. By then you might be ready for priming.
Miss one step and you’ll end up with a finish that doesn’t hold up, according to RealtyTimes’ writer Jamie Naciri. “If you’re the type who isn’t likely to finish what you’ve started, perhaps you shouldn’t embark on this paint-your-own adventure. Your old, dated cabinets are still better than half-old-and-dated, half-done cabinets. But if you still want to go for it, at least be prepared for a few realities.”
Source: Good Housekeeping, Realtytimes, TBWS
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