While the trend of multigenerational living began long before the pandemic, the popularity of it has grown significantly during the past couple years as families have been forced to reevaluate how to care for themselves and their loved ones.

We Americans tend to be outliers when it comes to multigenerational living.  Here in America we expect our kids to have it all figured it by the time they are 18 when they are “adults” and forced out of the home to make it on their own.  Instead of promoting independence, this can essentially start them off on a path of stress and financial debt.  They take out college loans and credit cards and start racking up debt before they can even legally drink a beer.

In most other cultures outside of the USA, the extended family model is the norm, and kids leaving the family home before marriage is not something you see.  Collectivist cultures are dominant in Asia, the Middle East, India, and Africa, as well as most Hispanic countries. In this model, the entire immediate family as well as the extended family, including grandparents, and even sometimes uncles, aunts, and cousins, are all an intimate part of the familial network.  They live together, share costs and responsibilities, and support each other financially, physically, emotionally, etc.

If more families here would adopt this way of living, it would drastically help the housing market and the economy as a whole.  Shifting our thinking to normalize our kids staying at home with us until they are 25 will go such a long way for helping set their future on the right path.  Look at it this way, you can pay for your kids to stay at home until they are 25, or you can pay later when they are in debt and unable to buy a home and come to you for help with the down payment.

Sometimes going against the trend is the wisest way.

As a renter, you have a tough choice to face each year: renew your current lease, start a new one, or buy a home.  In the past year, current and new renters have seen their rent increase, sometimes a jaw dropping increase like 20%.  So if you are considering renting as an option in 2023, it’s worth taking the time to look at the current trends, and the trends indicate that rent will continue to climb.

These rising costs may force you to reconsider what other alternatives are out there.  If you are looking for more stability, it could be time to prioritize homeownership.  One of the major benefits to owning your home is that it provides a relatively stable monthly cost that you can lock in for the duration of your loan.  Imagine the peace of mind that comes with not having to worry about rent increases each year!  It’s hard to build wealth when the cost of your shelter keeps going up.  And let’s be honest, the rate of increase may fluctuate, but the increases aren’t stopping.  Rent is only going to continue to climb up and up.

Homeowners also enjoy the major added benefit of home equity, which has grown substantially.  In fact, the average homeowner gained over $34,000 in equity over the past year alone.  As a renter, the money you pay in rent only covers the cost of your dwelling and when you leave that rental, you leave with nothing.  But when you pay your mortgage, you grow your wealth through the forced savings that is your principal paydown.

As I always say, most people in this country pay a mortgage, it’s up to them whether it is theirs or their landlord’s.

Buying a home in any market, at any time is a very personal decision.  The best way to make that decision is by educating yourself on the facts, working with a trusted professional, and not following the sensationalized headlines in the news daily. My team and I only deal in facts and bring an educational approach to this process. In reality, headlines do more to scare people than help people who are ready to buy a home.  As they say in the news: “If It Bleeds, It Leads!”

Here are two BIG reasons why the current market is still a good time to buy:

1. Home Prices Won’t Crash
   Home prices will continue to moderate at various levels depending on the local market and factors such as supply and demand, but leading experts agree that they do not believe a crash is coming like what we saw in 2008.  So if you are holding off on buying because you are worried about a crash, rest assured that is not what the experts are projecting. Keep in mind that there is no rule that says another Great Recession is inevitable. In fact, history has taught us that an economic failure like that is a once-in-a-generation event.

2. What Goes Up, Must Come Down
   The best kept secret of the media in the past four months is this: In 2022 until Thanksgiving, interest rates rose the fastest they ever have. Since then, they’ve dropped the fastest ever! The FED rate you hear about on TV is not the mortgage rate as it is somewhat independent. Many in the industry think if they enter the lower 5s or upper 4s, we will revert back to the manic environment we saw these past few years. That means you’ll once again face steep competition and bidding wars.  It would be a huge advantage for you to be a step ahead of them. Believe it or not, that’s more opportunity for buyers now to start building equity in a home instead of paying their landlord’s mortgage.

The bottom line is that you can’t sit around and wait for a unicorn of low mortgage rates and ample inventory. If you do, odds are there will be other factors preventing you from buying a home.  You want to start putting things in motion now, and start making moves so you stay a step ahead of all the people waiting and watching from the sidelines.

In 2022, mortgage rates hit 7%, which put a major strain on housing affordability and further priced buyers out of the market.  All the while inflation continued to drive up labor costs, sending costs for home renovations and new builds up and up.  This is a perfect recipe for disaster for home flippers.

Just like anything in life, timing is everything.  Flippers who bought right before the mortgage rates spiked are likely dealing with the reality that they’ll have a tougher time selling than in 2021 and early 2022 when sellers were seeing bidding wars amongst eager buyers.  All of this amounts to the fact that it will be increasingly difficult for home flippers to turn a profit.

Many believe this will just thin the herd of flippers who have entered the market in recent years as home prices increased and HGTV flipping shows gained massive popularity. Another factor is the internet and all the “get rich quick” hucksters selling their systems for flipping. I have clients who flip and it is not for the faint of heart. 

Perhaps the flippers who are more seasoned and have longer-running connections will still make it out of this fairly unscathed.  But for the less experienced, it will be very difficult and thus likely force many people to leave the space altogether.

It remains to be seen if the fix-and-flip market will continue to lose steam as overall home sales/bidding wars have declined, and the cost of financing increased over the past year. If you’re thinking about getting into flipping, best to chat with me first to get a lay of the land. Like I said, it’s not for the timid at this point.

First-time homebuyers are, on average, 33 years old.  Generally, the average age of homebuyers is 47.  Not only has the average age changed, but the home-buying process as a whole has changed not only with the invention of the internet, but then even more so when the pandemic pushed everything more digital.

I’ve been in this industry for many years and I have seen lots of trends come and go.  But I’ve noticed some recurring mistakes that I’m seeing young buyers making.  Let’s review the top three most common.

1. Taking outdated advice
   Of course, your parents will have advice for you when you are on the hunt for your first home purchase.  They will want to be part of the process and share their experience with you in hopes of being helpful.  However, not all advice is actually helpful if it is outdated. Don’t get me wrong… I actually invite the input of parents and others for young buyers because they do have valuable input, but things are not always done the same way they were done in the past. 

2. Not Working with professionals well in advance
   Take my word for it, there is no such thing as being too prepared.  Just because you are only thinking of buying, doesn’t mean it isn’t time to consult professionals, especially a realtor and lender.  Working with a lender well in advance will allow for time to get all your ducks in a row.  You can start to improve your credit if needed, you can work to save for your down payment, you can have a plan in place for your budget and know what is going to be realistic for you.  Too often a I see a potential buyer who thinks they are ready to buy, only to learn they have never spoken to a lender and in fact, are not ready. This makes for tough conversation and lots of unneeded delay.

3. Relying too much on the internet
   I’ve talked in a previous blog about my belief that you need all 5 senses engaged when looking for a home. (Here) Relying on internet photos is not reliable.  Photos can be very misleading, both in a good way and a bad way.  You could write off a property simply because the agent didn’t have optimal lighting in their photos, or you could fall in love with a property just because the staged photo looks amazing and misleading.  Just like working with a lender in advance is crucial, so is working with an agent in advance.  Work with someone who knows the areas you are interested in, go see properties physically in person, engage those senses and take in everything from the neighbors to the smells.  Nothing beats seeing things in person for yourself.

If you are a first-timer and buying a home is anywhere on your radar, start the legwork now.  I promise it is never too early.  I have zero doubt that consulting with a lender and an agent will help you in the long run to reach your goals.

Although the U.S. has been in a decades-long housing shortage, we have also found ourselves in a time where homebuilders across the country are pulling back on development.  What?  How can both things be true?  Stay with me here.

This riddle is at the heart of the boom-bust nature of the housing market.  With changing incentives, fluctuating interest rates, and ever-changing regulations it’s really no wonder that there is never a time that supply lines up with demand.  Solving this predicament means that more building is required during downturns, which will likely require some sort of public program to subsidize it.

Think about where building has been most of the past year.  Builders have been maxed out trying to figure out how to supply enough houses for everyone who wanted to buy one.  Building companies couldn’t find enough land, workers were scarce, and lumber prices were exploding.  Supply chain issues were rampant – it was like a scavenger hunt for everything from dishwashers to garage doors, everything was out of stock and back ordered.

But the one thing that builders were not short on during this time?  Qualified buyers.  Interest rates were low, household savings were high, and suddenly millions of workers wanted to set up home offices.  Building companies had to get creative with forming waiting lists and even holding elaborate lotteries to pick a “winner” from the list.

But now?  With interest rates being higher, it has made buying new construction more difficult for many. 

The problem, simply put, is that sales of new homes are falling at the same time that a wave of homes are hitting the market.  The number of new homes that have been completed but not yet sold hit a 15-month high earlier this year.  Redfin reported that at that time, buyers were trying to back out of sales agreements at the fastest pace since the early weeks of the pandemic.

At the end of the day, this slump and slowdown in sales isn’t going to last forever.  The market will continue to evolve and change, as it always does, and when buyers are ready to jump back in, there won’t be anything for them to buy unless the building continues even now in the down times. In my opinion, the smart builders will keep doing what they do best… Build!

Contrary to what you might think, inspections are greatly beneficial even after the home-buying process is over.  Think about it, when you own a home, it seems like there is always something that needs attention or repair.  Much like a car, your home needs to have regular check-ups done by a professional who knows what to look out for.

You home inspector will conduct thorough examination of home, looking at things like:

• Walls, floors, and ceilings
• Windows
• HVAC system
• Roof and attic
• Basement and foundation
• Plumbing and sewage
• Electrical
• Chimney
• Exterior of the home

After the inspection, which can last anywhere from 2-4 hours depending on the size of the property, the inspector will create a detailed inspection report that will include all of their findings.  This report can be a huge saver for you in the long run, as regular inspection can help you nip many home problems in the bud, and in turn save you a ton of money down the line.

The cost of a home maintenance inspection averages about $300-$600, whereas the money it can save you in early detection of problems like foundation deterioration or outdated electrical wiring… think about it, it’s worth its weight in gold.

Your home is the most valuable asset you own, so it makes sense that you should keep it in its best condition possible.  A yearly inspection may seem a bit redundant to some, but I would recommend a home maintenance inspection at least every 3 years.