Nov. 24, 2021

Josh Barker Real Estate Podcast Episode #1

Home Value Tool

Transcription*

Joey: Okay, so the local market has slowed down a little bit...

Josh: Yeah.

Joey: I mean that's... But it's also going in the holidays, I would say every year. It kinda slows down a little bit.

Josh: Yeah, there's a season to it.

Joey: It hit a peak in the summertime, around August. One of the things that we're seeing, and I don't know if that's related to the local market, but we saw Zillow who was gobbling up real estate, not only did they stop that, but they laid off... I think it was like 2000 employees. It was a very large number. Yeah, it was a huge number. It could have been 20,000 but it was significant enough that it hit headlines pretty hard, but what does that? Did that have any effect on the local market here?

Josh: No. The short answer to that, no, that didn't. In fact, I was watching some realtors running and posting on Facebook and everything else, "Oh my God, Zillow is not buying... IBuying anymore." And I'm like, "You know what? In Shasta County, there's no reason to freak out about it, 'cause Zillow wasn't buying homes in Shasta County." So it was not a big event when they stopped buying, but essentially what it was, is that Zillow was participating in the iBuyer market, which is where they're buying them with... Institutions are buying in these properties with the intent of just to resell them... Flip properties essentially. In some cases, they would fix them up a little bit and do a small little face left to him and re-market them to the market, but as a whole, they were trying to offer a value, which I think was well-intended, but the second you start buying an investment property or buy a property in general in any market center, you are an investor at that point. And Zillow wasn't really an investor to start with, they were in an advertising company, specialized in advertising products online for buyers and sellers to communicate with.

Josh: So what happened was, is that essentially they realized their Zestimate was inaccurate, that they were buying them for too much money. And that when they went to try to resell them for what they thought the Zestimate was reflecting, they couldn't get them sold, so then you had a lot of inventory sitting and in some cases being price reduced below what they even bought them for in order to get them off the books, and so I think they... They're publicly traded, they have to answer to their board, but they also have to answer to their investors, and they said, "We need to stop the bleeding," and made a smart decision of, "You know what, maybe we need to re-look at this." And so they made a decision to stop iBuying, which I'm sure they probably still have some commitments, I'm sure they're probably still closing on some of those transactions that they had already committed to. But they're winding it down. And it's probably a smart thing to do. I mean, an institutional investor buying to flip will never outmaneuver, outperform a local investor who really understands the lay of the land. That know... Real estate's local, people have always heard that. And it's true if you don't know all the little intricacies of a property or an area or a subdivision or what that type of buyer is searching for, you could get slaughtered out there and they did... They got, what, 500 million or more?

Joey: When you said that, what I immediately thought of was back in 2007, 2008, when they had the mortgage back securities and they were gobbling them up, but yet credit unions didn't have any problem because there were individual little credit unions that analyzed each loan and they wouldn't give out the bad loan.

Josh: That's right. Or...

Joey: Whereas the institutions were just gobbling up mortgages.

Josh: Yes, yeah, when you took comparisons of different assets... The credit union, to your point, did get hit a little bit, but it wasn't initially, it wasn't because of bad loans, it was because these bad lenders drug the market down so far that even the good loans that they provided were underwater, that's why that market was so exasperated. This market this time isn't like that... I've had a lot of people asking like, "Hey, are we in a bubble?" Those kinds of things. And it's like, "Well, I'm not saying that we won't see the market correct a little bit," because any time you have a period of a major increase over a period of time, and any time there's a breakthrough in pricing, which we've clearly had... We've had 10 years of major growth...

Joey: Yeah.

Josh: Well, after long periods of growth, there's always some sort of a pullback, some sort of a recession, so it'd be kind of irresponsible to say, "Oh no, not this time." But the good news is, is that the buyers that we see coming, they're purchasing on 30 year fixed mortgages, which means there are no balloon payments, their interest rates are extremely low, which makes them wanna stay in those properties and hold those properties, there's hardly any negative amortization or interest-only products in the market, so we don't have a lot of those issues to deal with. And the investor participation is really low. We're probably talking maybe 10% of the markets investment-related in Shasta County.

Joey: Really?

Josh: Oh yeah, yeah. And before it was almost 50% in that 2007, 2008 that everybody knows where that market just got hammered, it was because in those periods, major investor participation where today it's 10%.

Joey: So you think maybe the... When you say it like a market correction, are there any numbers that come to mind percentage-wise, or any length of time or... I know it's like, Hey. Do you have a crystal ball? Can you tell the future?

Josh: Yeah. I'd be retired. Completely if that were the case. But I think what it is is after periods of market expansion for a period of time like I said, I think you could expect to see some retraction. You have another way of investors look as we have tailwinds and we have headwinds. So tailwinds, what are the things that'll push the market up? Well, you have family formation, you have migration, you have wage growth, you have a lack of inventory, you have monetary policy that's easing and that's pushing the amount of pay up where people can afford more. You've got the cost of construction, if it's really high, then that pushes the existing inventory up in value too, if you have a lack of labor, that again can cause prices to get pushed out because you can't really replenish the needed supply. So right now our... Let's say our tailwinds right now are hovering at 7-8%, which are all positives, right, and then you have to... That's your tailwind. And then you look at the headwind, it's like, "Okay, well, what could push pricing down?" And one of them would be as if people were to lose their jobs, if we went into a major recession when people weren't getting jobs, well, then that would reduce the buyer participation and that could have an impact on value.

Josh: Do we see that today? Not really, they're even paying people to stay home, right?

Joey: Yeah. Not locally anyway.

Josh: Yeah, locally. And then you have interest rates, so interest rates are sitting in right around low threes, and the fad is said that they probably would see maybe two rate increases in 2022, and every time they increase, it's only about a quarter basis points, so next year they said, "Hey, rates might go up a half a percent." A lot of people don't know this, but for every 1% that the interest rate goes up, it has up to a 10% impact on your purchasing power. So if we know that the interest rates will likely go up 10% next year, which with inflation where it is, I'm sure they're going to go up, that could have an impact of about 5% on the value. So if you have a tailwind of 7%, you got a headwind of 5%, that means you have positive growth and value of maybe 2%, and that's how those things interact with each other. Does that make sense?

Joey: Totally.

Josh: Yeah. And whatever ingredients you wanna throw in the cake on the tailwind side or on the headwind side that's up to you and every investor, that's where the speculation comes in, but the principles are settled.

Joey: 'Cause I think one of the big factors would be... You said migration, and it just seems like there are a lot of people that are pouring out of the cities, and Redding is still... When you talk about California real estate, Redding is definitely at the lower end cost, it means by quite a bit...

Josh: It is. Yeah. Which makes it attractive.

Joey: Makes it very attractive.

Josh: Yeah. We're seeing a turnover a little bit, if you will, in our population. The composition of our population is changing a little bit. So you've got folks that are moving out and moving into Idaho or Texas or Tennessee, and we have families, mother, father, the children, and they're married off with kids. We have families coming in right now and saying, "Hey, our whole family is moving to another state." It's pretty... In 20 something years, I've never seen that before. And we see some of that right now. And then also on the flip side of it though, we see people moving up here from Sacramento, from the Bay Area, from Southern California, who are saying, "Gosh, we love California, we love the weather, we love the proximity of the big cities were Redding... Love the outdoors that Redding has to offer and we really like the price." So it's interesting, we're starting to see a little bit of a change in that composition.

Joey: Do you think that at any point we're gonna see like foreclosures or are we gonna see... I can't remember what the term is, but... 'cause we're being pretty positive right now, we're saying, "Hey, the whole Zillow thing really doesn't affect Shasta County because they never bought here anyway," but is anything gonna turn because... Is it all just roses?

Josh: Wouldn't that be nice, right? No, it's not all roses. You've got the pandemic-related impact that we're not talking about, and that's a pretty sobering conversation because no, there were people that understandably fell behind on their mortgages due to employment disruption and things like that, or even sometimes it was landlords who had a rental property and the tenant stopped paying, 'cause they had a disruption in their cash flow and well, now the landlord was expected to burn the responsibility to continue to make payments to the bank and they couldn't do it. So you have some distressed properties in the market. Right now, we have an estimate of just over 2000 property owners in Shasta County who are a period of time behind on their mortgage, and some of those are in a forbearance program, which expired at the... In the summer. And so some of these folks are in a situation or they're gonna have to make a decision, they're gonna have to decide, "Do I modify my loan with my existing lender, if they'll let me and maybe tack on what I didn't pay onto the back of the loan and pay it back over time? Or do I refinance my property based on whatever the criteria is that a lender is gonna require in order to start over again with my loan balance and get current?

Josh: And there are some programs I know of that are available for that. Some people might choose if they have equity in their home just to cash in, "Hey, it's time, we might be behind in our mortgage, but we have some equity still we're gonna sell our home anyway." Some are going to decide to do a short sell if they don't have the equity, so they can control when they close and how they close and kind of minimize the damage to their credit, and then unfortunately there'll be some that will ultimately possibly lose their home and go to foreclosure all the way. So we have reconciliation as a community that we are going to have to go through, because if those numbers are correct and it exceeds 2000 that are behind, a portion of those will get fixed and corrected and never reached the market, but there'll be another portion that will reach the market in one form or another.

Joey: So 2000, that number sounds really big to me, we're talking about Shasta County, that sounds like... That's a shockingly large number to me. I guess the good news is, if you are in that position, you're not alone and you do have options, and when you said equity in your home, I'm thinking, "Man, if you purchased your home more than two or three years ago, you should have quite a bit of equity." We've seen this market do very, very well over time, definitely for the last 10 years, but even over the last three years, the market has performed very, very well, so you shouldn't be upside down. There might be a... But I think that's gonna be a very small fraction of those people, so get ahead of this and do something about this now, so it sounds like they need to get in touch with either a real estate broker or if they need to get in touch with a loan officer. Find out where they sit. Get their options now.

Josh: Yeah. I agree. I think that if a person was in that situation, the very first thing you wanna try to do is figure out what is the actual value of our property right now, and there are means to do that...

Joey: Don't use Zillow. Don't get a Zestimate.

Josh: Don't get a Zestimate. On our website we have a place where we can check your value, you don't have to sign up for it or anything, it just will give you the value at that in there, but it's still only computer-generated, so it's not gonna be better than having an agent look at it, but it's still something. And I agree, I think you try to figure out where, if you have equity or not, ask yourself the questions. Do I wanna sell my own and cash in on the profits that there are now? Or if I'd prefer to stay and then go down the route of check-in with a lender and see what your options might be? Like I said, sometimes you can modify it along with your existing lender if they have a program for it. Some are right now, because of how many people nationally are going through this, lenders actually have some policies in place for if you have to check with each in the lender individually, but I know that I've heard that if you make a couple of months payments in a row, that then you can qualify for a refinance and so are some options...

Josh: The worst thing that somebody could do is just to put their head in the ground, we saw that last time, and that major... This isn't anything like that. But when we saw that for a closer market, we saw before, the ones that really got hurt the most were the ones that put their head in the sand, because by the time they finally wanted to do something, the protections that were awarded by the government were no longer there anymore. And that was the big price to pay for putting your head in the sand. Were the ones that kind of were proactive and working with the banks or doing a short sell or foreclose or whatever it was that they were trying to figure out, when they were proactive, they were going with the group, and with that comes some protections because, in numbers, you have some protections when you're by yourself, they're not gonna carve out a policy just for you, but they will when there are thousands of people that are in that situation.

Joey: And it sounds like there are thousands of them. When you said there are about 2000 homes that are in this, like at some point of this forbearance or there just behind, are you talking about people that have just missed their mortgage? What triggers as like they're two months are more behind or is it... I'm trying to get a context of how close those people are too, like, "Hey... Urgency."

Josh: Yeah, well, the... My understanding of it is, is that the current reporting agency is once you're 30 day late, they could report it is 30 days late, but because we're in that foreclosure moratorium, there was no... They wouldn't file a notice of default, for example, after 60 days. They didn't have the legal means to do that because that was the very thing that was suspended, but it didn't mean that you didn't have somebody tracking the fact that you're behind on your mortgage, and so I think that's where that information is coming from is that they're basically saying, "Hey, here's the number of people that are behind currently," it doesn't mean they're all gonna foreclose, it just means that these are the ones that are behind, and it's a number that will have to be rectified either they'll have to refinance, they'll have to do some sort of a modification to their existing loan or they'll have to sell it in some way, whether it be an equity sell or short-sell or foreclosure.

Joey: Do you think that that's gonna... 'Cause that sounds like a headwind to me based on what... How do you define a tailwind and headwind, if all of a sudden the market gets this huge number of inventory, do you see that having an effect on depreciation next year?

Josh: Oh yeah... Well, again, everybody's ingredients that they wanna put into a tailwind or a headwind is up to them, that's where the speculation comes in, and yes, from my own personal speculation in terms of the market for next year, that will be counted as a headwind.

Joey: You know, one of the other things, I think that we talk about markets... We're too generalizing when we talk about markets like the national market's one thing, the California market, the Redding market, but even within the market, there are market segments, and I've had friends that were looking to buy and looking to sell, and they're certain segments... I guess it's like stocks, just because the market went up 4% today, it doesn't mean your stock went up 4%, you might it went up 24% it might have gone down 4%. And so there's... Is there a particular segment, do you have those kinds of numbers, you're like, Yeah, out of those 2000 homes, the price is this, and so these are the segments that we're gonna... 'Cause I think of a bunch of inventory at $350,000 is not gonna affect home sales at 800,000 and vice versa.

Josh: That's a really good point. So obviously the... Well, the average sales price in the market, to your question is between... It's averting between 390 and 400. Really? Yeah, and it trans down in the fall, in the winter, it always does, 'cause fewer larger homes sell during the holidays, that's just... They're the ones that are doing all the entertaining, all the kids are coming to the big house, so the upper-end market tends to not have as many closings, which has an impact on the average selling price and the fall in the winter, and then that starts to change in the spring. The price point that's pretty much active year-round is the lower price point, so anything that's at that 350 year below in today's market, at that price point is going to move regardless or respective of what time of the year it is, and that's where most of the appreciation consequently actually took place during this whole pandemic, if you will, it's been, that's where most of the largest jumps and value off. What was interesting and COVID that... I look back and I go, "Wow," we weren't used to seeing upper-end properties sell at the volume they were selling at, that was...

Josh: That was shocking, but it was because we had people coming in from other markets like San Francisco Bay Area, Sacramento, Southern California, who were buying these expensive homes, at least expensive for us, it wasn't expensive for them, they're buying a 500 square foot Studios for a million bucks, so when they come up here and buy a 4000 square foot home with the beautiful pool for the same price, they're like "This is a no-brainer." But we've seen a lot of those transactions over the last year and a half, and that's largely being 'cause they're been second homes or people that we're able to work from any location, so they chose Redding as a wonderful destination, who wouldn't? It's gorgeous, especially if you still have to get back to the city once or twice a month for work. And so we started seeing some higher-in-price property selling, and I think a lot of it had to do with the pandemic, but what will be interesting going forward is that... Are we popular enough now? Have enough people discovered the beauty that we really do have to offer in the north state to have that volume maybe not stay exactly the same, but stay within a similar realm.

Josh: You know what I mean? Maybe it won't be the same number as last year, but if it could be 75% of the numbers of last year, that'd be still great. 'Cause, that would be a lot different than it was three years ago. We were pretty much a hidden secret up here in the North state three years ago compared to what I think we are right now.

Joey: And you have factors like telecommuting is much more popular now, COVID really impacted that. And also the Redding airport's expanding quite a bit. They've got direct flights, Vegas, Burbank, LA, obviously, they've always had San Francisco, Seattle. I was talking to Megan Spalding over at Shasta EDC, and she was talking about they wanna expand more, they're looking at like... She threw some things like Denver, Phoenix and that stuff will all have an impact on us.

Josh: Well, you'll be able to bring in a more of a working professional that needs to have the access to the airport, the biggest deterrent we have for the working professional, the travels is it's over two hours to the airport, and so we miss out on a market segment because of that, and the airport is obviously a point of attention, and I think if we have some intention with it in terms of expansion, better routes and things like that and if it's reliable. Let's not sugarcoat the reality that some people still have the stigma that it's hard to get a flight out.

Josh: Sometimes it gets canceled or whatever, everybody tells me it's gotten better, but for those who were trying to do this 10 years ago, fly out of Redding and then get burned once they're driving to stock right now. So maybe reporting those numbers, how often that they don't get canceled, that might be a good public message to get out there, but no, I think that as telecommuting becomes more viable... And they're still meeting too, it's not like these guys aren't driving back to the city or these gals aren't driving back down to the city to meet once a month, they're still doing that, so they still wanna be within a certain proximity of access to the city, but... Come on. Where would you rather live? You would try to live with... Do you have an hour and a half traffic every day that you have to contend with, or really have a five to 10-minute commute?

Joey: And a $4500 rent an apartment versus a...

Josh: Yeah, a $3500 house payment on a beautiful home that you can really enjoy. So we have... Our best days are ahead of us. For sure.

Joey: Well, that's good to hear. Yeah, that's good to hear. So you don't think that the 2000 homes that are in that are gonna impact us... People shouldn't be concerned.

Josh: Well, that... Everybody seems to be emotional these days. So what's gonna happen is, is that as soon as this conversation... Not our conversation, but as soon as the conversation of distress properties becomes more mainstream, you're gonna have articles written that are gonna try to make the worst presentation of it and try to make it look horrible. We had a rainstorm a month ago, and what did they call it? I forgot the name of it, but it was like some funny name for... It was like some cyclone bomb, is what they called it. Right. And it was like, "No, that's called rain. What are you talking about?" So you know they're going to paint a pretty dark grimson picture, but the reality is we have over 4000 homes that are selling here in the county every single year. And so let's say that even 50% of that 2000 or more end up coming to the market in one form or another, that's only a quarter of the inventory, it'll only take one quarter of a year to absorb that inventory and it's not gonna all come at once, so it's gonna get spread out, but it's gonna be... Some of it's gonna be distressed, and so there will be a conversation around it, some people are like, "Oh, finally, I'm right," but I have a feeling it won't last very long.

Joey: And they're expanding the loan... The packages, Chris Lam, I saw, he did a little bomb in video he was talking about them potentially offering 40-year mortgages, and I think you might have told me like, "Oh, they've had that around," you don't hear about it often, but it's gonna become a little more mainstream, which is only gonna open up buying power more. Right?

Josh: Yeah, yeah. For the listeners, a lot of people, when you go to take out a mortgage, you usually have a 15-year fix has been the historical or a 30-year fix. Those are the two that most people would choose from, but in Europe and in Canada, 40-year mortgages are pretty much mainstream, that's something that gets done all the time, and there's no problem with it, what I like about them or that I think makes them... Okay, is that they're usually fixed for that period of time, there's no balloon payment. And balloon payments are where you get people in trouble because you have to think as a borrower and you're like, "Okay, alright, so there's a balloon payment in five years. How do you know where you're gonna be in five years? Is the market gonna be up or down, am I really gonna be forced to refinance my property based on whatever the market conditions are at that point?" That's the problem with the balloon payment... Right, but these 40-year mortgages are fixed for the 40 years most of the time, and what it does is it brings down the monthly obligation a little bit because you're amortizing over a longer period of time, and so let's say that the fellow reserve raises rates a half a percent next year, and we know that the head one that's created is a negative 5% valuation as a result of that.

Josh: Well, if they go to a 40-year mortgage at the same time they raise the interest rates, then that may not have a 5% headwind impact, it might only be 1% at that point. So if they increase the availability of loan products as they're raising interest rates, we probably won't see a major disruption or major headwind created just from the rates alone... But man, I'll tell you right now, if they move to negative amortization or interest-only products with balloon payments, enjoy a 24-month run-up a value and then get ready for the crash, so I just hope they don't decide to get stupid like that.

Joey: Well, okay, that's a 24-month crash. I'm like, gonna set my watch.

Josh: Yeah, we already say it. 2004 and five was when they ran up the crazy loans available and people used them even though it didn't make sense. They still did it anyway. So hopefully, there are no products available in the market today, and for the most part, it's almost illegal because that DOD Frank bill that was passed after the mortgage crisis before for the most part, basically made it almost illegal to do something...

Joey: Well, the difference that I've noticed from then and now is back then you would hear people pulling out equity on the first home to buy the second home and equity is set on by a third, just... I don't hear that. I hear more cash buyers than I hear that, so...

Josh: Oh yeah. Absolutely. Well, and to your point, less than... It's roughly, maybe even at the most... And these are numbers that I'm coming from, but what we see in our office and when I talk to other brokerages, but it's 10% of the markets investors, so to your point, that's not happening, they're not pulling equity out and then going and buying another rental property with it, where before, that was very common.

Joey: If anything, it seems like the investors are coming from out of the area and they are cash buyers or they're very large down payment buyers, a lot of them, 10, 30 winning out of bigger properties and adding their portfolio by "Hey, I'll gobble up a single-family home in Redding with this $200,000, I need to recognize."

Josh: Well, people are chasing cap rates, and that's kind of a different conversation, but people are looking at the cities and trying to buy investment property down there and your cap rate might be 1% or up to 3% return on investment. Where in our area here it's... You're looking at 5%, even 8% cap rates on properties, and I think that people are much more attracted to those numbers.

Joey: I don't see a lot of inventory either, when you talk about the cap rate, you're not talking... Are you talking about the single-family home cap, reader you talking about more like multi-family?

Josh: Not... Well, just rental in general, so it could be a home or it could be a multi-family situation, but the investors for the most part, or shopping cap rates, and Shasta County has a better cap rate than a lot of other markets, at least currently, and so you do have investors that still wanna purchase, that's that 10% that are buying for investment, there's very little speculation going on right now, there are very few people flipping, there's not a lot of that, but there are people buying and holding, and that's that 10% that are looking at the cap rate and saying, "Hey, I'm gonna give X amount towards this property and I'm okay with the return I'm getting." It's not hard though, 'cause the banks are paying what, 1% right now at the most to save your money in the bank, and you're moving into an inflationary market where inflation 6%, if you don't put the money in a hard asset right now, your money, if I give $100,000, I'll put in the bank account today, based on the numbers, not my numbers, the federal government gave out where the inflation is over 6%, that same $100,000 is now worth $94,000, and that's just what inflict the cost of inflation is, but if I would have taken that $100,000, put it in real estate last year, right? Then let's say I bought a property with leverage, that $100,000 might be worth $150,000 today, so negative 6000 or up 50,000, which one sounds better?

Joey: Yeah, so if you really want to get the best of both worlds, you're gonna wanna buy a house and fill it full of crypto miners and then... And solar, don't forget solar.

Josh: Yeah. Crypto's a... You know... That's an interesting topic. 0

Joey: I was just kidding. I was just joking.

Josh: Yeah. Real estate is obviously the... It's a long game, but I haven't met too many people that bought real estate 20 years ago who lost money today.

Joey: No, no, exactly.

Josh: So if you can look at it from a long-view perspective, and as long as it's cash flowing, it just makes sense. I use this slide with the team and then I show on a slide of here since 1980s with rent increase. The most it might flatten out for six months, but that thing is at a 45-degree angle and it's been like that for 30 years. So the cost of living, cost of rent, cost of housing goes up.

Joey: Oh, absolutely.

Josh: And if you own a property and you secured a position in the market where your mortgage doesn't go up every month, it stays the same, but rents are going up every year in theory, or making more passive cash flow on that investment.

Joey: I guess one of the things that we've talked about, the big one for me would be... Because one of the things you talked about was access to materials to home builders, we don't have a lot of new construction, and it doesn't move fast here at all, so it doesn't take much for our inventory to drop quite a bit. The big factor is gonna be, I think, employment and locally it looks pretty good.

Josh: Yeah it's... Obviously, we have a pretty big disruption when it comes to raw materials. The good news is that in China right now, I was just reading this report, China right now is taking a pretty big hit on their new construction right now, and they compete against us for a lot of those raw materials and appliances and stuff like that. So if China is going through a correction right now where they're gonna have a reduction in demand that's gonna impact them, let's say 20-25%, then that means that we could begin to see our access to materials get better. Our biggest issue, I think, really is in the construction anyway is labor, do we have enough people to do what we need to do, 'cause I think that the material side of it is gonna fix itself over the next 6-12 months.

Joey: What... We're running out of time. I wanted to recap. So if anybody is part of that 2000, if you're behind on your mortgage payment, you have options, get ahead of it, don't get behind it, it's... It's putting your head in the sand. It's not gonna help you. No, but there are still programs right now, reach out to a broker, Josh, obviously reach out to Josh or your lender and find out, get ahead of this now, get ahead of the curve. And there are... You have options, you have solutions.

Josh: Yes.

Joey: This can end very, very well. It doesn't have to be a sad story, doesn't have to be a tragedy.

Josh: It can end the best it possibly can if you get ahead of it. Go with the crowd when it comes to these types of situations, go with the crowd because that's where the most protections are available at the government level.

Joey: Awesome. Well, thank you, Josh, I appreciate it. And until next time, look out for Josh Barker's market update, it comes out at the beginning of the month?

Josh: Yeah, we sent it out every month, it's more... This one's more free conversation, but the one we do each month is more confined to a couple of topics and put some time into that, so it's easy to read.

Joey: Awesome, thank you, Josh.

Josh: Yeah, thank you too.

*The transcription is auto-generated by a program and may not be accurate to the conversation. In order to ensure you get all the information from the video properly, you must watch the video.

Posted in Podcasts
Nov. 2, 2021

Shasta County Market Update - November 2021

<>

 

Click Here to watch Josh's video blog for the month of November.

From the Desk Of Josh Barker

The month of October proved to be a pivotal month for Shasta County Real Estate. It appears that the market has formally transitioned from a pandemic related market to a more traditional economic based market. The number of home sales decreased sharply in October while inventory continues to rise. The rental market continues to remain strong while builders struggle to get supplies to build new multi family units. This month we will discuss some of the hottest topics trending now in our local market. If you have any additional questions please feel free to contact us at any time at our office at 530-222-3800.

MARKET UPDATE FOR NOVEMBER 2021

Home Inventory Continues to Rise

Home Inventory Continues To Rise finishing October with 677 dwellings for sale, compared to 699 dwellings for sale at the end of October of last year. The growth in home inventory has largely been the result of fewer home sales over the past several months combined with a small increase in new listings coming to the market.

Home Sales Decrease Sharply

Home Sales Decreased Sharply in October finishing at 249 closed down 28% compared to October of last year. The sharp decrease in sales is largely a reflection of the market continuing to transform from a pandemic related market to a more balanced market. Sales peaked in June of this year with a whopping 367 closed which now appears to be the peak in the market for the year.

The Average Home Selling Price

The average home selling price finished at $389,272 down 8% compared to June of this year. The decrease in the average sales price was anticipated as fewer out of town buyers purchased in our local market recently. 

Interest Rates Continue to Remain Low 

Interest Rates Continue To Remain Low averaging 3.5% for a 30 year fixed mortgage. Mortgage rates are projected to inch higher as inflation begins to pay its toll on mortgage bonds. Interest rates are projected to increase to 3.75% by the 3rd quarter of 2022. For every 1% the mortgage rate increases, home buyer purchasing power decreases by 10%. 

The Rental Market 

The Rental Market continues to perform exceptionally well for investors. The vacancy rate has remained extremely low and rent rates have continued to climb. There have been several larger scale multi family developments under development in west Redding that are welcome additions to the much needed housing supply. Cost of rental housing is expected to climb as inflation pays its toll on operation costs combined with higher wages for tenants. Bad news for those on fixed incomes in rental situations. 

The California Foreclosure Moratorium

The California Foreclosure Moratorium expired July 31, 2021 providing a path for lenders to foreclose on delinquent mortgages in accordance with FHA guidelines. This policy change is beginning to work its way through the market as banks sort through forbearance policy and work with homeowners to restructure loans when possible. Unfortunately, many homeowners in forbearance are significantly delinquent and loan restructuring could prove to be challenging. It is estimated that over two thousand local Shasta County homeowners are behind on their mortgages and will be making some challenging decisions in the coming months. The options in these situations are slim: catch up the mortgage, sell, restructure the loan, or foreclose/short sale. Many of these types of properties are expected to reach the market for sale in the coming months.         

The Eviction Moratorium

The Eviction Moratorium ended September 30, 2021. This policy change has provided some additional options for landlords that either were struggling to collect rent or desired to sell but were not able to do so due to the moratorium. It is projected that there will be a noticeable increase in rental properties coming to the market for sale in the coming months. 

 

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. Please feel free to contact our office with any additional questions you may have. 530-222-3800

 

 

 

 

 

Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

reddinghomes.com/selling-your-home/ 

Learn more about Josh Barker's proven ideal investment formula by visiting

reddinghomes.com/buying-home/

 

Check the average value for your home instantly by visiting reddinghomes.com/home-value

 

Make it a great November! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting www.reddinghomes.com/blog

Posted in Josh's Blog
Oct. 5, 2021

Shasta County Market Update - October 2021

 

Click Here to watch Josh's video blog for the month of October.

From the Desk Of Josh Barker

The local real estate market has experienced noticeable changes in supply and demand in the past 3 months.  In this month's market update, we will share some of the hottest topics trending now in our local real estate market. If you have any additional questions please feel free to contact us at any time at our office at 530-222-3800.

MARKET UPDATE FOR October 2021

Active Home Inventory Is Growing

Active home inventory has grown by nearly 30% over the past 6 months. Starting at a low of 463 total dwellings for sale in March, and finishing September with a standing inventory of 656. The increase in home inventory has been a welcomed change for many home buyers. Although, the recent increase in home inventory has contributed to a slightly higher average days on the market to get a home sold for sellers.

Home Sales Have Decreased

Home sales have decreased by over 25% over the past 3 months, with a peak of 367 closings in June and finishing at a low of 290 closings in September. The reduction in home sales was anticipated and largely due to the market's transition from a pandemic related market to a more balanced market. During the early stages of the pandemic many additional home buyers entered the local market due to migration pattern shifts, work from home options, and second home purchases. This large disruption has cooled recently and has resulted in lower overall buyer demand.

California Eviction Moratorium Is Ending...Here Is What To Know

As of September 30th 2021 the eviction moratorium in the state of California has expired. However, there are some remaining protections in place for those that qualify. to learn more click here. The end of the eviction moratorium will bring some relief to landlords that have desired to liquidate but weren't legally able to do so. In the coming months we could expect to see some of these rental properties reach the resale market and could provide additional options for home buyers.  

Rental Market Continues To Remain Tight 

The local rental market has continued to remain tight with limited options available for tenants. The trend does not appear to be slowing and has had an impact on housing affordability in recent years. Renting versus owning is a complicated decision and certainly is not a one case fits all scenario. However, thoughtful consideration to all the options available may be a good first step. Owning a home can limit options, but it can also provide some protection against housing inflation that is inherent to renting. To learn more about purchasing a home, please visit our site click here.

Home Affordability 

Over the past year we have heard a lot of discussion around housing affordability. Many experts have very good points on both sides of the discussion. One point that most of the experts agree on is that housing affordability today is still lower than historical norms. Historically the national percentage of income allocated towards housing was 21% compared to the current percentage of 17.1%. However, It is hard to ignore the fact that abnormally low interest rates have contributed to housing affordability in the recent year. 

New Construction

Residential Construction is on pace for one of its best years since 2006. The recent fall in lumber prices has been a welcomed change for home builders and are expected to fall even more in the coming months. However, skilled labor, home appliances and other building materials are in short supply creating challenges for home builders. 

Home Price Expectations

Home price expectations are extremely difficult to predict in the current environment. However, there are two sides of the equation to consider. First, there are the tailwinds that can cause the market to appreciate. For example...lowering interest rates, migration pattern shifts, family formation, population growth, inflation, wage growth, cost of construction, and limits on supply relative to demand. Next, are the headwinds that can put downward pressure on home prices. For example...Availability of financing, the type of loan products available and rising interest rates. It is how the tailwinds and headwinds reconcile that determines future home prices. If the tailwinds are stronger than the headwinds prices could rise. If the headwinds are stronger than the tailwinds prices can go down. Most experts agree that rising interest rates will be the largest headwind the housing market will face in the coming years.

 

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. Please feel free to contact our office with any additional questions you may have. 530-222-3800

 

 

 

 

 

Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

reddinghomes.com/selling-your-home/ 

Learn more about Josh Barker's proven ideal investment formula by visiting

reddinghomes.com/buying-home/

 

Check the average value for your home instantly by visiting reddinghomes.com/cma/property-valuation/

 

Make it a great October! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting www.reddinghomes.com/blog

Posted in Josh's Blog
Sept. 9, 2021

Shasta County Market Update - September 2021

 

Click Here to watch Josh's video blog for the month of September.

From the Desk Of Josh Barker

As the market continues to transition from a pandemic related market to a more traditional market there will be noticeable changes to be on the watch out for. This month we will dive into some of the hottest topics trending now in the real estate market. As always, if you have any additional questions please feel free to contact me at the office at 530-222-3800.

MARKET UPDATE FOR September 2021

Home Inventory

The current growing home inventory relative to demand has been contributing to home price stabilization. Currently, there are approximately 641 homes active for sale on the market compared to 673 homes active for sale one year ago. 

Home Sales

Home sales reached 314 closed in the month of August, down from 366 closed in June of this year. Buyer demand appears to be transitioning from a pandemic related frenzy to a more traditional supply and demand representative market.

New Construction

New home and multi family constructions have continued to perform well in the Shasta County Market. The CARR Fire related rebuilds, existing home lot construction and other development are all contributing to the much needed housing supply. The future in the new housing sector is promising. Some very prominent national home builders are negotiating, and in some cases committing to developments in the area.  The pressures of higher lumber costs are beginning to abate slightly and are expected to trend down further by the end of the year.

Interest Rates

Mortgage interest rates have been the silver lining that has served the housing market extremely well over the past 18 months with rates as low as the mid 2% range for a 30 year mortgage. Although experts predict rates to remain fairly low in the near future, they expect to see rates inch into the mid 3% range by the end of the year. Keep in mind that for every 1% the rate increases, purchasing power is affected by as much as 10%.

Eviction Moratorium

Due to the pandemic related eviction moratorium and tighter eviction restrictions, imposed by the state of California prior to the pandemic, landlords have found it difficult to evict tenants. These restrictions have contributed to the overall lower home inventory and continue to serve as a challenge for investors that desire to liquidate. Recently the Supreme Court ruled to ban the eviction moratorium. However, the State of California's eviction moratorium remains in place until 9/30/2021 if not extended. 

Price Reductions

Over the past year home price appreciation greatly outpaced many overpriced listings. Homes could be listed for sale above recent comparable sales and, within several months, sell anyway. The market was HOT and most homes sold quickly.  As the rate of appreciation has recently begun to decline, many overpriced listings have continued to remain on the market for longer periods of time. In an increasing number of cases many home sellers that recognize the market shift, and are motivated, are electing to reduce prices and get moved.  

 

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. Please feel free to contact our office with any additional questions you may have. 530-222-3800

 

 

 

 

 

Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

reddinghomes.com/selling-your-home/ 

Learn more about Josh Barker's proven ideal investment formula by visiting

reddinghomes.com/buying-home/

 

Check the average value for your home instantly by visiting reddinghomes.com/cma/property-valuation/

 

Make it a great September! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting www.reddinghomes.com/blog

Posted in Josh's Blog
Aug. 3, 2021

Shasta County Market Update - August 2021

 

Click Here to watch Josh's video blog for the month of August.

From the Desk Of Josh Barker

As the market begins to transition from a pandemic related market to a more traditional market there will be noticeable changes to be on the watch out for. This month we will dive into some of the hottest topics trending now in the real estate market. As always, if you have any additional questions please feel free to contact me at the office at 530-222-3800.

MARKET UPDATE FOR AUGUST 2021

Homes Sales Report For July

Homes sales in the month of July fished at 300 closings, down from 363 in the month of June and down 25% from the month of July of last year. Higher home prices combined with lower inventory has contributed to the impact on the overall sales volume. In addition, the major migration pattern shifts from larger cities is showing signs of stabilizing and could reduce overall buyer demand in the local market. 

Homes Listing For Sale Report For July

The number of home listings available for purchase is increasing. Currently there are approximately 600 dwellings available for sale up from 462 dwellings for sale in March of this year. The absorption rate (the number of months of supply) has also jumped from 1.65 months supply in March to 1.85 month supply in July, a 16% increase. These numbers may not appear all that impressive on the surface, but it does illustrate the point that home inventory relative to demand is no longer decreasing. 

Interest Rates

Interest rates continue to remain historically low, although, in recent weeks have nudged a bit higher. Most experts predict rates to level off in the mid 3% range by the 4th quarter. As interest rates increase, the purchasing power of  the average buyer diminishes slightly. For every 1% in rate increase, a borrower's purchasing power is reduced approximately 10%. Provided interest rates do not increase quickly, it is likely that overall effect of rates on home prices will remain marginal. However, if interest rates increase abruptly, there could be a corresponding effect on home prices.

Opportunity For Transitioning Home Sellers

The recent changes in home inventory may serve as an excellent opportunity for transitioning home sellers. As the inventory increases, existing homeowners will have more options of homes to choose from for purchase. At the same time, homes are still selling quickly- which means the process can be completed with less stress and concern. 

The Media Impact

The future of the real estate market has been a popular discussion for many. Smart people on both sides of the issue have excellent points. One topic most experts agree on in the current state of the market is due to extremely low inventory relative to the demand, combined with historically low interest rates. As these major factors begin to shift we can all expect news organizations to pick and choose eye catching headlines that grab attention. If the factors of supply relative to demand and interest rates adjust slowly, the market will likely transition to a more balanced market. 

The Future For Real Estate

The long term prospects of the real estate market are positive. The country simply does not have enough existing housing units to need the demands of the future. However, we currently have a housing market the at is  largely a reflection of a pandemic. How these two issues reconcile is what makes this market very interesting. In the short term, the overall housing market and economy has to rebalance. In the longer term, the market will have to grow to meet the growing needs. 

 

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. Please feel free to contact our office with any additional questions you may have. 530-222-3800

 

 

 

 

 

 

Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

reddinghomes.com/selling-your-home/ 

Learn more about Josh Barker's proven ideal investment formula by visiting

reddinghomes.com/buying-home/

 

Check the average value for your home instantly by visiting reddinghomes.com/cma/property-valuation/

 

Make it a great August! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting www.reddinghomes.com/blog

Posted in Josh's Blog
July 1, 2021

Shasta County Market Update - July 2021

 

Click Here to watch Josh's video blog for the month of July.

From the Desk Of Josh Barker

First and foremost, I am excited to resume our monthly market update with all of you. A lot has changed in the past 12 months and real estate both locally and nationally has become one of the hottest topics being discussed at this time. In fact, Google has stated that one of the leading search terms that buyers are searching for is, "Are we in a housing bubble?". This month we will dive into this question and address some of the hottest topics trending now in the real estate market. As always, if you have any additional questions please feel free to contact me at the office at 530-222-3800.

MID YEAR REPORT FOR 2021

Home Inventory

The current low home inventory relative to demand has been the largest contributing factor to home price appreciation. Currently there are approximately 430 homes active for sale on the market, down approximately 40% compared to one year ago. The number of homes for sale is beginning to increase slightly due to lower health concerns combined with home price pressures.

Home Sales

Home sales have reached approximately 1,750 for the first half of the year, up nearly 30% compared to last year in the same period. Migration pattern shifts, combined with first time home buyers and incredibly low interest rates, have all contributed to the robust buyer demand. 

New Construction

New home and multi family construction has taken hold in our local market. The combination of fire rebuilds, infill lot construction and larger scale developments have all contributed to the much needed housing supply. The future in this sector is promising and has even caught the eye of DR Horton, one of the country's largest home builders. The headwinds of high lumber costs and the lack of skilled labor will likely be some of the largest challenges for builders.

Interest Rates

Mortgage interest rates have served the housing market extremely well over the past 12 months with rates as low as low as the mid 2% range for a 30 year mortgage. Although rates are expected to remain fairly low, most experts predict we could see rates inch into the mid 3% range by the end of the year. Keep in mind that for every 1% the rate increases, purchasing power is affected by as much as 10%. 

Loan Programs

Loan programs have expanded over the past 6 months. Nearly 100% financing has become available for many first time home buyers. This is made possible by using the FHA loan program combined with grants provided by the state of California. In addition, limited documentation loans have become available for buyers with large down payments and approved credit. Flexible loan programs foster additional home buyer participation, but can also raise concerns for many who lived through the housing crises of a decade ago. One big difference between today's loan programs and the programs of a decade ago is the absence of short term fixed loans and negative amortization products. 

Eviction Moratorium

Due to the pandemic and tighter eviction restrictions imposed by the state of California prior to the pandemic, landlords have found it difficult to evict tenants. These restrictions have contributed to the overall low home inventory and continue to serve as a challenge for investors that desire to liquidate. In the coming months legislators will likely address the eviction moratorium issue and bring some closure to many whose plans have been on hold. 

Foreclosure Moratorium

Fortunately many banks, with the help of the government, took a very proactive approach dealing with homeowners in distress due to the pandemic. Many of these homeowners were provided forbearance options that kept them in their homes. A portion of these homeowners have already transitioned out of the program and brought their mortgage current. Another portion transitioned out of the program by restructuring their loan with the intent to remain in the home. There continues to be a number of homeowners that are experiencing major financial difficulties. As the foreclosure moratorium begins to lift and the legal foreclosure process is permitted to resume we could expect to see these types of homes come to the market for sale.  

Migration Patterns

A large contributing factor to the active local housing market has been the disruption in migration patterns. Many of the larger cities throughout the State of California and around the country experienced abnormal migrations shifts over the past year. These shifts have grown the populations of many smaller communities like Shasta County. The major disruptions due to the pandemic have likely peeked at this point and could potentially have an impact on local buyer demand in the coming year.

Pent Up Seller Demand

Over the past year many homeowners have put their plans on hold. The combination of health concerns, travel restrictions and a volatile housing market have all contributed to that decision. Now that many of these concerns are beginning to abate, the possibility of moving is becoming realistic. As these homeowners begin to move forward with their plans, we could expect to see additional homes added to the existing depleted inventory.    

Home Buyer Concerns

The popular question, "Are we in a housing bubble?" is a very realistic question to ask. Many experts are weighing in on this question and very smart people on both sides of the topic have excellent points. One point nearly all the experts agree on is...Home prices of today are a reflection of low home inventory relative to demand, combined with extremely low interest rates. If one or more of these factors shift quickly, we could expect to see an impact in the number of homes selling, followed by price changes. Whether the changes are positive or negative relative to a person's perspective is difficult for anyone to predict. However, if any shift experienced is gradual, the market could have the needed time to adjust and prices could maintain at a stable, slower, and steady growth pattern.    

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. Please feel free to contact our office with any additional questions you may have. 530-222-3800

 

 

 

 

Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

reddinghomes.com/selling-your-home/ 

Learn more about Josh Barker's proven ideal investment formula by visiting

reddinghomes.com/buying-home/

 

Check the average value for your home instantly by visiting reddinghomes.com/cma/property-valuation/

 

Make it a great July! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting www.reddinghomes.com/blog

Posted in Josh's Blog
April 1, 2020

Shasta County Market Update - April 2020

 

Good afternoon,

First and foremost I hope that this email finds you and your family healthy and safe. To say that all of us, all over the world, are shaken by the latest events is an understatement. I want to take a moment and say thank you to all of those that are continuing to serve the public in this trying time. From our grocery store clerks, to the police officers, to the health care providers, and many, many more, Thank you! This month I will do my best to lay out the state of the real estate market in Shasta County. I apologize in advance as this update will cover a range of topics regarding real estate. For that reason, it may be best to just browse the topics that interest you most.

As always, if you have any additional questions please feel free to contact me at 530-222-3800 or feel free to respond to this email.

Respectfully,

Josh

Homes sold Report for March

Homes sold in the month of March finished at 237. This is down from 292 in the same month, 1 year ago. It is important to note that there were some additional cancelled escrows in the month of March due to the disruption in the economy. The cancellations were predictable and largely due to employment changes and financing guidelines.

Pending Sales Report for March

The first 2 weeks of March started out extremely strong for home sales and all indicators pointed to a very busy spring. Of course, that all changed in the second half of the month as the Pandemic began to take hold in our state. In spite of the pandemic news, we continued to see home sales take place as buyers and sellers found new ways to transact. New pending home sales finished at 290. This is down from 306, 1 year ago.

Rental Market

The rental market has experienced the largest changes over the past month. The State of California passed a law preventing the enforcement of evictions until the end of May. For landlords, this means that in the event that a tenant fails to pay, the landlord cannot take action until the end of May. This policy will likely transfer the hardship away from tenants and place it onto the landlords. Many of these landlords still have a mortgage on the property to cover. No easy answers...

Mortgages

The mortgage market has experienced a disruption over the past 30 days. The state of California, as well as the Federal government, has issued forbearance regulations for many of the Nation's banks. This means that in many cases homeowners who cannot afford to make their mortgage due to the current crises may qualify to temporarily suspend some or all their mortgage payment for approximately 90 days. As a result of this program, as well as the major impacts on the economy, many investors related to mortgages are becoming reluctant. Interest rates are unpredictable, and many loan programs are being eliminated altogether. Although these challenges are likely temporary, those challenges are affecting those that are currently transacting.

New Construction

New construction has continued to take place in our local market in spite of current events. Builders are considered to be a vital part of the state economy and with the State's housing shortage we can understand why. The challenge ahead for local home builders will be determining buyer demand. With already razor thin margins, any major shift in demand could leave many builders holding inventory. Again, no easy answers...

Home Price Expectations

Home prices have a lot more to do with supply and demand than volume. We can assume that home sales volume will decline. However, whether home prices decline has a lot to do with how many homes become available for sale. If inventory remains stable and does not climb rapidly, prices will likely remain stable. Too early to call this, but we know what to look for.

Home Sellers

I have been asked by many homeowners if now is a good time to sell. I can say that I do not see an advantage to selling now. If a person "needs to sell" there continues to be a market to accomplish your goals. If you "want to sell but do not need to sell" it may be a good idea to wait. The health risks involved, as well as the anticipated unpredictability of the market over the next 2 months, may cause many to think twice...

Home Buyers

The number of buyers continuing to shop in spite of current events is impressive. I can understand the opportunity. Low interest rates, little competition for the best homes on the market, the optimism and reality that these challenging times will come to pass are attractive to those who are currently looking for homes. The key to shopping for homes at this time is to conduct as much VIRTUAL research as possible. Minimize your exposure to others and become very selective as to what you are willing to look at physically.

Bottom Line

The real estate market continues to transact. Home mortgages will be a challenge over the next several months and payments for both rentals and mortgages may be disrupted. The key is not to panic, like all things, this too will come to pass and when it does, we will all climb out of it together one day at a time. 

Posted in Josh's Blog
March 2, 2020

Shasta County Market Update - March 2020

Click Here to watch Josh's video blog for the month of March.


From the Desk Of Josh Barker @ RE/MAX

Real Estate Market Report for Shasta County

The fundamentals in the local real estate market are strong. The vast majority of homeowners are enjoying a large equity position in their homes. In addition, most homeowners with mortgages are enjoying a fully amortized loan with a low-interest rate averaging below 5%. Foreclosures and short sales are at or near historic lows for the area and speculation and investor activity is also low. All that being said, the overall health of our local real estate market is positive. This month we will dive a little deeper into several of the hottest topics trending now in our local market. As always, If you have any questions please feel free to respond to this email or contact me at the office at 530-222-3800. 

New Listing Inventory

There were 365 new home listings taken in the month of February.  This number is up from 292 one year ago in the same month. One contributing factor to the increase in new home listings this year is the absence of the major snowstorm that hit our local market in February of last year. 

Home Closings for February

Total home closings in the month of February finished at 185. This is down from 213 one year ago. The slight reduction in home closings is not surprising considering that home buyers have fewer options available to choose from in the lower price ranges. 

Current Pending Home Sales

Pending home sales for the month of February finished at 316.  This is up from 241 one year ago. Again, last year's snow storm had an impact on pending home sales in the second half of February last year. At that time, many local residences were cutting their way out of driveways and waiting for power to be restored.

Average Sales Prices

The average sales price in the local market averaged $310,000 in February.  This is down slightly from $316,000 one year ago. The fact that the average sales price did not climb year over year indicates that home appreciation overall in 2020 has been off to a slow start.

Current Active Home Inventory

The overall inventory of homes for sale finished at 799 for February.  This is down from 941 in the same month one year ago. The 15% reduction in inventory has taken a bite out of the absorption rate. The absorption rate is currently averaging a 2.9 months supply.  This is down compared to the 3.3 months supply of just one year ago. If the absorption rate remains this low, we can expect to see home appreciation tick up in the months to come.

Home Construction

Homebuilders are active in the local market. In addition to the fire-related rebuilds on the westside of town, there are many additional housing units currently being constructed throughout the county. New construction is necessary for several reasons. First, new home construction contributes to overall home price stability. Second, new home construction provides moving opportunities for existing homeowners which adds to the resale market supply. Third, population growth is accommodated for and encouraged with the increase in housing options. Finally, wages paid and fees collected are added to the local economy and government infrastructure. 

Buyer Demand

The amount of "online search activity" currently suggests that buyer demand will be very strong in the first quarter of this year. Typically, our local market experiences an increase in buyer demand in the spring and peaks in mid-summer. Current data suggests that the selling season may start a little earlier in 2020. Lower than anticipated interest rates, combined with a strong economy and housing market is driving buyer demand.

Interest Rates

Currently, interest rates are averaging 3.75% for a 30 year fixed mortgage. The federal reserve is scheduled to meet this month and although previous forecasts projected little to no change in the rate, current events may change that. The novel Coronavirus referred to as COVID-19 has jarred the markets and could lead to more aggressive action taken from the federal reserve.

We want your feedback! Each month our team collects some of the hottest topics trending in the market and I present them to you in these market updates. If you would like to see any additional topics discussed, please feel free to respond to this email with your thoughts and comments.

Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

reddinghomes.com/selling-your-home/ 

Learn more about Josh Barker's proven ideal investment formula by visiting

reddinghomes.com/buying-home/

Check the average value for your home instantly by visiting reddinghomes.com/cma/property-valuation/

 

Make it a great March!

Josh Barker

P.S. You can view all of our past real estate market updates by visiting www.reddinghomes.com/blog

Posted in Josh's Blog
Feb. 17, 2020

The Overlooked Financial Advantages of Homeownership

There are many clear financial benefits to owning a home: increasing equity, building net worth, growing appreciation, and more. If you’re a renter, it’s never too early to make a plan for how homeownership can propel you toward a stronger future. Here’s a dive into three often-overlooked financial benefits of homeownership and how preparing for them now can steer you in the direction of greater stability, savings, and predictability.

1. You Won’t Always Have a Monthly Housing Payment

According to a recent article by the National Association of Realtors (NAR):

“If you’ve been a lifelong renter, this may sound like a foreign concept, but believe it or not, one day you won’t have a monthly housing payment. Unlike renting, you will eventually pay off your mortgage and your monthly payments will be funding other (possibly more fun) things.”

As a homeowner, someday you can eliminate the monthly payment you make on your house. That’s a huge win and a big factor in how homeownership can drive stability and savings in your life. As soon as you buy a home, your monthly housing costs will begin to work for you as forced savings, coming in the form of equity. As you build equity and grow your net worth, you can continue to reinvest those savings into your future, maybe even by buying that next dream home. The possibilities are truly endless.

2. Homeownership Is a Tax Break

One thing people who have never owned a home don’t always think about are the tax advantages of homeownership. The same piece states:

“Both the interest and property tax portion of your mortgage is a tax deduction. As long as the balance of your mortgage is less than the total price of your home, the interest is 100% deductible on your tax return.”

Whether you’re living in your first home or your fifth, it’s a huge financial advantage to have some tax relief tied to the interest you pay each year. It’s one thing you definitely don’t get when you’re renting. Be sure to work with a tax professional to get the best possible benefits on your annual return.

3. Monthly Housing Costs Are Predictable

A third item noted in the article is how monthly costs become more predictable with homeownership:

“As a homeowner, your monthly costs are most likely based on a fixed-rate mortgage, which allows you to budget your finances over a long period of time, unlike the unpredictability of renting.”

With a mortgage, you can keep your monthly housing costs steady and predictable. Rental prices have been skyrocketing since 2012, and with today’s low mortgage rates, it’s a great time to get more for your money when purchasing a home. If you want to lock-in your monthly payment at a low rate and have a solid understanding of what you’re going to spend in your mortgage payment each month, buying a home may be your best bet.

Bottom Line

If you’re ready to start feeling the benefits of stability, savings, and predictability that come with owning a home, let’s get together to determine if buying a home sooner rather than later is right for you. As always, we here at Josh Barker Real Estate Advisors are here to help answer any questions you may have about buying or selling homes here in Redding and Shasta County. Feel free to give us a call at 530-222-3800 or email me at josh@reddinghomes.com.

Posted in Josh's Blog
Feb. 10, 2020

How Pricing Your Home Right Makes a Big Difference

Even though there’s a big buyer demand for homes in today’s low inventory market, it doesn’t mean you should price your home as high as the sky when you’re ready to sell. Here’s why making sure you price it right is key to driving the best price for the sale.

If you’ve ever watched the show “The Price Is Right,” you know the only way to win the game is to be the one to correctly guess the price of the item up for bid without going over. That means your guess must be just slightly under the retail price.

When it comes to pricing your home, setting it at or slightly below market value will increase the visibility of your listing and drive more buyers your way. This strategy actually increases the number of buyers who will see your home in their search process. Why? When potential buyers look at your listing and see a great price for a fantastic home, they’re probably going to want to take a closer look. This means more buyers are going to be excited about your house and more apt to make an offer.

When this happens, you’re more likely to set up a scenario with multiple offers, potential bidding wars, and the ability to drive a higher final sale price. At the end of the day, even when inventory is tight, pricing it right – or pricing it to sell immediately – makes a big difference.

Here’s the other thing: homeowners who make the mistake of overpricing their homes will eventually have to lower the prices anyway after they sit on the market for an extended period of time. This leaves buyers wondering if the price drops were caused by something wrong with these homes when in reality, nothing was wrong, the initial prices were just too high.

Bottom Line

If you’re thinking about selling your home this year, let’s get together so you have a professional on your side to help you properly price your home and maximize demand from the start. As always, we here at Josh Barker Real Estate Advisors are here to help answer any questions you may have about buying or selling homes here in Redding and Shasta County. Feel free to give us a call at 530-222-3800 or email me at josh@reddinghomes.com.

Posted in Josh's Blog