Category Archives: Real Estate Advice

Helpful Tips For Showing Your Home to Potential Buyers

Buying a house is a significant endeavor, but selling one is also a considerable process. Everything from new real estate trends to knowing if you should hire an agent or not can have an impact on your sale. Another point to keep in mind is that presentation matters. To make the best possible impression, check out these tips for showing your home to potential buyers.

Real estate showing

A real estate showing is an opportunity to show the buyers the strengths of your property. For a buyer, it is one of the crucial moments upon which they will base their final decision. With this in mind, it’s easy to see why sight-unseen sales are so rare. Buyers will come to look around your property, and you need to make an effort to show them why they should buy it. If you present your home in the best light, it’ll be easier for buyers to imagine themselves living there, and this is sometimes all that matters. Since these sales are significant and should be based on logic, sometimes a feeling or a hunch can push the buyer in a particular direction.

Ensure that you’re aware of the experience that your potential buyers are going through as soon as they enter your home. Follow these tips to make their experience more memorable.

A living room.
This is the right time to make an impression.

Small renovations

Should you renovate your home, or should you sell it as is? This is a common question people ask themselves when selling their home. They don’t want to go through a home renovation project if it doesn’t pay off, and that’s something everyone can understand. However, keep in mind that sometimes you don’t have to do a major renovation to make a big difference. Before you start, create a step by step plan and stick to it. This will help you not spend more on your renovations than you’ve initially planned.

Touch-ups and repainting

If you have carpet flooring in your home, you don’t have to swap it for hardwood. However, as the carpets are likely to show signs of aging, you can shampoo or change them. Repainting will also freshen up your home, and it’s not too big of an investment. Bold color choices are not the best option here, as not everyone likes them. Even with neutral colors, one, two, or three colors are more than enough for the entire home.

Another good thing to do is to replace old fixtures. Door handles and light switches are inexpensive but can make a big difference. And while you don’t pay attention to these details anymore, be sure that most potential buyers will.

Take care of the exterior

The lawn is one of the first things the buyers notice when they enter your property. Ensure your lawn is well manicured and that the exterior will not contradict the experience the buyers will have inside your home. This means that your front porch or stoop should be clean, as well as the walkway. If you have some plants or flowers, they show that you regularly take care of them. You can use fertilizer to revive a tired lawn, and if bushes need some cutting, take care of that before you start showing your house.

Manicured lawn and a house.
The exterior is just as important.

Clean your house

You might’ve come to realize that a ‘clean house’ is not the same for everyone. If you’re not hiring a professional cleaning company, ensure that your home is clean, even for a germaphobe’s standards. Viewing a messy and dirty home leaves a terrible impression, even though it’s not too hard to clean a house after buying. Knowing its importance, you should make sure that your home is in tip-top share for as long as it’s on the market. This means that you’ll have to clean it even in-between showings. Even more so, having in mind that it’s not a good idea to ask potential buyers to take their shoes off at the door.

Clear the clutter

Remove any unnecessary items to create a minimalist look. You want your home to look larger and to be easy to walk through. This means that it’s better to remove any personal items, like photos, mementos, or valuables. But, having in mind that you probably still haven’t contacted the professionals found at Verified Movers to transport your belongings, it can be hard finding the right place for them at this point. You can put these extra items in bins and assign each room or a family member a container. But, be careful about valuables and ensure they’re somewhere safe.

Tuck away cords and remove unnecessary decorative elements. If an item is in sight, make sure it serves a purpose. Pillowcases, artwork, or candles can emphasize a particular part of a room and remove focus from other areas. With this in mind, use these tricks wisely and sparingly.

A well-lit bedroom.
A well-lit space looks more inviting.

Comfortable temperature

Make sure that the temperature in your home is at an optimal level so that you can create a welcoming atmosphere. An airless environment on a hot day or a cold house on a cold day will make the buyers uncomfortable. It will also leave them wondering if the cooling or heating systems are working, no matter what you say.

It doesn’t end with showing your home to potential buyers

It’s good to prepare for the process of showing your house to potential buyers. However, keep in mind that it doesn’t end here, especially if you have multiple offers. Knowing how to handle getting multiple offers on your home is also part of this process. It’s good to know what details you should consider to make a favorable decision and choose the right offer.

Saying goodbye

There is no reason not to say goodbye the right way. You can put a small note thanking buyers for coming and put it in a candy bowl on their way out. If a buyer needs time to evaluate and think, don’t follow them and describe additional amenities or features.

Thank you notes and cookies, a way to say goodbye after showing your home to potential buyers.
A thank you note is a good way to say goodbye.

 Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.

To see available properties, please visit our website licatagroup.com

Photos used: 

https://www.pexels.com/photo/brown-wooden-center-table-584399/

https://www.pexels.com/photo/apartment-bed-bedroom-comfort-545034/

https://www.pexels.com/photo/architecture-clouds-daylight-driveway-259588/

https://www.pexels.com/photo/thank-you-text-2072168/

8 Resources for Home Sellers: How to Quickly and Safely List Your Home Amid COVID-19

With mortgage interest rates hitting record lows, homebuyer demand remains strong — even in the midst of a global pandemic. And if you’re ready to take advantage of this situation by listing your home in the near future, there are some steps you can take to do it as quickly and safely as possible. Check out the eight resources below for some tips on finding an experienced listing agent, preparing your home for the housing market, and staying safe and healthy while showing your home to buyers amid COVID-19. 

  1. List Your Home with The Licata Group
  2. 10 Secrets to Selling Your Home Faster 
  3. How to Prepare for Home Services During COVID-19
  4. 15 DIY Curb Appeal Ideas That Will Help You Sell Your Home
  5. The Most Important Repairs to Make Before Selling Your House 
  6. Selling Your House? Here’s How to Prepare Your Home for a Virtual Tour 
  7. Open House Precautions to Take During the COVID-19 Outbreak 
  8. Cleaning Tips to Keep Your Home Free of Coronavirus

As you get ready to list your house, you’ll need to spend some time making a few home repairs and improvements — as doing so will help you to sell your home much more quickly. However, an experienced real estate agent can help you to determine which upgrades are worth completing — while also walking you through the entire process of selling your home in the age of the coronavirus. With these helpful resources and a great listing agent at your disposal, you’ll sell your home as quickly and safely as you possibly can.  

 Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.

To see available properties, please visit our website licatagroup.com

Free Virtual Home Seller Seminar on 9/12 From 11:00AM – 1:00PM EST!

Join us on Saturday, 9/12 From 11AM-1PM EST for this free online seminar, as we provide you with helpful tips and advice to prepare your home for sale in the current market! With interest rates at a historic low, and a multitude of buyers ready to jump on any and all available properties, now is the perfect time to consider selling. Learn from leading industry professionals on how to best prepare your home for sale in order to receive the highest market value in the least amount of time.

We will have multiple vendors present, as we want to provide you access to all the resources and information that you will need to successfully sell your home in today’s market. Click Here to register!

 Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.

To see available properties, please visit our website licatagroup.com

6 Tips For Settling Down in a New City

6 Tips For Settling Down in a New City

After connecting with The Licata Group, outlining a reasonable house hunting budget, and going to countless open houses, you have finally found the perfect property for your family. Now, it’s time to pack up, hit the road, and start making yourselves at home in your new city! Here’s how unpack strategically, keep your family safe and secure, and begin exploring your city.

Set Up Utilities

Before you move in, you need to set up basic utilities like electricity, gas, and water at the first available opportunity. In your new city, you may notice a difference in water taste or quality. If you’re concerned about contaminants in your tap water, you can conduct a local water quality search. Should you find that you’ve moved to an area with poor water quality, you may want to install a simple water filtration system. Just keep a few extra filters on hand so that your family always has access to clean drinking water!

Unpack Immediately

Don’t delay the unpacking process! You don’t want to leave your belongings in moving boxes for weeks on end. Plus, your kids will feel anxious without their belongings, and you’ll want to furnish their bedrooms quickly so that they can relax and decompress. Consumer Affairs recommends unpacking and arranging furniture and other large items first, and then organizing smaller essential belongings. 

Don’t Forget Security

After moving in, you may want to set up a home security system to keep your family safe. Electronic House recommends paying for a professional, 24/7 monitoring service to make sure that your family is always protected

Don’t forget about cybersecurity, too! You need to be proactive to keep your family safe online. Since you’ll be updating your address, consider how you can prevent your family from dealing with identity theft. Once your kids have unpacked their devices, give them a brief talk about online safety just to make sure that everyone in your household is up to speed. This may be a good time to change the passwords on your accounts, just in case.

Interior Design

How can you make your new house really feel like a home? Create an environment that truly suits your family’s lifestyle and aesthetic preferences with smart interior design choices! Ask your kids for their input, too, especially when it’s time to decorate and paint their bedrooms. When you’ve personalized each room, you’ll truly begin to feel like you’ve come home. You can also check out local antique shops and thrift stores to pick up unique items. 

Locate Essential Services

You’ve left behind your family doctor, your dentist, your bank, and your favorite coffee shops – now, it’s time to find replacements in your new city! Search for healthcare providers who are taking new patients, and locate your nearest urgent care center while you’re at it. Find the closest branch for your bank, or switch to a new credit union in your area. And check out a cute coffee shop where you can see your family becoming regulars!

Start Exploring

You’ve unpacked, you’ve decorated, you’ve secured your property and contacted your utility companies. Now, it’s time to experience everything your city has to offer! Feel free to reach out to your real estate agent and ask for suggestions for local attractions, or you can put some handy apps to work. 

Your kids are probably antsy after going through the whole moving process, and chances are, you’re ready to have some fun in your new city. Head to a local park, check out a downtown museum, pay a visit to a zoo or botanical gardens, and get outside of your comfort zone! You never know what gems you might find in your new location.

Moving as a family can be quite challenging, and during the weeks leading up to your move, you may feel overwhelmed and stressed out. But preparing for your next steps will help you feel like you’re in control. By following these tips, you’ll be able to make this transitory time go smoothly for your family. 

 Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.

To see available properties, please visit our website licatagroup.com

Finding Your Accessible Dream Home

Image provided by Pexels

“Accessible” and “dream home” aren’t two words that typically go together, but as home builders embrace universal design, it’s becoming easier to find homes that are both accessible and beautiful. If you’re a home buyer with a disability or are simply looking for a “forever home” that you can live in through every stage of life, read this guide to learn how you can buy an accessible home.

Buying an Accessible Home

There are lots of reasons why you might want an accessible home. Accessible homes enable independence for seniors and people with disabilities. Many accessible features also make daily life easier for people from all walks of life, whether it’s a parent pushing a stroller or carrying arm loads of groceries into the house.

Even if you don’t need an accessible home today, it’s smart to consider accessibility in your home purchase. Needs change over time, and buying for accessibility today ensures you can live in your home for years to come.

Along with accessibility needs, you’ll also need to consider your budget (Lake of the Woods home sales average $285,000) and which type of mortgage fits your finances best. If you have a spotty credit history, an FHA loan may be your best option. For example, PennyMac FHA loans have broader credit requirements, and you may be able to pay as little as 3.5 percent down. 

Accessible Homes: The Basics

A lot goes into making a home fully accessible. However, the average homeowner doesn’t need every accessibility feature available. If you’re in search of a forever home or shopping for an age-friendly home for your senior years, pay attention to major details like these:

  • Single-story living.
  • Step-free entrances.
  • Flush thresholds.
  • Wide doorways and hallways.
  • Ample lighting.
  • Raised power outlets.
  • Blocking for grab bars.

Thankfully, these home features are popular in new construction, making it relatively easy for buyers to find a house that offers basic accessibility. However, while these are the building blocks of accessible housing, they may not be all you need to enjoy full independence at home.

3 Ways to Increase Home Accessibility

Even when buying new construction, you may need to make changes to achieve full accessibility at home. Since remodeling can be costly, it’s important to factor these costs into your home-buying budget. You may even be able to roll remodeling expenses into your mortgage!

Replacing Carpet

One popular change for wheelchair and mobility device users is replacing carpet with wood floors. Mobility devices can’t move easily on plush carpet, and seniors are more prone to fall with high-pile carpeting underfoot. While there are a variety of alternatives to carpet, wood flooring offers the best return on investment because it’s both durable and in high demand by home buyers. Homeowners can save money by choosing inexpensive woods, removing old flooring themselves, and scheduling installation while the home is empty.

Adapting Counters and Cabinets

Most homes come with standard-height countertops and cabinets, but these can be inaccessible for wheelchair users and people with other disabilities. However, with counters and cabinetry accounting for as much as 60 percent of kitchen remodeling costs — which run nearly $30,000 on average — creating an accessible kitchen is costly. If you can’t afford to completely replace counters and cabinets or are worried about impacting your home’s resale value, talk to your contractor about working with what you have. For example, you may be able to add storage solutions that maximize lower cabinets or install a two-tier kitchen island to match your existing space.

Designing an Accessible Bathroom

Due to the high cost of bathroom remodeling, it’s best to buy a home that already suits your accessibility needs. But if you can’t find the right home in your budget, you may have no choice but to invest in bathroom updates. While minor changes like installing an accessible shower head and grab bars are affordable, replacing a bathtub with a walk-in tub or barrier-free shower costs as much as $5,000 or $15,000, respectively. However, for people who need them, the independence an accessible bathroom provides is priceless.

Finding a home that checks every box is difficult in the best of circumstances. When you have a disability or need an age-friendly home, finding the right home can seem impossible. But the truth is that there are lots of homes out there just waiting to be turned into your accessible dream home. Rather than giving up on your house hunt, reach out to an experienced agent who knows how to find the right home for you.

 Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.

To see available properties, please visit our website licatagroup.com

How to Sell a House — Messy Kids and All

As your family grows, your starter home is starting to feel awfully full. But there’s one big obstacle standing in the way of you and an upsized home: selling your house. From the crayon you gave up on scrubbing off the walls to the tornado of toys that is your kids’ playroom, there’s a lot to contend with if you’re going to get your house in show-ready condition and keep it there.

You could stay put, but why live in a cramped house if you don’t have to? Instead of avoiding a move, find your dream home and then tackle your upsize head-on with these time-saving tips.

Decide if You’ll Move Out

Moving out makes selling a house much easier, especially for parents. When you relocate while your home is on the market, you eliminate the need for constant cleaning and scrambling to leave before every showing. Before moving out, consider the average days on the market in your area. While renting an apartment or Airbnb is affordable in competitive markets, it could be costly if your home takes a long time to sell.

Sellers who move out should avoid leaving the home vacant. Instead, leave just enough furnishings for staging. Home staging improves listing photos and helps buyers imagine themselves in a home they’re thinking about purchasing.

Start Packing Now

Staging is an even bigger concern for families who don’t vacate. Clutter can kill a home sale, so it’s critical that parents have a plan for eliminating clutter while keeping their house livable. For most families, this means putting most belongings in storage and keeping only the bare necessities. Thankfully, buyers are forgiving when it comes to non-master bedrooms, so there’s no need to leave play areas barren. Instead, downsize toy collections and look for easy yet stylish storage solutions like wicker baskets.

Get Your Home in Tip-Top Shape

With clutter out of the way, you can finally see your home clearly, including all of its flaws. From the little repairs you’ve put off to the dust bunnies in the corner, it all needs to go before your home hits the market. Minor fixes like patching drywall, painting, and fixing loose knobs and cupboards are simple enough to DIY, but hire contractors for anything involving plumbing or electrical wiring. While they get your home in good repair, work your way through a deep-cleaning checklist that will make your home gleam.

Keep Up with Daily Cleaning

Right now, your home looks the best it has in years. But as a parent you know it won’t last for long. You need a plan for keeping your home clean day-in and day-out while your home is on the market. Some parents take the DIY approach, diligently following cleaning schedules to stay on top of dishes, laundry, and other hallmarks of a lived-in home, but don’t rule out hiring a housekeeping service. Letting someone else handle the house can be a huge relief when you have so many things on your plate.

Housekeeping and maid services, for example, can help with tasks such as running errands and meal prep in addition to general upkeep. These services ultimately allow parents to focus on work, parenting, and life instead of constantly tending the house.

Make Showings Fun for the Whole Family

Ask any parent who has bought and sold a home, and they’ll tell you that getting kids out of the house for showings is easily one of the most stressful aspects. Make these disruptions easier on the kids (and you!) by creating a reason to look forward to showings. Find fun places to go as a family and keep a bag in your trunk full of kid-friendly activities, snacks, and other supplies. By creating a positive association, you can eliminate the fight to get out of the house.

Moving may feel like an insurmountable feat right now. But before long, this will be just a blip in your family’s history. Instead of letting the idea of selling a house with kids overwhelm you, take charge of your move. With creative solutions (and maybe a little outside help!), you can tackle your move like a pro and settle into your new, right-sized home.

 Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.

To see available properties, please visit our website licatagroup.com

Everything You Need to Know About Buying a Lakefront Property

Having a house by the lake is a dream of many people, and for a good reason. Due to their picturesque settings, breeze along the shore, and range of outdoor activities, lakefront properties will give you the feeling that you are on a non-stop vacation. Still, purchasing a lakefront home is not only about buying a piece of real estate, but it is also “buying” into a certain lifestyle.  Owning a lake house is a lot of fun, but it also comes with a set of challenges you must prepare for. Here is everything you need to know about buying a lakefront property.

Consider the financing when buying a lakefront property

Before you start looking at houses, you need to take into consideration the financing and ask yourself whether you are able to afford an investment like this. A lot of costs come with purchasing a lake home, and it’s not just paying the mortgage. Before you buy a waterfront property, consider the following:

  • ●      property cost – for starters, waterfront properties are more expensive than other types of properties. Plus, if it is your second home, financing will come with more stringent requirements. However, if you have firmly decided to own a lakefront property, there are many easy ways to save up for a new home.
  • insurance and maintenance – don’t forget to buy flood insurance, because even just a few inches of water can cause costly damage to a home. Keep in mind that regular homeowner’s insurance typically doesn’t cover flood damage. Additionally, homes near the water tend to get more wear and tear, thus you will need a larger maintenance budget for your lakefront property.
  • fun stuff when you buy a lakefront property -Well, let’s be honest, fun stuff is a major reason why you are buying lakefront property. But, remember that all the fun activities, such as boating, jet skiing, and water skiing aren’t cheap.
Before buying a lakefront property, you need to take a few considerations into  account

Consider the location of the lakefront property

If you want a lakefront property to be your primary home, you must consider the distance from school, work, medical clinic, and standard amenities like grocery stores and post office. For example, choosing a lakefront property in Orange County, VA is a great idea, since it is near major cities such as Richmond, DC, and Charlottesville. Even if you want to lead a more rural lifestyle in a picturesque waterfront home in Lake of the Woods, you can have reasonable access to these services and make your everyday life a pleasure and not a chore.

Also, the proximity to your residence is important if the lakefront property is intended to be your vacation home. Some experts recommend that vacation homes should be one to two hours away from your primary home so that you use your vacation home more often and don’t get discouraged by a burdensome drive.

Make sure you have enough space in your lake home

A good lake house shouldn’t be small, because when you finally transport extra furniture you have, there should be enough space left to accommodate you and your friends and relatives because they will no doubt want to visit you. Apart from being big enough to provide comfort for you and your guests, there should also be enough activities available in the area. Besides water sports like fishing, swimming, or jet skiing, ask around if there are other activities like hiking, biking, and bird-watching. Also, ask about amenities like swimming pools, a gym, or a clubhouse.

Your friends and relatives will most certainly visit you in your lake house, so make sure you have enough space for everybody

Before buying a property talk to the neighbors If you want to get inside information on the property, ask your neighbors because they probably have all the information you need. You can ask them if they enjoy living in the community, if they have any issues with the property you are thinking about purchasing or if there are any waterfront related problems. If you are young and want to buy a property that is a bit rural, but at the same time modern, you can find some of the best neighborhoods in Orange County for young couples.

You will find a perfect house in Lake of the Woods

People in Orange County are charming and friendly, and you can find many interesting things to do and see here – there are local breweries, you can glance at the private life of James Madison, and most importantly, in Lake of the Woods, you will find magnificent lakefront houses no matter your age or interests.

Choose the right waterfront home for you

If you are considering buying a lakefront property, make sure you chose the right one for you. A lakefront home is a great place to move to after retiring, so you might want to buy a home that is a bit secluded without many people around. On the other hand, if you are young, you might want to have access to the activities you’re passionate about, so choose a property accordingly. Hopefully, these tips will give you the confidence you need and help you decide on the right lakefront property for you. Your lakeside life, full of serenity and happiness, can begin now.

Four Biggest Questions Regarding the Coronavirus and the Housing Market Part 4 of 4

 As we come to the end of this four-part series, we look to examine the outcome that we will face once this is all over. With that in mind, we ask ourselves the final question; are we going to see the same outcome and devastation that we saw in 2008?

One of the key factors in buying and selling a home is the confidence that people have, and in times like these, memories of past experiences come back to us as we recall all the uncertainties that we faced. But the focus cannot be on what has occurred in the past, but rather what is occurring today and the days to come. With that, we look to see what is being said from the Federal Housing Administration.  

The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days. The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”

What we are seeing is things in 2008 that we got wrong that you are now seeing the government respond to in regard to the needs that the consumers and the industry have so that It doesn’t happen again. We are seeing how banks are going to respond individually to borrowers in those situations. Actions like this show that the way this is being handled is significantly different than back then, and there are also structural actions that we can look at that are very different now. The visuals provided below will help to better illustrate this.

This first visual shows us exactly where we were in 2008, and what you’ll notice is that there were $828 Billion in cash out refinances back then, and homes were basically being used as ATM machines to which cash was being taken out to harvest equity from their home, a lot of which was being put in depreciating assets. When we start to look at today in the last 3 years, cash out refinances are a fraction of what they were leading up to 2008. What this entails, is that people have learned their lesson and are no longer doing what they have done in the past with the equity in their homes, and today the equity position is very different than what it once was, with over 50% of homes in the united states having over 50% equity. In 2008, people were walking away from homes when they had negative equity, but that is no longer the case.

We are in a very different situation today than we were back then. Those that fail to learn from history are doomed to repeat it, and its fair to say that the government and the American people have learned their lesson.

As we started out this year, we saw a market where income is rising, and mortgage rates have been falling. What this has created is a drop for the historic norm in the payment as a % of income, as demonstrated in the visual above. Historically speaking, the norm percentage of income that has been dedicated to their mortgage has been 21.2%, and right now what we’ve seen leading into this, is that number being 14.8%. This is significantly lower than the historic norm speaking in leverage to the consumer in relative to housing.

In conclusion, what we are seeing now and, in the months/years to come is not going to be the same as we saw after the crash in 2008. Homeowners have learned from their past mistakes, and the government is taking the necessary precautions to ensure that history does not repeat itself. While the uncertainty factor remains for a lot of what is occurring in the county and the world, it can be said with confidence that we will come out of this stronger, and better than going into it.

We hope that this four-part series has shed some light into the biggest questions that you may have right now. If you have any other questions about the current market and what’s to come, feel free to give us a call at (540) 388-2541.

Four Biggest Questions Regarding the Coronavirus and the Housing Market Part 3 of 4

Moving into part three of our four part series, the next question that we need to ask is: Are we headed towards another recession, and what does that mean?

When we talk about where we are today, the reality is that we can feel the slowdown occurring across the county, and it will continue to have an impact on economic activity. When addressing this question/concern, we have to ask ourselves what a recession truly is. A recession is a slowdown in economic activity. Now when we hear the word “recession” we immediately have these ideas and thoughts of what the prior recession was. If we talk about an economic slowdown, it’s very different, and keeping that in mind as we continue to talk about it is critically important in these times. To help discuss this, we’ll turn to the experts. Bill McBride from Calculated Risk had this to say:

“With this sudden economic stop, and with many states shutting down by closing down schools, bars restaurants etc. my view is the US economy is now in a recession (started in March 2020), and GDP will decline sharply in Q2 (as Goldman Sachs is forecasting). The length of the recession will depend on the course of the pandemic.”

Now certainly we can say that we are feeling this slowdown, and it can be said that we will continue to feel this throughout the course of the pandemic. If we look at where we were in 2008 compared to today, 2008 was like a tornado that had ripped through our town and tore things that had to be slowly rebuilt over time, and what we are experiencing today is a heavy snowstorm that is shutting things down. What we do know is that as time moves on, we will start to see things open back up again. We will be able to go to bars, restaurants and sporting events with the only challenge being getting into these places as everyone is going to be out and about.

Looking at that graphically speaking, the figure above provided by Goldman Sachs begins to show a “V” of recovery, and not a “U” like we saw in 2008, being a sharp decline followed by a sharp increase displaying further strong gains as we head into 2021. When looking at what the experts have to say, Wells Fargo agrees as well, saying “We do not expect a repeat of the severe recession of 2008-2009, because the virus and oil shocks are not endemic to the financial system, but are, rather, external. Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.”

Referring back to the analogy previously used, we will not have to rebuild our financial system like in 2008. Once the snow melts from this current storm, things will kick in, and that’s why we see that “V” curve instead of the “U” curve.

So rather than use the actual word “recession” we should look to use the definition, being an “economic slowdown” and if that does happen, we need to look at our history of events that have shown similarities to what is occurring, and what we can expect to see moving forward. The visual provided below shows what has occurred with changes in home price over the last 5 recessions.

What we can see from this graphic is that in three of the last five recessions, home prices actually increased as a result. We did see a slight decrease in 1991, but what we all really remember is the significant decrease shown in 2008.

The message that needs to be taken from this is that recession does not equal a housing crisis.

Four Biggest Questions Regarding Coronavirus and the Housing Market Part 2 of 4

As we continue to look for answers to some of the biggest questions surrounding this crisis, we start to wonder what kind of effect the stock market has on the housing market, and how much of an impact we will see as a result. We begin by asking ourselves; When the stock market goes down as quickly has it has been, does it have a tremendous effect on home prices?

Often the best answers to questions is another question itself, and in this case, we look to the last crisis that occurred; being the crash of 2008.  So, we ask, will this be just like 2008?

To help answer this, we take a look at the graph provided above which shows the crash of 2008, to the S&P Correction of the same time. The graph illustrates the S&P Correction at 51% during that time, and the Annual Home Price Deprecation that occurred just under 20%.

In a quote by David Rosenberg, he explains that what we are experiencing now has more in common with what we experienced in 2001 (9/11) than with 2008.

“What 9/11 has in common with what is happening today is that this shock has also generated fear, angst, and anxiety among the general public. People avoided crowds then as they believed another terrorist attack was coming and are acting the same today to avoid getting sick. The same parts of the economy are under pressure – airlines, leisure, hospitality, restaurants, entertainment – consumer discretionary services in general.” – David Rosenberg, Gluskin Sheff + Associates Inc.’s Chief Economist.

When breaking down what was said by Mr. Rosenberg, we can see that this event lines up more with how we acted when 9/11 occurred. To help better illustrate this comparison, we will look at the graph below similarly as we did for 2008, but instead observe what occurred with 9/11 as well as the Dot.com crash.

Here we can see that the S&P Correction was at 45%, however cumulatively over the same time, Housing Price Appreciation was up almost 24%. This shows that housing reacted very differently during 9/11 and the Dot.com crash compared to how it reacted in 2008. This visual helps make the case that it’s not unreasonable to say that if what we’re experiencing right now is a lot more like 9/11 and not 2008,  than the housing market will react a lot more like it did during 9/11 and the Dot.com crash than it did in 2008. Annual Home Price Appreciation reacted very well, and based of off what’s occurred so far, we can make the argument that we are seeing similar situations now.

When this year (2020) began, the housing market was off to a tremendous start, with home sale reports showing the highest number of houses sold within the last 13 years, on an annual basis. While a bit of a slowdown has occurred due to the events going on, we can say that when this is all over, and it will be, we can expect the market to come roaring back and continue that trend that started the year off.