Apr 16, 2021

Real Estate Investment Trusts (REITS) Buying Up Homes To Rent

Huge Real Estate Investment Trusts (REITS) are buying up homes to rent.  The trend began back in the 2008 - 2009 Financial Crisis when so many homes went into foreclosure and or lost significant value.  The sharks on Wall Street swooped in to buy the bargains for cash.  They attracted investors into huge funds seeking a good return like any other investment.  And, boy have they gotten it in the last ten years as values have sky rocketed and so have rents.  

The problem is the sweet spot for these REITS are middle class housing in great neighborhoods with great schools.  REITS pay cash so no mortgages needed to qualify.  They work with national property management companies some of which they actually set up when they bought thousands of homes in key markets during the last financial crisis.   They operate their REITS like any business looking for economies of scale to cut cost to generate more profit. 

Now that this investment modality has been discovered, it is not likely to go away any time soon.  It is just another way to diversify a portfolio.   Real Estate is generally a good hedge against inflation and has very favorable tax treatment.  So buyers today need to realize that they are competing with multi billion dollar REITs in the marketplace making it harder to buy a home.  Renters need to understand that there is a pretty good chance that they are renting from one of these REITS that will regularly raise rents and process evictions as allowed by law for failure to pay rent.  To REITS, this investment is strictly business with nothing emotional about it.  

Apr 15, 2021

The Housing Market Is 4 Million Homes Short

It is estimated that the housing market is short about 4 million homes to meet buyer's demand.  Builders have just not kept up with the need in the marketplace.  To say it is a seller's market is an understatement.  Houses are often selling above list price as buyers bid up prices.  Home inspections are being waived, or at least ignored in terms of required repairs as home are being sold "as is".  

What all this means is that it may take more than 3 years to catch up with demand as long as interest rates remain low, prices are likely to remain high.  However, if President Biden raises taxes, it could cause a recession.  If that happens, there will be lay off's and fewer people in a position to buy homes.  If interest rates go up besides, which is likely because of projected inflation coming our way, it could bring home prices down.  

A lot of this is a crap shoot.  What we know today is that home prices have gone up dramatically.  Average home prices nationally are above $300,000.  In many markets, prices are significantly higher.  The cost of building materials are going through the roof, which insures that new home prices will keep going up.  Used homes bench mark against new homes.  So used homes are usually about 20% less expensive that new homes.  So as the price of new homes goes up, so will the price of used homes. 

At Paragon Home Resources, we work with families all over the country to sell and buy homes.  We know how to negotiate the best price when selling and the best price when buying.  In these times, having an expert on your side is even more important.    

Making New Friends After Moving

What we have discovered from the Covid Pandemic is just how much our family and friends mean to each of us.  Social isolation has led to all sorts of problems in the last year.  So when people move away from family and friends, it is really important that new friends take their place in the new location as quickly as possible.  That means finding things in common with other people to make acquaintances.  

Some communities have Welcome Wagon groups.  The easiest way to meet new friends is to buy into a master planned community that has a recreational facility and all sorts of organized clubs.  Of course, it is possible to join a country club; but more expensive.  The least expensive way to meet new friends is to join a church, temple or mosque.  In that case, people have their faith in common. 

Most important, it is critical to understand that new friends don't just happen.  It could take years for people who are shy and not very talkative to make new friends.  That is why joining groups centered around activities in common is the best way to meet new people.  Further, in some ways hanging on to old friends in the old location as a crutch, not that old relationships should be abandoned, but they can be somewhat counter productive.   Those old friend interactions can actually impede the need to have social interaction with new friends.

Rooting in a new location is all about making new friends.  The sooner you just jump right in, the happier you will be.  


Apr 13, 2021

Buying A New Home - What To Expect

If you are thinking of buying a brand new home from a tract home builder expect lotteries to get on a waiting list.  There is little if any standing inventory in many markets.  And, many builders may not commit to a final price because the cost of building materials is going through the roof.  Further, if you are lucky enough to land a home, expect it to take 10 - 12 months to complete from the time you sign a purchase contract.  Many people are selling their current homes quickly because the markets are so hot and then finding themselves with no place to live.   

If you do sell your home and must wait for the new home to be completed, you may need to rent a home or apartment and put things in storage.  Rents are not cheap and neither is storage.  Try to do a six month lease if the owner will agree and then month to month after that with 30 days notice so you can move quickly when your home is ready.  Don't be surprised if the landlord demands a 12 month lease.  Though you will pay more, if you rent big storage lockers, make sure they are temperature controlled because otherwise, your furniture and other belongs could be ruined from excess heat during hot months.  

If you do buy a brand new home, expect to pay at least 20 - 30% above the list price for upgrades and lot premiums.  What you see in the models are highly upgraded homes.  What you get without the upgrades is really crap.  This can be a very frustrating process; but with a little patience, it can be done.  If you are thinking of building a custom home expect a 2 - 3 year process from start to finish and a whole lot more money. 


Apr 12, 2021

Living In A Desert Climate

Many times people who live in a desert climate try to bring a little bit of back home with them; planting grass and other water hungry plants.  That is not a good idea especially since many of these cities like Las Vegas are low on water.  It is a whole smarter to embrace desert landscaping.  If you must have grass or something green in some patches, there is artificial grass that works just fine.  But otherwise, planting succulents, cactus and desert tolerant trees and bushes are the way to go. 

And, of course, all of it requires a drip system so that not one one drop of water is wasted in sprinkler spray or run off.  Where there are no plants, rocks come in various sizes and colors to complete the job. Stay away from small grain sands that blow away in the wind.  Go with gravel size, or larger rocks. 

There are a wide variety of flowering trees and bushes that complement cactus, which also flower.  Bougainvillea, that come in many colors do particularly well in desert climates.   These bushes grow large as a hedge to cover an entire wall, or can be trimmed into bushes.   Either way, the flowers are very attractive when in bloom.  

Living in the desert does not have to be drab or boring.  Fortunately, lots of flowering plants and trees can create a really beautiful environment that is stingy on water.  

Buying A Home In A Seller's Market

Buying a home in a Seller's market can be tough to accomplish.  First, prices are higher than might otherwise be the case.  Sellers don't really need to negotiate much because they know they can get their price.  And, even if the buyer requests a home inspection, Sellers don't don't have to make repairs.  They can sell the home in "as is" condition.  

Further, many sellers may not accept offers contingent on mortgage approval because in a lot of cases and markets they can generate all cash offers.  So what is a buyer to do.  In some cases, it may be smarter to rent until the market cools down.  The risk is that though prices may fall when there is more inventory, when that happens mortgage interest rates are likely to be higher.  So whatever is saved by a lower price could be eaten up in higher payments over time.  

The best scenario is the all cash buyer.  If downsizing in particular, if the buyer can make an all cash offer with a quick close, the chances are the seller may negotiate on price a bit.  After closing on the home, the buyer can then take out a mortgage if needed to claw back some of the cash for living or other investments.  This is the best scenario that can be expected in a seller's market.  

Otherwise, be prepared to pay top dollar to buy a home and perhaps even be out bid with another buyer willing to pay more than list price.  It is very frustrating; but since real estate like all investments is cyclical.  The day will come when it is a buyer's market.  

Apr 11, 2021

Making Your Home Retirement Friendly

Unless purchasing a single story home in a retirement community, odds are pretty good that your home is not retirement friendly.   Certainly any two story home with the master bedroom and or other bedrooms upstairs is not the best living space for retired people, since stairs or steps of any kind are the enemy as people grow older.  Falling is the single biggest cause of serious injury for people over 65, so at all costs avoiding any circumstance that could cause a fall is critical.  

So, the first step in making your home retirement friendly might be to move from a two story home to a one story home.  If that is not possible, then if not already the case, making first floor the primary living space, would be the next best option.  That could involve some renovation to at least create a master bedroom and bath on the first floor along with a guest room and office if needed.  If none of this is possible, then putting in an elevator, or stair step so that actually using the stairs to get to the second floor will be come unnecessary. 

If the laundry is in the basement, it needs to come up or down to the living space.  Fortunately, with stackable washers and dryers, a closet can be converted to house both units.  Carrying laundry up or down stairs is not a good option.  This problem must be solved one way or another.  And, then there is bathing.  Old bathtubs can be converted to a shower with a sit down bench, which is much safer.  There are the walk in tubs that can also be installed in the space of an old bathtub if that is preferred.  Either way, the notion of climbing into a bath tub is dangerous.  Which ever option is selected, grab bars must be installed to allow for holding on when bathing.  

Making the kitchen easier to use is also something that should be done.  High cabinets that require a step stool to get to is a No No.  In fact, climbing on a ladder to do anything is a No No.  Again the chances of falling are too great.  Instead, dishes can be put in pull out drawers instead of overhead cabinets.  Glasses should never be higher than the first space in an overhead cabinet.  

Making an existing home retirement friendly just takes some good thinking.  It could be much cheaper than moving.  Most important, as we all grow older, living in a home that is retirement friendly is important to the quality of life.