In a year of unrelenting change, one thing has stayed the same. The real estate market is BANANAS. From lending to liquidating, brokering to buying, refinancing to renovating… nearly every professional related to the real estate industry has been busier than ever this year as buyers rushed the market to capitalize on primary, secondary and investment properties, ushering in record production and profits during the dumpster fire that was the global pandemic. PRESS PLAY on this episode to learn why 2021 may or may not prove to be the great equalizer for the housing market, how investing in real estate just might be your best wealth-building bet in the new year and how to approach timing your real estate decisions around the pandemic. ________________________________ Have a question about real estate? I'd love to help you out! Real Talk Q & A phone lines are open now at 1-844-5-BIG-RED and I’m here and ready to take your call. Connect with me on Instagram : https://www.instagram.com/denisepetti/ Connect with me on Facebook: https://www.facebook.com/denise.donnellypetti Visit my website: https://www.denisepetti.com/
In a year of unrelenting change, one thing has stayed the same. The real estate market is BANANAS.
From lending to liquidating, brokering to buying, refinancing to renovating… nearly every professional related to the real estate industry has been busier than ever this year as buyers rushed the market to capitalize on primary, secondary and investment properties, ushering in record production and profits during the dumpster fire that was the global pandemic.
PRESS PLAY on this episode to learn why 2021 may or may not prove to be the great equalizer for the housing market, how investing in real estate just might be your best wealth-building bet in the new year and how to approach timing your real estate decisions around the pandemic.
_________________________________
Have a question about real estate? I'd love to help you out!
Real Talk Q & A phone lines are open now at 1-844-5-BIG-RED and I’m here and ready to take your call.
Connect with me on Instagram : https://www.instagram.com/denisepetti/
Connect with me on Facebook: https://www.facebook.com/denise.donnellypetti
Visit my website: https://www.denisepetti.com/
Well, it's the most wonderful time of the year an in the year 2020. Is it even appropriate to use the word wonderful about anything? Perhaps one of the only industries that saw a silver lining in 2020? Other than healthcare, Amazon and Netflix is, well, real estate. So from lending to liquidating.
Brokering to buying refinancing to renovating. Nearly every professional related to the real estate industry has been busier than ever as buyers rushed the market to capitalize on primary, secondary and investment properties.
This is ushered in record production and profits during this dumpster fire that was the global pandemic. So with the Holidays in full swing in 2021, close on the horizon, what can we even expect? Will the new year be a repeat of 2020? God forbid, with all the urgency and the excitement of a sellers market, complete with solid equity positions, low interest rates.
And bidding contests well, I'm ready to tackle all your questions and more in this episode. I also have a caller who wants to know about timing the market so that she and her husband can best prepare to buy their first home. So stay tuned for real talk with Big Red.
Live from the Wildfire podcasting studios. It's the real talk with Big Red Show where we keep it real with real estate agents and real life buyers and sellers. Lenders and landlords, vendors and investors, and anyone who's anyone that lives to inspire real success. I'm your host. Denise petty. My friends call me Big Red and this is your show.
Where people, places and dreams come together real talk Q&A phone lines are open now at 8445 Big Red and I'm here and ready to take your call.
Well, good day to you all and welcome to the real talk with Big Red podcast. I'm your host, Denise Petty and today we gear up to immerse in the spirit of the holiday season with 2020 being what it is and what it was. I know there are many people out there that are still struggling to create a holiday worth remembering and so many folks either currently have the coronavirus.
Or there recovering from it, myself included.
And it got the best of me. I'll tell you over a month and I'm happy to say that I finally rounded that Covid corner. And that said today I want to chat with you for a little bit about how you can shift some things in your favor, including opportunities that as we head into what God willing, maybe a game changing year for all of us. So 1 silver lining seems to remain though, and that is the fact that the real estate
The market has been and continues to be positively bananas.
And could the gift of equity be the one thing that sets our sights firmly on a hopeful an gamechanging knew year. Which begs the question, why were there so many buyers and so few sellers in 2020? This year it was largely a sellers market. And what does that mean and what were the conditions that caused it so?
Basically, a sellers market is when.
There's a whole lot of buyers an not a lot of houses to buy, so when you think about 2020, especially if you were in the market to purchase a home, the inventory was literally flying off. What little inventory there was. So when you have a lock down and you have a global pandemic and you have conditions that create.
You know, maybe some fear in the general public where a seller doesn't want people coming through their home because they're afraid of risking exposure to a virus or contamination they may not want to list. Also, things like joblessness, unemployment is causing some.
Maybe some fragile conditions with economical, economic stability and so people are like, well, I'm not selling my house number one. Where am I going to go and #2? What if I lose my job and I can't qualify for a loan? Or, you know there's all these different variables that lead to something?
You know that we call the sellers market and the sellers marketing coronavirus.
Ends up having all these buyers that need homes, either because they're downsizing or their houses are too small. Because they're rate they're growing. Their families are growing or they're relocating due to a job transfer or work from home. They want to get out of the city. They want to get into the suburbs. They want to change schools. There's all these different reasons for people to purchase, and in my market, which I specialize in the destination vacation market there's.
People that are saying, well, you know, I'd rather have a beach house if I'm not going to be traveling. I'm not gonna be vacationing. I'd like to invest in a beach house, especially because it might actually give me a little bit of return on investment. I can make some money where the stock market otherwise isn't performing.
So that led to inventory issues, so we have.
All these buyers with no houses to buy, which led to bidding wars, which led to this like very intense contest. Everybody bidding on the same house which led to inflated values which led to cash deals, you know, because even though the interest rates were really low, if you had an FHA or if you had a VA or a conventional loan.
And then somebody else comes in with cash. An you've got these inflated home values that create a better opportunity to avoid appraisal because it's the mortgage company that's actually ordering the appraisal. You know it is an intense, intense time for all. So amid all this chaos, all this confusion. All this trauma.
An Los we've got this real estate market that just there's no end insight.
It was a wild time to be an agent to be a lender to be an appraiser, to be a seller.
You know an and it continues to be that even though we have a vaccine on the horizon, there's no prediction. You know, if I had a crystal ball, I would love to say yeah, absolutely 2021 is going to be a repeat. I don't know.
There you know, we might find that with the release of the vaccination it creates a whole lot of neutralisation in the market because now there's more safety. You know there's more safety involved, so this is another question that I get a lot. One of the things that we saw were really historically low interest rates, practically free money.
When you think about it.
Why not capitalize on these low interest rates in either refinance or you know, just purchase? You get more buying power when you have these low interest rates around, like 2.753%, you can actually buy more house because the interest rates are so low that it actually makes it more of an economical investment an you can.
You can actually purchase more home.
And especially given the fact that there are so few homes on the market right now to even purchase in the 1st place, does it make sense to refinance and just stay put until the market levels out an this is a great question because what we're finding is that a lot of people.
In this sellers market, are choosing to stay where they are and simply create the space that they otherwise would have bought so.
We're talking about things like home offices because we have this remote learning excuse me, yeah, remote learning with the kids, but also remote work situation with the adults and they need to make themselves comfortable in their office environment and productive and secluded and without the kids and the dogs and the cats and the neighbors and the.
Well, not that they're having neighbors over, but you never know everybody's different.
So we're seeing people that are saying, you know, if I can't buy a house that has designated Office space that has.
A finished basement that has a bonus room, a pool, a gym, a refinished kitchen. You know? Why not? Take a little bit of money out of our equity an go ahead an make this house what it is that we would be buying and if it were a buyers market it does make sense to do that.
Ann, I've been talking about giving the gift of equity this season to yourself. You know, give yourself the gift of equity.
Talk to a lender. Talk to a realtor and start crunching the numbers and really looking at whether or not it makes financial sense. Is it prudent?
To take money out and put it back in the house.
Because we don't know what the conditions are going to be in 2021 and one of the things I said to a friend of mine recently who was asking me about this was she said, I really think I'd like to make the kitchen of my dreams and I said, well, how long do you plan on living in your house?
Because if you have any intention of moving in the next five years.
I would sit tight and use that equity to propel you into your next financing your next refinance your rather your next financial decision so.
You could refinance now and take some cash out and do that 50, sixty, $70,000 kitchen that you dream of and then in five years you're going to want to move out of state.
And save on property taxes, specially in New Jersey, you're going to do that.
All that 50 sixty $70,000 wrapped up in a kitchen. You're not going to use anymore, so think about these low interest rates and how they can work for you.
And we do have a caller an I'd like to take this call an you know, here's another question about the market I.
Big red, my name is Lydia, my boyfriend. I have been researching how to purchase our first home in the next six months or so. This past year we've been keeping a close eye on the areas in neighborhoods that we love so we can get a sense of the whole values. Watching how few homes went up for sale.
And then how fast those homes were selling this year we're getting a little anxious as the timeline for our goal to buy a home gets closer.
So I'm wondering as first time homebuyers, are we going to run into some trouble finding a place of our own, especially if the market conditions remain the same. Well, it is a great question, Lydia and thank you for that call. It's true given the fact that Kovid still lingers. We've got to wonder whether these market conditions are going to remain the same for 2021. Are we bound to see the same kind of activity?
Now that we've seen in 2020 and I, I really appreciate the fact that you're a first time homebuyer and that you will have your.
You're keeping tabs on what's going on in the neighborhood that you have your eyes on, so kudos to you for being an educated consumer for having your finger on the pulse of what's going on. That makes you an informed buyer, and knowledge is power. So good for you. So as you're preparing to purchase your first home.
You're about six months out for those of you that maybe listening that are first time homebuyers as well. It's important to know that.
It typically takes anywhere from 30 to 90 days to close on a deal, so if you're looking to buy a house in the next six months, that's put that puts you around the June.
Timeline that means you'll go under contract, probably somewhere around.
Maybe March, April and that means you should be looking at houses in like February, February, March. So really to start looking at houses now is a little too early. I would say get your pre approval in order understand what your buying power is. As far as your you know your interest rate.
And your budget you want to make sure that your and your lender can go over this with you, but you want to make sure that your mortgage payment, including property taxes and interest.
Principle.
And.
If you're not putting 20% down, you're going to have something called pity, which is is our excuse me. PMI and PMI is private mortgage insurance, so if you're not putting 20% down, your mortgage company is going to put insurance against you to make sure that if you default on the loan that they have some opportunity to recoup. So all of that.
Your property insurance, your homeowners insurance, your your PMI and your principle interest payment.
You want to make sure that it's not more than 25% of your take home. Pay your monthly take home, pay combined household so your lender can go over those numbers with you and make sure that the houses that you're looking at are actually houses that you can afford.
And then you can structure your showings. You can your real estate agent can structure the showings around that price point, give or take a certain percentage you know of. You know the what the market is bearing right now so.
I know that you said that you wanted to know how it was going to influence you. As far as the way things are going under contract, and you know what your concern is valid because.
Truth be told, the.
The first time boat home buyers an the conventional buyers are in contest with each other. You know? So a lot of first time homebuyers end up not having 20% down and they go the FHA route. You know the the the FHA loan program, which allows for a lower percent down.
And so when they submit their offers, they're getting beat out by these conventional buyers, and these cash buyers. So first time homebuyers, you really want to focus the next six months on getting 20% down an you want to be able to qualify for a conventional mortgage. If you can, the more you can put down and the better your terms. A lot of first time buyers.
Are obviously by definition are noncontingent, which is a much more favorable position to be in, so if you're if you need to sell a house in order to buy your next house.
That puts you at a disadvantage. I have a seller right now who needs to sell his 1.2 million dollar home in order to buy his next home.
And he said.
I'm gonna very strongly consider renting. I'm going to get myself set up with a rental.
List my house. Make sure it's vacant, staged but vacant.
So that when he goes under contract, he's actually noncontingent for his home purchase because he's got a rental until they close. So these are really good strategies. Now that we've talked a little bit about the first time home buying strategy, we've talked a little bit about the even if you're if you're not a first time homebuyer, but regardless.
You know if 2021 is as crazy as 2020, you got to take these steps too.
Set yourself up for success and these are just a few things they might be inconvenient. They might actually.
Push it a little bit on the comfort scale, you know, but it's definitely going to position yourself to find and purchase the home of your dreams.
All right, so that leads us to our next segment, which is our market analysis segment an according to a study that was published this month by the National Association of Realtors.
8.9 million people relocated since the beginning of the pandemic. Let that simmer a little bit. 8.9 million people relocated since the beginning of the pandemic. That is.
9 short months ago.
This is an increase of nearly 94,000 people. Changing the address of their residents.
Compared to 8.84 million in 2019.
And that's during the same period March through October, breaking down that data by month. Most moves occur during March with 1.23 million people relocating compared to just one million a year early earlier. So to better understand that COVID-19 impact on the US mobility.
This data was collected by the United States Postal Service. Change of address data and that is for each County across the United States. This data set served as the proxy on how many people move since the beginning of the pandemic, and they tracked the location of movers at both state and County levels. Let's see what we've got here so.
34 states experienced net migration across the country. This means that these states had more people moving in the state compared to those who moved out of the state. An among them. New Jersey, South Carolina, and Maryland saw the highest migration gains across the country. So specifically in New Jersey, which is where I'm broadcasting this podcast 2032.
More people moved into the state compared to those who left, so we all have seen that we've seen people coming from Pennsylvania, Philadelphia, the Tri State area in New York.
Getting out of the cities. Getting into the suburbs. Getting you know? Coming into the Ocean County Market Ocean County Atlantic County Cape May County and Monmouth County. We have seen great influxes of people buying not only primary but also secondary investment properties so.
And again it comes back to this idea of.
If I'm not traveling, why not invest? If I'm not, if the stock market is performing, you know less than desirable.
Desirably, then, why not?
Invest my money in an investment secondary.
Vacation rental, so to speak. Now I can use it for my family. I can use it from with my friends. I can make a little bit of money on it and actually the ROI, the returns and gains on investment property sometimes exceed it match if not exceed the gains on the market. So really smart investment strategy.
Um?
You know, and with the money being what it is as far as the like. I said the interest rates being as low as they are whynott and even flips. Being able to rehab a house and then sell it. You know if you purchase on the on the lower end of the market values put a little bit of rehab.
Investment into it. So during March and October of 2020, New Jersey gained nearly 2000 people compared to only 1100 a year earlier, and more than 50% of those who left New York moved to New Jersey.
And then Connecticut was close behind.
I think we can.
I mean, again, we don't have a crystal ball. We can't predict anything, but I think it's safe to say, and an the National Association of Realtors agrees that we can expect similar migration patterns for 2021. I don't think we're going to see this vaccine on a widespread scale population wise until spring or.
Early summer.
So there are very promising developments with that, with the distribution starting already.
I just don't think we can predict that we're going to return to our pre pandemic sense of normalcy until probably mid to late 21.
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Well, that does it for this episode of Real Talk with Big Red. Thank you for tuning in. It was great to spend some time with you and if you like the show, share it with a friend and don't forget to subscribe to this podcast. Also, if you found any value at all in today's episode, I do encourage you to go ahead and leave a review. This way more people who love real estate.
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