The PJ Team
Newsletter January 2021
Updated: Feb 2, 2021
Is It Time to Stop Renting?
In years to come, observers may well look back and report that this was, "the best of times and the worst of times" when it came to purchasing your home.
The first thing most people think about when they consider the wisdom of buying a home or continuing to rent is whether or not they can afford it. They look at their monthly rent and compare it to the rough cost of a monthly mortgage for a similarly sized and similarly located property. What they really need to ask themselves is "Can I afford not to buy a home when interest rates are likely as low as they will ever be?"
Right now, several overlapping factors have contributed to causing interest rates to drop lower than anyone could have imagined as recently as six months ago, not to mention years ago. If anyone had told you in 2018 or 2019 that it would be possible to purchase a house with a mortgage interest rate between 2.5% and 3.5% or in some instances even lower, you might have smiled, nodded, and walked away thinking how easy it is for some people to lose their grip on reality. However, this is the reality of the moment.
It is also true that many of the contributing factors to our current financial environment, such as the COVID-19 pandemic, the ensuing financial crisis, and a historically low inventory of available homes may also make it more difficult to take advantage of the unique time in which we are living. While this is a time of great opportunity, it is also a time that requires the assistance of seasoned professionals who can guide, advise, and help you to achieve ultimate success in a highly competitive market.
Those with relative job stability and a stable income will find that the question should not be "whether to buy", but "where and what to buy."
Ask yourself, "If I can't afford to invest in real estate as a means of improving my personal financial future at today's interest rates, what steps do I need to take so I can do so in the near future?"
There are other questions and concerns to address when choosing to buy or rent, such as:
How long do I plan to live in this area?
How much house do I need? vs. How much house would I like?
In what type of home would I be comfortable living?
- Single Family Home
How much house can I afford?
In which neighborhoods would I consider living in order to afford owning my own home?
Is commuting an issue for me? (The pandemic will end at some point.)
In place of your monthly rent payment, your monthly mortgage payment will include principle, interest, taxes & insurance (PITI), however, there are other costs such as a down payment, earnest money deposit, and closing costs that will also determine the size, location, and financing options available to you, should you determine that now is the time to buy. Unlike when you pay rent, the benefits of owning include certain other advantages such as annual tax deductions increased equity as you pay off the principal and the market appreciates, and the ability to decorate, paint, and renovate to make your home your own.
One example in a recent seminar on renting vs. buying demonstrated that depending on factors such as current rent payments, interest on a home mortgage, maintenance costs, taxes, appreciation, and other related costs and expenses, someone paying $2,500 in rent today might purchase a home for $450,000, live in it for 5 years and sell it for a potential benefit of $120,000 or more.
How many investments do you know that will potentially net you $24,000/year and let you live in them? The last time we checked, no one was living in their mutual fund or Bitcoin accounts.
If you would like to investigate home ownership, contact the PJ Team for a no-cost, no-obligation conversation. Why not make 2021 the year you take steps to strengthen your financial future and find a better place to live that you can call your own? There really is "No place like home..."
"Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world." Franklin D. Roosevelt
Ideas for Home Preparation Prior to Selling...
Even in the current COVID environment, the PJ Team is helping both buyers and sellers to set realistic real estate goals and take steps to accomplish them. This is especially important for home sellers. Depending upon your intention and general inclination, there are 3 common options when selling your home, each with its own benefit and drawback:
Sell "AS IS" - No investment on your part of either time or money.
Cosmetic renovations - Small or modest investment of both time and money.
Major renovations - Large investment of both time and money.
While you probably already know the basic steps of cleaning, de-cluttering, and de-personalizing your property prior to listing it, you may find the following reminders helpful, as well as considering the wisdom and cost-benefit of painting, minor repairs, and minor landscaping. Major improvements, such as adding another bath and/or bedroom may significantly increase the home's sale value but will certainly be both expensive and time-consuming.
In the current market, most homes are selling very quickly relative to 18, 12, or even 6 months ago. However, the homes that move most quickly and command the highest price are still those in neighborhoods with sought after school districts and central locations for shopping, travel, and commuting - even though there is less shopping and commuting these days AND have updated kitchens, bathrooms, and flooring.
Little touches starting with the exterior of the property can make a big difference like pulling weeds, trimming bushes, mulching, and adding some blossoming plants.
It’s important to make your home a place where others can imagine their lives and possessions, which means you need to create space for this imagining to be possible.
Pack and remove as much as you can, leaving only the clothing and items you use regularly.
You will likely need to clean or replace the carpets ... and paint.
You may feel like you’re living in a museum – personal items put away, house always clean, countertops nearly empty – but remember, you’re creating a space for others to imagine your home as their home.
Doing these things will help you sell your house for the best price and get into your new home sooner.
Finally, make sure everything works including all the lightbulbs! Don't let a $5 fix spoil a $500,000 first impression. The adage remains trite but true, "You never get a SECOND chance to make a good FIRST impression."
"Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth." – Theodore Roosevelt
Statistics Worth Noting:
Check our featured homes
We hope that your 2021 has gotten off to a good start and that you are maintaining any resolutions you may have set for personal, family, or community improvement. One resolution that most people make, after losing weight and practicing healthier habits, is to improve their financial well-being. We know that one way to accomplish this goal is to proceed step-by-step in the right direction and that one of the best directions to head in order to improve personal finance is real estate.
Even if you can't buy a house today, you can investigate the necessary steps, by talking to a professional.
Attend an online buyer’s seminar and talk directly with a Realtor (reply to this email and we will set one up for you). Many of the clients we are helping today are people who were brave enough to start a conversation with us months ago, and in some cases years ago. The point is that they took the first step.
If you or someone you know is interested in buying, selling, or investing in real estate - be brave!
Signing-off for now!
We really hope you have enjoyed this edition of the PJ Team newsletter; covering news and updates about Virginia Real Estate. We want our newsletter to address your concerns. If you have any questions for me or the Team, or if you would like to suggest a topic you'd like us to cover, CLICK HERE. Thanks for reading.
"Risk comes from not knowing what you’re doing." Warren Buffett