Strategic Realty

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Government Funding for Your Home Improvements

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If you’ve been contemplating home improvement, especially those that help the environment while reducing monthly expenses, this is a great year to get started on them.

In 2002, Congress passed the Inflation Reduction Act (IRA) which dramatically increased the tax incentives on many home improvements related to energy savings. In Oregon, we’re fortunate to have a non-profit organization that can not only help you navigate through some of these potential savings, but in many cases, add cash incentives themselves. EnergyTrust of Oregon helps businesses and individuals save on their energy costs and improvements and they are a great resource when evaluating some of the Federal incentives that you may be eligible for.

With the passing of the IRA, you may be eligible for up to $14,000 via the “high-efficiency electric home rebate program.”

Income caps apply, but you may get to that maximum by buying efficient, electric appliances: $1,750 for a heat pump water heater, $8,000 for a heat pump that heats and cools their home, and $840 for an electric stove or an electric heat pump clothes dryer.

You can also get rebates on non-appliance upgrades such as $4,000 for an electric load service center upgrade; $1,600 for insulation, air sealing and ventilation; and $2,500 for electric wiring.

In most instances, rebates can be combined with tax incentives plus other cash incentives from place like EnergyTrust, so the savings to homeowners is really significant.

Pro Tip: To get the maximum savings out of these programs, phase your improvements over a few years when practicable. That’s because of the annual limits on savings. For instance, windows are capped at $600, but that cap renews every year for the next decade or so. By phasing your improvements you’ll be able to save money each and every year.

Homeowners Still Have Positive Equity

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If you are a homeowner, you should have noticed a huge boost in your net worth over the past couple of years. Most people have noticed the rising prices and, last year, you knew about the low interest rates. Although prices are softening and interest rates have gone up, a lot of homeowners still have substantial equity in their homes. Here’s how it happens and what it might mean for you, even as we see the changes in the market.

Equity means the current value of your home minus what you owe on the loan.

Over the last few years, with inventory as low as it has been, there was an imbalance between the number of homes available and the number of buyers that were searching for a home to buy. The low inventory and demand caused housing prices to skyrocket in Central Oregon.

And while home price appreciation has moderated this year, and even depreciated slightly in some overheated markets, that doesn’t mean you have lost all the equity you gained during the major Seller’s market we are all adjusting from.

The latest Homeowner Equity Insights from CoreLogic finds the average homeowner equity has actually grown by $34,300 over the past 12 months.

So, despite the headlines, the average homeowner still gained positive equity over the last year in most markets. Keep in mind that the gains may not be as drastic as they were in April or even May, but they are still significant. Another thing to note is the longer you have owned your home, the more equity you may have in it!

What Does This Mean For You?

Equity, of course helps you increase your overall net worth, but it can also help with other goals, like buying your next home, buying an investment property, and making major home improvements. Selling your current home could result in more cash from closing to provide you with a largerdown payment, or cash for other uses!

If you have been on the fence about wether or not you should sell, because you weren’t sure what the news has meant for you or your situation, you can take a deep breath. You likely still have substantial equity and we are here to help you know just how much might be there for you.

Bottom Line

If you are considering a move, the equity you’ve gained over time can make a big impact. To find out just how much equity you have in your current home, and how you can use it to fuel your next purchase, give us a call.

How to Sell a House FAST for Top Dollar

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If you are looking to sell your home, it’s a safe assumption, that you’re looking to sell it as quickly as possible for as much money as possible. After all, selling a home under the best of circumstances is quite stressful. Selling it and ending up with a price that is well below your original asking price can be downright impossible.

If you are looking for ways to sell your home fast and make as much money as possible while doing it, we have some experience that might help. Strategic Realty and its trusted brokers are experts in selling property in Central Oregon.

Below are some top tips for selling your home fast, and some of the most impactful things you can do might surprise you!

Assessment and Preparation of your Home

There are many things that can affect the value of your home in Central Oregon. Real estate cycles, our seasonal market conditions, the economic trends, supply and demand, and of course even the number of homes currently listed for sale. Assessing and positioning your home for sale is an important step where money can be made. Perform an in-depth analysis of where the market tells you your home fits. As most homeowners can only see the currently available homes on the market, this will usually take a qualified professional with access to deep statistics on past sales.

Focus on the things that you can control like; curb appeal, condition issues, online marketing, and exposure to the buyers in our marketplace. You will want to assess your financial goals, the number of comparable properties for sale and get your home show ready.

Add Value Through Home Improvements

One of the best ways to sell your home fast in Central Oregon for the greatest price is to make desirable renovations to your home that can improve the value by thousands of dollars or more. For example, based on many professional studies, doing a job like a bathroom remodel can increase the value of your home significantly. Updating countertops, windows, trimming the bushes, and getting a fresh paint job can also have a major impact on the final amount your home will sell for.

Before you decide to go through with any type of home improvement with the hope of increasing the value of your home, you should talk with a REALTOR® to learn about how much the improvements you are considering will really impact the final value. After all, you do not want to spend thousands of dollars on a renovation that will end up making your home harder to sell? Make sure that you will get a great return on the new expenses you are adding to your home. Also know that a clean, well-staged, uncluttered home always has better odds of getting a higher price.

Know your Target Buyers Needs

Obviously, the best time to sell is during a seller’s market, because a seller’s market condition is going to push prices up. That is especially true if you are selling a home that offers people a ton of value. No matter the market you will want to think about who your target customer is when you’re selling. For example, if your home has a large number of bedrooms and is in a great public school district, your home may be more valuable to a young family. Or if you have a home with a master bedroom on the first floor, that is in a great location close to shopping, doctors, and entertainment your home could be in more demand from retirees. Think about comparing your home to the new construction homes in the area. How does it compare?

Keep in mind if you have the upgrades that are in high demand it could affect the value of your home. Dark cabinets, ceramic tile floors, laminate countertops, dark or jewel tone paint, will all decrease a home’s value since they tend to be dated and out of style. Upgrades that are in demand are quartz countertops, light-colored custom cabinets, light washed wood-tone floors, and open floor plans that include kitchen, living, and dining rooms as open space.

Price it RIGHT The First Time

Sometimes all it takes to sell your home fast is the right price. Your goal should be to set the right price from the beginning. Setting a price that ‘you believe it’s worth’, rather than what ‘it is actually worth’ may feel like a good idea, but this can end up hurting you in some really important ways. Even if you find a buyer to pay an unusual price, you still have to convince their appraiser that the home is worth it.

First and foremost, if you have to keep reducing the listing price, it will lead to more days on the market which can sometimes lead to buyers asking “what is wrong with this home?”

This delay in a sale could end up looking really bad for the home. Even worse, you could end up reducing the price even lower than something that you would actually be comfortable selling for. Additionally, when buyers see price reductions they may feel like they can make low-ball offers due to the perceived loss in value.

When you are thinking about putting your home on the market, consult with the local Central Oregon REALTOR®, at your home, in order to get the most accurate home value. Many of the online home value tools may give you ‘an idea’ of price, but these values can vary wildly and are often proven to not be accurate. Zillow Home Values in Central Oregon are NOT precise or accurate. The valuations online are based on computer algorithms that can not view the inside of your home, see the condition, or give you the most accurate information. Only a professional who does this every day can give you the most up to date information. Giving you a price without seeing it in person is like a Doctor giving you a diagnosis before they have even seen you.

Understand The Local Market Trends

One of the most important things you should keep in mind when you are preparing to put your home on the market for sale is the location and the neighborhood. Your home’s competition will ultimately determine its value. Currently we are seeing more inventory and slower pace of sales driven by higher interest rates. If new construction homes are available in your local market, then they are driving the competition. Even if your home is just a few years old, it still has to offer better value than what buyers will will see in the new construction homes.

One of the top things you can do to sell your home fast for the most money is to talk with a local REALTOR® and pick their brain. Setup a meeting in your home and discuss not only the current market conditions but also the condition of your home and possible improvements you can make. Give us a call today and setup an appointment. We can help you create a plan to set you up for success!

All Eyes on Central Oregon Statistics

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I had the distinct pleasure of attending a one-hour continuing education class this past week on Valuation Process and Adjustment Methodologies. It may sound a little dry, but when the market is shifting, as is the case now, we all turn to metrics and statistics to make sense of it. The class was hosted by Deschutes Title and presented by Donnie Montagner. The former name is that of Central Oregon’s last locally owned title company..and the latter name should be familiar to anyone who watches the Central Oregon real estate market closely. Donnie Montagner heads up Beacon Appraisal services, and his “Beacon Report” is often cited as an independent gold standard in reporting the local market trends.

The class was well-attended by real estate brokers and appraisers alike. We quickly went over some cost, income, and sales approach strategies and then dove into the deeper weeds of paired analysis, ratio studies, binomial regressions and the like. Appraisers have the challenge of turning what brokers do as an informed guess into a distinct science. As one appraiser mentioned in the audience, “Houses come in red, yellow, brown and blue…but banks want us to turn it into black-and-white…and they don’t like gray.” (I should have gotten his name, because I’ll probably use his words throughout the rest of my career.)

Throughout the class, one theme that kept reemerging was the market’s rapid change. A fact that Donnie reflected on with a sense of glee. When what you do for a living is mostly measuring a trend, it is somewhat exciting when it switches direction. Many of the real estate brokers’ questions centered around what could be divined from the appraisers’ data, and the appraisers’ answers reminded the brokers that we are all working with the same data. And in the appraisers’ case, they are more interested in what happened than what’s coming.

The market is changing, and that is exactly what interest rate hikes were supposed to accomplish. Now how much the market has changed is just now coming into focus, and where it will go next is anyone’s guess. Many real estate brokers talk as if the world is shifting under their feet, and sometimes that itself can have an effect on consumers’ confidence. But we all must remember that real estate brokers were building their companies over the last two years to handle the onslaught of transactions that no one predicted coming out of the COVID-19 response. Any return to a more normal market is going to create a some slack in those systems, and may feel like a more dramatic shift than it really is.

I’ll borrow some of Donnie’s data to illustrate the point. One of the sentiments you hear from brokers recently is how rising interest rates have decimated the number of real estate buyers in the local market. Below are monthly sales numbers for the Bend single-family house market from Donnie’s Beacon Report. I’ve overlayed the average weekly rates for a 30-year mortgage.

Did you spot the decimation? Neither did I.

Do I believe the market is changing? Absolutely. But the magnitude does match up with the mourning. Not to say that a market can’t turn quickly. We certainly saw that in 2008, and I’m not convinced that it can’t happen again. We continue to watch everything very closely. If you have any questions about the market, statistics, or how your home value might be affected, please don’t hesitate to reach out.

Why Rental Property is a Great Inflation Hedge

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In these days of increased inflation (I almost said hyperinflation, but thought I should check the definition on that…apparently that’s inflation above 50%…good reality check) many folks are trying their best to hold on to what they have. Cash is a poor reserve of wealth when dollars are buying less and less, and some of our knee-jerk ideas like buying gold just don’t hold up to scrutiny. (It worked in the 1970’s….not since.)

For savvy investors few inflationary hedges are better than income real estate, and there are a few reasons for that. The first, when talking about residential real estate, is that rents have historically kept up with inflation. That’s important because when you’re valuing duplexes, triplexes, quadplexes, and apartments, what they are worth in any market is based on what they rent for. Unlike single-family homes, these products are sold on a gross-rent multiplier or cap rate. When rents go up, value goes up.

To illustrate inflation vs rent, allow me to borrow the excellent graph from Nuveen with all credit and gratitude given.

https://www.nuveen.com/en-us/insights/real-estate/re-as-an-inflation-hedge

One of the reasons that real estate tracks so well with inflation is that the competition for real estate product is new real estate product. And construction costs of new real estate product are directly and severely impacted by inflation. On top of those increased material and labor costs, new real estate product relies heavily on bank financing which also increases steeply in inflationary times. All of this combines to prevent demand from being quickly satiated with new supply.

Footnote: So it makes sense to buy income real estate in today’s market (obviously not every deal is a winner), but what if you’re one of our clients who bought income real estate ten years ago? The appreciation of those properties has been significant, and, in the case of single-family homes, eye-watering. You were probably just considering selling those assets 6 months ago, when inflation started to give you a reason to hold on. The answer is…it’s time to reevaluate the portfolio. Not all income properties are the same, and it’s important to know which you want to be holding in this market. Ask us, and we’ll be happy to help.

What’s the COVID effect in Bend?

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We’ve been getting a lot of questions regarding the impact that the COVID-19 virus and the stay-at-home order are having on the Bend Oregon real estate market. We made a quick video to update you on what we’re seeing int he Bend residential market by March 25th. We’ll continue to update these pages with statistics we’re pulling together to guide our clients through this difficult time.

Let us know how you like the update, and whether you would like to see more videos, graphs, tables, etc. Want copies of the graphs used in this video? Send us an email.

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