The Coronavirus’s Impact on Home Prices

What does the coronavirus have to do with home prices? Find out here.

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The coronavirus has spread to all corners of the news and the internet lately. But what does this illness
have to do with real estate?

We’re starting to see a decrease in Chinese investment here in the United States. In 2018, total Chinese investments in the U.S. equaled around $30.4 billion compared to $13.4 billion in 2019.We first encountered the coronavirus at the end of 2019, but part of that decrease also probably stems from the trade war with China that lowered the value of the Chinese yuan, which ultimately made U.S. real estate more expensive (especially on the coasts).
"In 2018, total Chinese investments in the US equaled around $30.4 billion compared to $13.4 billion in 2019."
Ultimately, it doesn’t impact Arizona much, but there are certain parts of the country where Chinese
investment has slowed. That said, the Chinese as a whole do see America as a safe-haven investment,
so money is still pouring into our country for real estate—just not at the same rate as in 2018.

If you have any questions about what factors in your area could be affecting your home price, feel free
to reach out to me. Remember: Real estate is local. Call me on my cell 602-738-9943.

Renovating vs. Selling As Is: Which Is Better?

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If you’re struggling to decide between renovating your home before listing it on the market and saving yourself the effort by selling it as is, consider the cost of the renovation projects you’d want to do and compare them to the return you’re likely to get when you sell.

A 2018 report from Remodeling Magazine shows us that the average cost of the top 20 renovations sellers make have a recapture rate of less than 80%, meaning you’ll only get 80 cents back for every dollar you spend. So in most cases, a renovation doesn’t make sense for your bottom line.

"This year, the most expensive projects didn't have much of a gain," Craig Webb, editor of Remodeling and manager of the report, said back in 2018. "I think it's because real estate professionals think we're getting close to a peak in market prices. So consequently, spending a lot of money does not automatically mean your house will just ride the escalator up and be worth a lot more."

Now, there are some exceptions to that trend: If you like to trade or buy your materials from a warehouse at a discount and you plan to do the labor yourself, you can certainly make a profit when you sell. Similarly, if you’re an investor who buys homes at steep discounts and has crews to do the remodel for cheap rates, you can also make your money back. However, the average homeowner who hires contractors to take care of the renovations and repairs typically doesn’t make a lot of money back.

That said, there are four things you can do to your home that will get you your money back in multiples: installing new flooring, adding new paint, deep cleaning, and decluttering.

One common objection I hear, using carpet replacement as an example, is, “What if I replace the carpet before I sell the home, but the buyer ends up just tearing it out after they buy it?”

Yes, but they bought the home and that’s the key! Why take a $20,000 discount on a home for $7,000 worth of carpet?

For some people, though, renovating isn’t an option at all, and they have to sell it as is. In that situation, you just need to price the home accordingly so it will sell. You could also consider offering a discount to potential buyers to offset your lack of renovations—you can read more on that here.

If you have any questions about selling your home or the pros and cons of certain renovations you’re considering, please call me on my cell phone 602-738-9943 I’d love to hear from you.

What's Unusual About Our Current Market?

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Today I’m sharing the December 2019 real estate market recap, which is very different than December 2018. That’s a great sign for 2020. 

In December, we had an 8.6% decrease in new homes coming onto the market compared to December 2018. We also had a decrease of 21% in active listings. Additionally, we had a 35% decrease in the months’ worth of inventory available; we’re currently sitting at 2.02 months’ supply. However, we had a 20.2% increase in the number of homes sold year-over-year. At 0:26 in the video above, you can view a chart that lays out each number of these four statistics from September 2018 through December 2019. 

What’s unusual is that inventory was dropping but buyer demand was increasing. Why? Rates were dropped by the Fed again, so more buyers were coming into the marketplace. Many buyers who were waiting until 2020 to purchase a home decided to buy in the fourth quarter of 2019 instead. They wanted to lock in an excellent interest rate while it was below 4%. 

Now, in January, I have more and more people reaching out to me wanting to move, more than in recent years. With rates as low as they are, and with it being an election year, I believe many people will move in 2020. This is a wonderful time to make a move; rates are low and prices are stable—in many markets, they are still going up. Take advantage of these exceptional numbers while you can!

If you have any questions about buying or selling real estate, please call, text, or email me. I would love to help you.