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The secret? It’s all about the lighting. Here’s how to get it right.

Well that was a total waste. That Robin’s Egg Blue you picked for your entryway now looks like the color of that (really cheap) beach hotel room back in your spring break days.

Kind of makes you feel sick.

Not at all what you envisioned.

“People have to understand that the color of an object won’t look the same 24 hours a day,” says lighting designer Joseph Rey-Barreau. “I just had bamboo flooring installed throughout my house, and during the day it looks totally different than it looks at night.”

The way we “see” color primarily depends on two things:

1. The light that an object absorbs. Black absorbs all colors; white absorbs none; blue absorbs red.

2. How the light source works. Natural light (sunlight) changes throughout the day and is affected by a room’s location. Artificial light changes with the type of bulb you use.

Here’s how to figure out how lighting will affect your paint color choices before you plunk down cash for the paint:

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How Sunlight Affects Colors

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As the amount and angle of the sun changes, so will your room colors.

“Natural light should always be considered when choosing color for a space,” says Sarah Cole of the Farrow & Ball paint company.

North-facing rooms: Light in these rooms is cool and bluish. Bolder colors show up better than muted colors; lighter colors will look subdued. “Use strong colors and embrace what nature has given,” says Cole.

South-facing rooms: Lots of high-in-the-sky light brings out the best in cool and warm colors. Dark colors will look brighter; lighter colors will virtually glow.

East-facing rooms: East light is warm and yellowy before noon, then turns bluer later in the day. These are great rooms for reds, oranges and yellows.

West-facing rooms: Evening light in these rooms is beautiful and warm, while scant morning light can produce shadows and make colors look dull.

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How Light Bulbs Affect Color

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The type of bulb you use can alter the colors in a room, too.

Incandescents: The warm, yellow-amber light of these bulbs will make reds, oranges, and yellows more vivid, while muting blues and greens.

Fluorescents: This flat and cool light enriches blues and greens.

Halogens: These white lights resemble natural light and make all colors look more vivid. Using halogens would make the shift from daylight to artificial light less jarring.

Compact fluorescent lights (CFLs): CFLs can produce either a warm white, neutral, or bluish-white light.

Light-emitting diodes (LEDs): You can buy warmer or cooler LEDs, and even “smart” LED bulbs whose color you can control wirelessly. “You can point to the color of the sky in a picture at sunset and make the light bulb in the house be that same color,” says Rey-Barreau.

Related: The Latest In Lighting Trends to Enhance Your Home

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Tips for Achieving the Color You Want

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1. Paint squares of primed drywall with samples of the colors you’re considering, and then move them around the room during the day. Apply at least two coats.

2. Evaluate samples of carpet during different daylight conditions.

3. Most contractors won’t hang lights before you paint, but you can get a color approximation by placing a bulb you’ll be using in a floor or desk lamp. If you’re hyper-sensitive to color or want a very specific look, ask your electrician to hang the lights, then cover them carefully during painting.

4. Remember that natural and artificial light will work together during certain times of day, especially in summer when dusk lasts a long time. Turn on artificial lights even during daylight to see what your colors will look like.

5. Paint sheen also affects color. Glossy finishes will reflect light and change the way the color looks, whereas flat finishes are less reflective and allow colors to look truer under bright light.

6. Light-colored walls can reflect the colors of bold carpets: A bright blue rug, for instance, can cast a bluish tone on a white wall.

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Author: Lisa Kaplan Gordon

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Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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These 5 timeless ideas work because they’re both fun and functional.

Outdoor entertaining spaces aren’t always equal when it comes to home value (think about that house with the falling-down above-ground pool with no curb appeal at all). Homes that get them right, though, have patios and backyards that blur inside and outside spaces.

And the best thing: these outdoor entertaining space ideas have been working for decades — and adapt to most any house today. Here are five reasons why they work (and why you may want to add to your home):

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#1 They Function Like Indoor Spaces

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The more outdoor entertaining spaces mimic their indoor equivalents, the more functional they are. And you’ll get more than sunshine and memories: According to the “Remodeling Impact Report” from the National Association of REALTORS®, you’ll recoup 70% of your costs on resale after building a new patio. An outdoor kitchen gets 71%.

A couple of small ways to get more functionality in your outdoor space:

• • Add built-in benches for seating.
  • Hang a chandelier or pendant lights for functional lighting over a dining space.

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#2 They Create Privacy Without Blocking Light

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Precast-concrete geometric blocks protect privacy without blocking light or air in outdoor entertaining spaces. Plus, they’re super affordable and durable.

Use them to screen a patio or carport, fence in your patio, or as a vertical element to make small yards feel larger. It’s a small project with big impact.

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#3 They Find Clever Ways to Provide Shade

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Low, sloping roofs help transition from indoors to outdoors by casting shade and protection from the elements.

If extending the roof isn’t an option for your home or budget (fair), you can still make some shade. For example:

• • Try a pergola planted with vines.
  • Or a retractable awning, which keeps the sun off when you want it to, and rolls back into place when you don’t.
  • Tons of affordable, ready-to-hang shades and sails are available, too.

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#4 They Use Lots of Windows — and Big Ones

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Large windows help merge inside and outside living. Even if you don’t have the ultimate in window bling like this atrium, you can increase the natural light in your home. Consider:

• • Trading smaller windows and doors for big accordion, pocket, sliding or swinging doors, or replacing a plain wall with a wall of glass doors.
  • Adding a corner window, to create the effect of an atrium or courtyard.

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#5 They Take ‘Entertaining Outdoors’ Seriously

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Though a sport court isn’t exactly a high ROI project, being the fun house on the block certainly does a little something to a home’s appeal.

And, after all, an outdoor entertaining space should do just that: entertain. Here’s to a fun summer season!

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Author: Kelley Walters

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Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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What they typically cost, and tips for getting the most return on your investment.

Building an outdoor kitchen is more than an indulgence: These backyard beauties can improve your home’s value. Outdoor kitchens typically get a 71% return on investment, according to the “Remodeling Impact Report” from the National Association of REALTORS® — and that’s on top of your own outdoor-cooking joy.

The investment can be a little — or a lot. These five outdoor kitchen ideas fit a range of budgets and homes.

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#1 A Tiny Outdoor Kitchen for Limited Spaces

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If you boil down an outdoor kitchen to the basics, what more do you need than a grill, a little oven, cupboard space, and a cozy place to sit? This setup does it all efficiently, for as little as a few hundred dollars if you already have outdoor electricity. An electrician will add to the cost.

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#2 An Outdoor Kitchen From a Kit

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Modular kits, like this one from WWOO (starting around $1,500), can be customized to suit your backyard. Some companies even offer design help for additional cost.

The galley-inspired layout here also does double duty by adding privacy. (Keep in mind the cool outdoor sink requires additional plumbing, which will increase the cost.)

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#3 An Outdoor Kitchen Made of Concrete & Steel

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DIY-savvy homeowners used concrete and cement board to create this L-shaped outdoor kitchen that mimics today’s indoor layouts. Guests relax at the counter while the host flips burgers — it’s open-concept living in the great wide-open.

No, this isn’t DIY 101, but if you’ve got the skill set you can do it for the cost of materials — and concrete is cheap. If you hire a pro, though, the typical cost is about $14,000 for a kitchen that includes an inset grill, steel drawers, ice chest, sink, and concrete countertop, according to the “Remodeling Impact Report.”

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#4 An Outdoor Kitchen With Personal Style

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Your outdoor kitchen doesn’t have to look like everyone else’s. But it should match your home’s style if you want to get a return on your investment. This DIY kitchen fits the home’s rustic style and comes with enough storage any indoor cook would envy.

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#5 An Outdoor Kitchen That Says “Sit a Spell”

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Your outdoor kitchen can play the same role in your yard that your kitchen inside does: as the heartbeat of every gathering where guests will want to stay awhile. And bonus: The added deck and pergola could also kick up your home value a couple of notches.

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Author: Jamie Wiebe

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Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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Want to upgrade your deck but watching your budget? Here are 5 easy deck makeover ideas, many well under $300.

If you’d rather hide inside rather than hang out on your tired-looking deck, you need a deck makeover.

Here are five ways to transform your deck back to its fun self.

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#1 Install a Stone Landing at the Foot of Your Deck Stairs

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Dress up the transition from your deck to your yard with a little hardscaping — a stone landing at the bottom of your deck stairs. Stones are a natural compliment to wood decks, and they’ll help prevent mud from forming where there’s heavy foot traffic.

Cost: Flagstone is priced by the pound; you’ll spend $60-$100 for enough stone for a 3-foot-by-4-foot landing.

How-to: Techniques for installing a landing are the same as putting in a patio , although you’ll have to temporarily support your existing stairway while you work around — and under — it.

What else: You should be able to add a landing in less than a day. It’ll get done faster if you hire a pro, but it’ll cost you another $150-$200 in labor.

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#2 Put Up a Privacy Screen

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Whether you’re relaxing alone au naturel or entertaining friends, a little home privacy is always welcome. You can add some vertical supports and fill in a variety of cool screening materials that are as nice for your neighbors to look at as they are for you.

Types and costs:

• • Bamboo fencing comes in a 6-foot-by-16-foot roll for $20-$25.
  • Lattice panels are either wood or plastic, $15-$30 for a 4-foot-by-8-foot panel.
  • Grow climbing plants on a trellis ($20-$100) to create a living privacy screen. Plant climbing vines in tall containers ($40-$120) to raise them above the deck surface and give them a head start filling in your screen.
  • Outdoor fabric resists moisture and fading; $12-$120 per yard. You’ll pay another $20 to have a seamstress cut and hem a 3-foot-by-5-foot panel.

How-to: Your privacy screen should integrate with your deck; make the framework using the same basic materials as your deck railing and structure.

Add some flash by building a frame with 2-by-2- or 2-by-4-inch uprights spaced 1 foot apart, then weaving aluminum flashing between the uprights.

What else: Make sure to position your privacy screen where you’ll get maximum benefit. Sit on your deck and check your lines of sight.

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#3 Add Solar Lighting

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Add lighting to your deck if you’re wanting your deck to come alive after dark. Try solar lights: you don’t need an on/off switch — they light up when it gets dark, then fade away 4-6 hours later.

You won’t have to plug them in or wire anything, either. Their solar-charged batteries are renewed every day, and the lights are built to withstand all kinds of weather.

Types and cost:

• • Paper lanterns (made from synthetic, weatherproof nylon; $20-$30) are made for hanging and come in all sorts of fun shapes, sizes, and colors.
  • Carriage lights can be fixed on top of a pillar or railing newel post. $45-$150.
  • Solar illuminated replicas of old-fashioned mason jars can be set on any flat surface, about $35.
  • Rope lights have small LED bulbs inside a flexible cord. A 25-foot-long rope with solar charger and stand is $25.

What else: Suspend lanterns from overhead trellises, railings, and nearby trees, where they’ll shed a soft, colorful glow. Wind rope lights around rafters and railings.

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#4 Paint a Faux Floor Rug on Your Decking 

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Punch up a boring old deck with a faux rug. This is a fairly low-cost project with a big wow factor, and one you can share making with your (well-behaved) kids. It works best on a newly cleaned deck (see below).

Cost: Most of your cost will be deck stain or paint in various colors. Because you won’t be using that much stain per color, you can buy quarts. Figure $15-$20 per quart.

How-to: Figure out a size, sketch out the design on your decking, and then all you have to do is paint or stain between the lines. You can use painter’s tape as a guide, but a little leakage is likely on a wood decking surface.

What else: Keep a few basic cleaning supplies on hand for any drips or spills. After the stain is dry, coat the entire deck with a clear deck sealer.

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#5 Wash and Refinish Your Wood Decking

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The ultimate deck makeover is none other than a good cleaning. Applying a coat of deck sealant afterward ensures your wood decking looks great and will last for decades.

Cost: There are many brands of deck cleaning and brightening solutions. Some require the deck to be wet; others need the decking to be dry. Some are harmful to plants and you’ll have to use plastic sheeting to protect your landscaping. Consult the instructions carefully. 

You’ll pay $15-$25 per gallon, enough to clean 300 sq. ft. of decking.

How-to: Scrubbing with a good cleaning solution and rinsing with a garden hose is more foolproof than scouring your decking with a power washer that may damage the surface of the wood. 

What else: After you deck is cleaned, apply a coat of deck stain or clear finish. The sealer wards off dirt, wear, and UV rays, and helps prevent deck splinters. A gallon covers 250-350 sq. ft., $20-$35/gallon

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Author: John Riha

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Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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May 2021 Market Report

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Demand for Housing & Population Changes: The Affects on San Mateo County

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As we enter the second quarter of 2021, a new horizon is apparent in the US. Vaccination levels are rising everyday, borders are beginning to open, and the demand for houses continues to rise. Bay Area population trends have an impact on real estate metrics and have been a hot topic. My team and I compiled the data below to keep informed.

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San Mateo County Market Report for May 2021

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Courtesy of the Dinsmore Group and Compass,
this report will look at trends from a variety of angles:

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• Year-to-Date, Year-over-Year Changes: A Summary of Data
• 1-Year Population Changes in the Bay Area
• Median Sales Price Trends Since 2012
• San Mateo Home Value Appreciation
• Year of the Pandemic: Sale Volume
• Additional resources

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Industry News to Keep you in the Know

CNBC: Homebuilder confidence rises in April despite record high lumber prices
WSJ: U.S. Housing Market Is Nearly 4 Million Homes Short of Buyer Demand
NYT: Reverse Migration: Moving to Cities While Others Flee

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STILL HAVE QUESTIONS? WE HAVE ANSWERS
We welcome you to contact us today.
CarolineDinsmore.com | phone: 650.773.2226

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The Dinsmore Group is busier than ever:

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Caroline Dinsmore sold $93M in 12 months!

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Finding the Perfect Place:
35 Questions to Ask

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As market data continues to astound, many have moving on their mind. Are you dreaming of finding that PERFECT place?

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Charts like the one we’ve featured above inspire many people to consider buying or selling, to find that perfect place to call home. But what is “perfect”? Where you live should work for your needs, likes, wants, and specific individual circumstances. To guide clients to an answer, here is a checklist of 35 questions I have used in the past:

1. Where can you work and get a well-paying job that supports you and your family if you have one? Will you be able to build the career of your dreams (not other’s expectations, YOURS)? Will you be working?
2. What educational institution/s do you or don’t you need close by?
3. What weather do you enjoy most?
4. What cultural aspects are important to you? What is the variety and type of cultural institutions? Opera, symphony, rock concerts, art, museums, etc?
5. How suitable is the area to building a strong network of business colleagues and friends that would appeal to you most?
6. Does the area deliver the sporting activities you enjoy?
7. What is the cost of living and housing?
8. Do you like the beach, country, city, suburbs? Could you live in a place that is close to these…..30 minutes, an hour, 3 hours?
9. What is the topography? Mountains, hills, flatland?
10. DO you like trees and forests or the desert?
11. Are you a gardener? What areas are great for types of gardens you love?
12. What is the quality of healthcare? How close is a good hospital?
13. Do you like driving everywhere or walking mostly?
14. Do you rely on public transportation? Will you commute every day and how long will that take?
15. How close do you need to be (or want to be) to family and/or friends?
16. Do you need to be close to an airport with many direct flights to the places you like/want/need to visit?
17. What is the quality of air, water, environment?
18. Is there an adequate water supply year-round?
19. How exposed/prepared is the area to climate change?
20. What is the level of crime? Where is the crime concentrated?
21. How clean is the area?
22. What is the condition of local government? City? Town? State? Are all well run? Fiscally sound?
23. Is the area growing or shrinking population-wise?
24. Does the area have the kind, quality and variety of restaurants and food stores you enjoy? Food matters!
25. What kind of architecture appeals most? Modern? Historic? Both?
26. Philosophically is the population in the area more left or right leaning: does this matter to you?
27. What religious institutions are important to you?
28. What is the cost of help, services, staffing?
29. What is the history of the area, and its more recent trajectory to help you gauge its future?
30. How long do you plan to live in this area? Forever? To retire? To raise kids?
31. How good/bad is traffic? Do you care?
32. What are the noise levels?
33. Are there lots of bugs? Do bugs love you or ignore you?
34. Are some of the things you really love that are not in this area things you can travel to easily/quickly and enjoy for a few hours/days/weeks of the year and be satisfied?
35. Have you spent time in the area at different times of the year –
preferably for a more extended period – to know what life is really like, somewhat akin to a test-drive?

What is important to you is often not important to others. All of us have to compromise on SOME things. Knowing yourself, your likes and dislikes is
the key. Never choose a place for just ONE reason, unless it’s a critical aspect, eg: a sick relative or specialized school.

At the Dinsmore Group we believe that real estate is more than a
transaction, it’s about finding a true home. We hope that our article helps you to evaluate the factors that will make a house your home.

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What is Proposition 19?

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Click here to take a look at the CALIFORNIA ASSOCIATION OF REALTORS® Quick Guide about Prop 19
for a breakdown of the changes on tax breakdown portability, the impact on intergenerational transfers to children or grandchildren, when the law goes into effect, and more!

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Compass is not authorized and will not offer tax or legal advice on this matter. For more information on how Proposition 19 impacts you individually, contact a qualified professional such as your tax preparer, Certified Public Accountant, or tax lawyer.

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The Dinsmore Group is here to give you the knowledge you need to make your decision to buy
or sell a home, no matter what stage you’re at, a huge success.
We welcome you to contact us.

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What Will the Housing Market Look Like in 2021?

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WHAT’S IN THIS ISSUE?

• Our featured article: What Will the Housing Market Look Like in 2021?
• The latest buying and selling activity here in your neighborhood
• Our Bay Area Lifestyle highlight: Let’s Celebrate Women’s History Month

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Now, as the spring market approaches, you may be wondering whether the strong housing market can continue. If you’re a homeowner, should you take advantage of this opportunity? If you’re a buyer, should you jump in and risk paying too much? Let the Dinsmore Group help answer some of your most pressing questions:

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While many areas of the economy have contracted, the housing market has stayed remarkably strong. But can the good news last?

When COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the shift. Record-low interest rates caused some lenders to call a halt to new underwriting, and homeowners debated whether or not to put their houses on the market. However, those first days of uncertainty ushered in a period of unprecedented demand in the U.S. real estate market, which ended the year with increasing average home prices (up 13.4% from the previous year) and shrinking days on market (13 fewer than in 2019).

Now, as the spring market approaches, you may be wondering whether the good times can continue to roll on. If you’re a homeowner, should you take advantage of this opportunity? If you’re a buyer, should you jump in and risk paying too much? Below we answer some of your most pressing questions.

How is today’s market different from the one that caused the 2008 meltdown?

At the beginning of the pandemic, fears of an economic recession and an ensuing mortgage meltdown were top of mind for homeowners all across the country. For many buyers and sellers, the two seemed to go hand in hand, just as they did in the 2008 economic crisis.

In reality, however, the conditions that led to 2008’s recession were very different from those that triggered the current downturn—and this time, the housing market is the source of much of the good news.2 This is in line with historical patterns, as housing prices traditionally hold steady in the face of recession, with homeowners staying put and investors putting their money into bricks and mortar to ride out uncertainty in the stock market.

This time around, because of lessons learned in 2008, banks are better funded, homeowners are holding more accrued equity, and, crucially, much of the economic activity is focused on financial factors outside the housing market. As many industries quickly pivoted to work-from-home, early fears of widespread job loss-related foreclosures have failed to materialize. Federal stimulus payments and the Paycheck Protection Program also helped to offset some of the worst early effects of the shutdown.

Are we facing a real estate bubble?

A real estate bubble can occur when there is a rapid and unjustified increase in housing prices, often triggered by speculation from investors. Because the bubble is (in a sense) filled with “hot air,” it pops—and a swift drop in value occurs. This leads to reduced equity or, in some cases, negative equity conditions.

By contrast, the current rise in home prices is based on the predictable results of historically low interest rates and widespread low inventory. Basically, the principle of supply and demand is working just as it’s supposed to do. In addition, experts predict a strong seller’s market throughout 2021 along with increases in new construction.3 This should allow supply to gradually rise and fulfill demand, slowing the rate of inflation for home values and offering a gentle correction where needed.
Effects of low interest rates
According to Freddie Mac, rates are projected to continue at their current low levels throughout 2021.4 This contributes to home affordability even in markets where homes might otherwise be considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.
Effects of low inventory
Continuing low inventory is another reason for higher-than-average home prices in many markets.5 This should gradually ease as an aggressive vaccination rollout and continuing buyer demand drive more homeowners to move forward with long-delayed sales plans and as new home construction increases to meet demand.6

Aren’t some markets and sectors looking particularly weak?

One of the big stories of 2020 was a mass exodus from attached home communities and high-priced urban areas as both young professionals and families fled to the larger square footage and wide-open spaces of suburban and rural markets. This trend was reinforced by work-from-home policies that became permanent at some of the country’s biggest companies.

Speculation then turned to the death of cities and the end of the condo market. However, it appears that rumors of the demise of these two residential sectors have been greatly exaggerated.

With the first vaccine rollouts, renters have begun returning to major urban centers, attracted by the sudden rise in available inventory and newly discounted rental rates.7 In addition, buyers who were previously laser-focused on a single-family home responded to tight inventory by taking a second look at condos.8 While nationwide condo prices continue to lag behind those of detached homes, they’ve still seen significant price increases and days on market reductions year over year.

In addition to these improvements, the 2020 migration has spread the economic wealth to distant suburban and rural enclaves that normally don’t benefit from increases in home values or an influx of new investment. As many of these new residents set up housekeeping in their rural retreats, they’ll revitalize the economies of their adopted communities for years to come.

How has COVID affected the “seasonal” real estate market?

Frequently, the real estate market is seen as a seasonal phenomenon. However, the widespread shutdowns in March 2020, coming right at the beginning of the market’s growth cycle in many areas, has led to a protracted, seemingly endless “hot spring market.”

While Fannie Mae’s chief economist Douglas Duncan predicts slower growth from 2020’s historic numbers, the outlook overall is positive as we embark on the 2021 spring selling cycle.9 Duncan anticipates an additional lift in the second half of 2021 as buyers return to business as usual and look to put some of their pandemic savings to work for a down payment. Thus we could be looking at another longer-than-usual, white-hot real estate market.

How will a Biden administration affect the real estate market?

Projected policy around housing promises to be a boost to the real estate market in many cases.10 While some real estate investors bemoan proposed changes to 1031 Exchanges, the Biden plan for a $15,000 first-time homebuyer tax credit aims to increase affordability and bring eager new home buyers into the market. In addition, Biden-proposed policy pinpoints low inventory as a primary driver of unsustainable home values and is geared toward more affordability through investments in construction and refurbishment.

Overall, according to most indicators, the real estate news looks overwhelmingly positive throughout the rest of 2021 and possibly beyond. Pent-up demand and consumer-driven policies, along with a continued low-interest-rate environment and rising inventory, should help homeowners hold on to their increased equity without throwing the market out of balance. In addition, the increase in long-term work-from-home policies promises to give a boost to a wide variety of markets, both now and in the years to come.

STILL HAVE QUESTIONS? WE HAVE ANSWERS

While economic indicators and trends are national, real estate is local. We’re here to answer your questions and help you understand what’s happening in your neighborhood. Reach out to learn how these larger movements affect our local market and your home’s value.

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CarolineDinsmore.com  |  phone: 650.773.2226

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The Dinsmore Group is busier than ever:

Caroline Dinsmore sold $78M in 12 months!

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When we support women to shine, to grow exponentially, and to be truly empowered — everyone wins. Join the Dinsmore Group in celebrating Women’s History Month through these free virtual events.

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S.F. Public Library: Women of the Marin Headlands | 3/7 at 11 AM

In recognition of Women’s History Month, National Park Ranger Lara Volski will provide a look at different women who have played a role in the history, stewardship, and preservation of the sea swept bluffs and coastal prairies just north of the Golden Gate Bridge.

LIVE STREAMED HERE

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WOMXN at Work: Champions of Change 3/12 at 10 AM

We’ll hear lightning talks from five women from diverse backgrounds and lived experiences who will shed light on their personal and career journeys and the strides they made to get to where they are today.

REGISTER HERE

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Women’s History Month: Latina SHEroes
3/18 at 1 PM

In honor of Women’s History Month, Olivia Franco and Nicky Trasviña welcome you to an eye-opening experience where you will learn of the valuable contributions made by Latinas to the betterment of society through their insight and deeds.

REGISTER HERE

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While many areas of the economy have contracted, the housing market has stayed remarkably strong. But can the good news last?

When COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the shift. Record-low interest rates caused some lenders to call a halt to new underwriting, and homeowners debated whether or not to put their houses on the market. However, those first days of uncertainty ushered in a period of unprecedented demand in the U.S. real estate market, which ended the year with increasing average home prices (up 13.4% from the previous year) and shrinking days on market (13 fewer than in 2019).

Now, as the spring market approaches, you may be wondering whether the good times can continue to roll on. If you’re a homeowner, should you take advantage of this opportunity? If you’re a buyer, should you jump in and risk paying too much? Below we answer some of your most pressing questions.

How is today’s market different from the one that caused the 2008 meltdown?

At the beginning of the pandemic, fears of an economic recession and an ensuing mortgage meltdown were top of mind for homeowners all across the country. For many buyers and sellers, the two seemed to go hand in hand, just as they did in the 2008 economic crisis.

In reality, however, the conditions that led to 2008’s recession were very different from those that triggered the current downturn—and this time, the housing market is the source of much of the good news.2 This is in line with historical patterns, as housing prices traditionally hold steady in the face of recession, with homeowners staying put and investors putting their money into bricks and mortar to ride out uncertainty in the stock market. 

This time around, because of lessons learned in 2008, banks are better funded, homeowners are holding more accrued equity, and, crucially, much of the economic activity is focused on financial factors outside the housing market. As many industries quickly pivoted to work-from-home, early fears of widespread job loss-related foreclosures have failed to materialize. Federal stimulus payments and the Paycheck Protection Program also helped to offset some of the worst early effects of the shutdown.

Are we facing a real estate bubble?

A real estate bubble can occur when there is a rapid and unjustified increase in housing prices, often triggered by speculation from investors. Because the bubble is (in a sense) filled with “hot air,” it pops—and a swift drop in value occurs. This leads to reduced equity or, in some cases, negative equity conditions.

By contrast, the current rise in home prices is based on the predictable results of historically low interest rates and widespread low inventory. Basically, the principle of supply and demand is working just as it’s supposed to do. In addition, experts predict a strong seller’s market throughout 2021 along with increases in new construction. This should allow supply to gradually rise and fulfill demand, slowing the rate of inflation for home values and offering a gentle correction where needed.

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Effects of low interest rates

According to Freddie Mac, rates are projected to continue at their current low levels throughout 2021.4 This contributes to home affordability even in markets where homes might otherwise be considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.

Effects of low inventory

Continuing low inventory is another reason for higher-than-average home prices in many markets.5 This should gradually ease as an aggressive vaccination rollout and continuing buyer demand drive more homeowners to move forward with long-delayed sales plans and as new home construction increases to meet demand.

Aren’t some markets and sectors looking particularly weak?

One of the big stories of 2020 was a mass exodus from attached home communities and high-priced urban areas as both young professionals and families fled to the larger square footage and wide-open spaces of suburban and rural markets. This trend was reinforced by work-from-home policies that became permanent at some of the country’s biggest companies.

Speculation then turned to the death of cities and the end of the condo market. However, it appears that rumors of the demise of these two residential sectors have been greatly exaggerated. 

With the first vaccine rollouts, renters have begun returning to major urban centers, attracted by the sudden rise in available inventory and newly discounted rental rates.7 In addition, buyers who were previously laser-focused on a single-family home responded to tight inventory by taking a second look at condos.8 While nationwide condo prices continue to lag behind those of detached homes, they’ve still seen significant price increases and days on market reductions year over year.

In addition to these improvements, the 2020 migration has spread the economic wealth to distant suburban and rural enclaves that normally don’t benefit from increases in home values or an influx of new investment. As many of these new residents set up housekeeping in their rural retreats, they’ll revitalize the economies of their adopted communities for years to come.

How has COVID affected the “seasonal” real estate market?

Frequently, the real estate market is seen as a seasonal phenomenon. However, the widespread shutdowns in March 2020, coming right at the beginning of the market’s growth cycle in many areas, has led to a protracted, seemingly endless “hot spring market.”

While Fannie Mae’s chief economist Douglas Duncan predicts slower growth from 2020’s historic numbers, the outlook overall is positive as we embark on the 2021 spring selling cycle.9 Duncan anticipates an additional lift in the second half of 2021 as buyers return to business as usual and look to put some of their pandemic savings to work for a down payment. Thus we could be looking at another longer-than-usual, white-hot real estate market.

How will a Biden administration affect the real estate market?

Projected policy around housing promises to be a boost to the real estate market in many cases.10 While some real estate investors bemoan proposed changes to 1031 Exchanges, the Biden plan for a $15,000 first-time homebuyer tax credit aims to increase affordability and bring eager new home buyers into the market. In addition, Biden-proposed policy pinpoints low inventory as a primary driver of unsustainable home values and is geared toward more affordability through investments in construction and refurbishment.

Overall, according to most indicators, the real estate news looks overwhelmingly positive throughout the rest of 2021 and possibly beyond. Pent-up demand and consumer-driven policies, along with a continued low-interest-rate environment and rising inventory, should help homeowners hold on to their increased equity without throwing the market out of balance. In addition, the increase in long-term work-from-home policies promises to give a boost to a wide variety of markets, both now and in the years to come.  

STILL HAVE QUESTIONS? WE HAVE ANSWERS

While economic indicators and trends are national, real estate is local. We’re here to answer your questions and help you understand what’s happening in your neighborhood. Reach out to learn how these larger movements affect our local market and your home’s value.

CarolineDinsmore.com  |  phone: 650.773.2226 

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