International Buyers: Where’s Home?

By Terry Bremer Allison, J.D., REALTOR®, CHMS, CNE
Manager, Coldwell Banker Brokers of the Valley

Now and then, our listing agents work with sellers who are certain that the perfect buyer for their property is going to come from Hong Kong, or Russia or some other faraway land.  That notion prompted me to do some research.  I wondered if we know the odds for the perfect foreign buyer’s purchase among all residential sales.  Here’s some of what I learned:

Since 2009, the National Association of REALTORS® (NAR) has conducted an annual survey of residential purchases made by international buyers.  The most recent report covers the period between April 2016 and March 2017, when foreign buyers and recent immigrants purchased $153.0 billion of residential property, which is a 49 percent jump from 2016 ($102.6 billion) and surpasses 2015 results ($103.9 billion) as the new survey high.  Overall, 284,455 U.S. properties were bought by foreign buyers (up 32 percent from 2016), and purchases accounted for 10 percent of the dollar volume of existing-home sales (8 percent in 2016).  Survey results revealed that nearly half of all foreign sales occurred in three states:  Florida, California and Texas.

NAR Economist Interprets Survey Results

Lawrence Yun, NAR Chief Economist, explained, “The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of U.S. property over the past year.  While the strengthening of the U.S. dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work, and invest.”

Buyers from China exceeded all countries by dollar volume of sales at #31.7 billion, which was up from last year’s survey ($27.3 billion) and topped 2015 survey results ($28.6 billion) as the new survey high.  Chinese buyers also purchased the greatest number of housing units for the third consecutive year, 40,572, up from 29,195 in 2016.

Rounding out the top five countries whose people bought in the U.S.A. during the survey period, the sales dollar volume from Canadian buyers ($19.0 billion), the United Kingdom ($9.5 billion), Mexico ($9.3 billion) and India ($7.8 billion), all increased from their levels measured one year ago.

Where Foreigners Buy US Homes

The latest survey once again revealed that foreign buying activity is mostly confined to three states.  Twenty-two percent purchased in Florida, California had 12 percent, and Texas, also had 12 percent.  These three states maintained their positions as the top destinations for foreigners, followed by New Jersey and Arizona, each at 4 percent.  Florida was the most popular state with Canadian buyers, Chinese buyers mostly chose California, and Texas was the preferred state for buyers from Mexico.

The upswing in foreign investment came from both recent immigrants and non-resident foreign buyers.  Sales to foreigners residing in the U.S. reached $78.1 billion (up 32 percent from 2016) and non-resident foreign sales spiked to $74.9 billion (up 72 percent from 2016).

By way of background, the term international or foreign client refers to non-resident foreigners and resident foreigners.  Non-resident foreigners are non-U.S. citizens with permanent residences outside the United States.  These clients typically purchase property as an investment, for vacations or other visits of less than six months to the United States.  For purposes of the NAR study, resident foreigners are non-U.S. citizens who are recent immigrants, in the country less than two years at the time of the transaction or temporary visa holders residing for more than six months in the United States for professional, educational or other reasons.

“Although non-resident foreign purchase climbed over the past year, it appears much of the activity occurred during the second half of 2016,” said Yun.  “REALTORS® in some markets are reporting that the effect of tighter regulations on capital outflows in China and weaker currencies in Canada and the U.K. have somewhat cooled non-resident foreign buyer interest in early 2107.”

What’s in Store for the Future

Looking ahead, Yun believes that the gradually expanding U.S. and global economies should keep foreign buyer demand at a robust level.  However, it remains to be seen if both the shortage of homes for sale and economic and political headwinds end up curbing sales activity to foreigners.  “Stricter foreign government regulations and the current uncertainty on policy surrounding U.S. immigration and international trade policy could very well lead to a slowdown in foreign investment,” said Yun.

In the short run, local sellers are well advised to list with experienced REALTORS® who are affiliated with brokerages that are known for their global marketing reach.

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Ride-Sharing and Self-Driving Cars Will Reshape Housing

By Terry Bremer Allison, JD, REALTOR®, CHMS, CNE
Manager, Coldwell Banker Brokers of the Valley

Futurists have always fascinated me. Recently, an item in “The Housing Scene,” a weekly syndicated newspaper column written by Lew Sichelman, captured my attention and imagination.  “Eight big housing changes thanks to driverless cars” screamed the caption above the infographic that accompanied the article.

 

 

Sichelman was describing a report recently published by John Burns Real Estate Consulting Company that predicts in twenty years from now, when fully autonomous vehicles (AVs) become commonplace, the American housing sector will experience significant change.

According to their website, the Burns team of research analysts and consultants work together to deliver the most trusted source of US housing data and analyses.  Based on their study, they maintain that the proliferation of driverless cars will leave more money in consumers’ wallets, because automobiles will be transformed from consumer goods to an on-demand service.  Consumers will have extra cash available because they will not have monthly car payments, automobile insurance premiums, and other vehicle operating expenses.

Major Shifts in Real Estate

According to Burns Director of Research Rick Palacios, by the year 2037, because of AV’s, there will be major shifts in the real estate sector:

Prime, but outmoded real estate, such as parking lots, auto dealerships, and traditional gas stations will be replaced by small new home projects, creating additional supply in historically supply-constrained locations.  Such new supply of housing stock will have a chilling effect on the outlying residential markets, those beyond suburbia, but only temporarily.  Once the core in-fill premium sites are repurposed, the outlying residential communities will eventually reemerge.  In 2037, consumers will think differently about their long commutes because the AV’s will enable people to sleep, work or relax while the vehicle drives itself.

In the future, urban employment will be popular again because the repurposed real estate will allow workers to live closer to city centers.  Density will rise because streets won’t need to be as wide as they are today.  There won’t be a need for large driveways or big, multiple car garages.  People will be buying homes in which the entire space is genuinely livable.  With accessory dwelling units already becoming popular and accepted by some governmental authorities today, there is another possibility for creation of additional residential opportunities by conversion of the garages into housing, once they no longer are needed to store personal cars.

Construction Costs Likely to Decline

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The Burns analysts opine that twenty years in the future, construction costs will decline because the developers’ costs will shrink for transportation of building products and materials from plants and warehouses to construction sites.  With transportation provided by AV’s, moving materials and supplies will become a ‘round the clock operation, so it is possible that construction time required for projects should also decline.

Seniors Aging at Home, Not in Facilities

According to the Burns report, twenty years from now, senior citizens will remain in their own homes longer, aging in place, because AV’s will enable them to retain some mobility and independence even if they no longer are able or licensed to drive.  It is reasonable to envision that the remodeling market will flourish as aging home owners make accessibility adaptations so that their homes become more livable for themselves.  The demand for assisted living facilities will decrease accordingly; if services are needed to help seniors with the activities of daily living, care givers will come to them at home, via AV’s, of course.

Burns chief researcher Palacios emphasizes that their observations and predictions are “based on what we know today.”  He adds, “Everything is subject to change, depending on government policies, which are difficult to predict.  All in all, we expect the advent of autonomous vehicles to benefit the overall housing market and greater economy.”

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When the House is Going to the Dogs, or Cats, or Birds, or Snakes

By Terry Bremer Allison, JD, REALTOR®, CHMS, CNE

Manager, Coldwell Banker Brokers of the Valley

With the prevalence of pets and animals in millions of homes across the country, it is no surprise that the Research Department of the National Association of REALTORS® (NAR) recently published a report entitled “Animal House: Remodeling Impact.”

The report aims to inform buyers, sellers, and REALTORS® about the following: search considerations for home buyers and renters who own animals, home remodeling projects that animal owners undertook and their level of satisfaction upon completion of various projects, and selling advice from REALTORS® for animal owners.

By way of background, according to Bureau of Labor Statistics, in 2016, 61 percent of U.S. households owned an animal or planned to own an animal in the future.  Eighty-one percent of U.S. households report that animal-related considerations will play a role in decisions about their next living situation.  For animal owners, in the NAR study, 99 percent felt that their animal is part of their family.  Among respondents in the NAR research, only four percent owned a companion animal, and just three percent owned a service animal.   (By way of definition, per the Americans with Disabilities Act (ADA), companion animals provide comfort just by being with a person and service animals are individually trained to do work or perform tasks for people who have disabilities.)

We Love Our Pets, Whether Large or Small

Many of the study participants had more than one animal in their home.  Dogs were owned by 83 percent of the consumers surveyed, 43 percent had cats, 9 percent owned a bird, reptile, amphibian, arthropod, small mammal or miniature horse, 8 percent had fish, and 5 percent owned a farm animal that the consumer considered to be a pet.  Clearly, the 38 percent of American households that had no pets were in the minority.

When searching for a home, 95 percent of consumers who participated in the study stated that it is important that a housing community allows animals.  Fifty-four percent of consumers wanted to live near a walking path, 49 percent wanted proximity to an animal products store, and 37 percent sought to live close to animal grooming services.  Thirty-two percent favored easy access to a dog park.

Whether renting or buying a home, 53 percent of consumers made decisions that were influenced by the community’s animal policy, such as homeowner association rules or landlord’s policy regarding pets.  Of the REALTORS® surveyed, 78 percent reported that a community’s animal policy influenced buyers’ decisions.

 Not So Easy to Find Pet-Friendly Housing

According to the REALTORS®, 61 percent of buyers tell the professionals that it is difficult or very difficult to find a rental property or home owners association that accommodates animals.  Of those consumers who have companion or service animals, 50 percent reported that it was very difficult to rent or purchase a home.  The REALTORS® stated that 31 percent of animal owners often or very often refuse to make an offer on a home because the property is not ideal for their animal.

Based on their experience representing buyers with animals, REALTORS® stated that 91 percent of their clients wanted a fenced yard, 66 percent preferred laminate flooring, 19 percent wanted an animal washing station, and 11 percent desired a dog door.  A kitty litter closet was important to 7 percent of animal owner buyers.

Based on the buyers’ preferences described above, it is no surprise that more than half of the consumer respondents in the NAR study completed home renovations to accommodate their animals.  The most popular projects included building a fenced yard, adding a dog door and installing laminate flooring.  According to the study, homeowners spent three times as much money on their animals as did renters.

Reported results of renovation satisfaction were measured.  Of the consumer respondents who completed a renovation, 44 percent hired a professional to do their project and 56 percent did the renovation themselves.  Ninety-four percent of the consumers were satisfied with their projects.  Fifty-eight percent reported having a greater desire to be at home and 62 percent stated that they enjoy spending more time at home since completing their renovations.

Pets and Homes for Sale:  A Challenge

According to 67 percent of REALTORS®, owning an animal has a moderate to major effect on selling a house.  These REALTORS® said they strongly advise sellers to replace anything that has been damaged by the animal(s).  The agents persuade sellers to thoroughly clean the home to eliminate any animal scent or odor, and direct owners to take pets out of the home during showings.  Forty-one percent of the agents recommend professional deep cleaning and removal of pet “objects,” such as food dishes, litter boxes, beds or crates as part of their pre-marketing preparations.  A real estate professional’s tact and diplomacy skills are put to the test whenever a member of the seller’s family, who just happens to be a pet, becomes a barrier to selling the home for the best price in the least amount of time.

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Girl Power: More Single Women Take the Homeownership Plunge

Terry Bremer Allison, JD, REALTOR®, CHMS, CNE
Manager, Coldwell Banker Brokers of the Valley

While flipping thru a recent edition of one of our industry publications, an article about home buying trends caught my eye.  It seems there’s a rapidly growing group among American home purchasers:  single women.

Statistics compiled by the National Association of REALTORS® (N.A.R.) in 2016, married couples made up the largest share of homebuyers, sixty-six percent.  Single women comprised seventeen percent of purchasers, more than twice the number, seven percent, of single men who bought homes.

Three Reasons Single Women Buy

Real estate is a proven path for building wealth.  Based on a Gallup study done in 2016, thirty-five percent of Americans cite real estate as the best long term investment, up from just under twenty percent who expressed that opinion in 2011.

The latest figures available from the Pew Research Center shed light on another reason women are buying homes on their own.  Marriage rates are declining and couples are getting married later in life.  Pew data reflect that nearly half of today’s 25 to 34-year-olds have never married.  By comparison, in 1960, only twelve percent of that age group had yet to tie the knot.

Simultaneously, the median age for first marriages has increased to 27 years of age for women and age 29 for men.  In 1960, the median ages reported for first marriages were 20 for women and 23 for men.  The declining rate of marriages yields a greater number of singer female heads of household and more single mothers, with a result that women no longer feel the need to wait to own their own homes.  They are motivated by their personal independence, their desire to establish stable roots, and their wish to have a place of their own.

Ongoing controversy about equal pay aside, women today generally hold higher paying jobs and it is not uncommon that many are the primary breadwinners in their households.  According to the Pew Research Center in 2016, forty percent of all households with children younger than 18 years of age had mothers who were the family’s sole or primary source of income.  The Pew statistics from 1960 for the same group was a mere eleven percent.

The California Affordability Factor

Most home buyers in California, whether female or male, single or married, face the affordability challenge.  Leslie Appleton-Young, California Association of REALTORS® (C.A.R.) Vice President and Chief Economist notes, “It’s difficult for anyone but the most highly paid professional to make it on one income alone, so affordability affects both men and women in California’s housing market.  The trade-offs many home buyers make, such as accepting longer commute times in exchange for buying an affordable house that accommodates their family are not specific to women.

Upon reflection, it was only forty-three years ago, in 1974, when women in America were allowed to apply for credit, including mortgages, in their own names, regardless of their income.  The women who comprised seventeen percent of American home buyers in 2016 have come a long way indeed!

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Get Dialed In on Home Buyer and Seller Generational Trends

By Terry Bremer Allison, JD, REALTOR®, CNE
Manager, Coldwell Banker Brokers of the Valley

Ah! Spring! Sunshine! Buds on the vines, blossoms in the garden, and time for annual publication of the National Association of REALTORS® (NAR) Home Buyer and Seller Generational Trends report.
Every year NAR surveys a random sample of American consumers who have participated in home sales transactions. The 2017 report just released is based data gleaned from surveys of buyers who purchased homes between July 2015 and June 2016, and their respective income data from 2015. More than 93,000 home buyers received the study’s 132-question instrument and the adjusted response rate was 5.9 percent.
By way of definition, the generational cohorts for the survey were defined as follows: Younger Millennials (ages 26 and under); Older Millennials (ages 27 to 36); Generation X (ages 37 to 51); Younger Boomers (ages 52 to 61); Older Boomers (ages 62 to 70); and, the Silent Generation (ages 71 and above).
Gen X-er’s, Not Just Millennials, Face Home Buying Challenges
We frequently read or hear about the challenges facing many Millennials seeking to climb on the property ladder: student loan debt, poor credit history, lack of down payment funds, and unemployment or under-employment with insufficient income to afford rent, let alone a house payment. The newest NAR survey sheds light on Generation X consumers who delayed buying because they, like Millennials, had debt, but they also had little or no equity in the homes they owned. Gen X homeowners were the most likely among the generations surveyed to have previously sold a distressed property. They reported that they had significant student load debt, an average of $30,000, and they stated that they would have liked to sell their home sooner but they couldn’t because the house was worth less than their mortgage balance.
NAR Chief Economist Lawrence Yun summarized the situation faced by numerous Gen X households: they bought their first home, started a family, and entered the middle part of their careers only to be shaken by job losses, falling home values, and overall economic uncertainty during and after the Great Recession. Yun went on to say, “Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining. Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number to build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year and are definitely needed to ease the inventory shortages in much of the country.”
Sellers Who Bought 10 Years Ago Could Be Pleasantly Surprised
The Sonoma Valley and Napa Valley are two areas facing extreme inventory shortages at many popular price points. Based on the NAR study data, perhaps we need to reach out to the sellers who bought at the height of the market and share with them the good news that their houses today likely are worth more than the prices they paid, provided, of course, that they didn’t use their property as an ATM machine in the interim, pulling out equity via refinancing or home equity lines of credit. We need to do something to break the log jam of no inventory of previously owned homes to sell and no place local for the Gen X sellers, or any other sellers, to purchase as replacement property.
As expected, the NAR survey results showed that Millennials were the largest group of recent buyers, 34 percent, for the fourth consecutive year, but their share was down from last year when it registered at 35 percent. Gen X buyers in the survey tallied 28 percent, Baby Boomers comprised 30 percent of buyers, and the Silent Generation made up 8 percent.
Multi-generational Homes Fit Needs of Boomers with Boomerang Kids
Another familiar theme seen within survey results this year was that of Baby Boomer parents, especially middle-aged Younger Boomers, purchasing “multi-generational” homes because their young adult children had either moved back home or had never moved out. With residential rents at all-time high levels, student loan debt repayment requirements, and low entry-level salaries, young people must share housing with multiple roommates or live at home with the folks.
Survey results showed that about two-thirds of the Millennial respondents were married, and nearly half of them had at least one child. The more children in Millennial households, the more space the families require, and to obtain affordable additional space, the Millennials who purchased as a couple in an urban area, now are looking to buy replacement homes outside big cities. The survey showed that only 15 percent of Millennial buyers bought in an urban area, which is down from 17 percent last year and 21 percent two years ago.
Anecdotally, our agents get many calls from Millennials who want to move back home to the wine country valleys where they grew up, because they want to raise their own children in Sonoma or Napa, with a familiar quality of life and lifestyle. What and where can they purchase if there’s no housing stock inventory expansion? It’s time for the equity rich home owners, be they Gen X or Boomers or members of the Silent Generation, to step up and get moving on the property ladder to replacement homes that fit their current needs, making room for the up and comers.
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How’s Your Repair, Replace or Remodel ROI?

By Terry Bremer Allison, JD, REALTOR®, CNE
Manager, Coldwell Banker Brokers of the Valley

In our profession, we admit it.  We like to look at “house porn,” browsing the weekly RE tab in the Sonoma Index Tribune andthe RE section of the Sunday edition of the San Francisco Chronicle.  Truth be told, we also enjoy flipping through the pages of a Restoration Hardware catalog.  If you could see us on vacation in other countries or even on a day trip to ski near Lake Tahoe, we pick up and pour over the real estate publications in other markets.  It’s just what we do.

And there’s one more:  an annual ritual for many real estate professionals begins with their eager anticipation of the January publication of Remodeling magazine’s annual Cost vs. Valuereport.

Last week, we drilled down into the 2017 Cost vs. Value report, perusing the national and regional costs and ROI (return on investment) for 29 popular home improvement projects.  If you’re curious, go to www.costvsvalue.com to access the full report.  Smart listing agents use this data to help sellers make decisions about getting their properties ready for market.

Learn Which Projects Pay Off

We know that spending money on a listing to attract buyers and achieve top dollar from the sales transaction requires some careful research and dialed-in knowledge of the current local market.  As listing agents, we strive to make sure that our sellers do not overspend on pre-sale improvements.

By way of background, the Remodeling 2017 Cost vs. Value report is based on input from licensed real estate agents across America.  According to Remodeling editor-in-chief Craig Webb, “I think that this year’s Cost vs. Value report actually reflects the general optimism that both remodelers and REALTORS® have about the state of the housing economy. . . prospects are good for everyone involved in the process the consumer, the remodeler and the REALTOR®.”

Generally, across America, some less costly and seemingly subtle changes are producing the biggest bang for the seller’s buck.  The national leader with 107 percent return was attic insulation, followed by entry door replacement at 90.7 percentacross all states.  Remodeling compared these minor improvements to painting with “greige,” the color blend of gray and beige that is a subtle, but extremely popular, color.

In the Pacific region, attic insulation produced a nearly 123 percent ROI and steel entry door replacement yielded a 101.3 percent return, followed by replacement with a fiberglass entry door at 96.4 percent.  Closer to home, in the Santa Rosa, CA market, the leading mid-range curb appeal improvement was installation of manufactured stone veneer, producing a 125.7 percent ROI.  Top of the chart upscale improvement projects in Santa Rosa were a master suite addition that had ROI of 118 percent and installation of a grand entrance, including a fiberglass door, which produced 106.1 percent ROI.

Curb Appeal Enhancements Get Top Rewards

Survey results indicate that projects that enhanced curb appeal produced greater returns than interior home improvements.  For instance, upscale garage door replacements yielded 85 percent ROI and mid-range garage doors recaptured nearly 77 percent of their cost.  In the Santa Rosa market, sellers who replaced a mid-range garage door recaptured 85 percent of their investment and those who installed an upscale garage door recouped 98.2 percent.

Overall, the real estate professionals whose opinions were surveyed by Remodeling ranked highest those projects that involved total replacement, for example, windows and doors.  What sellers-to-be should note:  a worn, broken or seriously outdated door needs to be replaced, even if the return is not dollar for dollar.  The same applies for drafty, old single-pane windows.  Not only do doors and windows boost curb appeal, they create the impression of a well-kept home, and they can conserve energy, which is important to cost-conscious buyers.

Some Projects Don’t Add the Value You’d Expect

At the opposite end of the cost versus value chart for Santa Rosa, it is interesting to note that a mid-range project to replace siding yields only 55.5 percent ROI, a major kitchen remodel has 63.4 percent return on investment, and addition of a wooden deck produces ROI of 63.9 percent.  By way of contrast, the ROI for an upscale deck addition using composite material is 65 percent.

When it comes to bathrooms, in the Santa Rosa market, the ROI for a mid-range addition is 76.5 percent and a mid-range remodel is close at 75.1 percent ROI.  With regard to upscale bathroom improvements in Santa Rosa, the cost recouped for a bathroom remodel was 99.9 percent and a bathroom edition yielded 80.2% ROI.  It’s interesting to note, that in the Santa Rosa market, the upscale universal design bathroom made the list of top improvements, possibly as a result of baby boomers who are aging and don’t want to move.  Instead, they are revising their bathrooms with features including a walk-in shower, support bars and grab handles and even wheel-chair accessible sinks.   While providing safety and accommodation of the older homeowner’s changing needs, the ROI for the average universal design bathroom only tips the scale at 44.7 percent of cost.

There are many factors to consider when prepping a property for sale.  All potential home sellers need some expert guidance to make strategic and cost-effective choices to replace, repair orremodel.  A trusted REALTOR® is the best source of local market information and resources.

 

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Duckhorn Vineyards

A wonderful up Valley option for wine tasting. Duckhorn is a well known winery with high quality wines, great staff and a gorgeous view of the Valley. This winery is all around a fantastic experience.

For more information on Duckhorn contact- https://www.duckhorn.com/

Oxbow Public Market

The Oxbow has become a staple in The Napa Valley. It is a wonderful indoor type market that has everything you are looking for. There are Lots of little shops, and Restaurants. This is a great place to grab a beer and get dessert with the family. There are options for everyone at the Oxbow.

For information about The Oxbow contact- http://oxbowpublicmarket.com/

Ristorante Allegria

If you are looking for a fine dining experience in the middle of downtown Napa, we would recommend Allegria.  you can have a candle lit dinner and listen to music while enjoying some fantastic cuisine.

For more information contact- http://www.ristoranteallegria.com/

Napa Tourist Info Center

If this is your first time to The Napa Valley we recommend you check out our Visitors Center. There is a plethora of information about our lovely valley. There is information about all upcoming events and festivities. There are maps and fliers available and the staff there is extremely welcoming and helpful.

For more information contact- http://www.napatouristinfo.com/