8 Real Estate Investing Mistakes to Avoid

With the stock market volatility real estate investing is becoming more popular. Here are 8 mistakes to avoid in order to make your real estate portfolio successful.

Buying Without Researching: Rushing into real estate without understanding what you’re getting can lead to bad results, says Kyle Whipple, a financial advisor and registered investment at advisor at C. Curtis Financial Group in Plymouth, Michigan. “Just because real estate is doing well doesn’t mean it will turn out to be a good investment for you.” Stock investors are often told to “buy low, sell high” and that same rule can be put to use for property investments. “You want to make sure that you’re getting a good deal and not purchasing an overpriced piece of real estate which will lower your long-term returns,” Whipple says.

Developing a Tunnel Vision: Real estate adds a new dimension to a portfolio, in terms of balancing against the risk and volatility associated with stocks. Kaufman says a common mistake is being too narrow about property focus. “Many individuals fail to diversify their real estate holdings,” he says, investing only in one local geographic area or property type. “This all-eggs-in-one-basket approach drastically increases downside risk, but investors do this because they are more comfortable investing in markets they’re familiar with.” Casting the net wider to incorporate crowdfunded investments or real estate investment trusts, known as REITs, can offer exposure to a broader group of properties and increase diversification.

Going It Alone: Owning a commercial or residential rental property can be both time- and capital-intensive. Trying to handle it all solo can require a level of focus and commitment that may not be realistic for every investor. A simple way to avoid that mistake is building a team from day one, says Kevin Ortner, president and CEO of Renters Warehouse in Minneapolis. That may involve investing with a partner or working with a broader group of individuals that includes an experienced real estate agent, an attorney who’s well-versed in property law, professional contractors and a property management company. Having support can make investing in real estate a smoother experience, with less room for error.

Relying on Bad Advice: When seeking out help in making decisions regarding property investments it’s important to go to the right sources. “Making an investment in real estate, especially for first-time investors, can be daunting and nerve-wracking,” says Rowena Dasgupta, an agent at Warburg Realty in New York. “Often, people ask friends and family for their opinion more for reassurance than for legitimate guidance.” What they should be doing instead, Dasgupta says, is seeking counsel from real estate professionals or an investor with a lengthy track record of buying and selling properties. These individuals have the knowledge and experience to provide more reliable advice.

Assuming It’s Easy: Just like stocks, mutual funds, bonds or other investments, real estate requires a certain amount of know-how to navigate. Terrell Gates, founder and CEO of Virtus Real Estate Capital, says both large and small real estate investors can make the mistake of thinking that investing in property is easier than it is. This can be exacerbated in bull markets when real estate is going strong because people tend to forget about previous downturns. “Unfortunately, to be consistently successful in real estate over the long haul requires more skill than luck,” Gates says.

Chasing Bargains: Ortner says another common pitfall among real estate investors is only looking for a deal when buying a property. “If you’re going to make long-term real estate investments, you don’t need to buy at a major discount,” Ortner says. “You just need to do deals that make sense, because, over time, you’re going to be building equity.” He says many investors limit the properties they can buy because they’re hoping to land a major discount with value, which isn’t a realistic target in the current market environment. By maintaining a long-term outlook, investors can avoid the bargain hunter mentality and focus instead on growing their property portfolio.

Not Having an Exit Strategy: Real estate can be a good buy-and-hold option but failing to develop an exit strategy can be damaging. Whipple has seen this scenario play out firsthand, with investors selling a highly appreciated piece of property without a plan in place for what to do with the funds. “They feel they are done with the real estate game and want out,” he says. “Unfortunately, they end up getting hit with a lot of taxes.” Having an end-play for real estate investments from day one can help avoid costly situations when it’s time to sell.

Overlooking the Bigger Picture: The worst mistake with real estate investing may simply be not considering how to utilize it within a broader portfolio. “Many investors make mistakes when they don’t understand how real estate fits into their overall strategy that includes diversification, long-term appreciation, liquidity needs and cash flow,” says Brent Weiss, co-founder and chief evangelist of Facet Wealth. Having a financial plan that incorporates real estate begins with understanding investment goals, risk tolerance and time horizon. These are things a financial advisor can help with. “Once investors understand what strategy will support their plan, they can determine the right mix of asset classes to create success,” Weiss says.

Article from USNews

U.S. Inflation Rate, 1969 to 2019

With the 50th anniversary of the Moon Landing I was curious about how things have changed monetarily since 1969. I located some interesting information that I wanted to share.

According to the Bureau of Labor Statistics consumer price index, today's prices in 2019 are 597.94% higher than average prices throughout 1969. The dollar experienced an average inflation rate of 3.96% per year during this period, meaning the real value of a dollar decreased.

In other words, $100 in 1969 is equivalent in purchasing power to about $697.94 in 2019, a difference of $597.94 over 50 years.

The 1969 inflation rate was 5.46%. The current inflation rate (2018 to 2019) is now 1.65%1. If this number holds, $100 today will be equivalent in buying power to $101.65 next year. The current inflation rate page gives more detail on the latest official inflation rates.

USD Inflation since 1913    Annual Rate, U.S. Bureau of Labor Statistics CPI

USD Inflation since 1913

Annual Rate, U.S. Bureau of Labor Statistics CPI

This chart shows calculation of buying power equivalence, often referred to as "the value of a dollar" over time for $100 in 1969 (price index tracking began in 1635).

This chart shows calculation of buying power equivalence, often referred to as "the value of a dollar" over time for $100 in 1969 (price index tracking began in 1635).

Inflation by City

Inflation can vary widely by city, even within the United States. Here's how some cities fared in 1969 to 2019 (figures shown are purchasing power equivalents of $100):

San Francisco, California experienced the highest rate of inflation during the 50 years between 1969 and 2019 (4.30%).

Detroit, Michigan experienced the lowest rate of inflation during the 50 years between 1969 and 2019 (3.74%).

Inflation by Country

Inflation can also vary widely by country. For comparison, in the UK £100.00 in 1969 would be equivalent to £1,632.35 in 2019, an absolute change of £1,532.35 and a cumulative change of 1,532.35%.

In Canada, CA$100.00 in 1969 would be equivalent to CA$663.68 in 2019, an absolute change of CA$563.68 and a cumulative change of 563.68%.

Compare these numbers to the US's overall absolute change of $597.94 and total percent change of 597.94%.

Inflation by Spending Category

CPI is the weighted combination of many categories of spending that are tracked by the government. This chart shows the average rate of inflation for select CPI categories between 1969 and 2019.

Comparison to S&P 500 Index

The average inflation rate of 3.96% has a compounding effect between 1969 and 2019. As noted above, this yearly inflation rate compounds to produce an overall price difference of 597.94% over 50 years.

To help put this inflation into perspective, if we had invested $100 in the S&P 500 index in 1969, our investment would be nominally worth approximately $12,498.44 in 2019. This is a return on investment of 12,398.44%, with an absolute return of $12,398.44.

These numbers are not inflation adjusted, so they are considered nominal. In order to evaluate the real return on our investment, we must calculate the return with inflation taken into account.

The compounding effect of inflation would account for 85.67% of returns ($10,622.00) during this period. This means the inflation-adjusted real return of our $100 investment is $1,776.44.

Investment in S&P 500 Index, 1969-2019Original AmountFinal AmountChangeNominal$100$12,498.4412,398.44%Real
Inflation Adjusted$100$1,776.441,776.44%

News headlines from 1969

Politics and news often influence economic performance. Here's what was happening at the time:

  • Golda Meir becomes first female Prime Minister of Israel.

  • Colonel Muammar Gaddafi deposes King Idris during the Libyan revolution.

  • Millions protest against the war on Vietnam Moratorium Day.

Data Source & Citation

Raw data for these calculations comes from the Bureau of Labor Statistics' Consumer Price Index (CPI), established in 1913. Inflation data from 1665 to 1912 is sourced from a historical study conducted by political science professor Robert Sahr at Oregon State University.

You may use the following MLA citation for this page: “1969 dollars in 2019 | Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 20 Jul. 2019, https://www.officialdata.org/us/inflation/1969.

Special thanks to QuickChart for providing downloadable chart images.

in2013dollars.com is a reference website maintained by the Official Data Foundation.

» Read more about inflation and investment.

The Cost of Waiting: Interest Rates Edition

Some Highlights:

  • Interest rates are projected to increase steadily heading into 2020.

  • The higher your interest rate, the more money you will end up paying for your home and the higher your monthly payment will be.

  • Rates are still low right now – don’t wait until they hit 5% to start searching for your dream home!

Interest Rates.jpg

Our Town St. Helena nears construction start on affordable housing project

DAVID STONEBERG editor@sthelenastar.com

Eight Upvalley families started a journey of home construction Saturday that will end in 18-20 months when all of the townhomes on Brenkle Court in St. Helena are finished.

The Brenkle Court subdivision at 684 McCorkle Ave. is sponsored by Our Town St. Helena, a local nonprofit affordable housing advocacy group.

The families spent Saturday clearing weeds, cutting down shrubs and getting the land ready for a concrete subcontractor to form and pour the two slabs needed for the single-family common-wall townhomes. Each of the homes will be two-story with three bedrooms and 1 1/2 baths. On Monday, there was a large pile of brush behind the chain-link fence, on which hung several colorful and whimsical paintings.

The hard work begins in six weeks, as each family has pledged to build 65 percent of all of the homes, spending 35 hours a week on construction. That’s in addition to their regular jobs, which means working nights and weekends for the next 18 to 20 months.

Site supervisor Adam DeLeon will be on the job five days a week, directing the families. Retired contractor Larry Vermeulen is OTSH construction supervisor. “We thought we were going to start in December or January,” Vermeulen said, noting that the site development work, including curbs, gutters, street, grading and underground utilities were all done in October or November.

Longer than expected

Vermeulen said it took longer than expected to work with the USDA Rural Development, which is providing a technical grant to OTSH and low-income mortgages to each of the families. Three years ago, OTSH started out with 43 families who were interested in building and owning one of the townhomes. That list got narrowed down to 12 or 15 families who could qualify.

OTSH board member John Sales said qualifications are difficult, since families have to make the payments, estimated at $1,800 a month, although they can’t make too much or they won’t qualify for the USDA mortgages, which are 35 or 38 years. “We ended up with eight families and when we got to the point of signing purchase agreements, two of the families dropped out, so we had to go back, pull some more applications and go through the qualification process again,” Sales said.

Six of the families are qualified as low income, which is $66,375 for a family of four and two are very low income, which is 50%, or $44,250, of the HUD median income. “They can’t make more than that, but they have to make enough to manage these mortgage payments,” Vermeulen said.

The units are protected to be affordable housing for 55 years. “It’s affordable housing in this county by any definition,” he added, since a median home sales price last year was $1 million and the lowest sold was $600,000 and that was a condominium. The value of each of the eight townhomes will be $412,000 when finished.

It has taken a tremendous amount of work to get to this point. After the City of St. Helena bought the property and sold it to OTSH for $1, with the express purpose of building affordable housing, OTSH hired consultant Howard Siegel, who had been with Napa County for a number of years. The Gasser Foundation help pay for Siegel.

“We have to give Howard a lot of credit, because he walked us through some of the deepest ditches we could have walked through, subdividing the property, coming up with subdivision maps and satisfying the state,” Sales said. The process of going back and forth with the state for eight or nine months was “horrible,” Sales said.

The families

An additional challenge was that OTSH had to get all the families’ mortgages done at the same time, since the eight units are common-wall townhouses, that is single-family homes with common walls and a courtyard.

The families are cellar workers, vineyard workers, and hotel and restaurant employees. “They are the service people who keep our little town going, that keep our wine industry going,” Vermeulen said. “Some of them have been at the wineries for many years, they are the assistant cellar masters, for example, but they don’t earn enough money to buy a home in St. Helena.”

Erica Roetman Sklar, who serves on OTSH’s advisory council, added, “I think this is an important point, these families will have the benefit of home ownership in St. Helena,” and when the homes are finished, they will be moving out of their subsidized rental housing, whether it’s at Hunt’s Grove or Stonebridge. “That opens up a new opportunity for another family,” she said.

Building a team

In the past few months, Vermeulen worked with the families, training them on basic construction: how to measure, mark, cut and assemble, how to read a tape measure, for example. Also there have been videos, lectures and tool safety talks, especially with power tools. “To practice our skills we built sawhorses in the parking lot at Grace Episcopal Church in December,” Vermeulen said.

“We got all the families together, so I’ve got 20 odd sawhorses waiting to get over to the job site. It’s been about team building, too, it isn’t just about the skills, it’s about working together,” he added.

Families will have to put in 35 hours a week, which is difficult for a family of two on just the weekends, “so we’ve impressed on them that they need to twist the arms of their relatives and friends,” Vermeulen said. “They can bring volunteers that count against that 35 hours. We’ll keep track of it, to keep it equitable.”

After the group starts building and learns to work together, Vermeulen said he will be looking for volunteers from the community at large. “We haven’t pushed that very hard, because we’re not ready for it. I want to see how the families work first, I need to get them working as a unit, then we’ll add another 50 people. If we start day one with 100 people, it will be chaos.”

The construction is expected to take between 18 and 20 months. OTSH will hire subcontractors for concrete, electrical, plumbing, roofing and drywall, although that could change. “We may end up doing more labor to meet our budget,” he said, since the budget was established before the wildfires of 2018 hit, driving up the cost of materials.

In the end, they may need to do the roofing and the drywall. “It’s a lot more efficient to have a professional crew come in and bust out the drywall. We’ll know in a year, whether we have to do it and we’ll get a better picture in a few months,” Vermeulen said.

Additional financial support was received from the City of St. Helena, who donated the land and waived development fees and the county of Napa. Rural Community Assistance Corporation is providing technical support and financing.

What a Difference a Year Makes for Sellers

Over the last few years, many sellers have been hesitant to put their houses on the market because they feared not being able to find another home to buy.

We’ve reported on inventory shortages in the past, and it’s been a constant concern for potential buyers throughout recent years. New research shows the inventory concern is starting to decrease among potential buyers.

According to First American, the two leading obstacles to homeownership that buyers feel today are Affordability and Limited Inventory. This means the feeling that homes are less affordable has risen, while the fear of limited inventory has decreased, delivering a wealth of good news for sellers.

2 obstacles to ownership.jpg

At the same time, over the past 12 months, we’ve seen a steady month-over-month increase in the number of homes coming to market for purchase. In the past, the lack of listings and available inventory slowed down the real estate market. This recent increase in current inventory has many buyers and sellers now thinking it is time to make their move – and rightfully so! For the last two months, we’ve seen over 4 months of inventory become available for sale, a promising number that’s been slowly increasing this year and creating more buying opportunities.

Inventory For Sale.jpg

To further support the idea of an improving real estate market, Sam Khater, the Chief Economist at Freddie Mac says,

“…In the near-term, we expect the housing market to continue to improve from both a sales and price perspective.” 

Many experts, like Sam, believe the second half of 2019 will drive a stronger market than we saw at the beginning of the year. This is great news for homeowners who have put off getting their houses on the market and are now ready to make a move.

Bottom Line

What a difference we’ve seen over the course of this year! If you’re thinking of selling, now is the time as inventory is on the rise.

Should I Refinance My Home?

With the recent lower interest rates, many homeowners are wondering if they should refinance.

To decide if refinancing is the best option for your family, start by asking yourself these questions:

Why do you want to refinance?

There are many reasons to refinance, but here are three of the most common ones:

  1. Lower your interest rate and payment – This is the most popular reason. If you have a 5% interest rate or higher, it might be worth seeing if you can take advantage of the current lower interest rates, hovering below 4%, to reduce your monthly payment and overall cost of the loan.

  2. Shorten the term of your loan – If you have a 30-year loan, it may be advantageous to change it to a 15 or 20-year loan to pay off your mortgage sooner.

  3. Cash-out refinance – With home prices increasing, you might have enough equity to cash out and invest in something else, like your children’s education, a vacation home, or a new business.

Once you know why you might want to refinance, ask yourself the next question:

How much is it going to cost?

There are fees and closing costs involved in refinancing, and Lenders Network explains:

“If you were to refinance that loan into a new loan, total closing costs will run between 2%-4% of the loan amount.”

They also explain that there are options for no-cost refinance loans, but be on the lookout:

“A no-cost refinance loan is when the lender pays the closing costs for the borrower. However, you should be aware that the lender makes up this money from other aspects of the mortgage. Usually pay charging a slightly higher interest rate so they can make the money back.”

If you’re comfortable with the costs of refinancing, then ask yourself one more question:

Is it worth it?

To answer this one, we’ll use an example. Let’s assume you have a $200,000 home loan. A 4% refinance cost will be $10,000. If you want to lower your interest rate from 6% to 4%,  then refinancing is going to save you $244 per month. To break even ($10,000/$244), you need to continue owning your home for over 40 months.

Now that you know how the math shakes out, think about how much longer you’d like to own your current home. If you plan to stay for more than 3 years, then maybe it is advantageous for you to refinance.

If, however, your current home does not fulfill your present needs, you might want to consider using your potential refinance costs for a down payment on a new move-up home. You will still get a lower interest rate than the one you have on your current house, and with the equity you’ve already built, you can finally purchase the home of your dreams.

Bottom Line

There are many opportunities for growth in the current real estate market. To find out what’s right for your family, contact me and I’d be happy to help.

Coming Soon! Beautiful Rental Off Silverado Trail

Beautiful covered, private deck with vineyard views on the east side of the valley. Ensuite 2 bedroom, 2 bath, unfurnished custom built home on a quiet, private estate. Walkable to CIA and a 5 minute drive to downtown St. Helena. Located in the desirable St. Helena School district. One story with hardwood floors, open kitchen concept with built-in gas range and oven, refrigerator, dishwasher, garbage disposal, large great room w/gas wood burning fireplace. Handicap accessible bathroom w/shower in Master suite, new carpet, central air A/C and heat, freshly painted inside and out. Drive right into attached garage w/electric garage door and walk right into your mud room with full washer/dryer. Owner/Manager on-site.

Available August 1, 2019. One Year lease: $4,500.00/month [not including gas, power and cable/internet], Includes: landscaping, water and garbage.

Click here for more information.

Compass Concierge! Easily increase your property's market value with home improvement services!

Exclusive to Compass, our Concierge program will prepare your home for the market. From deep-cleaning to cosmetic improvements, we'll work with you to assess every opportunity to elevate your home's value.

Compass will cover all upfront costs, collecting payment for the services rendered at the time of the property's closing. By investing in your home's potential, we aim to provide a swifter, more profitable sale.

Services include:
Staging

Deep-cleaning

Cosmetic renovations

Decluttering

Landscaping

Painting

Pest control

Custom closets

And More

Curious to learn more? 

Contact me to discuss how Compass Concierge could help you.

Festival Napa Valley Events This Week

Festival Napa Valley is committed to enriching the vitality of the community through innovative performances and inspiring education programs. Some things you should know about Festival Napa Valley

  • 1) They donate 6,000 tickets every year to seniors, veterans and families.

  • 2) 1,600 students attend Free Concert for Kids.

  • More than 200 artists from around the world perform every year at Festival Napa Valley.

  • 1,400 students attend Arts for All summer camps launched and funded by Festival Napa Valley

  • 95 College & Conservatory Musicians study and perform at Festival Napa Valley’s tuition-free summer music academy.

  • $1,000,000 is invested in Napa County public school arts education programs

For the events calendar click here.

Highest Mortgage Rates in More Than 3 Weeks

Mortgage rates moved decisively higher this week as the underlying bond market finally began shifting gears.  After the Fed meeting in June, rates moved to the lowest levels in more than 2 years and had been holding in a narrow range since then.  The risks of a breakout were set to increase as the market digested several key events.  One of the most important of those events was this week's congressional testimony by Fed Chair Powell.  

Interestingly enough, Powell's testimony actually helped rates at first.  In the 2nd part of the testimony yesterday, there wasn't much of a market reaction.  Instead, it was stronger economic data and poorly received Treasury auction that pummeled the bond market.  As bonds weaken, rates rise. 

Not all lenders fully adjusted their rate sheets to reflect yesterday's market movement.  That means many lenders offered even higher rates on Friday despite the fact that the underlying bond market actually improved somewhat.  That leaves today's rates at the highest levels since before the Fed meeting on June 19th.


Loan Originator Perspective

Bond markets recovered a good portion of yesterday's pronounced losses, but we're far from out of the danger zone here.  Market sentiment has gone from bond-friendly to (at least) bond-neutral.  It's going to take a LOT to spur rates lower, and not much motivation for them to rise.  I'm locking loans closing within 45 days. -Ted Rood, Senior Originator


Today's Most Prevalent Rates

  • 30YR FIXED - 4.00%

  • FHA/VA - 3.625%

  • 15 YEAR FIXED - 3.5-3.625%

  • 5 YEAR ARMS - 3.375-3.75% depending on the lender

    Ongoing Lock/Float Considerations 

  • Early 2019 saw a rapid reevaluation of big-picture trends in rates and in markets in general

  • The Federal Reserve has been a key player, and while they aren't the ones pulling the global economic strings, their response (and even their EXPECTED response) to the economy has helped rates fall more quickly than they otherwise might.

  • Based on the Fed's laundry list of concerns, the bond market (which determines rates) will be watching economic data closely, both at home and abroad, as well as trade-related concerns. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars will lead to new long-term lows.

  • Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.

Mortgage News Daily

4 Tips to Sell Your Home Faster

Since June of last year, we have seen an increase in the inventory of homes for sale month per month. Every spring and summer, the inventory increases because people want to sell their home. For those with children, they may want to be in their new home for the beginning of the school year.

If you are one of those sellers, you may find these 4 tips helpful in getting your home sold more quickly.

1. Make buyers feel at home

Declutter your home! Pack away all personal items like pictures, awards, and sentimental belongings. Make them feel like they belong in this house! According to the Profile of Home Staging by the National Association of Realtors,

“83% of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home.”

Not only will your house spend less time on the market, but the same report mentioned that,

“One-quarter of buyers’ agents said that staging a home increased the dollar value offered between 1 – 5%, compared to other similar homes on the market that were not staged.”

2. Keep it organized

Since you took the time to declutter, keep it organized! Before the buyers show up, pick up toys, make the bed, and put away clean dishes. It is also a good idea to put out some cookies fresh from the oven or a scented candle. Buyers will remember the smell of your home! According to the same report, the kitchen is one of the most important rooms to stage in order to attract more buyers.

3. Give buyers full access

One of the top four elements when selling your home is access! If your home is available anytime, that opens up more opportunity to find a buyer right away. Some buyers, especially those relocating, don’t have much time available. If they cannot get into the house, they will move on to the next one.

4. Price it right

As we mentioned at the beginning, more inventory coming into the market guarantees there will be some competition. You want to make sure your home is noticed. The key to selling your house in 2019 is ensuring it is Priced to Sell Immediately (PTSI). That way, your home will be seen by the greatest amount of buyers and will sell at a great price before more competition comes to market!

Bottom Line

If you want to sell your house in the least amount of time at the best price with as little hassle as possible, a local real estate professional is a useful guide. Call me today to find out what you need to do to sell your home more quickly.

5 Powerful Reasons to Own Instead of Rent

Owning a home has great financial benefits.

In a recent research paper, Homeownership and the American Dream, Laurie S. Goodman and Christopher Mayer of the Urban Land Institute explained:

“Homeownership appears to help borrowers accumulate housing and nonhousing wealth in a variety of ways, with tax advantages, greater financial flexibility due to secured borrowing, built-in ‘default’ savings with mortgage amortization and nominally fixed payments, and the potential to lower home maintenance costs through sweat equity.”

Let’s breakdown 5 major financial benefits of homeownership:

1. Housing is typically the one leveraged investment available

Homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. A 20% down payment results in a leverage factor of five, meaning every percentage point rise in the value of your home is a 5% return on your equity. If you put down 10%, your leverage factor is 10.

Example: Let’s assume you purchased a $300,000 home and put down $60,000 (20%). If the house appreciates by $30,000, that is only a 10% increase in value but a 50% increase in equity.

2. You’re paying for housing whether you own or rent

Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are baked into the rent payment already – along with a profit margin!!

3. Owning is usually a form of “forced savings”

Studies have shown that homeowners have a net worth that is 44X greater than that of a renter. As a matter of fact, it was recently estimated that a family buying an average priced home this past January could build more than $42,000 in family wealth over the next five years.

4. Owning is a hedge against inflation

House values and rents tend to go up at or higher than the rate of inflation. When you own, your home’s value will protect you from that inflation.

5. There are still substantial tax benefits to owning

We know that the new tax reform bill puts limits on some deductions on certain homes. However, in the research paper referenced above, the authors explain:

“…the mortgage interest deduction is not the main source of these gains; even if it were removed, homeowners would continue to benefit from a lack of taxation of imputed rent and capital gains.”

Bottom Line

From a financial standpoint, owning a home has always been and will always be better than renting.

What's New?! Listings! Up Valley Condominiums and Around Sylvaner Ave, St. Helena

Curious as to what Condominiums in Yountville, St. Helena or Calistoga are for sale?

Curious as to what Single Family Residencies are for sale in the Sylvaner Ave, St. Helena area?

I have created a public collections page for each! Just click the links below and send me a message if you or anyone you know is interested!

Up Valley Condominiums

Around Sylvaner Ave, St. Helena

Americans Rank Real Estate Best Investment for 6 Years Running!

Some Highlights:

  • Real estate has outranked stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long-term investment among Americans for the last 6 years.

  • Stock owners are more positive about real estate than stocks as an investment.

  • Of the 4 listed, real estate is the only investment you can also live in!

Real_Esate_Investment.jpg

Top 4 Renovations for the Greatest Return on Investment

Some Highlights:

  • If you are planning on listing your house for sale this year, these four home improvement projects will net you the most Return on Investment (ROI).

  • Minor renovations can go a long way toward improving the quality of your everyday life and/or impressing potential buyers.

  • Whether you plan to stay in your house for a long time or just a few years, it’s smart to know which home renovations add the most value.

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Mendocino Coast’s 35th Annual Winesong! Announces Jackson Family Wines as Vintner of the Year

It was announced on July 2nd that “Jackson Family Wines will be honored as 2019 Vintner of the Year at Mendocino Coast’s annual Winesong. The region’s Vintner of the Year designation is always a highly-anticipated award, and is especially significant this year as Winesong celebrates its 35th anniversary as Mendocino Coast’s capstone event. Set along the picturesque Mendocino coastline, the beloved two-day festival will take place September 6th and 7th 2019, and is both a showcase of the region’s exquisite wines as well as special wines from Napa, Sonoma, Oregon and beyond. The weekend event offers a full entertainment experience, characterized by local wineries, breweries and cideries, as well as regional culinary vendors, fine art, music, and charitable giving.

Jackson Family Wines Chairman & Proprietor Barbara R. Banke said, “I am honored to be named Winesong’s Vintner of the Year. My family has grown grapes in Mendocino County for more than 25 years and we’ve long believed the wines stand among the best in the world. We’re proud to support the region’s premier event that also gives back to vital health services in the community.”

The Jackson family has long been committed to Mendocino County. They acquired the Edmeades Estate in 1988 after falling in love with the Anderson Valley’s rugged beauty and distinctive wines. In addition to making Edmeades wines, the family also owns and farms the Skycrest, Sable Mountain, Edmeades and Maggy Hawk estate vineyards in the Anderson Valley. Their Maggy Hawk wines are dedicated to showcasing the region’s nuanced and elegant Pinot Noir. Today, several wineries within the family’s portfolio of wines, including Hartford Family Winery, Copain, Windracer, La Crema and Kendall-Jackson, continue to craft world class wines from estate vineyards and other exceptional sites in the Anderson Valley.

Winesong is hosted by the Mendocino Coast Hospital Foundation, and has raised more than $8 million to date for improvements in local healthcare, including equipment, facilities and services at the Mendocino Coast District Hospital. The centerpiece of Winesong weekend is always the Charity Auction, which will take place Saturday, September 7th, featuring both a silent and live auction (Silent Auction: 11am–3pm; Live Auction: 2pm–5pm. Celebrated author, writer and former Winesong Auction Director, Norm Roby, will serve as Honorary Auction Chair. Roby founded the Charity Auction and has been its beating heart for 30 years, “I am happy to be back for the 35th anniversary to reunite with those who attend and contribute to my favorite event. I like to think I still keep the exclamation mark in Winesong!”

In addition to honoring Norm Roby and Jackson Family Wines, Winesong will also honor longtime donor Karen Bowers as its 2019 Artist of the Year. Nationally and locally recognized for her evocative watercolor paintings, Bowers’ artwork will be featured on the official Winesong poster – always a treasured commemorative keepsake for event attendees.

A Pinot Noir Celebration will kick off the weekend on Friday, September 6th (from 1-4pm) when guests will enjoy 35 outstanding wineries (in celebration of 35 years!) in an intimate setting at the Little River Inn (two miles south of Mendocino Village) accompanied by a taste of the Inn’s famous culinary delights. Tickets are $85 and can be purchased here.

The Winesong Wine & Food Tasting will take place Saturday, September 7th, from 11am–2 pm in Fort Bragg’s lush Mendocino Coast Botanical Gardens, featuring world-class wineries from Mendocino, Sonoma, Napa, and beyond, as well as live music and regional bites from local gourmet food purveyors (see list of past wineries and epicurean participants here). 

Radio and television wine personality Ziggy Eschliman (aka Ziggy the Wine Gal from The Krush 95.9 FM) will build excitement as the newly appointed Auction Chair with lively bidding in the auction tents for nearly 200 live and silent lots, featuring spectacular wines from the world’s most prestigious wine producers, rare vintages, large format bottles plus special vertical and horizontal collections. Other auction highlights include original art from acclaimed California artists and photographers (including work by the renowned local photo-artists George Rose and Andy Katz), as well as highly coveted international wine getaway packages to South Africa, the Caribbean, and a six-night castle stay for up to six people in Mazzo di Valtellina, Italy, including a personal concierge to arrange comped private wine tastings, VIP historical tours, and a wine-paired dinner on Lake Como.

General Admission tickets are $150.00, and include a commemorative glass and plate, full access to the tasting & Silent Auction, and festival seating around the Live Auction tent. Auction Reserve tickets are $250.00 and include all of the above plus reserve seating, reserved parking and a commemorative tote bag, with wine and lunch in the Live Auction Tent. The Mendocino Coast Hospital Foundation thanks ticket holders for their support of its hospital!

A full list of events along with ticket purchase information (including pre-sale) can be found at winesong.org/events/purchase-tickets/. Directions to all events can be found here, along with a generous Winesong shuttle schedule from a wide array of pickup/drop-off locations. For more ticket and logistical information, email ellen@mchfoundation.org.

About Winesong!

Winesong is an annual charity auction and wine + food tasting produced by the Mendocino Coast Hospital Foundation. Proceeds are used to enhance equipment, facilities and services at the Mendocino Coast District Hospital. The Diagnostic Imaging Center, Medical Evacuation Helipad, Out-Patient Surgical services and Emergency Department Equipment are just a few of the vital areas that Winesong funds have enhanced. Since 1985 Winesong has raised over $8 million for improvements in local healthcare.

Head to mchfoundation.org/about-us/what-we-support/ for a comprehensive list outlining previous years’ capital improvements funded by Winesong proceeds and donations from the Mendocino community.

About the Mendocino Coast Hospital Foundation

Since 1984 the Mendocino Coast Hospital Foundation has engaged in fundraising and community activities to provide support for vital equipment and services at Mendocino Coast District Hospital. The hospital’s unique rural locale presents an environment in which the provision of comprehensive hospital services and up-to-date equipment is a tremendous challenge. The Hospital Foundation exists to help the Hospital and our community to meet these challenges.
 
About Jackson Family Wines

Jackson Family Wines is a family-owned wine company with a penchant for exploration. Founder Jess Jackson placed his faith in farming and a meticulous expression of wine with his first landscape-changing vintage in 1982, an ethos that chairman and proprietor Barbara Banke, the Jackson family and the company’s employees continue to uphold to this day. The family’s collection of 40 wineries span significant winegrowing regions across the globe, from California, Oregon, France and Italy in the northern hemisphere, to Australia, Chile and South Africa in the southern half of the globe. Artisan winemaking underscores a steadfast commitment to making exceptional wines in the most responsible manner. The Jackson family’s focus on vineyard ownership remains key to consistent high quality and environmental stewardship for future generations. To learn more, please visit: www.jacksonfamilywines.com

Article from Wine Industry Advisor.


Is Mortgage Debt Out Of Control?

The housing crisis of the last decade was partially caused by unhealthy levels of mortgage debt. Homeowners were using their homes as ATMs by refinancing and swapping their equity for cash.

When prices started to fall, many homeowners found themselves in a negative equity situation (where their mortgage was higher than the value of their home). As a result, they walked away. This caused prices to fall even further.

Headlines are again talking about record levels of mortgage debt, making the comparison to the challenges that preceded the housing crash. However, cumulative debt is not an important data point. If we look at the debt as a percentage of disposable personal income, we are at an all-time low.

Here’s a visual representation of mortgage debt as a percent of income:Furthermore, according to a new report from ATTOM Data Solutions, more than 1-in-4 homes with a mortgage have at least 50% equity. The report explains:

Mortgage Debt.jpg

“[O]ver 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value — up by more than 834,000 from a year ago to a new high as far back as data is available, Q4 2013.”

Bottom Line

Unlike 2008, homeowners have a comfortable level of mortgage debt and are sitting on massive amounts of home equity. They will not be walking away from their homes if the housing market begins to soften.

Millennials Are Increasing The Demand For Condominiums

I know a lot about the Condominiums in St. Helena and Yountville in Napa County and have seen an uptick in the interest to purchases. Condominiums are more affordable in a lot of ways which makes them a great starter home, second home or downsize.

When deciding to buy a home, people are presented with many different options. The type of home you buy depends on your needs, budget, and in many cases, the desired maintenance level. For many millennials, their choice has been buying a condominium!

According to CoreLogic,

Last year about 43% of all condo home-purchase mortgage applications were submitted by FTHBs… Similarly, the data show condos were more popular with young homebuyers and empty nesters. For instance, 21% of all condo home-purchase mortgage applications were submitted by buyers aged 18 to 30, compared with just 17% of all single-family home-purchase mortgage applications by the same group in 2018.”

With home prices increasing year-over-year, it makes sense millennials are buying condos instead of a single-family house. As a result, the demand for this type of home has been increasing.As this graph explains,

The younger millennials are the largest cohort and are likely to drive much of the condo demand in the coming years”.

millennials and condominiums.jpg

Bottom Line

If you are a millennial considering buying a home, understand that there are many options available. You may find yourself in a condominium as your first home. If you would like to determine which type of home best fits your needs, sit down with a real estate professional that can help evaluate your options! I’m happy to help if you are in northern California.

kate.spadarotto@compass.com

c. 707.321.6231