9 Ways to Prepare for Winter

Now that the leaves are falling, you know snow and freezing temperatures are soon to follow. Here are 9 good ideas that we need to get done before winter to prevent costly home repairs.

1. Prevent Plumbing Freezes – Protect your outdoor facets
A ruptured pipe can ruin your home and everything in it. Rupturing occurs when a pipe freezes and the water inside it expands. You can protect your exterior pipes by wrapping them with heat tape or add a faucet protector which can cost less than $10.  Protect your interior pipes by ensuring your thermostat is never set below 50 degrees. Disconnect and drain garden hoses. If your exterior faucets aren’t self-draining, be sure to turn off the water manually at the shutoff valve inside the house so water doesn’t stand in the wall pipes. If you have an irrigation system, it’s important to make sure all the water has drained from the system before the first freeze. If you have a well make sure the pipes in the well house are insulated, or make sure there is a heat source in the well house.

2. Tune up your Heating System
Don’t wait until the first cold snap to discover the heat isn’t going to work. Turn your furnace on and make sure it runs. If you have a monitor heater make sure you have lots of heating fuel. Do not allow oil to run low – you run the risk of running out and freezing pipes.  While you’re at it, don’t forget to replace the furnace filter, which cleans the air in your home.

3. Fireplace
What better way to beat the cold than the heat of a wood burning fireplace! Prep your fireplace by clearing out any debris that might be left over from last season, have the chimney cleaned once a year if you use it a lot. Lastly, be sure you screen is still in good shape to shield your flooring from any flying sparks.

4. Windows Air-Conditioners
You should not have any air conditioners in the windows. If you do, remove them and replace the windows in their proper positions.

5. Roof & Gutters – Don’t be lazy
Check your roof for loose or broken shingles. Be sure your gutters have been cleaned free of leaves, sticks and debris, so you will have proper drainage. It can be so tempting to skip gutter cleanups as winter nears. It seems like as soon as you clear your gutters, they clog right back up again. So what’s the point? Well, if it looks like you’re living inside a waterfall when it rains, water is missing your gutter system completely and it may be directed to your foundation instead.

6. Smoke Detectors, Fire Extinguishers and Carbon Monoxide Detectors
Test your detectors to make sure they work. Replace batteries if needed. Have spare batteries available.

7. Fill in the Gaps

Finding the places where cold air sneaks into your home can drastically reduce your heating bills this winter. Cracks can be easily and inexpensively sealed with a simple tube of caulk, and it’s available in hundreds of colors to match your window panes, outside siding, and even brick. Not sure where to caulk? Look for visible cracks around:

  • Window sills
  • Baseboards
  • Fireplace or dryer vents
  • Anywhere something inside pokes a hole to the outside

If you have a real chimney, don’t forget to close the damper to prevent cold air from billowing down and into your home.

8. Get Personal with Your Thermostat

We all know we should, but we seem to have some mental block when it comes to programming our thermostats to align with our schedules. It’s not that hard and sometimes all it takes is buying a new one that suits you. Maybe you’ll like a Wi-Fi thermostat that’ll give you a little money-saving thrill each time you swipe your app or maybe you will like the Nest Thermostat that learns your temperature likes. Top of Form

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9. Prep your yard

Your yard may take a beating this winter, but a little prep now can help your lawn be lush and green again once the warm weather comes back. Spend a few hours fertilizing and ridding your lawn of leaves now, and reap the benefits later.

Lastly, enjoy the best that winter offers in Southern Oregon. The great downhill skiing of Mt Ashland, snowmobiling, cross country skiing, a drive to Becky’s café, guided hikes at Crater Lake, ice fishing at frozen high mountain lakes, or just a reading a book by the fireplace.

To Rent or to Buy-That is the Question!

To Rent or to Buy – That is the Question! 


 To Rent or to Buy – That is the Question! 

Rental prices have been increasing since the real estate crash in 2007, but home prices didn’t begin to rebound until 2013. Rental prices are now running at an average of $1 a square foot for a suburban home in Medford and higher in Ashland and Jacksonville or for rural and view homes. With rental prices so high, it is not unusual for tenants to pay $1800 a month or more.  The question is, at what point does it becomes cheaper to buy your home instead of renting it. The answer depends on your tax rate, loan rate, current rent you’re paying and the price of the house you want to buy.  What follows are the actual numbers showing the cost to Rent vs. Buy on a home in Medford located in Hampton Place. 

The tenants are married and they make a little over $50,000 year combined. They rent a home that is a newer 1680 square foot home with a two car garage and their rent is $1660 a month or $19,920 a year. 

Cost to rent their home for the next 5 years:  

  • $99,600 to rent their house for the next 5 years ($1660 month). This assumes their rent will not go up, but they don’t have to pay for any maintenance or pay any property taxes. They are paying for renters insurance.

Cost to buy their rental home or one similar and live there for 5 years: 

  • $285, 000 is the value of the home. They are pre-approved to put 3% down which is $8,550 down, Borrow $276,450 and have been quoted 4% interest rate. 
  • -$81,000: 5 years of mortgage payments ($1317.67 month) 
  • -$16,000: Cost of property taxes and home insurance over 5 years. We are assuming they will go up 3% a year
  • -$10,020: Maintenance costs over 5 years ($167 month). This is a national average for maintenance costs but can vary drastically based upon the year of the home. 
  • +$19,440: Tax savings over five years (15% Fed / 9% State). They get to deduct the interest on their mortgage from their gross income, so this is based on their combined earnings of $50,000 and filing a join return. 
  • +$26,815: Debt Reduction or the amount of the principal being paid off in 5 years and the reduction in the mortgage owed.
  • So it will cost $60,765 to buy the home over 5 years without factoring in appreciation. 

Appreciation on the home in 5 years: 

  • +$51,026 at 5% appreciation. Currently we are experiencing about 10% appreciation but let’s be conservative and do the numbers based on 5% appreciation and 7% appreciation 
  • +$77,370 at 7% appreciation   

Is it more to rent or to buy?

These renters will spend $99,600 over 5 years if they continue to rent, but if they buy, they will spend $60,765 for a savings of $38,835! If you factor in appreciation, they will save $89,861 if there is 5% appreciation, and $116,205 if there is 7% appreciation. This is quite a difference and a huge advantage to buying because you’re paying off the home as you go and paying fewer taxes as you go! 

Other financial factors: 

We are assuming if they continue to rent that their rental rate will not go up in the next 5 years which may be unlikely, so we may have underestimated their cost if they continue to rent. This is also a scenario for a couple making $50,000 a year combined income. Keep in mind, the more you make the less your home will cost you because the higher your tax bracket, the more you save from the mortgage deduction. If your Federal and State tax rate adds up to 40%, then each $1000 of deductions you have saves you $400 in tax dollars. The great thing about appreciation is that it compounds, so if you leave your appreciation in the house the next year, you have appreciation on the original cost of the house plus last year’s appreciation. The longer you live in the home, the faster your equity builds up as you pay more principal and less interest as time goes on. We see this as a silent savings plan, and have dealt with countless retirees who have retired with the help of the equity in their home. 

How do you save your down payment to buy your first home?

Most renters know it’s cheaper to buy the home in the long run, but they don’t know how to save the down payment to get started. It’s never easy to save, and it takes a long time, especially when you’re young, but there are some great loans out there to help home buyers. Here is a recap of the major loans available – two loans require zero down and three loans require 1% – 3.5% down. 

USDA Loan

  • No down payment – 100% Financing 
  • Stable 30 year fixed loan 
  • FICO credit score: 620 or greater 
  • Debt to Income ratio:  About 28% available for house payment 
  • Closing costs can be included in the loan amount 
  • No manufactured homes 

VA Loan

  • No down payment – 100% Financing 
  • No mortgage insurance 
  • FICO credit score: 600 or greater. Manufactured home 620 or greater 
  • Debt to Income ratio: Really based on “residual income” but have seen  Up to 68% based on size of family 

Guild 1% down – 2% gifted to you loan 

  • 1% down payment required 
  • Guild Mortgage will gift you 2% down 
  • FICO credit score: 680 or higher
  • Debt to Income: up to 50% 
  • Must make less than the Median Income in your County: 
    • $53,500 Jackson County 
    • $47,800 Josephine County

FHA Loan 

  • 3.5% down payment required
  • FICO credit score: 580 or greater
  • Use this loan for a single family home or up to a 4-plex 
  • Debt to Income ratio: Up to 57% 

Conventional Loan 

  • 3% down payment required 
  • FICO credit score: 620 or greater 
  • Debt to Income ratio up to 50% 

Medical Doctors and Dentists Loan 

  • 5% down required 
  • FICO credit score: 720
  • Student loan must be in deferment or forbearance 
  • Debt to Income ratio 45%

Most of our clients are surprised when they find out how much they qualify for, how many different types of loans are out there, and how much renting may be costing them vs. buying!   So it may be time to stop reading this article and see what renting is costing you. 

State of the Real Estate Market

Home Prices Soar, but will it last?  

Home prices soared over the last 5 years with the median price of a single family home in Jackson County increasing from $176,000 at the end of 2012 to $282,500 as of August 2017, yielding an increase of over 60%.  The increase in the median price of a home is only part of the story as we also saw a 30% increase in the number of homes sold in 2017 compared to 2012. Add these two factors together, and you have a huge boom to our local economy. In 2012 the total dollar amount of single family homes sold was $605 million, and based on our current run rate in 2017, we are likely to see $1.2 billion in home sales.  These are pretty big numbers for our local economy!

Price Points of homes sold in Jackson County 

 2012        2017 (Current run rate) 

$1        –           $99,999              442          50

$100,000 –   $199,999            1247        566    

$200,000 –   $299,999           681          1196

$300,000 –   $399,999           275          732

$400,000 –   $499,999           115           368

$500,000 –   $599,999           46            206

$600,000 –   $699,999           29            78

$700,000 –   $799,999           17             35

$800,000 –   $899,999          7               21

$900,000 –   $999,999          5                8

$1,000,000 -$1,999,999      4               18

$2,000,000 -$2,999,999     2             2

  • Total             2870        3280 (Current run rate) 

Homes are selling quickly, pending sales are up and the number of homes available on the market has dropped. You can see from the above chart that in 2012 the bulk of home sales accrued in the $100,000 – $300,000 range and in 2017 the bulk came from the $200,000 – $400,000 range showing how much prices have increased. To everyone’s surprise, interest rates have stayed low and are still around 4%.  There is a general housing shortage in Jackson County and new home starts aren’t keeping up with the demand. During the housing crisis, from 2007-2013, there were very few homes or apartments built in Jackson County and we’re feeling the crunch now. We have had both population and age growth with lots of millennials now moving out of their parents’ basement and looking for housing. Retirees are back in large numbers and many of them who tried to retire in the late 2000’s had to wait for their equity to return in their homes and their 401K’s to return to pre-recession values. Escapees, those city dwellers escaping commuter traffic, crowds and high costs are also increasing. On the rental front, rental rates are going up yearly and the supply is going down as investors sell off their rental homes to realize their equity, leaving lots of competition for rental homes – especially those priced under $1,500 month.

So will this market last? There are many economic factors that contribute to the real estate market but the top four are, Local Economy, Demand, Interest Rates and Rental Prices.

Local Economy:  Jackson County has a population of just over 212,000 with the largest Industries being Healthcare, Agriculture, Lumber, Manufacturing, Service and Tourism. We are currently at our highest employment rate in history with just over 100,000 jobs, which is good considering the large retired population. Our little airport is setting records each month on the number of travelers coming and going. We are continuing to attract more and more tourists because of our interesting combination of Outdoor sports, Culture, and Agricultural diversity. We have seen a huge growth in the Wine, Cannabis, Hops, & Hemp industry and our Culture keeps growing with new live theaters, art galleries and music venues. All of this keeps attracting more tourists, retirees and escapees. Our Medical industry and retirement homes keep expanding but are struggling to keep up with demand.

Supply and DemandThe supply of homes is limited with very low inventory of homes for sale and strong demand for housing coming from three areas, Locals, Retirees, and Escapees.

The local buyer: Our local market is an interesting one. On one hand we worry that as prices go higher, the first time home buyers will be priced out of the market; but on the other hand, rental prices have increased so quickly the financial incentive for buying vs. renting is at an all-time high. In many cases your mortgage payment will be less than your rental payment especially when you factor in the tax savings by writing off your mortgage. This means whether you rent or buy, you will be paying a higher portion of your income towards housing.

Retirees: 10,000 baby boomers a day are turning 65 and that number will continue for the next 19 years, so areas that appeal to retirees will feel the demand for many years to come. Baby Boomers are 26% of the US population so we are heading for a huge population of retirees. We are seeing retirees coming here from all over the country and many of them are checking out three or four different areas to retire. We don’t always win the competition. We recently had a buyer who was retired from Rochester, New York and looked at Medford, Boise & Colorado Springs. Coming from Rochester he found our real estate prices to be high, Boise to be the cheapest but it looks like he’ll end up in Colorado Springs because the combination of weather, outdoor activities and real estate prices. The good news is our neighbor to the south has a population just over 39 million and some of the highest priced real estate. So, in comparison, our home prices look like a deal.  In fact, seven out of ten cities with the highest priced real estate are in California. (San Francisco, Redwood City, Cupertino, Los Gatos, Saratoga, Malibu & Newport Beach)

Escapees: We have always seen escapees moving to our valley but it seems like the pace is growing. Escapees are individuals like me who left California, a large crowed and expensive metropolitan area, for a slower, cheaper and better lifestyle. What’s interesting to me is how many clients we have dealt with from other states. This year alone we have helped many clients relocating from California but also from Arizona, Texas, Hawaii, Alaska, South Africa, Ohio, Montana, Nevada, Washington, New York, Minnesota and Idaho.

Interest Rates: Interest rates are critical to the housing industry and play a big part in how much a buyer can afford. We are currently around 4% interest – The Federal Reserve has done a great job of keeping interest rates low to stimulate the economy while not creating inflation. We’re likely to see slow, small increases in the interest rate every year for the next few years which will make it more expensive to buy the same home.

Rental PriceRental homes are in high demand and rental prices are crazy. A 2,000 square foot home can rent for $2,000 a month and more in Ashland and Jacksonville. In most cases the financial cost of buying is cheaper than renting when you factor in the tax savings of owning.

So, will our current market of increasing home prices and demand continue? The answer is, it’s very likely. Our local economy is at record employment, demand is increasing with the number or retirees and escapees moving here and rental prices are driving tenants to buy. Lastly, interest rates are still lower than they have been in years. These four economic factors are all pointing in one direction, a positive future for Southern Oregon real estate.

 

New Loan: You Put 1% Down and 2% Will be Gifted to You!

NEW 1% DOWN CONVENTIONAL LOAN WITH 2% GIFTED TO YOU! 
Program Details 
  • Our lender is giving a 2% grant to borrowers that does not need to be repaid 
  • Loan amounts up to $424,100 
  • Flexible Underwriting includes: income from non-borrower household members or rental income 
  • Condos OK
 
Eligibility
  • Must make less than $53,500 if you live in Jackson County 
  • Must make less than $47,800 if you live in Josephine County
  • Minimum 680 FICO Credit Score 
  • Homeowner education course required 
  • Not just for first-time home buyers 
Call us today for details!
541-899-7788
 

4 Ways to Boost Property Value Before Sale

Selling your home is an opportunity to get back what you’ve put into your house – and hopefully more. There are certain things prospective buyers look for in a home to make their purchasing decisions. By making a few simple updates to your property, you can increase your chances of selling at a price point that makes you happy.

Clean Your Home, Inside and Out

A clean home sends the message that the property has been well taken care of, and is ready for move-in as soon as the deal closes. It also gives a good impression during home tours and walk through helping your home stand out in the buyers’ minds. Clean the inside of your home, clearing away clutter and making things look as neat and stylish as possible. Clean the outside as well, because this is the first thing potential buyers will see. Clear the gutters and pressure wash dirty siding.

Make Minor Repairs

You can make your home more appealing to buyers without spending a fortune by investing in minor repairs. Replace cracked windows or patch a leaky roof to boost property value without breaking the bank. Small repairs can go a long way toward making buyers want to make your home their home.

Focus on the Front Entrance

Spend time making your front entryway look its best. This may involve a new coat of paint on your front door, a sharp new welcome mat, planting a few wildflowers, and polishing up your house numbers. Your entryway is important in giving potential buyers a great first impression of your home, and enjoying the view from the curb.

Partner With Real Estate Experts

Sell your home quickly and at the highest possible price with help from the marketers at Expert Properties in Southern Oregon. Our expertise is at your service can help you rest assured your home will sell for what it’s worth. Contact us today for more information.

 

 

 

 

Accidental Investors

I just left the title company where our clients picked up a $61,000 check – the proceeds from selling their house. What makes this such a great story is how young and financially smart this couple has been. I first met this twenty- something couple, two and a half years ago when he was transferred here by the army; she was pregnant and they came to us looking for a rental home. They settled into a rental home in Eagle Point for $1250 month, and after renting for six months, they called us to see if we could help them buy a home. They soon found the perfect home for $167,900 and moved into it. Because he was in the army, he was able to get a VA loan with zero down giving them a mortgage under $800 a month – $450 a month less than they were paying in rent. In addition, they had a $9,000 a year tax deduction by writing off their mortgage payments, and in two years’ time they walked away with a $61,000 check. Accidental Investors or really smart young couple, you decide? 

One of our brokers is 25, married, and bought his first home at 23, which in two years is worth $65,000 more that he paid for it.  He’s a great example of either a financial wizard or Accidental Investor and he now gets to help his peers follow his path. One of his clients called him after a year of owning their home and they wanted to sell it to move to the country. He had to deliver both bad and good news to them. The bad news was that if they sold their home without owning it at least two years, they would have to pay state and federal capital gains tax on any equity they had in the home. The good news is that they had made $40,000 in equity in just one year and if they want to move at the end of this year they will most likely have about $80,000 in equity. What’s also interesting about this couple is their parents weren’t always supportive of them buying a home and they thought they should wait and save more money first. If they had waited to purchase a home, any savings would have been wiped out by the $40,000 cost increase of their home. 

Our young broker had another couple that came to him to see if he could buy a home with the goal of paying less in a mortgage payment than what they were paying in rent. They were successful, and in addition to lowering their monthly payment they have made at least $25,000 in equity; and if that’s not enough, their lot is so large they are now working with a private planner to split it in half and sell off the vacant portion for $70,000. 

Today we just completed a “value evaluation” for another young, newly married couple who bought a small two bedroom, one bath home in 2015, with a mortgage payment less than their rent and it looks like they have made about $2,275 in application for each and every month they have lived in their home. This month we close on a new home for the newly married daughter and son-in law of another broker on our team and they will soon be enjoying the world of tax deductions, sweat equity and appreciating values as well. 

All of these cases are young couples just married and making smart financial choices. Don’t you wish you were as smart as they have been when you were their age? They all have mortgage payments that are lower than their previous rent payments! They all save on their taxes by deducting their mortgage payments, and lastly, they are all making about $30,000 a year in appreciation. 

Accidental investors or financial wizards, these are all smart couples who have made sound financial decisions. We hope other young couples reading this article think twice about continuing to rent and they too can become Accidental Investors! 

Written By Graham Farran