Massive Issues In Temecula
In this blog posting video I wanted to talk about some massive issues in Temecula regarding housing. I don’t see these issues going away anytime soon, so you should understand what is going to be the norm in the Temecula real estate market moving forward, especially if you plan on buying or selling.
Inventory is no doubt going to be a massive issue in Temecula in the coming years. One issue is land. There is not a great deal of it to build on anymore. Temecula is becoming more and more popular and without additional areas to build new homes, home prices will inevitably rise on existing homes. Depending on how you look at it, this can be both good and bad. It’s a good thing because the population growth won’t explode.. The downside? If you’re a home buyer and there’s no land to build new homes, prices will go up and competition will stay high.
New Home Building Incentives and Price Increases
I learned this firsthand this year. When home builders realize there is a lot of competition, incentives get smaller and smaller. Those days of the builder paying for closing costs and giving you free upgrades might become less frequent. Another thing that I have personally seen this year with new home builds is home price increases on each phase. Because home prices have risen so much, so fast the builder is able to raise prices on each building phase substantially. The home that you’re wanting to build in 3 months might be 15-20k more than originally thought.
Releasing Your Appraisal Contingency
This is a massive issue in Temecula and something I really don’t like my clients doing. In this housing market, there is no other choice, especially with pool homes. If you, the buyer, find a desirable home that you love, chances are there’s 5 to 10 other people thinking the same way you are. If this is your dream home, and the home you need to have, be ready to release your appraisal contingency in your offer
What Does This Mean?
Let’s say you find a home listed at $500,000 that you really love. After looking at comparables, your agent determines that this list price is spot-on with like comparables in the neighborhood. There are six other offers ranging from $520,000 to $540,000. You offer $540,000 and have your offer accepted. Yeahhhhh! Hold up. Your lender is only going to lend what the property is worth, which is the $500,000, minus your down payment. You, as the buyer have to come up with the other $40,000 out of pocket. For many people this is not a huge issue but for many first time home buyers, it gets very demoralizing.
City People With The Big Bucks
This does not make many Temeculans happy and is definitely an issue not only in Temecula but across the US. Many people in large cities don’t want to live in large cities anymore. Peace homes, especially in Southern California bring millions of dollars on resales. When these people move to the suburbs, they have a lot of cash to play with and oftentimes are okay with homes getting bid and paying higher prices.
Finding People To Do Work
This isn’t just a massive issue for Temecula but across Southern California. Finding qualified people to complete good work always seems to be difficult. It seems all the good companies are booked out for months. I see this a lot as a real estate broker. I always have clients and needing plumbers, painters, electricians Etc. If you do happen to find somebody that’s really good, it’s going to be expensive. With all the regulations,insurance, red tape, taxes, workman’s comp, these small businesses need to charge an arm and a leg just to stay afloat. This is not helping homeowners, especially first time home owners or younger people who generally don’t have thousands of dollars for repairs they cant complete on their own.
First Time Home Buyers
This is a massive issue in Temecula and probably the group of people I feel for the most in this market. Many are young and working hard just to save enough money for a down payment and closing costs. Sadly, this is often not enough with homes getting bid up over asking.
Many people might argue, “well just buy a home that has been on the market a while!” well, it’s not that easy. In this housing market, if the house is on the MLS for over 20 days, there is something wrong. Major repairs and overpriced are two things that come to mind. Again, we are getting in a situation where first time home buyers don’t have the money to pay the difference on the appraisal or make major repairs. Also, many times, first time home buyers go with FHA loans because it is less of a down payment. This loan has strict guidelines on safety or repairs on homes. Even if you get an FHA loan approval, that doesn’t mean you can go buy any house you want. (If you have qualified for an FHA loan make sure your agent understands the guidelines of the loan.)
This is a massive issue for home sellers in the Temecula Market. Because the market is so competitive now, it’s hard for many homeowners wanting to sell and move up to a larger home, a pool home, or a home on more acreage Etc. Trying to purchase a new home with a sale contingency in your offer is difficult in this market to say the least. We always seem to get it done but it’s not easy and can create a lot of stress for two to three weeks.
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