Tag: COVID-19

Ways COVID-19 Will Affect Future Home Design and What to Look For

Are you looking to build a new construction home in Orange County? Do you wonder what the difference will be in home design pre- and post-COVID-19? If so, then you’ll be interested to learn how the coronavirus might affect future home design.

Understanding future home design trends will help to stir your imagination and plan for the features you want, before you set out to find or build your next home. We are beginning to see old spaces used in new ways, with novel additions to current homes and adjusted open floor plans, just to name a few.

See below for an in-depth guide on several COVID-19 architecture design solutions that you can expect to see in a post-COVID world!

1. The New-Look Open Floor Plan

Everyone loves an open floor plan. It’s a trend that has become commonplace in many modern home designs, whether you’re building a new construction home or remodeling an existing structure. 

However, the worldwide pandemic revealed something to us about open floor plans that we didn’t consider before: productivity is just as important at home as it is in the workplace. Really, the home has become a workplace itself. 

Among those who were able to maintain their employment during the pandemic, many were forced to share space with their family members in ways they had never imagined. Suddenly, mom and pop were forced to work at home, while kids ran around, eating, playing, destroying, sometimes learning…

All of a sudden, those coveted open floor plans became more distracting than invigorating. Productivity declined as a result. 

That brought on the invention of what we’re calling the “new-look open floor plan”. In this design, the entire space is maximized. What was once a living room/kitchen combo is now a living room, kitchen, office, arts and craft station, play area, study room, and more.

When looking at a new home, we at the Stavros Group believe that we need to embrace these changes, not run from them. It makes your home more functional and, thus, more valuable to your family!

2. Super Porches

Sounds like an awesome comic book title, right? While it might not be picked up by Marvel for their next blockbuster, this is certainly a growing trend in the home design industry.

We all had those neighbors, friends, and relatives that used the 2020 pandemic as a way to catch up on their home renovations, both inside and outside. Maybe you did too.

Many homeowners used that opportunity to improve the outside of their properties, like patios and porches. For some, it was the deck in their front yard. For others, it was the balcony or the roof lounge atop their home.

With more time spent at home, homeowners want better exterior living spaces to maximize their enjoyment of the great outdoors. A good portion of them preferred covered patios so that they could enjoy the fresh air in any weather (it helps that we’re blessed in Southern California with great weather most of the year). 

These homeowners are on to something! Not only does the “super porch” give you more ways to enjoy the outdoors, but it also enhances the curb appeal of your home for when it comes time to sell. It’s what we like to call a “win-win,” improving your enjoyment of the home now and your sale price later. 

3. At-Home Gyms

Did you know that Orange County has been ranked the healthiest county in California

This can be attributed to the residents, who are often health-conscious and committed to bettering their health and fitness each day. Unfortunately, when the pandemic struck, all the gyms we frequent to stay in shape were temporarily shuttered.

Everything was closed: CrossFit gyms, big-name gyms, the track at the nearest high school football field. All completely closed off to the public. Even public parks were shut down for a time!

So, many homeowners made their own workout solution. They invested in creating an at-home gym, which gradually continued to evolve as the year 2020 went on. Since everyone at once started looking for gym equipment, buyers had to hunt and buy piecemeal to put it all together. But now, a home gym has become a feature that many homebuyers are looking for in their next home.

4. Potential for Additions

As if land wasn’t already at a premium in Orange County real estate, the 2020 coronavirus pandemic made it even more of a hot commodity.

Economists believe that this is a direct correlation to many families having relatives move in with them during the pandemic, especially elderly relatives. Now, they’re with them for the long haul, and many homeowners are looking to build additional living space to give their new “roommates” their own private area.

Having a bonus bedroom suite or standalone ADU (Accessory Dwelling Unit, aka “granny flat”) is a huge boon for housing multiple generations of family. An ADU is amazing when you have teens or grandparents living with you. Homebuyers know this too and will pay a premium for it!

5. Healthy Homes

An aging, dirty or broken HVAC system is never great, but homebuyers these days are putting even more attention on ventilation and comfort. After all, if the COVID-19 pandemic taught us anything, it’s to be more conscious of the air we’re breathing (and who’s breathing it near us). 

The indoor air quality of a home is no different. Home inspectors put an emphasis on checking the home’s HVAC system for signs of mold or build-up in the air ducts, signs of poor air quality, etc.

Good cooling and heating has become a primary selling point. If you’re in the market for a new home, make sure that the home’s HVAC system is inspected by an expert. This pandemic has shown us all how much air quality truly matters!

Consider These Future Home Design Trends as You Search

Now that you have seen a few ways that COVID-19 has affected future home design, be sure to use these to your advantage while you search for or build your new house!

Getting ready for a big move? It’s never too early to start planning. See this article for a list of tips and tricks for a stress-free move.

For any other inquiries and questions about real estate, please feel free to connect with us and we will be happy to assist you further!

COVID-19: Understanding Mortgage Rates and Opportunities

COVID-19, Mortgages and Opportunities

 

As we battle both a healthcare crisis and an economic crisis due to COVID-19, it can be hard to keep up with topics that might otherwise be important to you like mortgage rates and opportunities in the Orange County housing market.

 

When you do find time to consume the economic news, you might find it hard to digest. You’ll hear jargon like margin calls, short sales and T-notes. What does it mean for your average Orange County homeowner? What does it mean for Orange County home buyers and sellers?

 

Instead of relying on opinions from the talking heads, you can stay better informed by understanding the underlying principles behind housing and mortgages.

 

In this article, we’ll cover the broad strokes of the latest mortgage and housing news. We’ll explain the difference between the Federal funds rate and the 10-year Treasury note, and their effects (or lack thereof) on mortgage rates. And we’ll explore the unique challenges and opportunities presented by COVID-19 to Orange County homeowners and prospective buyers and sellers.

 

Battle for Wall Street: The Fed vs Coronavirus

The economic impact of COVID-19 has been swift and far-reaching. In just a few weeks between February and March, the stock market lost all its considerable gains from the previous three years. This sharp decline prompted the Federal Reserve to cut rates down to rock bottom (0.00-0.25%) on March 15th. Sounds good for businesses—what about prospective homebuyers?

 

When you hear that “the Fed cut interest rates,” that refers to the Federal Funds Rate. It’s the interest rate that the Federal Reserve charges banks who in turn lend to businesses and individuals. Lowering the Federal Funds Rate gives businesses easier and cheaper access to capital, thereby improving their quarterly outlooks and share values.

 

Since stocks are seen as a relatively short-term investment, other short-term investments tend to follow the same trajectory. In mortgage markets, these include variable-rate loans, such as 3/1 and 5/1 ARMs, as well as home equity lines of credit, or HELOCs.

 

As the Federal Funds Rate rises and falls, so do the rates on these shorter-term real estate loans. Rate cuts by the Fed directly benefit Orange County homeowners with an adjustable-rate mortgage and Orange County homebuyers looking to get one.

 

But adjustable-rate mortgages are nowhere near as popular as longer-term mortgages like the conventional 30-year fixed-rate. How are those affected?

 

Safe Haven in Long-Term Investments

When investors are spooked by uncertainty in the stock market, they flock to more secure and long-term investments like Treasury notes and mortgage-backed securities. 

 

You’ve probably heard of the “10-year T-note,” at least in passing. It is the most widely tracked government debt instrument and a common benchmark for other economic indicators. Along with other bills, notes and bonds, the US government partially funds itself by issuing 10-year Treasury notes. Investors receive a modest and relatively safe return in the form of interest payments that are exempt from state and local taxation.

 

You probably know about mortgage-backed securities, too—they precipitated the Great Recession. When a lender loans capital to a homebuyer, they don’t necessarily hold onto that investment. Oftentimes, they package the debt and sell it, acting as a middleman between many homebuyers and their ultimate debtholder. If the economy falters, that debtholder is left holding a big bag of bad mortgages. So begins a cascade of financial ruin, which in 2007-2008 we saw firsthand. Fortunately, lending standards are tighter now, and Americans as a whole are less leveraged with debt.

 

Because mortgage debt securities and Treasury notes are both long-term investments, their rates also tend to follow the same trajectory. When wary investors shift from stocks to long-term investments, that increased demand prompts lower interest rates on the long-term investment supply.

 

In short, the falling stock market led indirectly to lower 30-year fixed mortgage rates due to increased demand for long-term investments.

 

Opportunities for Orange County Homeowners and Homebuyers

On March 5th, the national average rate for a 30-year fixed mortgage hit its all-time low of 3.29%. Homeowners and buyers leapt at the opportunity to take advantage of this historic low, and lenders were soon overwhelmed by an onslaught of refinancing applications. In response, mortgage lenders raised rates back up to 3.65%. Since then, rates have fallen yet again and leveled out at a very attractive 3.33% over the past two weeks.

 

With average 30-year fixed mortgage rates again close to historic lows, now is a great time to refinance your existing mortgage or even buy a home.

 

Keep in mind that refinancing has costs. All told, the fees associated with refinancing—like closing costs, term extensions, and debt consolidation—can total upwards of $5,000. The first step is to make sure the numbers work out in your favor.

 

Conventional wisdom says that you should only refinance if current rates are at least 1 or 2% lower than your existing mortgage. However, real estate analytics firm Black Knight contends that a refinance makes sense for any homeowner with an existing mortgage more than 0.75% (or 75 “basis points”) higher than the going rate.

 

For prospective homebuyers, low rates mean they can afford more home with the same savings and income. Every basis point, up or down, makes a tangible difference in the cost of a mortgage across its lifetime. At 3.33%, today’s near-rock bottom 30-year fixed rates are incredibly appealing for buyers. The question is… during a global pandemic, are they willing to buy?

 

The impact of the novel coronavirus is still evolving throughout local real estate markets and the national economy as a whole. Stay-at-home orders make home tours complicated, if not impossible. If you’re looking to buy a home while rates are low, are you open to making an offer based entirely on a virtual tour, videos, photos, and a look at the exterior? Are you open to leaving your place of residence to tour a property with your partner and a showing agent?

 

Your Trusted Orange County Real Estate Advisers

At the Stavros Group, we are working hard every day to facilitate the needs of our buyer and seller clients with the utmost concern for their health and safety. Some buyers and sellers are motivated by external life events like relocation, divorce, or a birth or death in the family. Some buyers are looking to take advantage of low rates while they last. The good news is that, although business has inarguably slowed, sales are still happening. New listings are coming to market, properties are entering escrow, and deals are being closed.

 

If you are thinking of buying or selling a home, taking advantage of low rates by refinancing, or if you simply have a question about the market, feel free to reach out. We are always here to help, and it’s our honor to be of service. Now more than ever.

 

Stay safe, stay healthy, and stay in touch—figuratively, of course!