Pierce County 3rd Quarter Market Update

Now that the 3rd quarter is done, we're back with our quarterly Pierce County real estate market update. Things are looking strong in our local market this year.

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With the 3rd quarter in the books, I wanted to give you our quarterly Pierce County market update. We've seen some great things happening the local market.

Typically, the main factors we look at are how many homes sold in comparison to the 3rd quarter of 2015, the average and median asking price versus the average and median sold price, and finally, the days on market.

This year in the 3rd quarter, we saw sales go up to 4,242 compared to 3,852 last year, good for a 10% increase, which is great to see. We also saw the median list price go up this year. In the 3rd quarter of 2015, median list price was $250,000, and when you fast forward to this year, it was $279,950, which is an 11% increase.

We saw list price and sales price both increase by 10% or more.

The number I'm usually most interested in is sold price. We can ask whatever we want for a house, but the price that somebody is willing to pay for it is what really counts. The median final sale price in Pierce County last year was $253,475, which was on average 1.3% over asking price. Looking at this year, the median sale price was $282,250 and 0.8% over asking price on average.

Looking back at last year, the average days on market was 21 in the 3rd quarter, and it has actually shrunk down to 13 days in the same time frame this year.

Here at the Hauer Real Estate Group, our listings sold for an average of 3% over asking price, which is definitely outperforming the market as a whole. Our listings also have an average of nine days on market compared to 13 days for the area as a whole.

As always, we're here to be a resource for you, so give us a call with any questions you have. We'd love to hear from you!

Why Real Estate Is Your Best Investment

I always like to ask financial planners what their best clients did to become as wealthy as they are and 9 times out of 10 the response I get is that they're heavily invested...in Real Estate!

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We've recently been car shopping, and it blows my mind how much people are paying for vehicles!

I saw someone paying $80,000 for a Cadillac Escalade (and hey, if they can truly afford it then more power to 'em!).  Regardless, all I could think about is how that's a LOT of money for something that goes DOWN in value because for that same $80,000 one could buy TWO investment properties that would go UP in value.

In the greater Tacoma area you can buy a rental property for around $200K with 20% down.  That comes out to a $40K down payment. From there, you're using other people's money.

The mortgage you get will be around $1,100/month, but you can charge that same $1,100 for rent in the home + more!  Historically speaking, home values have increased by an average of 5% per year since World War II.  Based on that, the fourth year you own the home, the value would likely rise to about $243,000.  By year 10, the home would likely rise to $325,000!

You can greatly increase your net worth.

So you purchased the home for $200,000.  It has appreciated by $125,000 and your tenants have simultaneously been paying down your mortgage by $30,000 over 10 years.  Based on that, between the appreciation and the debit that is paid off by your tenants, your net increase is $155,000 in 10 years!

But wait...there's more!  You'll save even more money with TAX ADVANTAGES!  You can write off the property tax and mortgage interest that your tenants have been paying for you, which will add up to nearly $100,000 in tax write offs over 10 years!

You've now got the $155,000 increase in equity from the property plus another $100,000 in tax savings.  That's $225,000 of value in just 10 years!  That's over $25,000 per year of other people's money that you are making off of your initial $40K investment.  And that doesn't even include the full extent of tax advantages, but I promised I'd keep things simple so we'll leave it at that.  You'll continue to enjoy increase in values over time and passive income until the day you decide to sell.

Oh, and as a reminder, the above example is only based off of ONE rental property, so if you want to really set yourself up for financial success...why not buy TWO!?

You decide...$80,000 for a Cadillac Escalade OR Two Rental Properties.

This is a simplistic approach to the secret behind real estate investing, and we hope it was eye opening.  If you have any questions, feel free to give me a call or send me an email.  My team & I look forward to hearing from you!

Simple Steps to Transition into Your New Home

For many people, one of the trickiest aspects of purchasing a home can be what I call "the dance"...I refer to "the dance" as the financial transition from your old house to your new house, especially when your finances are all tied up in equity in the old property.  Today I’m going to discuss a few different steps you can take to transition from your old home to your new home.

My first recommendation is to sell your current home before purchasing a new one. This is the safest, most financially prudent way to go.  As a big Dave Ramsey follower I strongly recommend this option. This way, you’ll know exactly how much money you have to work with from that sale, and from there you’ll have a price range within which you can work to find a property. You’ll have a clearer picture of your finances and will avoid paying any extra holding costs, too.

This recommendation can seem incredibly scary as there's always that fear of "what if we don't find a place to live in the meantime!?". What I’ll tell you though, is that it's EXTREMELY rare that we’re not successful in helping clients find a home that they’re more than thrilled about immediately after selling their old home.  I can count on one hand the amount of times in the last 13 years that we've had a client unable to identify a great property to purchase and move into after selling their old house.  Our "Love it or Leave It" guarantee is also an added benefit to Hauer Group V.I.P. Buyer Clients.

My recommendation is to sell your current home first.

I understand that not everybody has this level of risk-tolerance in transitioning from an old home to a new one so quickly; some would rather remain in a home that they've long outgrown over the thought of selling it and not already knowing where they're going to move to.

If you’re stuck in this spot and you have a good amount of equity built up in your home, you might consider the option of getting a Home Equity Line of Credit, or HELOC, through Columbia Bank. They have a great promotion going on which will allow you to pull a line of credit from your current residence and only pay 1.49% interest on whatever amount of equity that you choose to use from your current house.  It doesn't cost you any money to simply have the HELOC open and available to you, so by being proactive about it, you can be prepared knowing that those funds are readily available in case your dream home pops up on the market! You can use those funds for your down payment and then upon the sale of your home, you can pay off your heloc with proceeds from your home sale.

If you’d like to speak more specifically about your own options for transition loans like this, I'd encourage you to contact me or Allisha McVay at Columbia Bank by email at amcvay@columbiabank.com or by phone at 253-858-5105.  When it comes to HELOC loans in particular, Allisha is the best, most knowledgeable gal around on the topic and Columbia Bank has some excellent options to work around your specific scenario. You can always give me a call or send me an email as well. I look forward to hearing from you.

How Does a Home Warranty Protect You?

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Once you’ve purchased a home with us, we want to make sure your butt is covered and your risk is limited moving forward. One of the ways we do this is through a home warranty.

I have a home warranty for each one of my properties. A home warranty covers mechanical items in your house such as your furnace, heat pump, hot water tank, appliances, and other fixtures in the home. If they fail, the warranty is there to cover you. Most people just get a home warranty for their first year of owning a home and let it expire. You can actually renew a home warranty each year. Not a lot of people know that. You can also purchase one at any time when you own a home, whether you’ve just purchased or have had the home for 10 years.

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You can renew your warranty each year.

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I renew my home warranty each year and it’s saved me thousands. One time, our heat pump went out and instead of having to pay $7300 to replace it myself, I contacted my home warranty company, paid a $50 deductible, and got a brand-new heat pump. A lot of my clients have similar stories.

There are a lot of different options for home warranties out there. I do have a personal favorite, though, and I might be able to get you a discount from them if you give me a call and let me know.

If you have any other questions, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.

What the Tiny House Movement Says About Today’s Buyers

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I recently had a client ask which is more important - size or quality of a home. Do buyers want more square footage in a home, or do they want higher-quality finishes?

I would definitely say the trend we’re seeing in Pierce county real estate in the last few years is people less concerned with a lot of square footage, and more interested in good use of space, and smaller homes with high-quality finishes. A perfect example of this would be the tiny house movement, especially in the great Seattle area market. People are wanting to live green.

We’re actually going to have an event where we want you to come check out a tiny house in downtown Gig Harbor on Saturday, August 6th from noon to 2 p.m. Our event will have food and drinks, and we want you to see the amazing amount of things you can do with a very small amount of space.

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Tiny houses are a great way to get into land ownership.

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Tiny houses are a great way to get into land ownership; simply buy a lot and build an inexpensive tiny house. Many tiny houses are built to be off the grid, so you don’t need any power or utilities. It’s a pretty incredible option we’re seeing right now.

If you have any other questions or you’re interested in buying or selling a home, reach out to me soon. Let’s talk today!