Because real estate is cyclic and none of us have much control over a global economy, it is important to do everything we can to maintain and grow value in our homes. Here is an overview of some ideas on how you can build equity even in a down housing market:
1.) Leveraging your home can be a beneficial tax benefit as well as a good investment for your money. Consider interest rate and terms carefully when choosing any loan product to buy a home or refinance a home. With rates hovering at 4%, check in with your loan agent to see if re-financing makes sense. Obviously, the more cash in, the more initial value, but weigh that carefully against the cost of borrowing and cash flow.
2.) Know your neighborhood and local real estate market. Work with your real estate agent to choose the best neighborhood for historic value growth and value stability during tough times. Once you are living there, do everything in your power to keep the neighborhood positive. Neighborhood watch, involvement in local schools, participating in neighborhood associations, as well as local planning boards can help keep your neighborhood improving. Also work with your neighbors to maintain a pride of ownership in your neighborhood.
3.) Look at cost effective ways to improve the energy usage of your home. Consider greening your home in ways that make sense. There are many things you can do before you invest in solar to significantly impact energy usage of any home. Consider dual paned windows, weather stripping, caulking, tank-less water heaters, and other ideas to reduce your home’s energy usage. Recognize that there are energy related rebates from the government to help make your home greener. Take advantage of these opportunities whenever you can.
4.) Stay in touch with trends in housing and do your research before any major remodeling or updating project. Look at your home from a future perspective of 10 years. Granite may be the rave now, but greening your home with recycled materials, lower VOC based materials, and sustainable materials may very well be the standard for the next generation of home buyers. When you remodel, think about the floor plan and the demographic who might be buying your home. Especially in retirement areas, consider carefully before adding a second floor. Combined family living where parents join their children may require homes to have two master suites. Completing research before you remodel can make a difference in determining the value added to your home. Consider becoming an HGTV fan and consult with your real estate agent to ask about local trends and return on investment specific to your local market.
5.) Finally, keep up on home maintenance. The single most important item related to maintaining value in a home is maintaining the structure itself. Pass on expensive landscaping if you don’t regularly clean your gutters. The value of maintaining proper drainage, roof/attic ventilation, and major appliance health can make a big difference in how a buyer perceives the condition and therefore the value of your home. Keep records, and when you are ready to sell, hand them to your agent so they can include copies of them in the advertising binder for the house. Below is a chart from the California Building Association on home maintenance recommendations and frequency. Here is a down-loadable PDF chart for home maintenance.
Take care of your home and your neighborhood and you will tip the odds of growing your home’s equity in your favor. If you would like neighborhood market trends contact me or visit Home Values in San Jose.