Mortgage crises drive house prices down by 20%. End of Tenancy Cleaners will be the winners
If you still think that 2020 was the worst year ever, you’ve obviously slept through 2022 so far. With energy prices soaring and war-induced 40-year-high inflation, there isn’t an industry that was not hit hard by the post-covid crisis. This was not a genuine surprise, as experts had predicted high inflation and market shrinkage a year ago. However, what they couldn’t take into consideration was Putin’s imperialistic obsessions, which spiked the crises out of control and produced what we see today.
Still, a genuine surprise was the ever-climbing housing market. For seven months straight, housing prices have been going up and the market scaled by 15.5% annually by the end of July.
However, over August and September, the housing market didn’t just slow down but began shrinking. Moreover, with October passing its midpoint, the housing market decline seems to be speeding up.
Why didn’t the housing market continue to rise
There were several factors which led to the rapid rise of the housing market, despite the inflation and volatile industry. The first of many was the Covid crisis, which deterred people from spending too much. Naturally, they managed to accumulate significant capital. In addition, the high inflation introduced another factor, as it pushed those who managed to save money, to invest further and not lose them to inflation. Moreover, the pandemic made it painfully obvious what are the benefits of owning your own place, especially one outside the big urban centres. The final nail in the coffin was the relentlessly rising rent cost, which, unlike wages, rapidly increased. By June 2022, the average rental price in the UK increased up to 3.6% for a 12-month period.
All these factors pushed people to seek housing opportunities despite the expectations that the Bank of England would raise the interest rates. After all, many concluded that if they would pay massive sums each month, it’s better to make it toward their own home rather than just pay a landlord.
On the other hand, many who were saving for a second or third home were forced to choose whether to let inflation take a huge bite out of their savings or invest it in a bigger, better and newer home.
All of this drove the housing market up, but as we are preparing for the next increase in interest rates, it seems that the housing market will finally take a blow.
Why is a mortgage crisis expected?
The Bank of England announced yet another aggressive interest rate increase in November to battle the ever-increasing inflation. This might bring some peace of mind in other markets, but the increase will actually make things worse when it comes to the housing market. Private banks in terms will increase their interest rates towards their customers, so people will have to pay higher amounts to cover their mortgages. For example, the interest on two-year fixed-rate mortgages has more than doubled, rising to 5.17% compared to 2,57% in March 2021. The five-year fixed-rate mortgage has done the same, reaching 5.1% compared to 2.75% in March 2021.
This means that many won’t be able to cover their loans, as some estimates claim that millions would not be able to afford to deposit their monthly payments. On average, a person who took a £100,000 25-year mortgage at a rate of 2% pays £424 monthly. However, if the interest rate goes to 6%, as is the BoE plan for next year, this would mean that the monthly payment will rise to £644. Many won’t be able to afford this drastic change. Thus it will lead to a mortgage crisis.
From the mortgage crisis to the housing market collapse.
Since many won’t be able to afford their monthly payments, they will be forced to sell their homes. Moreover, many would try to sell their homes in panic, as they will be afraid of even higher increases next year. The significant drop in mortgage applications and the fact many landers suspended most of their mortgage products means the housing market is not just in crisis but should be ready for a free fall. High offering and low demand are usually a recipe for disaster in any market. Experts expect the real estate cost to drop as much as 20%.
According to UK’s National Statistics, the average house price in the UK was £292,118 in July 2022. If the experts’ predictions come true, soon a new home in the UK could be bought for as little as 233.7 thousand (on average)
Is there a silver lining?
It’s hard to imagine there will be any winners in this horrific scenario which is currently unfolding. However, if we have to find a bright side to this, there will be some industries that will probably benefit from the housing market’s downfall. For example, people who already have the money or can afford the constantly increasing mortgage prices will have the opportunity to get a new home with a 20% discount. Landlords will also take a significant boost from the collapsing market, as many would have to go back to renting. With the skyrocketing rental prices, this turn of events is more than welcome for many rental apartment owners.
However, the biggest winners will be the service sector, which takes care of preparing homes for sales and new residents.
End-of-tenancy cleaners will enjoy a busy winter.
EoT is an essential service when you want to let your home look stunning before selling it or whenever you are switching your permanent residence. Although the money will be tight in most cases, many would prefer to hire a professional team to prepare their homes for sale, as it will drive the price up. Moreover, an end-of-tenancy cleaning is a one-time spend that significantly increases the property’s value. For example, the price range for one of the most prominent end of tenancy cleaning companies in the UK, Fantastic Cleaners, shows that the average price for a single-bed home goes from £180 to £210, depending on the area. This is a small price that can easily increase the value of your home by up to several thousand pounds.
Moreover, storage providers, staging companies and others will also experience a boom, especially with fewer potential clients on the line. The significant reduction in demand will force sellers to upstage their competition in order to sell without drastically lowering their prices, so any trick in the book will come in handy.
There is a hard winter coming
Despite the opportunity for some home services sectors, the mortgage crisis portend one truly harsh winter. High inflation and the inability to strike good mortgage deals will force people to seek other ways to save their money, which may lead to funds draining away from the UK economy. So how will our lawmakers deal with this impending crisis? We will have to wait and see.
What are the Advantages of HOAs?
Homeowners associations or HOAs are a vital part of property ownership. They provide assistance to property owners and tenants, particularly with respect to maintenance and repair. Without a proper HOA, the quality of living spaces can deteriorate quickly and pose a real threat to the safety, health, and well-being of residents.
HOAs also play an important role in maintaining the aesthetic appeal of communities, including the landscaping and aesthetics of properties. They also set up detailed rules for property improvement, which is a main concern for community development. HOAs regulate the overall appearance of properties as well as common areas like parks, roads, or recreational areas. Most HOAs outsource HOA management services for proper functioning and regulations.
Let us now see the main advantages of HOAs.
- Set and enforce community rules
HOA rules are set and enforced by the community’s elected body. They are set to help the community flourish. Some associations have HOA documents that contain their rules and regulations, which include fines and guidelines. These rules are meant to prevent disputes and problems in the community.
- Protect property values
HOAs are responsible for protecting the value of properties in the community. They determine what can be built on properties and how it should be built. The conditions for land use are set by the association’s governing body.
- Provide services, amenities, and facilities
The responsibilities of HOAs include the provision of services and amenities to the property owners. These include recreational, health, and community services, such as a swimming pool, gym, playgrounds, and sports facilities. They also have security systems, in case of break-ins.
- Offer self-governance
HOA boards and committees are responsible for carrying out and collecting fees from property owners. They may also offer other programs and services, depending on the HOA group. In addition, they also ensure that an HOA has a good cash flow. This is done by setting up a budget, which revolves around the collection of HOA fees and fines.
- Improve property value
HOAs help improve the property value of a neighborhood. This is because they take care of all maintenance matters related to a property’s exterior appearance. For example, they help maintain the landscaping and appearance of homes at least once or twice per year. It also helps with keeping common spaces clean and maintained in a pristine condition throughout the year.
Home Buying Process From Start To Finish
Buying a home for the first time can be an exciting and overwhelming experience. There are many factors to consider, from finding the right home to securing financing and navigating the legal process. In this blog post, we’ll explore some tips and advice for first-time homebuyers to help make the process smoother and more successful.
Determine your budget
Before you start looking at homes, it’s important to determine how much you can afford to spend. This will depend on a number of factors, including your income, expenses, and credit score. You may want to consider getting pre-approved for a mortgage to help you determine your budget and show sellers that you’re serious about buying a home.
Define your needs and wants
Once you know your budget, it’s time to start looking at homes. But before you start visiting properties, it’s important to define your needs and wants. What are your must-haves in a home, and what are your nice-to-haves? Do you need a certain number of bedrooms or bathrooms, or a certain size yard? Make a list and prioritize your needs and wants to help guide your home search.
Work with a real estate agent
A good real estate agent can be a valuable resource for first-time homebuyers. They can help you find properties that meet your needs and budget, negotiate the sale price, and guide you through the legal process. Make sure to choose an agent who has experience working with first-time homebuyers and who you feel comfortable working with.
Be prepared to compromise
It’s unlikely that you’ll find a home that meets all of your needs and wants within your budget. You may need to compromise on certain features, such as location or size, in order to find a home that fits your budget. Keep an open mind and be willing to adjust your expectations to find a home that you love.
Get a home inspection
Once you’ve found a home that you’re interested in, it’s important to get a home inspection. A home inspection can uncover any potential issues with the property, such as structural problems or water damage. This can help you make an informed decision about whether to move forward with the purchase or negotiate repairs with the seller.
Understand the legal process
Buying a home involves a lot of legal paperwork and processes. It’s important to understand these processes and work with a lawyer or real estate agent who can guide you through them. You’ll need to sign a purchase agreement, obtain a mortgage, and pay for closing costs, among other things. Make sure to read and understand all legal documents before signing them.
Factor in additional costs
In addition to the purchase price of the home, there are many additional costs associated with buying a home. These may include closing costs, property taxes, homeowners insurance, and maintenance and repair costs. Make sure to factor in these costs when determining your budget and make sure that you can afford them.
Don’t rush the process
Buying a home is a big decision, and it’s important to take your time and not rush the process. Don’t feel pressured to make an offer on a home that you’re not completely comfortable with, and don’t let your emotions cloud your judgment. Take the time to carefully consider each property and make an informed decision.
Plan for the future
Finally, when buying a home for the first time, it’s important to plan for the future. Are you planning on starting a family or changing jobs in the near future? Will you need a larger home or a different location in a few years? Make sure to consider these factors when choosing a home and make sure that it will meet your needs for the foreseeable future.
Buying a home for the first time can be a daunting process, but with the right preparation and guidance, it can also be a rewarding one. By determining your budget, defining your needs and wants, working with a real estate agent, and understanding the legal process, you can make the process smoother and more successful. Remember to take your time, factor in additional costs, and plan for the future to make sure that you find a home that you love and can afford for years to come.
9 Advantages of Hiring Property a Management Company in Oakland California (2023)
Oakland, California, is widely recognized by residents and tourists for its diverse set of attractions. Numerous factors contribute to the city’s appeal, including its advantageous location, abundant employment opportunities, agreeable climate, reasonable lodging prices, and potential for profitable rental investments. Compared to other California cities, Oakland provides a high level of convenience, which is why it has become a preferred destination for individuals of various ages and lifestyles.
If you plan to relocate or invest in Oakland, you may have some initial hurdles, as navigating a new location can be difficult. However, once you overcome these hurdles, your hard work can be extremely rewarding, allowing you to reap the benefits of your efforts. You can seek assistance from a property management company to simplify the complexities. They can help you with your relocation or get you acquainted with the new area so that you can become familiar with the different neighborhoods. By utilizing their services, you can enjoy numerous benefits that will make your stay in Oakland much more satisfying than you initially expected. Still unsure of how this is possible? Here are some benefits of hiring a property management company in Oakland that you should be aware of.
Did You Know?
There are around 37,600 property managers all over California.
9 Advantages of Hiring a Property Management Company in Oakland
- Save Time for Property Search
The task of searching for a new home can be daunting, particularly when you’re exploring options in an unfamiliar city. However, companies dealing with property management in Oakland California have extensive knowledge about various property types, associated expenses, local amenities, and more. Engaging their services can provide crucial information to help you identify the most suitable home and save valuable time in your search.
- Reduce Expenses for Repair and Maintenance
Once you find the home you’re looking for, you may have to spend on finding services that will help you with repairs, landscaping, and other relevant changes. This can prove expensive as you may not be aware of suitable places to approach for these requirements. Hiring a property management company will help you save on these expenses. They usually know the best service people who can assist you with repair and maintenance and give you high-quality results without overspending.
Did You Know?
About 80% of property managers help with maintenance and repairs.
- Generate Additional Income With Ease
If you plan to rent out a portion of your property to generate extra income or as an investment opportunity, property management companies can assist you with advertising the vacancy, vetting potential tenants, drafting lease agreements, and managing rent collection. Enlisting the services of a property management firm can help you optimize your rental income without incurring additional costs or worrying about the details of the rental process and tenant management.
Did You Know?
At least 70% of property managers help with inspections, leases, and advertising for the property.
- Resolve Legal Disputes With Confidence
There may be times when an unprecedented legal issue presents itself due to a faulty tenant or property concern you didn’t know about. Irrespective of the reason, it can be challenging to deal with such disputes without legal guidance. Companies handling homeowners property management services are equipped with the knowledge, skills, and legal team that caters to different property legal issues. Hiring them can help property owners combat these problems conveniently by taking the appropriate steps to resolve each grievance.
- Get Assistance With Accounting
As a property owner, you must cover various expenses to maintain your home, address tenant needs, and more. Property management firms can assist you in monitoring your expenses relative to your income and identifying cost-effective strategies for managing your property, which can help you mitigate the financial burden associated with property ownership.
- Assistance With Rental Pricing
Due to constant market changes and price fluctuations, it can be challenging to adequately determine the monthly rent you want to charge a tenant. Property management companies can assist you with pricing and help you come to a reasonable amount that will allow you to earn sufficiently while attracting tenants consistently.
- Assistance With Real Estate Investment
If you’re looking to invest in a property that you don’t want to use as a place of personal stay, property management companies can help you find the best ones that will allow you to invest efficiently. They can assist you with market guidance and price fluctuations and facilitate investments that will help you gain long-term returns for a stable passive income source.
- Timely Digital Assistance
When moving into a new property, you may encounter issues that require prompt attention. Property management companies can address your concerns promptly through digital channels to help you resolve minor problems. They’ll communicate with you to understand the issues and provide on-site assistance as soon as they clearly understand your needs.
- Improve Landlord-Tenant Relationships
Investing in a rental property is critical to maintaining healthy relationships with tenants for its success and high returns. Property management companies help facilitate a smooth flow of communication, set reasonable rental terms, and manage the grievances of both parties to create a friendly atmosphere between you and the tenant.
Property management companies offer streamlined services to property owners and real estate investors, simplifying the intricacies of property management. In Oakland, these service providers undertake various activities such as relocation assistance, rent collection, maintenance, legal compliance, and more. For individuals relocating to the city or seeking to invest in local property, engaging the services of a property management firm can significantly streamline various processes and deliver optimal outcomes for all involved parties.
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