No One Could’ve Predicted the Popularity of THIS Purchase Post-COVID

No One Could’ve Predicted the Popularity of THIS Purchase Post-COVID

4 min read
Tamar Hermes

Tamar Hermes is a full-time real estate investor and educator. After building successful businesses in the retail and entertainment industries, she turned her attention to real estate with a mission to get more women to become investors and continue to build her portfolio. Tamar has been investing for over 20 years with a focus on appreciation with buy and hold single-family homes and duplexes in Los Angeles. In the past few years, she has expanded her portfolio to include passive multi-family investments across multiple states, private lending, and Airbnb properties. She bought her first duplex when she was 28.

Experience
As an educator and advocate for women to become educated and invest in real estate to grow wealth, Tamar focuses her time empowering and educating women across the country through her masterclass, The Real Deal Formula. She also coaches and consults women and couples privately about the opportunities to build their assets through real estate and supports them to connect with reliable partnerships through her Wealth Warrior Woman Alliance.

Tamar always had a knack for saving money, but it took her years to discover there were other ways to earn income besides working a 9-5 job. She now firmly believes financial freedom is possible through real estate and understands the importance of knowing how to allocate and invest your money and protect assets is a critical piece of sustaining financial independence and creating a legacy.

Tamar currently lives in Los Angeles with her husband of 18 years and her two children. They plan to relocate to Austin at the end of 2020. When she isn’t teaching, reading, or learning more about real estate investing and self-development, you can find her on a hiking trail with her rescue terrier Teena, listening to the BiggerPockets Podcast.

She also loves traveling, yoga, hosting dinner parties with friends, supporting her favorite non-profits, hanging out with her Gobundance Women’s’ Tribe, and binge-watching Curb Your Enthusiasm. She currently serves as the co-director of the Los Angeles Chapter of The Mona Foundation, which has worked for 20 years to alleviate poverty through gender equality and education around the world.

Tamar’s first book on real estate investing for women will be published this year.

Education
Before Tamar discovered real estate investing, she attended Pitzer College and the American Academy of Rome. She majored in communications and fine arts.

Accreditations
In addition to growing her portfolio in real estate, Tamar became a certified life coach, holds a real estate license in California, and studied finance so that she could master the knowledge she needed to own her financial destiny.

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On March 11, 2020, the world was told to shut down and social distance due to a national pandemic infecting millions. We barricaded ourselves and prayed for the best. Five months later, COVID-19 continues to spread. Businesses have had to close down, and the economy is in flux.

Strangely, despite economic uncertainty, the real estate market is thriving.

The 2020 Homebuying Boom

According to a survey of 1,000 people conducted by Redfin, three-quarters of homebuyers who plan to buy a home within the next 12 months indicated that the coronavirus pandemic has impacted their homebuying plans.

“Somewhat counterintuitively, the coronavirus-driven recession is propping up the housing market,” said Redfin chief economist Daryl Fairweather. “Homebuyer demand is surging despite GDP taking a historic nosedive in the second quarter, largely because Americans value the home more than ever and are willing to prioritize housing even as they cut back on other expenses. Additionally, the Fed is using low-interest rates to stimulate the economy, which is giving buyers more purchasing power and boosting home sales.”

Related: Tenant Turnover in COVID Times: Real Estate Experts Weigh in on How to Adapt

Coronavirus’ Impact on Priorities

People spend money on what they value. With many more people living and working from home, the need for more space has become extremely important. Between concerns about being near others and contracting the virus or simply requiring a quiet, designated area in the home to complete work, people want to buy homes that accommodate them.

Also, many kids are learning from home full-time for the unforeseeable future, so a yard to run around in has become a huge priority. Having a private space to let your kids roam freely has now become an issue of safety.

Mother Carrying Son And Daughter As They Play In Park

The need for safety will often trump other desires. People will prioritize housing and be willing to expand their budgets to attain it.

In fact, 25% of the people surveyed by Redfin said these factors and others affected their decision to move sooner than later:

“When it comes to home preferences, the pandemic’s most common impact on homebuyers is a desire for more space, with 21% of respondents saying they want a designated area to work from home and the same share wanting more outdoor space. Additionally, 10% of respondents said they now want a bigger home, and 7% want a designated space for their children to learn from home.”

The Fed’s Impact

Another incentive to find a new home sooner is that interest rates are at an all-time low. More than half of the people surveyed said that the low mortgage rates played a factor in their moving plans.

At the time the survey was taken, a 30-year fixed-rate was at 2.98%. The savings over the life of the loan at these low rates equates to thousands of dollars.

Related: Despite COVID-19, These 5 Markets Saw Rent Increases in 2020

“Pending sales were up 12% year over year in the four weeks ending July 26; the median sale price was up 11% year over year for the week ending July 26, the biggest increase since 2014; and more than half of Redfin offers faced bidding wars for the third consecutive month in July.”

Based on how hot the housing market was a year ago, the fact that it was up another 12% this year is huge! It means that people are paying a lot to purchase homes at this time.

Since lenders are working with strict criteria to qualify home buyers, it seems that people paying top dollar for homes can afford the mortgage payment. If those people lose their jobs or find their company’s income decrease, they may have a hard time marking mortgage payment.

If you are considering a move at this time, it is crucial to keep in mind that low-interest payments will ultimately not compensate.

Related: 5 Markets Where Rents Are Plummeting Due to COVID-19

Housing Demand & the Impact on Prices

We live in a world of supply and demand. If you have equity in properties and are ready to make a move, this could be an excellent opportunity to sell for a profit.

On the flip side, if you are house hunting, as any investor should always be doing, expect to find a very competitive market and to pay top dollar. If you follow the rules of a savvy investor, you will need to work harder to find distressed sellers and great deals.

Opportunities are always out there, but you need to be looking and continuously expanding your network.

couple-no-kids

What Does a Housing Boom Mean for Landlords?

The good news is that while many are unemployed and businesses have shut down, there are still people who have money and are looking to spend it now. Since the need to move is a top desire for many, the people who cannot afford to buy a new home will likely rent one. Places in the suburbs with open space have become more appealing.

The bottom line is that as people value the home more, they will be apt to spend more money to live in a comfortable and secure environment.

“The people who are delaying plans to move are most impacted by economics, with 45% of those respondents citing financial concerns as a factor in their changed plans,” Redfin reported.

In addition, many tenants do not want to move during a pandemic. They may feel safe in the space they have or cannot afford to make a change.

But when there is movement, there is an opportunity. I sold a condominium last month in Los Angeles for $23,000 over the appraised value and sold my primary home in Los Angeles within 90 days for multiple seven figures.

If we thought the housing bubble was going to burst with COVID-19, it seems to have done the opposite. We are indeed overdue for a housing correction, and with any purchase, always check your numbers and make sure they work for your goals and objectives.

Stay prepared, knowing that this hike in the housing market can’t last forever. In the meantime, make the most of the ride—let it work in your favor.

Questions? Comments?

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