Goldman Sachs has certainly made a name for themselves as a major multinational investment bank. Their 2017 revenues were more than $37 BILLION. As a major investment banking firm for many very large corporations, they typically are not the first thing you think of when talking about “small” loans in the world of residential real estate.
With the addition of a home improvement calculator being offerd on one of their sites, there appears to be some interest in residential real estate loans. In fact, they are looking to tap into home improvement loans which seems to have been a large part of the market for quite some time.
While the Golden Boys at Goldman Sachs certainly aren’t the first ones to offer home improvement loans, their interest in this space seems to indicate that they feel this type of loan will be in demand for a while and that they can use these loans to benefit their bottom line. We also see that they could expand into life insurance, mortgages, auto loans and wealth management services down the road. Personally, I prefer working with local lenders and contractors as they seem to be much easier to deal with.
The residential real estate industry has been following the trend of home improvement for many years. In the recent past, we have seen people decide to stay in their homes rather than sell their home because of multiple market conditions. Basically, anyone who has purchased a home in the past decade while we have seen historically low interest rates. The combination of the very low interest rate they have on their mortage and the fact that prices have been on the rise, make it more appealing for people to stay put. Why? Because if they are looking to “move up” right now, they get less home for the same payment than what they are currently paying. For most people, it comes down to what their monthly payment will be when deciding to buy or sell a home.
In this video below, the National Association of REALTORS talk about trends, issues, and outlook in the home remodeling business. We hear about home designs and remodeling projects that are in demand, especially by the largest demographic groups, the baby boomers and millennials. They also discuss which home renovation projects appeal most to home sellers and buyers. These are important things to think about as remodeling a home can be a good investment in your future, as well as being something to do for your own personal satisfaction while living in your home.
As prices rise and interest rates rise, it is harder to “move up” in to a larger home. This keeps people in their existing home and helps with the “low inventory” issues we see in the current market. Basically, it is hard to find quality homes for people looking in most “affordable” price ranges.
Keeping It Local:
While big banks like to talk about national trends, we think it is super important to watch local markets. Some online calculator from a big giant bank is rarely going to be your best bet. Sure, Goldman Sachs can attempt to generalize your construction costs in Phoenix, or Tempe, or Mesa, Chandler, etc., but I feel like their numbers could be incorrect. Some ginormous bank in New York just might have a hard time estimating values in our market. Just sayin…
If you are ever thinking of buying or selling a home here in Arizona, or even if you want tips on best practices of what kinds of improvements tend to get you a great return, please feel free to give us a call at 602-803-6425. We are always willing to help, and we love to talk about the real estate market in general.