BHAUS EIGHT May 2023 Newsletter

Hello community,

Summer is almost here! The countdown has definitely begun (at least in my household it has!), and many of us are planning our summer retreats, summer camps, and hopefully leaving room for plenty of R&R! Our own team is busy working with clients and finalizing summer plans! We are covering a few countries amongst all of us, including Germany, Croatia, Vancouver, US, El Salvador, and maybe Peru! Tell us, where are you going this summer?

In this month’s newsletter,…

• We continue our Investor Corner chat discussing vacation homes/second homes, and the process and fees an investor should be aware of before buying abroad, this time in El Salvador

• The Southbay Real Estate section will not only give you local stats, but it also talks about the advantages sellers have to go to market now - there is no better time!

• Finally, read on to Economy & Mortgage News to get the latest updates on inflation, consumer spending, and up-to-date mortgage rates.

Stay tuned for the next BHAUS EIGHT newsletters throughout the summer as we visit different hot spots for Americans to buy, and learn the processes and important information before taking the plunge to buy abroad!

SouthBay Real Estate.

In the month of April, the Southbay real estate market had healthy home price increases, even though inventory remained low vs last year. Prices also showed signs of improvement vs last month. Still, we had less homes sold in the same time period and properties stayed on the market for a little longer than last year and the previous month.

Across all property types, average home prices jumped by 19% vs last month, and by 3% vs last year, with an April average price of $1.365MM. Median prices were flat vs. lat month, and decreased slightly by 6% vs last year, with a median price of $895K across all Southbay cities.

Inventory remained low decreasing 25% vs last year, although the good news is that it increased by 25% vs last month, with 385 new homes coming on the market during April. Homes stayed on the market a little longer (on average of 30 days), while sold listings decreased by 9% vs last month and by 39% vs last year.

Despite the inventory challenges vs same period last year, we are seeing signs of improvement versus last month, while home prices continue strong with healthy increases. This continues to be a great time for sellers to list their homes, and take advantage of their equity to either move to a larger home, or to downsize if their lifestyle permits.

Home Stats by City.

You will be receiving this information the 3rd week of each month going forward. For pricing stats earlier in the month, please contact us directly at Sonia@bhauseight.com.

Economy & Mortgage News.

Many economy issues are at top of mind of consumers, including debt ceiling negotiations, regional bank failures, and some fears of a soft recession. Despite those issues, the labor market continues to stay strong, inflation has dropped to the lowest in the last two years (hitting below 5%), and mortgage delinquencies have reached the second lowest level since 1979, according to C.A.R. research.

When it comes to the Consumer Price Index (CPI), C.A.R. research points to the fact that consumer prices remain elevated, although there are signs of upcoming gradual easing given the softer reading of energy and food inflation. Although there are a couple more inflation-related reports due before the next Federal Reserve meeting, analysts suggest that the April CPI release offers encouraging news that the Fed will be pausing rate hikes in the near future.

Those are great news for consumers, even when higher costs of borrowing have continued to slow down the market in some areas.

On the mortgage front, rates are currently around 6.375% on a 30-year fixed conforming loan, while 30-year fixed rate jumbo loans hover around 6.0%.

Investor Corner.

Continuing with our second home market chats, this month we are taking you to a place where surf is always up! El Salvador, which is only a 5-hour flight away from Los Angeles, has become a surf mecca for wave lovers all over the world, and it has been the center of international competitions due to its great surf, warm hospitality, great food, charming colonial towns, luscious forests, and delicious coffee all for still a great value!

Purchasing property in El Salvador seems to be made relatively easy for foreigners. For one, a buyer will only need his or her passport, in addition to an NIT card (Tax ID Number) that can be easily obtained from the Ministry of Finance government office in El Salvador.

There are no restrictions on property rights for foreigners, and title to a home a foreigner is purchasing is easily verified via a state-owned registry called “Instituto Libertad y Progreso”.

An attorney will handle the transaction and will carry out the buyer’s due diligence. This includes completing the deed, investigating that the property is free of encumbrances (such as municipal taxes owed), and that there is no cloud on title. The whole process will take roughly between 25-40 days.

Fees to pay:

• Real estate agency fees: 3%-5% usually paid by Seller (but always negotiable)

• Attorney fees (depends on the attorney a buyer chooses, it can vary between $500-$1,000)

• Registration fee (“Alcabala”): 0.63% of property price

• Transfer Tax: 3% of property price (in excess of $28,571)

• Real Estate Property Tax: $0 (there is none! El Salvador is the only country in Central America that currently has no property tax, although this may change in the future)

• Municipal fees: very minimal fees of roughly $10/monthly that include services such as garbage disposal

• Property financing: there is no financing available to foreigners, therefore the cost of the home must be paid in cash. Due to strict money laundering laws, it is easier for the Buyer to establish a bank account and transfer into his/her bank account directly from a US bank, and then create the transfer to Seller between El Salvador banks. Otherwise, if transferring directly from US to El Salvador (into Seller’s account), process may take a little longer as bank will need to verify the provenance of the funds transferred.

• Other: When purchasing a home in the coastal or countryside areas, note that owners usually hire a caretaker to be on-site 24/7, and can cost up to $300/month. Also, bitcoin is being used more and more in this tiny country, and therefore, some real estate purchases maybe available to transact with Bitcoin, depending on Seller.

We have partners in many international countries and can help guide you to the right local broker when ready. Don’t hesitate to call us with any questions before you start your search!

Contact your BHAUS EIGHT team with any comments or questions!

To subscribe to our weekly emails of investor opportunities and our digital newsletter, please email Sonia directly at Sonia@bhauseight.com

From BHAUS to yours.