Category: Real Estate

5 Things Renters Should Know About Owning | Realtor Magazine

For renters who aspire to be home owners, transitioning from an apartment to a house requires a shift in their thinking that they may not be prepared to make. The financial changes that come with owning, the need to consider planting longer-term roots in a neighborhood, and new neighborhood rules are things renters may not be thinking about enough.

As their real estate agent, it’s important for you to be there for your clients when they’re embarking on a life-changing event such as buying a home.

Moving can already be one of the most stressful times in a person’s life, but it may be doubly so for a new home owner. In order to be their most reliable resource, using your knowledge and experience to provide them with guidance, share these helpful nuggets of information with your clients so their transition from renter to owner can be as smooth as possible.

They need to understand how their financial investment is changing. Renters may see an increase in their monthly rent every lease term, but they don’t see exactly where it goes — toward property taxes and insurance, even “luxuries” such as trash pickup. As home owners, they don’t have a landlord who handles all those details, so they need to be ready to juggle the financial responsibilities of home ownership. Have an open conversation with your clients about these changes and the importance of budgeting to make sure they make smart financial decisions during this process.

They need to be happy with their location for the long-term. As a renter, you can bounce around from home to home every year if you want. But when you own a home, you have to stay put — unless you plan on renting it out, which most home owners don’t. Impress upon your client that location is going to play a much more significant role in their future, so they should think about evaluating school districts, access to amenities, and commute time now as they search for their next home.

They may need to abide by new rules. Renters don’t think about possible homeowner association rules they may be governed by, such as trash pickup rules or any curfews or rules pertaining to animals. Make sure to get all the information on neighborhood rules and associations to help your client understand what their new obligations will be.

They’ll need to get into the mindset of an owner. Life as your client knows it is about to change. Once your client purchases a new home, they will no longer have a landlord to tend to their many needs, including lawn care and plumbing. The best way you can help them as their real estate agent is to provide them with contact information for local industry experts. They will eventually need certified specialists ranging from HVAC companies to carpenters to electricians. Let them know they don’t have to do everything themselves.

They should know their neighbors can affect their value. Renters don’t care who their neighbors are as long as they’re quiet (enough). But your client is now going to want to know whether their new neighbors are renters or home owners. This knowledge can help your clients gauge current and future home value in the neighborhood. If the neighborhood consists mostly of rental properties, it is likely a home owner will lose money on their house in the future. Renters do not always feel responsible for maintaining their properties the way home owners do. Property value comes down to curb appeal. Less-appealing neighborhoods often have more-appealing prices, which is not always good for buyers and home owners.

Home Buyer Confidence on the Rise | Realtor Magazine

Home purchase sentiment reached an all-time survey high in July, an indication that Americans are feeling more upbeat about the housing market, according to Fannie Mae.

Overall sentiment rose 3.3 points to a reading of 86.5. Each of the index’s six components– including selling outlook and personal finances – also rose last month.

The share of consumers who said they would buy if they were going to move climbed to 67 percent, while the share of consumers who said they would rent dropped to 26 percent, an all-time survey low.

Forty-one percent of consumers expect home prices to rise over the next 12 months, an increase of 8 percentage points from June. Household income rebounded in July as well, rising 3 percentage points to 11 percent.

“The HPSI reached a new survey high in July, but enthusiasm should be tempered because the increase only returns the index to a very gradual upward trend,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers. Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.”

Here are some additional findings from the latest survey:

• 33% of Americans say it’s a good time to buy a house, a 1 percentage increase over June.
• 20% of Americans say it’s a good time to sell a home, a 2 percentage point increase from June (a new survey high).
• 41% of Americans believe home prices will rise, an 8 percentage point increase from June.
• 36% of Americans believe mortgage rates will drop over the next year.
• 69% of Americans say they are not concerned with losing their job, a 1 percentage point increase from June.
• 11% of Americans say their household income is significantly higher than it was 12 months ago, a 3 percentage point increase from June’s sharp decline.

Renovation Tips to Attract Millennial Buyers | Realtor Magazine

Generation Y makes up the largest pool of potential buyers, and builders and current home owners alike are keeping their needs in mind when building and renovating homes.

The millennial generation is overwhelmed with options and information online, which is also reflected in their home search process. They are not looking to settle for a home that is good enough, they want to find one that is ready to move in and enjoy right away.

“They’re picky,” says Peggy Yee, a supervising broker at Frankly Realtors in Vienna, Va. told Consumer Reports recently. “Millennials have specific needs, and if your home doesn’t meet them, they’re going to move on to the next house.”

When your clients are looking to tackle a renovation project, Consumer Reports suggests they should focus on improving these four areas of the home that will make it an easier sell and appeal to younger buyers:

Create a Laundry Room

Young buyers want to separate their laundry from their main living space. Having a separate laundry room is so important to millennials, in a recent survey 55 percent of them said they wouldn’t even consider a new home without one.

Get Smart

Having energy efficient, up-to-date appliances and including smart home technology in a home is a big value-add for young buyers. As NAHB reports, over two-thirds of millennials say smart home technology is a good investment, and they are willing to pay 3 percent more for these upgrades. But as Consumer Reports cautions, “keep in mind that high-tech features can quickly become poor investments because technologies evolve quickly.”

Make Working from Home Easier

Many millennials have jobs with flexible schedules and work from home policies, so owners should think of ways they can re-imagine a space to make telecommuting a reality. As Consumer Reports points out, “It’s also relatively inexpensive to convert a room into an office; a basic desk, office chair, and door should do the trick.”

Focus on Outdoor Spaces

Many young buyers are looking for a home that’s move-in ready and comes already equipped with thoughtful landscaping and a outdoor space for entertaining. This type of space doesn’t have to be fancy either. Just adding a patio or deck that has room for seating and a grill should do the trick to attract these buyers.

Brace Your Buyers for Bidding Wars Here | Realtor Magazine

In some markets, rising home prices are being triggered by bidding wars. Home buyers in California are the most likely to face steep competition for properties, according to a new study by CoreLogic. Seventeen of the top 30 cities with multiple offers that pushed sale prices above the list price are in California; eight are in Washington.

The largest average increase over list price, on a percentage basis, was in San Francisco at 12.2 percent, followed by San Mateo, Calif., at 11 percent.

“Let us pause for a moment and think about this: if you happen to get into a bidding war in San Francisco CA, which actually occurred in six out of ten closed sales in Q2 2016, you’d better be prepared to pay an additional $134,000 for your dream home,” writes Bin He, CoreLogic’s principal economist, in the analysis for the company’s Insights Blog.

Bin He notes that tight inventories are triggering many of these bidding wars. In California and Washington, for example, the inventory is at a 2.6 month and 2.04 month supply, respectively. The rest of the country is at a 3.75 month supply.

The following cities had the highest share of bid properties in the second quarter:

Santa Clara, Calif.

• The share of bid properties: 78.4%
• Additional money paid per bid property: $63,550
• % of additional money paid per bid property: 8%

Milpitas, Calif.

• The share of bid properties: 75%
• Additional money paid per bid property: $51,000
• % of additional money paid per bid property: 6.5%

Fremont, Calif.

• The share of bid properties: 74.6%
• Additional money paid per bid property: $38,000
• % of additional money paid per bid property: 5.2%

San Carlos, Calif.

• The share of bid properties: 74%
• Additional money paid per bid property: $116,000
• % of additional money paid per bid property: 8.8%

Sunnyvale, Calif.

• The share of bid properties: 73.8%
• Additional money paid per bid property: $92,000
• % of additional money paid per bid property: 9.6%

Daly City, Calif.

• The share of bid properties: 73.7%
• Additional money paid per bid property: $65,500
• % of additional money paid per bid property: 9.5%

San Mateo, Calif.

• The share of bid properties: 73.4%
• Additional money paid per bid property: $106,000
• % of additional money paid per bid property: 11%

Cupertino, Calif.

• The share of bid properties: 70.1%
• Additional money paid per bid property: $123,000
• % of additional money paid per bid property: 8.2%

Mountain View, Calif.

• The share of bid properties: 69.9%
• Additional money paid per bid property: $120,500
• % of additional money paid per bid property: 9.9%

Redwood City, Calif.

• The share of bid properties: 69%
• Additional money paid per bid property: $91,000
• % of additional money paid per bid property: 8%

One vs. Two-Story Homes: Which Dominates? | Realtor Magazine

Most people prefer a single-story home, one study reports. But home shoppers may have a more difficult time finding a one-story home in some regions of the country.

The greatest shares of single-family homes with two or more stories are in the Northeast, Pacific, and Western regions of the U.S., according to a new analysis of Census Bureau data by the National Association of Home Builders.

Overall, a greater number of two or more story homes are completed than one-story homes – 58 percent compared to 42 percent.

The Northeast has the largest number of completed two or more two story homes in the nation, which may be due to pricier lot values there, NAHB notes.

“Median lot values in the New England and Middle Atlantic divisions far surpass lot values elsewhere in the country,” the NAHB notes on its Eye on Housing blog. “At the same time, higher density and land constraints may also have contributed to a higher proportion of two or more story homes across coastal divisions.”

The Midwest was the only region of the country where the majority of single-family homes completed were one-story homes, the NAHB notes.

Most home owners prefer a single-story home, A recent NAHB report found that 64 percent of all buyers surveyed said they preferred a single-story home. But researchers note the study’s survey pool was skewed mostly older. Older adults tend to prefer single-story homes, a separate study found. NAHB’s Housing Preferences of Boomer Generation study found that 75 percent of baby boomers and 88 percent of seniors say they want a single story, one-floor living home. However, fewer than half of millennials – 35 percent – and Generation X — 49 percent — say they prefer a one-story home.

Good Schools Give 77% Boost to Home Values | Realtor Magazine

Home values can get a big increase from having a highly rated school nearby. According to the new ATTOM Data Solutions 2016 Schools and Housing Report, homes in ZIP codes with at least one good elementary school have values about 77 percent higher than in ZIP codes without highly ranked schools close by.

Researchers looked at home values and price appreciation against 2015 average test scores in nearly 19,000 elementary schools across 4,435 ZIP codes. They considered a “good school” to be one that had an overall test score that was at least one-third above the state average.

The research team found that out of 1,661 ZIP codes with at least one good school, the average estimated home value was $427,402 – 77 percent more than the home value of $241,096 in 2,774 ZIP codes without any “good schools.”

“While good schools are one of the top items on most homebuyer checklists because of the quality-of-life benefit they provide, this report shows that high-performing schools also come with a financial benefit for home owners in most markets – at least over the long term,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile, home prices in ZIP codes without any good schools tend to be more volatile, which might work to a home owner’s financial benefit in the short term but not over the long term of at least 10 years.”

Home owners living near at least one good school have gained, on average, $74,716 in value since purchase — an average return on investment of 32 percent, the study found. On the other hand, home owners in ZIP codes without any good schools have gained, on average, $23,311 in value since their purchase, an average return on investment of 27.5 percent.

The following metro areas had home values in ZIP codes with at least one good school that were at least 95 percent higher than home values in ZIP codes without any good schools: Birmingham, Ala. (169% higher); Flint, Mich. (129% higher); St. Louis (99% higher); Detroit (97% higher); and Baltimore (95% higher).

July Marked a Big Month for Housing | Realtor Magazine

The housing market heated up in July, with several factors favoring buyers this summer.

Jonathan Smoke, realtor.com®’s chief economist, says these factors have made this summer one of the best in a decade: we’re seeing the highest consumer confidence for a July since 2007, we’ve also had the highest nominal home prices for a July on record, and we’ve had the lowest July mortgage rates on record.

Millennials, aged 25 to 34, picked up their presence on the market this summer too. Realtor.com® reports that last July 75 percent of its 25- to 34-year-old users were looking to purchase a home. Fast-forward to July 2016, that percentage has bloomed to 81 percent.

Buyers are finding a few more choices later in the summer: There are 1 percent more homes for sale in July compared with June.

But hurdles do remain for buyers this summer: It’s tougher to get approved for a mortgage than last year, Smoke notes. In July 2015, 5 percent of first-time buyers reported that qualifying for a mortgage was a significant hurdle. This July, that percentage has increased to 9 percent, Smoke reports.

Also, repeat buyers say their major challenge is finding a home to buy. The share of repeat buyers who say “finding a home” is a problem rose to 25 percent this July, realtor.com® reports.

“The good news for would-be buyers who have struggled to find a home or have been outbid in prior attempts is that the balance of power shifts a bit more in your favor in late summer and fall,” Smoke writes in his column at realtor.com®. “This is the time of the year when sales slow down, but inventory is at its peak. That means there are more homes for sale per buyer now, and yet mortgage rates remain close to their all-time lows. The window to enjoy the best summer in a decade for real estate remains open for the well-qualified and those ready to act.”

Renovation Ideas Owners May Want to Rethink | Realtor Magazine

Home renovation television shows give home owners big ideas about how they can spruce up their property. But some of these projects can open up problems for owners whose big remodeling dreams may not have been well-thought out. Realtor.com® recently spotlighted a few renovation plans that often turn out badly:

Tearing down walls: While some walls may not look like they’d be any big deal to tear down – even, say, a half wall — they actually may be providing more support to a home than home owners realize. The walls may be holding up floors or framework. Also, those walls may contain electric and plumbing. Always ask a professional the implication of tearing down any wall and check what is required by your municipalities building code.

Modernizing a historic home: Removing some of the historic appeal or character of a home – such as removing original woodwork, built-ins, or claw-foot bathtubs – can be one of the worst mistakes remodelers make, says Matt Forcum, a real estate pro with Century 21 Realty Concepts in Effingham, Ill. The interior may no longer match the character of the exterior, and thereby bring down the value of the property.

Replacing worn-out wood floors: “Unless you’ve had significant water damage, it doesn’t take much to replace hardwood flooring,” says Luis Leonzo with TableLegsOnline.com. Tearing out old floors could potentially lower your home’s value too, Leonzo adds. “The older the home, the higher the quality of hardwood, which might have cost $20 a square foot when it was built. Replacing the flooring with laminate or carpet at $1 a square foot is like reupholstering your leather couch with canvas!”

Using the highest priced materials: Some of the priciest renovations rarely pay off at resale. For example, Morgan Franklin with United Real Estate Lexington in Kentucky suggests finding a nice granite for $35 to $50 instead of the marble for $100-plus a square foot. “In the eyes of the appraiser and the next buyer, there isn’t much difference,” Franklin says.

The Townhome Market Sparks a Comeback | Realtor Magazine

In an effort to create more affordable housing options for entry-level buyers, home builders are increasingly turning to townhomes.

In recent years, builders focused on constructing higher-end homes. Less than 20 percent of newly built single-family homes were priced below $200,000, and the size of a new home grew to an average of 2,700 square feet, according to Census Bureau data.

The National Association of Home Builders say that rising regulatory costs – up about 30 percent over the past 5 years – means that it is more expensive to build a house today. As such, first-time home buyers have mostly been priced out of the new-home market.

But builders think townhomes may change that. These homes tend to be smaller (the average size was 1,983 square feet, according to 2015 Census data).

Townhouse starts totaled 94,000 in the last four quarters ending with the first quarter of 2016 – a 29 percent increase over the prior year, estimates Robert Dietz, chief economist for NAHB. In fact, the growth rate exceeds the total single-family building market, Dietz notes.

Currently, the townhome market share comprises 13 percent of all single-family homes on a one-year moving average basis, down slightly from just under 15 percent from the high set at the start of 2008. Since the Recession, the townhome market share has steadily grown.

“These trends will continue,” Dietz says. “As regulatory cost impacts persist and millennials enter the for-sale market, the cost of construction and the growing demand for medium-density housing in walkable neighborhoods in inner and outer suburbs will support townhouse development growth.”

4 Common Home Buyer Oversights | Realtor Magazine

Buyers on the hunt for the perfect home often overlook common issues that could cost them thousands of dollars and give them buyer’s remorse later on.

As their real estate professional, your guidance can help clients focus on these four often-forgettable things during their house hunt:

Not taking into account all of the expenses of home ownership.

“People focus so much on mortgage payments and closing costs,” says Brendon DeSimone, author of “Next Generation Real Estate. “What they don’t realize, until after the fact, is that there are expenses like oil or propane and landscaping that are built into home ownership.” Home buyers should ask sellers for a property expense list to get a better gauge of what they’ll be paying each month. Also, financing experts often suggest setting aside 1 percent of the home’s total value annually for repairs and maintenance.

Failing to consider a home’s resale value.

Few buyers actually stay in their home for decades. Buyers should talk to their real estate agent about trends in the neighborhood and the likelihood that the home would sell for the same amount two years, five years, or 10 years down the road, Avery Boyce, a real estate professional with Compass Real Estate in Washington, D.C., told realtor.com®. “Buying a home should make financial sense now, but if circumstances make this home no longer the right one within a few years, you don’t want to be in a tricky financial situation while trying to sell,” Boyce says.

Not investigating the neighborhood more closely.

Make sure your home buyers also closely inspect the neighborhood too. DeSimone suggests that home buyers walk around the neighborhood at different times of the day. Talk with the neighbors too.

Failing to look into the homeowners association.

“Never close on a home without doing serious due diligence on the homeowners association,” says DeSimone. Many HOAs can be supportive, but there have been reports of a few cases where home owners have clashed. Also, it’s important to note if there are a lot of delinquent home owners in the neighborhood because “if there is an upcoming assessment, or there are delinquent home owners, the HOA and you will have to cough up the money to cover it,” DeSimone says.