Yajnesh Rai

Young Buyers Are Skipping the Starter Home | Realtor Magazine

Millennials who delayed homeownership following the Great Recession are now finally entering the market in bigger numbers. They comprised 36 percent of home buyers last year, up from 32 percent in 2013, according to the National Association of REALTORS®. But they’re trying to make up for lost time by skipping over the starter, entry-level home and heading right into buying larger, pricier homes that they plan to stay in longer, USA Today reports.

Inventory shortages are particularly critical in entry-level price points. Use these strategies to help expand housing options for your clients. Read more.

“They rented for longer,” says Diane Swonk, chief economist at Grant Thornton. “Now they’re going to where they want to stay.” 

Many millennials in their mid-30s can now afford the more expensive homes. Some young adults have been saving by living with their parents for years into adulthood. They’ve also been moving up in their jobs and earning higher salaries. 

As they get married and start raising kids, they’re finding they need more space and are moving into homeownership. However, a severe shortage of lower-priced starter homes is prompting them to up their budgets and look at pricier places. 

The cost for what is generally considered a starter home can vary widely by geographic area, but tends to average between $150,000 to $250,000 in most markets, Swonk says. 

The percentage of millennials who purchased homes for $300,000 or more this year stands at 30 percent, up from 14 percent in 2013, according to data from NAR. 

Older millennials tend to splurge the most. From 2012 to 2016, nearly one-third of buyers ages 33 to 37 purchased four-bedroom homes compared to about 24 percent in 1980, 1990, and 2000, according to an analysis by Ralph McLaughlin, chief economist at Veritas Urbis Economics.

Pre-Listing Inspections Put Sellers in Control | Realtor Magazine

In the typical real estate transaction, the buyer is the one to order a home inspection. But sellers, too, can request a professional assessment of their home before putting it on the market. A pre-listing inspection provides sellers with upfront information about the condition of their property, which gives them more control over repairs and potentially strengthens their negotiating position.

Few sellers take advantage of this opportunity, according to Steve Wadlington, president of national home inspection services company WIN Home Inspection. “I don’t expect pre-listing inspections to become mainstream in my lifetime,” he says. Lack of awareness contributes to the underutilization, Wadlington adds, but he also acknowledges that sellers may be reluctant to spend the money for such services.

Additionally, sellers and their agents have a legal duty to disclose to buyers any property issues that are revealed in a pre-inspection report. REALTOR® Magazine spoke with Wadlington about how pre-listing inspections can boost home sales and help sellers defend their asking price.

Are there any differences between a pre-listing inspection and a buyer’s inspection?

The only differences are the customer for whom the inspection is being conducted—in this case it’s the seller, not the buyer—and the point when the inspection occurs. The scope of the inspection is the same. A pre-listing inspection focuses on proper functionality of all major systems and components of the house: heating and cooling; electrical; plumbing; roof and structure; siding; and doors and windows. It’s a full inspection for the seller to better understand the condition of their home prior to the buyer’s inspection. This gives the seller important information to consider so they’re not caught off-guard in the midst of a transaction.

How much does a typical pre-listing inspection cost?

The fee is usually the same as a buyer’s inspection, generally ranging from $350 to $500 for a qualified inspector who carries E&O insurance. Of course, the price varies based on location, square footage, age of the home, and any special conditions, such as whether the home is built on a steep incline.

Why should a seller do an inspection, particularly if the buyer is going to do one anyway?

The value to the seller is that a pre-listing inspection makes them aware of issues in advance of negotiating a purchase agreement, allowing them the chance to resolve the issues or have them accounted for upfront in the asking price. This gives the seller better control in marketing their home and helps minimize stress from heat-of-the-moment negotiations once a purchase agreement is tendered. Homes that have a pre-listing inspection generally sell faster and have fewer inspection-related issues to negotiate, enabling a smoother transaction.

What should a seller do if a pre-listing inspection uncovers significant problems in the home?

It’s always better for everyone to know about major inspection issues as soon as possible. Once they’re identified, they can be carefully assessed for proper resolution. Depending on the nature of the issue, a seller shouldn’t automatically assume that everything needs to be fixed before putting the home on the market. Their real estate professional should advise whether the repairs are necessary to the viability of the sale. Regardless of who owns the property, issues of concern to the buyer will need to be dealt with somehow, and the associated cost of the resolution is a consideration for both the buyer and seller.

If the seller doesn’t want to pay for repairs, what solace does a pre-listing inspection give to the buyer?

For many buyers, being provided forthcoming inspection information has both tangible and emotional value. They’re made aware of issues identified in the inspection report, which gives them more facts to work with, and then they’re provided subsequent clarity on which issues have been or will be resolved as part of the transaction. Sellers who proactively disclose pre-listing issues give buyers proper awareness to factor them into their offers.

Can pre-listing inspections help real estate professionals when marketing a home?

The more information agents can provide to give buyers peace of mind, the better it is for the sale. A pre-listing inspection can also reinforce the seller’s asking price. It enables agents to explain how the inspection report—plus any repairs that were made before listing—helped the sellers arrive at the home’s value. At WIN, we also provide a “Ready for Purchase” sign rider to identify the house as one that has pre-listing inspection information available. It’s similar to what the auto industry has done with marketing certified used cars.

What about sellers who don’t see the sense in paying for an inspection?

Actually, a pre-listing inspection can ultimately save money for sellers in two ways. First, by being aware of and disclosing known property issues upfront, the seller can make it known that consideration for those items has already been factored into the sales price. That effectively takes these issues off the negotiation table. Second, the seller can choose to repair the issues prior to listing, which gives them more control over repair costs.

Should a seller offer the entire pre-listing inspection report to a buyer or just a summary? How much detail is necessary?

I think this is a situational consideration, where sellers should consult with their real estate professional. The industry has evolved such that it is reasonable to view the inspection summary as containing all of the important need-to-know items found in the full report. Since the real goal here is to ensure transparency and awareness, the summary should be adequate to achieve that. Depending on the length and complexity of the full report, as well as the technical complexity of the issues presented in the summary, I can see where a good faith effort to offer more detail could actually cause undue alarm if the buyer can’t put the information in proper perspective. But bear in mind that much of the longer report will also confirm positive functionality of the major systems and components of the home, so it can offer added positive value as well.

Wouldn’t buyers still want to do their own inspection?

Yes, absolutely. If a seller claims to have resolved issues that were uncovered in a pre-listing inspection, the buyer will want a subsequent inspection to confirm those repairs. Whether the buyer uses the same inspector that the seller used is a matter of personal preference, and there are pros and cons either way. Using the same inspector can be beneficial because their prior experience and familiarity with the home allows them to better detect changes based on a point in time. But a properly trained and certified home inspector will inspect the home for the seller or the buyer in the same manner. This person’s view of the home is objective and won’t change based on who hired them.

Smart and Sustainable Home Technology to Reduce Utility Bills

The financial and environmental costs of using utilities add up fast. In many cases – and we’re all guilty of this – we don’t realize how much we’re consuming until the utility bill shows up. We scratch our heads and think, “wow, there’s no way I used 897 kilowatt-hours of electricity this month.” (The average U.S. household uses that much each month and 10,766 kWh per year.)

Fortunately, there are several in-home tech products that will save you money on your utility bills and help the environment at the same time.

How Much Electricity Do You Use Around the House?

Each month, your utility bill is calculated based on how many kilowatt-hours are consumed.

So just how far does one kilowatt-hour go?

A kilowatt-hour, which is a measure of electrical energy equivalent to a power consumption of 1,000 watts for one hour, could power ten incandescent 100-watt lightbulbs for an hour. One kwh costs about $0.12 (so leaving the lights on, despite what your mother said about turning them off to save money, isn’t as expensive as it seems). Check out this table, which lists common household appliances and how much energy they use in an average month:

Appliance average kWh per hour used each month and average cost

Appliance	Appliance Average kWh per hour used each month	Average cost each month
Smartphone	.08 kWh	$0.01
Tablet	.9 kWh	$0.11
One LED Lightbulb	1.2 kWh	$0.14
Big-screen TV	2.5 kWh	$0.30
Wireless modem and router	7.5 kWh	$0.90
Gaming System	8.3 kWh	$1.00
One 60-watt Incandescent Lightbulb	18.3 kWh	$2.20
Desktop Computer	25.0 kWh	$3.00
Refrigerator	29.1 kWh	$3.50
Washer and Dryer	69.44 kWh	$8.33
Water Heater	416.7 kWh	$50.00
Heating and cooling	640.5 kWh	$76.86

So does that mean you have to put on a sweater or take a cold shower? Not necessarily. If you know what you’re doing, you can save hundreds of kWh each month by utilizing the latest in-home technology.

Heating and Cooling

• Smart Thermostat: To save cash on heating and cooling, no matter what climate you live in, consider investing in a smart thermostat, such as a Nest. Most are compatible with Google Home, Echo and other in-house automated assistants, and they work by keeping temperature settings consistent. Some have sensors to keep tabs on hot and cold spots in your house, and you can program them to manage the temperatures when you’re at work, on vacation or asleep, so you’re not wasting energy on climate control you don’t need.

• Motorized Shades: Many motorized shades today allow you to set specific times when they should open or close. This is usually done from an app on your phone regardless of if you are home or not. You will end up saving money by keeping the sun out when it’s hot in the day or choosing to let the light warm up your space. You can also opt for honeycomb shades, which are designed especially for insulation, but any shade or drape with the right spacing will help slash your heating costs.

Average Savings: Between $131 and $145 per year

Light Use

• Smart Lights: Smart lights, like Philips Hue and LIFX, can save you cash through programming, motion detection and remote access to your lights when you’re away from home (so you’ll never have to leave the lights on for two weeks straight while you’re visiting your mother-in-law in Poughkeepsie), but that’s not all there is to it. Smart lights are LEDs, which cost less to operate; running an LED costs only a few pennies, while old incandescent lights cost about 11 times more.

Average Savings: Between $80 and $120 per year

Games, TVs and Other Appliances

• Surge Protectors: Video game consoles and some other appliances use energy even when nobody’s using them, so a conservation-themed surge protector, like the Belkin Conserve Switch Surge Protector, lets you switch things off with a remote. Other types, like ThinkEco, cut down consumption when your plugged-in devices are in standby mode.

Average Savings: Between $60 and $80 per year

Laundry

• Energy-efficient washers: Although energy-efficient washers are pretty much all you’ll find when you shop, know that certified ENERGY STAR products can help you save cash and water, so you get even more bang for your buck if you pay a water bill. If you wash your clothes in warm (not hot) or cold water, you’ll save even more. Typically, an ENERGY STAR washing machine uses 25 percent less electricity than its non-eco-friendly counterparts do.

Average Savings: Between $75 and $125 per year

How Much Water Does Your Household Use?

While estimates vary based on location, the average U.S. household uses about 90 gallons of water every day. Most of that water goes right down the toilet – literally. Toilet flushing and showers are the two biggest culprits when it comes to wasting water, and dishwashers, washing machines and outdoor watering are right behind them. Check out this chart to figure out how much water the average American household uses each year and how much it costs (tap water costs about $0.004 per gallon).

Appliance	Average Gallons Used Each Time	Average Cost Per Use
Bath	36 gallons	$0.14
Shower (10 Minutes) with ordinary shower head	50 gallons	$0.20
Shower (10 Minutes) with water-saving showerhead	20 gallons	$0.08
Dishwasher (non-ENERGY STAR)	16 gallons	$0.06
Dishwasher (ENERGY STAR)	6 gallons	$0.02
Toilet Flush (Regular)	3 gallons	$0.01
Toilet Flush (low-flow)	1.6 gallons	Less than $.01
Outdoor watering (30 minutes)	60 gallons	$0.24

Other than cutting down on water consumption by investing in ENERGY STAR appliances, doing fewer loads of laundry and taking shorter showers, there are a few devices you can add to your home to drastically reduce your water consumption.

Showers and Faucets

• High-efficiency faucet aerator: Installing a high-efficiency faucet aerator in your shower and on your taps can cut your water consumption in half. Because they add air, you won’t suffer a loss in pressure.
• Smart home water meter: You can also opt for a smart home water meter, which shows you how you’re using water around the house, as well as how much you’re using. You’ll be able to keep tabs on how much goes to laundry, lawn irrigation and other applications in your home, and you can create a “signature” for each appliance to get a better understanding of where you can cut back and prevent your budget from drying up.

Average Savings: About $100 per year

Toilets

• Smart toilets: First, they can help you save water, and second, they can eliminate toilet paper waste – so that means you’re helping the environment in two ways. The EPA states that toilets labeled with WaterSense labels can reduce water usage by 20-60% and save around 13,000 gallons of water per year. 

Average Savings: About $100 per year

Smart Home Security

• Smart Home Security System: Having a smart home security system in place can save you money on homeowners insurance. Think of it like having airbags in the car – your insurer knows that you’re taking measures to mitigate risk, which means your rates are likely to go down. The latest-and-greatest security systems monitor your home’s electricity and wiring, and record activity that goes on inside and outside your house. Sometimes you can even get a claims-free credit, which offers you a discount if you haven’t made a claim in the past.

Average Savings: Up to 20% of your normal bill

 

What Smart Tech Do You Depend On?

Utility bills can get expensive, so savvy homeowners are using all kinds of smart tech to save cash, while also helping the environment. We’d love to hear about the technology you can’t live without, so share your story in the comments!

Where Property Taxes Are Most Burdensome | Realtor Magazine

New Jersey homeowners pay the most in property taxes in the nation, and homeowners there also find taxes make up some of the highest percentages of their total housing costs in the nation. A new study by SmartAsset, a personal finance resource, found that seven cities—five of which are in New Jersey—had property taxes that were more than 30 percent of the cost of owning a home. The average effective property tax in New Jersey is 2.19 percent, which is nearly double the national effective property tax rate of 1.19 percent. 

On the other end, Alabama and Louisiana homeowners pay some of the least in real estate taxes. Nine of the bottom 15 cities in SmartAsset’s study are in Alabama or Louisiana. On average, property taxes make up less than 7 percent of housing costs for homeowners in these states. 

SmartAsset ranked cities where property taxes have the biggest impact on housing costs by looking at the data on 599 cities across two factors: median property taxes paid and median housing costs. The following chart ranks where property taxes have the largest impact on housing costs.

 

After April Hikes, Mortgage Rates Slide in May | Realtor Magazine

 

 

After mortgage rates rose for most of April, they dropped slightly in the kickoff to May. The 30-year fixed-rate mortgage dropped three basis points to average 4.55 percent. 

“While mortgage rates have increased by one-half of a percentage point so far this year, it has not impacted home purchase demand, which continues to grow this spring,” says Sam Khater, Freddie Mac’s chief economist. “The observed buyer resiliency in the face of higher rates reflects the healthy economy and strong consumer confidence, which are important drivers of home sales activity. It’s also good news that first-time buyers appear to be having more success so far this year, despite higher borrowing costs and home prices. Our data through April shows that first-timers represent 46 percent of purchase loans, up from 43 percent over the same period a year ago.” 

Freddie Mac reports the following national averages with mortgage rates for the week ending May 3:

• 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, dropping from last week’s 4.58 percent average. Last year at this time, 30-year rates averaged 4.02 percent. 
• 15-year fixed-rate mortgages: averaged 4.03 percent, with an average 0.4 point, rising from last week’s 4.02 percent average. A year ago, 15-year rates averaged 3.27 percent. 
• 5-year hybrid adjustable-rate mortgages: averaged 3.69 percent, with an average 0.3 point, dropping from last week’s 3.74 percent average. A year ago, 5-year ARMs averaged 3.13 percent. 

Fed Decides to Leave Rates Alone—For Now | Realtor Magazine

The Federal Reserve decided Wednesday that it would not raise rates and keep its benchmark interest rate unchanged, despite rising inflation. Mortgage rates are not directly tied to the Fed’s benchmark rate, but they do tend to be influenced by them. 

The Federal Open Markets Committee had raised rates for the first time in 2018 at its last meeting in March. At that time, it had increased the federal funds rate by 25 basis points. 

At May’s meeting, the FOMC voted to keep rates the same and maintain the target range at 1.5 percent to 1.75 percent. 

“Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate,” the committee noted in a statement. “Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.” Inflation has risen to nearly 2 percent. 

The FOMC also said that it expects to continue gradually raising interest rates later on, but that they will likely remain at historically low levels “for some time.”

“The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the committee stated. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data”

Must-Do May Checklist for Homeowners | Realtor Magazine

May marks a golden opportunity for homeowners to assess their home and ensure everything is in tip-top shape before the summer months begin. HouseLogic recently provided a checklist that your clients can use to save both time and money. 

For smart homeowners, these four tasks are essential for the month of May:

1. A new refrigerator. If your current fridge is leaky, not cooling enough, or tight on storage space, consider buying a new model this month. May is pre-summertime—which is when new fridges will hit the sales floor—and stores will need to clear out old models to make room. If your home needs a stove or other kitchen appliances, HouseLogic advises to wait until fall when they’ll be going on sale.
2. Exterior painting. Buff up your home’s outer coat of paint to revive its color after winter’s drab weather. In most areas, May temperatures range from 50 to 80 degrees Fahrenheit, which is prime weather for painting your home’s exterior. HouseLogic also suggests making touch-ups to your home’s trim and siding while you’re repainting.
3. A new mattress. How old is your current mattress? Over time, mattresses collect more dust and mites so be sure to upgrade yours if it’s needed. Stores will offer a good mattress deal in May before new stock comes in, helping you save hundreds of dollars.
4. Overflowing closets. Be on the lookout for deals on storage materials at Memorial Day sales, and start tidying up those closets! According to HouseLogic, experts estimate that only 20 percent of what’s in peoples’ closets are actually worn. This month, trim down and store the 80 percent of your wardrobe that’s left: put sentimental clothes (college sweatshirts, t-shirt memorabilia) and those pieces you need but rarely use (formalwear) in storage containers and under-the-bed bins.

Highest Rates in 5 Years Prompt Pullback | Realtor Magazine

Would-be home buyers and refinancing homeowners both receded from the mortgage market last week as mortgage rates surged to their highest averages in nearly five years. The Mortgage Bankers Association’s seasonally adjusted index showed that total application volume, which includes home purchases and refinances, dropped 2.5 percent last week and are now 3.3 percent lower than a year ago. 

Refinance volume took most of the hit, dropping 4 percent last week compared to the previous week. Refinance volume is now 15 percent below a year ago. Borrowers who wish to refinance tend to be more rate-sensitive than home shoppers. 

Applications to buy a home still dropped 2 percent last week. Purchase applications, however, remain 5 percent higher than a year ago. 

The average for a 30-year fixed-rate mortgage was 4.80 percent last week, the highest level since September 2013, the MBA reports. The share of adjustable-rate mortgages continues to rise in the lending market. ARM activity rose to 6.7 percent of the total applications. ARMs offer lower introductory rates, usually for a set time period, before rising. 

The market will closely be watching the Federal Reserve’s meeting on Wednesday. 

“While the Fed is not even remotely expected to hike rates again at this meeting, investors are always tuned in to the verbiage of the announcement in case it offers clues about the future policy path,” Matthew Graham, chief operating officer at Mortgage News Daily, told CNBC. 

March Home Prices Up 8.9%, the Biggest Increase in Four Years – @Redfin

The median home sale price increased 8.9 percent in March from a year ago, the highest price growth in four years. The median home sale price in March was $297,000 in the 174 markets that Redfin tracks.

The lack of homes for sale, down 11.9 percent year over year, continued to constrain sales, which declined 3.7 percent. The number of homes newly listed for sale in March fell 5.6 percent compared to a year ago.

“The Easter holiday fell early this year, which may have played a role in the decline in new March listings. Sellers are slow to list this year and we aren’t seeing enough new construction homes to fill the gap,” said Redfin chief economist Nela Richardson. “If we don’t see the new listings number turn around next month or a pickup in new housing starts, inventory will be a persistent drag on sales for the remainder of the year.”

Though seller enthusiasm is waning, buyer demand is strong, making for a highly competitive market. The typical home went under contract in 43 days, eight days faster than a year earlier and faster than any March on record. Among homes that sold last month, 23.9 percent sold above their list price, up from 22.3 percent last March. One in five (20.5%) homes that sold in March went under contract within two weeks of their debut, compared to 18.4 percent last year.

Seattle was the fastest-moving market for the second month in a row, joined by Denver. Homes in these metros were on the market for a median of just seven days in March.

Market Summary	March 2018	Month-Over-Month	Year-Over-Year
Median sale price	$297,200	4.4%	8.9%
Homes sold	230,300	34.5%	-3.7%
New listings	326,100	26.3%	-5.6%
All Homes for sale	636,800	2.2%	-11.9%
Median days on market	43	-10	-8
Months of supply	2.8	-0.8	-0.2
Sold above list	23.9%	2.8%	1.7%
Median Off-Market Redfin Estimate	$281,300	-0.8%	6.1%
Average Sale-to-list	98.6%	0.8%	0.6%

Strong price growth was not limited to hot coastal markets like San Jose, CA (32.3%) and San Francisco (16.7%). Places like Allentown, PA (21.8%), Detroit (20.6%) and Las Vegas (16.5%) are also experiencing strong price appreciation.

Inventory declined in 65 of the 73 most populous metros Redfin tracks below. In 48 of those metros, inventory fell more than 10 percent compared to last year. Baton Rouge, Washington, D.C., and Allentown bucked the declining inventory trend, respectively adding 26.6 percent, 11.8 percent and 11.4 percent to housing supply from last year.

More Americans Are Homeowners in 2018 | Realtor Magazine

Over the last year, more Americans became homeowners as the number of renters continued to decrease. The homeownership rate in the first quarter was unchanged at 64.2 percent, higher than last year’s 63.6 percent, the Census Department reported Thursday. This is also the fifth consecutive quarter of yearly increases in the ownership rate. 

The homeownership rate has been gradually climbing back since hitting a 50-year low in 2016. The rate peaked in 2004 at 69.2 percent, but despite recent climbs, it still remains below the 25-year average rate of 66.3 percent. Meanwhile, the number of renters has dropped.

More young Americans are buying homes. The ownership rate for Americans under age 35 was 35.3 percent in the first quarter, which is a full percentage point higher than a year ago.

The homeowner vacancy rate dropped to 1.5 percent in the first quarter—the lowest vacancy rate since 2001, the Census Department reports.