Thursday, March 4, 2021

New Construction Homes Are in Demand but Face Many Challenges

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 The current housing market is strong and new construction homes are in demand. In fact, builder confidence is on the side of new construction as sales have blown expectations. The new construction interest is stemmed from a shortage of listings and record low mortgage rates.

Zillow New Construction Consumer Housing Trends Report 2020 shows that almost half of those who purchased a newly built home in the past two years only looked at new construction. For the 40% who would only look at new construction, the other 60% did consider purchasing an existing home.

Last year not only brought confusion with a global pandemic but also hindered materials, shipping and timelines in new construction. The report revealed that 80% of those who purchased new construction found some part of the purchase process challenging.

Demographics played a big part in the data shown of those who struggled with purchasing new construction. Close to 45% of new construction buyers were under the age of 40 and out of those 70% purchased their first home.

Fair price also was one of the top challenges. Last year 30% said that a fair price was a challenge while this year 37% express issues with fair pricing. Prices are hard to gauge because of the shortage of inventory. There are not enough sales to compare pricing.

Thirty-six percent of home buyers were concerned with the sale of their current home with the completion of their new home. Thirty-five percent admitted they are overwhelmed and doubt some of the processing of building and purchasing a new home.

Using a Realtor can help overcome these challenges. A Realtor can help with communication between the builder and buyer. Fifty-one percent of those purchasing a new construction home asked their Realtor to handle communications with the builder. A Realtor can educate buyers regarding financing and pricing and help buyers with timelines and delays. A Realtor can make purchasing a new construction home a breeze.

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Several Tips To Follow When Selling a House in 2021

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Both selling and buying a home can be very exciting. When it comes to the sale of your home, it can be bitter-sweet. Leaving a home behind where there are sentimental attachments can be difficult. An emotional mindset might hinder the sale of your home. Here are some tips to follow that will help navigate you through the process and hinder costly mistakes.

1. Price Your Home Right

Low inventory usually means higher pricing, but that is not always the case when it comes to a listing price. A buyer can only purchase a home based on the fair market value when it comes to obtaining a mortgage. In a nutshell, the bank will only lend what the home is worth. During the mortgage process, the lender will require an appraisal from a professional appraiser who will determine the fair market value. It is always best to stick with a Realtor who can help you price your home right.

2. Keep Your Emotions in Check

Most homeowners live in the house for quite a long period of time. During this time, they will create a lot of memories and these memories will be attached to their house.  According to the National Association of Realtors, current homeowners lives in their home for an average of ten years. It can be hard for a homeowner to separate the sentimental value of a home from fair market value. Using a Realtor can help you with the process and can negotiate without emotional attachment.

3. Stage Your Home Properly

The first impression goes a long way when a potential buyer enters a home.  A buyer will not be impressed with all of your sentimental nick-nacks or special wallpaper hung in the dining room.  A home needs to be staged with a buyer in mind.  The buyer needs to be able to come into the space and envision it as their own. A Realtor can help you stage your home before it is listed.

If you are considering selling your current home, now is a great time.  Even though it is a seller's market, it is a good idea to use a real estate professional.  A local Realtor can help you sell your home for the right price.

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Houses Are Still Affordable in 2021

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 Even with the home prices on the rise, houses are still very affordable. The NAHB/Wells Fargo Housing Opportunity Index (HOI) explains that the historically low mortgage rates allow buyers to purchase at a higher price.

Homebuyers who purchased between October 2020 and the end of December 2020 with a U.S. median income of $72,900 purchased 58.3% of the new and existing homes that were sold during this time. This has been the lowest since seen since the fourth quarter in 2018.

In the fourth quarter of 2020, the average mortgage rates were reported at 2.85%. This helped offset the national median home price which HOI reported rose to $320,000 in 2020's fourth quarter. The mortgage rates dropped by 20 basis points in last year's fourth quarter.

Telecommuting has become a big part of American's work habits since the onset of the pandemic. The smaller markets are beginning to see an uptick in home sales. Cumberland-Md.-W.Va was reported to be the most affordable smaller market. Those earning a median income of $57,500 were able to purchase 96.4% of the homes that were sold in the last quarter of 2020.

The country's most affordable major housing market was Lansing-East Lansing, Mich. at number one with 89.9% of homes sold to those earning a median income of $75,000. The top five of the affordable major housing markets included Harrisburg-Carlisle, Pa.; Pittsburgh, Pa.; Scranton-Wilkes-Barre-Hazleton, Pa.; and St. Louis, Mo.

“While historically low mortgage rates are helping on the affordability front, there was a significant jump in year-over-year home pricing from 2020 to 2019, as inventory remained lean due to supply chain issues and the COVID-19 pandemic,” said NAHB Chairman Chuck Fowke. “Moreover, lumber prices remain extremely high and builders anticipate that regulatory costs are likely to rise, which will put even more upward pressure on home prices.”

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Single-Family Permits Ring In the New Year Strong

 We might have had a rough 2020 with the COVID-19 pandemic and strict stay-at-home orders but the housing market showed no sign of slowing down. The National Association of Home Builders reported a great ending to 2020 for Single-Family Permits. According to the United States Census Building Permits Survey, a total of 977,863 single-family permits were issued year-to-date in the country in 2020. This is a 14.5% increase on a year-over-year basis from December 2019 which reported 854,158.

National Association of Home Builders

The chart shows the amounts for each region. The South had the strongest with a 16.9% increase, Midwest followed with a 13.1% increase, the Northwest had an 11.6% increase and the West showed a 10.5% increase for 2020. Muli-family numbers were all on the decline in all four regions. The worst was the Northeast with a -11.1% decline, followed by the South with a -9.2% decline, the West declined -8.2% and the Midwest -1.2%.

Vermont had the highest rate of growth in single-family permits from 882 in 2019 to 1,285 in 2020. This was a 45.7% increase YTD. Forty-five states all showed an increase while the District of Columbia and five states showed a decline. The top 10 states accounted for 61.5% of the total single-family permits issued in 2020.

At the local level, below are top 10 metro areas that issued the highest number of single-family permits.

Metropolitan Statistical AreaSingle-family Permits: Dec (Units #YTD, NSA)
Houston-The Woodlands-Sugar Land, TX48,208
Dallas-Fort Worth-Arlington, TX43,884
Phoenix-Mesa-Scottsdale, AZ31,724
Atlanta-Sandy Springs-Roswell, GA28,057
Austin-Round Rock, TX21,653
Charlotte-Concord-Gastonia, NC-SC17,807
Tampa-St. Petersburg-Clearwater, FL16,028
Orlando-Kissimmee-Sanford, FL15,523
Nashville-Davidson-Murfreesboro-Franklin, TN14,125
Washington-Arlington-Alexandria, DC-VA-MD-WV13,594

For multifamily permits, below are the top 10 local areas that issued the highest number of permits:

Metropolitan Statistical Area Multifamily Permits: Dec (Units #YTD, NSA)
New York-Newark-Jersey City, NY-NJ-PA42,739
Houston-The Woodlands-Sugar Land, TX20,207
Austin-Round Rock, TX19,222
Los Angeles-Long Beach-Anaheim, CA17,494
Dallas-Fort Worth-Arlington, TX16,178
Phoenix-Mesa-Scottsdale, AZ14,894
Seattle-Tacoma-Bellevue, WA14,752
Miami-Fort Lauderdale-West Palm Beach, FL14,034
Minneapolis-St. Paul-Bloomington, MN-WI11,515
Nashville-Davidson–Murfreesboro–Franklin, TN11,404

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Wednesday, January 27, 2021

Five Things a First-Time Homebuyer Can Do To Boost Their Chances in a Hot Housing Market

 Buying a home is an exciting yet stressful life event. The current housing market is definitely a seller's market with tons of buyers and limited inventory. 

"Buyers walk in a home and say, 'This is it!' Then, they see all the business cards [from other agents] on the table and start panicking," says Georgia Stevens, president of the Seattle King County Realtors and managing broker of the Compass Washington agency.

If you are a first-time home buyer have no fear about the competition. Here are five tips to follow when shopping for your first house.

Start with an authentic budget

You will want to know how much home you can afford before you start house shopping. Get on solid financial ground from the beginning. Decide what your price range will be by looking at how much you can borrow and what your monthly budget will be.

A mortgage lender will be one of your first contacts during the home buying process. A mortgage lender can give you a preapproval letter. Getting preapproved on a mortgage will allow you and your realtor to get a gauge on what exactly you can afford. In this day in age with the current housing market, you have to have a preapproval letter from a lender to show real estate agents and sellers that you are a serious buyer.

"I always caution borrowers not to stretch for a home, and to establish a realistic budget that will afford a financial cushion for the future," Scott Lindner, national sales director for mortgage lending at TD Bank, said in an email. "This is even more important in the current uncertain environment."

Learn what to expect before you shop

An experienced real estate agent can help you with the process step by step along with verbiage you might not be familiar with. It is best to be familiar with the process before you start.

"Right now, the emotion is lowest and logic is highest," Alicia Holdaway, president of the Salt Lake Board of Realtors in Utah and an agent with Summit Sotheby's International Realty. says. "As soon as we look at homes, those are going to swap."

Emotions can take over and logic can go out the door. A Realtor will be your logic no matter how much you love a home. Holdaway says she will not take a buyer to see a home without first discussing what a real estate contract says and what terms can be put in place along with negotiations. A Realtor can stay grounded through this roller coaster of a ride.

Be firm on your needs, flexible on the rest

Make a list of the features you need in a home versus those amenities that would be nice to have. Spend a good bit of time thinking about the reasons you want to purchase a home to help distinguish between needs and wants.

Once you have your list you want to stick to those must-have items. You might love a home but it has only one full bathroom. You do not want to settle for something that does not tick off your must-have items.

There is a difference in compromising on cosmetic characteristics and amenities that you do not need in a home. A kitchen might have your must-haves but you hate the paint color. This is something that should not detour you from purchasing a home. Paint color can be easy and fairly budget-friendly to change.

"A house may not be HGTV-ready, but it can be something that can be improved over time," says Stephen Medeiros, president-elect of the Massachusetts Association of Realtors and an associate broker at Keller Williams Realty in Dartmouth.

Don't let negative emotions get the upper hand

Searching for a home, especially in a hot market, can be frustrating. You find a home you like and before you can even discuss it or think about an offer, it is already under contract.

According to Josh Harris, a certified financial planner and lecturer in finance at Clemson University, you do not want anxiety to make you rush into a bad decision. Before you get too worked up, take a break and think about why you are so anxious. He says to get a reality check from your real estate agent.

Holdaway says a good way to prevent this frustration is to not look at too many homes. First-time homebuyers are making this mistake a lot she confides. Doing this will lead to exhaustion and wears you down making you just want to make a decision to get the process over with. "They're sick of looking, and they say, 'I'll make it work. I just need a house,'" Holdaway says.

Stick to your price range and priorities

Buyers want to please a seller so they can seal the deal but this is not always the wisest way to go about the process. In a hot market, buyers are under pressure to make these concessions. Before you make any concessions make sure you completely understand the risks.

Many homes in the current market are in bidding wars. Potential homebuyers must compete with their offer to win the war. A good example is to offer above the listing price. Before doing this, make sure you can afford the higher price and still be comfortable financially.

"You don't want to live for your home," Medeiros says.

"There's always another great house," Stevens says. "This isn't the only one."

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Home Prices Soaring the Fastest Seen In Over Six Years reports that U.S. home prices rose the most the country has seen in more than six years October 2020. The price jump is stemmed from a pandemic-fueled buying rush that drives the number of available properties for sale to record lows. 

The S&P CoreLogic Case-Shiller 20-city home price index showed that home prices jumped 7.9% in October 2020 from the same time in October 2019. The strong demand for housing and limited housing inventory caused the largest annual increase seen since June 2014.

As has been the case for the last 10 months the pandemic caused a great deal of Americans to work from home. People are not going out to eat, or socializing outside of the home. This has put more value on the size and design of the home. Many Americans are now looking for bigger rooms or more rooms such as a home office or space to workout.

The 19 cities that were mentioned in the report all had larger year-over-year price spikes in October 2020. Phoenix had the largest gain by 12.7% in October, this was the 17th straight month of gains for the city.

“The data from the last several months are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, Managing Director at S&P Dow Jones Indices.

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Tips To Shorten Days on Market for Sellers

 Days on Market (DOM) is an important term when it comes to selling a home. DOM is defined as the number of days a home has been listed for sale basically the time from the date a home is listed for sale to the date it closed.

The lower DOM the better the housing market in that certain area. The longer a home stays up for sale, the more detrimental it can be for the listing. Higher days on market can raise a red flag to buyers who will question why it hasn’t sold yet.  Here are some tips to follow to help ensure a fast sale of your home.

Understand your local housing market

Today's market in almost every location across the country is a seller's market. It comes as no surprise that there are more buyers than sellers with such low inventory in today's housing market. When it is a seller's market, homes stay on the market for a shorter period than if it is a buyer's market. This can vary from the location in the country and even by neighborhood. Get to know your local housing market to get a better understanding of buyer demand for your house.

Check your price

Listing for the right price can be very important to your listing. If you price your home out of the local market you can potentially cause a high DOM and make it harder to sell your home. The goal is to list your home for a price that reflects an accurate and realistic value of your home. A smart move is to list your home with a licensed agent who knows the local market.

Prep your home

Staging your home is a must. You want your home to look move-in ready for buyers. A staged home will appeal more to a buyer than a home that is not staged. It is very important this day in age because many buyers are viewing your home online. Small things you can do such as a fresh coat of paint or decluttering.

Remember listing your home with a Realtor can be a smart move. A local Realtor knows the current and local market so they can help you along the way.

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