The Cost of Buying a Home

Buying a home is one of life's big moments and is a huge financial expense. If you are in the market for a home, then you will want to factor in all the costs associated. Here are the true costs of owning a home.

A home inspection is a cost that you will occur and if there are any issues with the home, you will either negotiate with the seller or have to come up with the money to fix the problems. A detailed, in-depth home inspection is a good idea to get on the home you are going to purchase.

When you purchase a home, you will need to bring closing costs to the table. Closing costs include title fees, lawyer fees, contract fees, and more. Future homeowners need to realize the listing price is not the only expense but closing costs will be added on.

Potential homeowners will need to consider monthly utility expenses. Operating home expenses can be a surprise to first-time homebuyers. Some of these expenses, just to name a few, include heat or cooling, appliances, lights, gas, water, trash and recycling.

Along with a mortgage monthly payment, you will need to pay homeowner's insurance. A homeowner's insurance agent can explain what is included in these monthly costs. The homeowner's insurance premiums are held in the escrow account and paid each year. They are collected monthly on top of the mortgage monthly payment.

Moving costs are many times looked over. These costs need to be considered whether your move is local or far. These costs can include time off work, packing, loading and unloading, and in some cases storage facilities and packing supplies.

When you live in a neighborhood with a homeowners association there will be HOA fees that are due each year. These will be paid either monthly or annually. You will need to factor this cost into your budget.

If you are in the market for a new home, using a Realtor is a smart choice. Remember to leave the house shopping, buying, and selling to the professionals.

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August Sees A Rise In New Home Sales

 Inventory has been extremely low and buyers are in high demand and some prospective home buyers have been frustrated with the current market. This is not the case with the new home sales statistics. According to the Census Bureau, new home sales rose 1.5% in August 2021.

August saw a solid improvement in new home sales. The median home price was up 20.1% from August 2020 and is now $390,900. In fact, new home sales rose for the second consecutive month in August, the latest sign that homebuilders are recovering from problems that plagued them earlier in the year. The increase also reflects homebuilder sentiment that is on the rise as housing demand remains robust and the cost of lumber continues to ease.

New home builders still have the problem with building materials, the supply chain and labor shortages. These factors are also causing home prices to soar across the United States. This coupled with low inventory is not a good issue for both the builders and home buyers. It is reported that total for-sale inventory which includes new and existing homes has dropped over 20% from August 2020.

If you are in the market for a new home or want to sell your current home now is a great time. Even with the shortage of inventory, a professional sales agent can help you find the right home for the right price.

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Several Reasons Why A Home Has Good Resale Value

When looking for a new home, it is always a good idea to purchase a home with good resale value. A house is a real estate investment and you never want to invest your money into something that will not profit a good return. Resale value can save buyers a lot of money in the long run but is not always a guarantee. When looking for a home, here are seven signs to look for to make sure the home you are purchasing is a good resale value.

1. The neighborhood's hopping...

When house hunting, don't just focus on the house itself but also the neighborhood and its surroundings. If you love to walk, make sure the neighborhood is walkable. It is always a plus to have good proximity to shopping and restaurants.

“If you buy in an area that is not well-developed and doesn’t have good infrastructure—like shopping close by—you will not have a high rate of return on the home,” says Realtor® Patricia Vosburgh. “The more amenities, the higher chances the home will sell faster and for more money,” Vosburgh explains.

2. ....but the street itself is quiet

As mentioned in the first sign, you want your neighborhood to be hopping but you do not want a restaurant right in your backyard. Even if you love the quaint place to get a bite to eat right next to your front door, not every buyer will think this way.

“We advise against buying on a busy street or purchasing a home surrounded by commercial properties nearby,” Vosburgh says.

3. The home's systems are in good shape

A home might be located in the right neighborhood and have all the bells and whistles, but if the major systems are old, you will spend a lot more on the home, making your return less likely.

Make sure to have a home inspection before you close. An inspector can give you a rundown on how your major systems are working. Before making an offer, closely inspect the roof, water heater, HVAC system, windows and foundation.

“When these items are new or in good standing, that’s a great sign,” Kukwa says.

4. The schools are great

If you do not have kids, then you think schools do not matter, but this is not necessarily the case. If you ever have to sell your home, you limit your buyers if you are not in a good school district.

“Even if buyers personally don’t have children, for resale it is imperative that they buy in a great school zone,” Vosburgh says.

“Often agents will advertise a property as being near such-and-such school area, but not necessarily specify the district, which can be very confusing,” explains Tina Maraj, a Realtor with Re/Max North Orange County in Fullerton, CA. “It can be a real eye-opener if a buyer closes and they’re on one side of a main street that is the dividing line between the top-rated and the lowest-rated high schools.”

5. The light is inspiring

No one wants to live in a dungeon. Natural light is a great selling factor.

“Any apartment in any neighborhood that has good light will sell—and will always sell,” says New York City broker Noemi Bitterman.

With good light, “there is always a good feeling—a feeling of embracing and belonging,” she continues. “When [a home] is dark, no matter how nice and new it is, it doesn’t feel inviting, it takes a much longer time to sell, and the price reflects the lack of light.”

6. The floor plan is family-friendly

Even if you do not have kids, this is a big selling point. A family-friendly home will more likely bring in a profit. Look for at least three bedrooms with an open concept kitchen and at least one bathtub.

“Look for a home with a floor plan that will appeal to families,” says broker Kris Lindahl.

“Buying a home that is too quirky or has very untraditional features can result in a decreased ROI and smaller pool of potential buyers in the future,” Kukwa says.

7. The community is restrictive

Who wants to buy a nice house and have the neighbors yard full of junk or the house a tacky color? Homeowners associations can be a pain sometimes, but they are a positive when it comes to resale value. HOA's are there to keep everyone in line and bring value to your home.

Good resale value is never a guarantee but with these seven indicators, a buyer has a better chance of purchasing a good investment. If you are in the market for a new home, contact a Realtor in your area.

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2021 Will See Another 7% Surge In US Home Prices

 

Home prices are rising the fastest we have seen in 15 years. According to Goldman Sachs, US home prices will rise another 7% in 2021. In fact, Goldman upgraded its 2021 house-price appreciation forecast to 6.8% from 4.7% previously.

January 2021 saw the fastest rate since 2006 stemming from the low-interest rates and low inventory. The S&P CoreLogic Case-Shriller house price index increased 11.2% in January 2021 year on year. James Orlando, senior economist at TD Economics gives credit to the pandemic. Since spending more time at home during the pandemic, people want to improve on their living situations. Now more than ever, we are seeing more buyers entering the market.

“Underwhelming supply appears to be the primary driver of continued high levels of house price appreciation,” noted Apurva Gundaria and Marty Young who lead Goldman Sachs.

“In our view, this supply crunch is driving another leg up in home prices,” the analysts said. “Though mortgage rates have backed up in recent weeks, they still remain below their pre-pandemic tights and the backdrop for housing demand remains supportive.”

If you are in the market for a new home, now is the time to take advantage of the low-interest rates. Be sure to purchase through a local sales agent who can help you navigate this aggressive current market.

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Steps To Take Prior to Obtaining a Mortgage

Applying for a mortgage is one of the most important steps in purchasing a home unless you are lucky enough to just pay cash. Getting a mortgage is a big stress factor when it comes to buying a home. Planning can help the process run much smoother. Below are six important facts to know when it comes to mortgaging your dream home.

1. Define a realistic budget

What you can afford makes a big difference when budgeting for a home purchase. Apply for a loan that you know you will be able to pay. Your monthly mortgage payment should be 28% of your income according to most lender's standards. If you have any other monthly debt payments, those added to your monthly mortgage payment should not exceed 36% of your total income.

2. Improve Your DTI (debt-to-income) ratio

This is a very important figure to a lender. A lender will want to know your DTI ratio to determine how much they can loan you. You are in luck if your DTI is 0 - 36% because you should have no problem with your desired mortgage. If your DTI is above the desired percentage you still can obtain a mortgage by lowering your DTI. A good way to accomplish this is to reduce or pay off current debts.

3. Make a huge down payment

The higher your down-payment the better your rates will be. A high down payment can also allow you to have better terms with your mortgaging services. Your monthly DTI can be reduced if you have a lower mortgage payment due to a big down-payment usually over 20% of your borrowing amount.

4. Boost your credit score

Your credit score can also boost or hinder your loan rate. If your credit score is low, avoid debts, make your payments on time to help boost your credit score.

5. Prepare the necessary paperwork

When you are applying for a mortgage, you will need to provide a lot of paperwork. The lender will ask for things such as pay stubs from the past month, your tax returns for at least a year, and bank statements for a few months. Some lenders might also ask for credit cards, loan statements, retirement funds, and other investments.

Being prepared and having everything in line will make the mortgage application process run smoothly and will be less stressful. Remember using a mortgage lender and a Realtor is the best way to ensure a smooth transaction.

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Several Tips To Follow When Selling a House in 2021

 Photo by Anete Lusina from Pexels

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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Reasons to Buy a Home

From a survey conducted every 2 years by the National Association of Homes Builders (NAHB), builders and Realtors can learn and understand what the “average home buyer” wants in the home that they are buying.  This survey is very important in detailing a buyer’s reasons to buy a home.   From a broad perspective, the survey indicated that over 55% of home buyers would prefer to buy a new home vs. a pre-existing home, but the actual percentage of home buyers buying new homes was only 11% from 2011 – 2013.  However ,this 11% was actually a 3% increase from 2008 when only 8% of home buyer bought a new home.

Size, floorplan, price and neighborhood scored in the top 70th percentile as reasons to buy a home by home buyers surveyed by the NAHB with the aesthetics and safety playing an important role in the decision to buy in a certain neighborhood.  In St. Tammany Parish, Bedico Creek Preserve offers a master planned community in Madisonville that scores highly on not only beautiful homes and an almost completely safe neighborhood location, but also, with 10 Neighborhoods within the subdivision from which to choose, new home buyers also get to enjoy lots of variety in choosing not only a house to buy but also a lot location on which to build a new, custom home, if desired.

The NAHB also said that good schools tended to be important to new home buyers especially.  Madisonville, Louisiana, boasts the best school district in St. Tammany Parish which already scores as one of the best school districts in the state.  Many home buyers’ reasons to buy a home in Bedico Creek is because of its excellent school district.

Another important factor found in the survey was that buyers of new homes valued quality construction especially when using a builder to build them a new home.  The construction, durability, and beauty of the home was extremely important to them.  In Bedico Creek, we have 14 new home builders that are available for a consultation on either building a new home on a lot purchased in our community or buying a new home built by our quality builders in St. Tammany Parish.

According the National Association of Home Builders,  Bedico Creek Preserve scores highly across the board for all of the features that are important to new home buyers which is probably why the homes and lots in our new subdivision are selling out so quickly.  Don’t miss your opportunity to own a new home in the fastest growing master planned community in St. Tammany Parish!  Contact Us at 985-845-4200 or E-mail Info@LiveBedico.com.

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Housing Market Is on its Way Towards a Full Recovery

One of the key indicators that the housing market is on its way towards a full recovery post-Recession is house prices.  House prices reached “bubble status” pre-Recession and was the partial cause of the entire crash of the mortgage industry during the crisis because buyers found themselves living in homes with loans that vastly exceeded the appraised value of the home.  House prices must maintain a delicate balance as the ebb and flow of the housing market dictated by new home and existing home buyer supply and demand raises and lowers pricing year-over-year.

The House Price Index (HPI) reported that house prices have been increasing for the last three months as of May, 2015, which had an annual growth rate of 5.4%.  That percentage was higher than April’s increase of 4.7% and March’s increase of 3.8%.  The HPI is issused by the Federal Housing Finance Agency, and another report by The Standard and Poor’s/Case-Shiller also showed a slower growth based on a moving three-month average.  This growth in home prices shows a strong demand for new and existing homes from home buyers nationwide.

The National Association of Realtors (NAR) also had good news to report about existing homes under contract nationally.  The Pending Home Sales Index (PHSI) reached a record-high in 9 years in May, 2015, and declined only slightly in June.  This statistic is based on homes with signed contracts as reported to the NAR.  Even with the decline, the PHSI was up 8.2% compared to June, 2014, and the number of homes under contract has been increasing for the last 10 months consecutively.  The Southern Region reflected a 5% increase for the entire year of 2015 for contracts on homes for sale.

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Student Debt Is Not an Obstacle to Homeownership

According to a study done by Zillow.com, the only way student debt can negatively impact young professionals interested in starting a family and “settling down” to buy their first home is if that debt is combined with no degree at all.  According to the study, student debt is not an obstacle to homeownership with those students who finished with a bachelor’s degree or higher for the amount of debt they acquired.  Home buyers that are college graduates and never had to take on student loans have a higher chance (70%) of becoming a homeowner than home buyers that have student debt and at least a bachelor’s college degree, but not by much – the statistic only drops to 66% for these types of buyers.

Because of the Recession and the lack of jobs for college graduates upon completing college, many young people did not get married and start a family right away, so household formation was also a considering factor in the study done by Zillow.com.  The study seemed to indicate that people were waiting until their 30’s to have children, and the study included those couples that had actually started a family with at least one child.

High rents were also a factor as being a deterrent for young professionals to be able to buy a home.  The payment of higher rent made it impossible for them to get the larger down payment together upon trying to get financing for a conventional mortgage.  The FHA just recently reduced the percentage of down payment required for both FHA and Rural Development loans, so this factor will not be as pertinent moving forward.

The truth about young professionals becoming homeowners is that student debt is not an obstacle to homeownership, and the possession of a bachelor’s degree or higher and the acquisition of a good job after college has made it possible for these students to be able to buy a new or pre-existing home upon graduation (or later).  This is good news for the housing market as one more positive sign that the real estate market is moving in the upwards direction.

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