First-Time Home Buyers Make Up Most of the New Home Market

The February 2021 National Association of Home Builders/Wells Fargo Housing Market Index (HMI) reported that 43% of homebuyers in the new home market were first-time home buyers. Two-thirds of builders with single-family starts in 2020 said that 20% of their homes were sold to first-time buyers.

The report also revealed that 15% of new single-family home sales were second homes. A second home according to the report includes homes that are used as a vacation home or investment property. According to 65% of the builders of single-family starts in 2020, 5% of the homes were sold as second homes.

The NAHB/Wells Fargo Housing Market Index is derived from a survey that is monthly given to NAHB members. This survey is designed to take the pulse of the single-family housing market. These chosen members are asked to rate the housing market on a scale of "good", "fair" or "poor" and a scale of "high to very high", "average" or "low to very low". There are three separate parts of the measurements which are Present Single-Family Sales, Single-Family Sales for the Next Six Months, and Traffic of Prospective Buyers.

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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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St. Tammany Makes Recommendations To Change an Ordinance for Subdivision Development Requirements

 

March 16, 2021, an amendment was approved that added more requirements for applicants to provide when it comes to major subdivisions. The parish planning department will now require the following information at the initial, tentative phase which includes the location of all drainage, access, and utilities’ rights of way, topological contours extending at least 100 feet beyond the proposed subdivision boundary and the direction of flow of surface water in roadside ditches, canals, and drainage features.

If adopted commissioners will review and consider the drainage impact of a subdivision when it first appears on their tentative approval agenda, rather than having to wait to do so at the subdivision’s preliminary and final hearings. John Martin, Goodbee Civic Association president is excited about the amendment.

Another amendment was also discussed at the March 16th meeting which will change the current regulations where traffic and drainage impacts cannot be discussed during a rezoning hearing. The amendment would allow its members to consider the impact of a planned unit development overlay on traffic and drainage before granting the overlay request.

Developers will see the full impact of the changes in the New Directions 2040 committee’s report.

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2021 Sees A Gain in Single-Family Permits

The first month of 2021 had a 19.2% year-over-year increase over January 2020 for single-family permits. In the first month 83,921 were issued nationwide which was an increase in all four regions. Midwest reported a 21.5% increase, the Northeast saw a 20.7% increase, the South a 20.3% increase and the West saw a 15.1% increase.

From January 2020 to January 2021 46 states and the District of Columbia experienced growth in single-family permits.  The highest growth rate was seen in South Dakota with a 104% increase.  Montana was one of the four states that saw a decline with a 15.8% decline.

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

Metropolitan Statistical Area	Single-family Permits: Jan (Units #YTD, NSA)
Dallas-Fort Worth-Arlington, TX	4,330
Houston-The Woodlands-Sugar Land, TX	4,258
Phoenix-Mesa-Scottsdale, AZ	2,656
Atlanta-Sandy Springs-Roswell, GA	2,622
Tampa-St. Petersburg-Clearwater, FL	1,954
Austin-Round Rock, TX	1,940
Charlotte-Concord-Gastonia, NC-SC	1,506
Washington-Arlington-Alexandria, DC-VA-MD-WV	1,335
Jacksonville, FL	1,275
Nashville-Davidson–Murfreesboro–Franklin, TN	1,208

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COVID-19 Has Changed the Way Builders Regard Floor Plans

 

The COVID-19 global pandemic has put a spin on the way people look at their home’s space.  The stay-at-home-orders shifted a home’s space to serve more purposes than ever before. Before the pandemic, home was a place where we returned from work, school and any daily activities but now it has become the place where we work, go to school and live out our days. Builders have now changed the way they are designing homes to incorporate these changes into the floor plans. Here are five ways home designs are changing.

Every room needs to serve multiple purposes

Working from home or remote learning demands a quiet space. According to Jennifer Pyatt of Indianapolis-based Pyatt Builders, she is seeing the use of barn or pocket sliding doors.  This feature allows for privacy in an open concept floor plan where space is still needed. Zillow design expert Kerrie Kelly believes that the whole home will be used in multi-purpose ways such as a guest room turned into a wellness studio or a dining room becoming a game room.

No home office? No thanks

If you work from home and are a parent this can be really challenging.  Parents need a dedicated space for work that is separate from their children. Zillow did a survey that revealed that two-thirds of those surveyed are working from home from an area that is not a dedicated home office space and a dedicated space is on the top of their wish list.

Designing for health and cleanliness

Now more than ever everyone is conscious of germs because of the spread of COVID-19. As of now, builders are integrating touchless faucets and self-cleaning toilets into their building plans but this is just the tip of the iceberg. “Just wait until the floor tile takes your temperature and the bathroom mirror checks your vitals,”  says Kelly.

Builders are already coming up with ways to build mudrooms with sinks off the garages so that before anyone enters they can get clean.  Other ways are by building more en suite bathrooms, using easy-clean flooring and building larger foyers for space to take off shoes before entering the home. Air quality is also a must: “Air cleaned by a UV light system in the HVAC can help minimize the risk of spreading germs,” notes Joe Klusnick, marketing director at Blue Mountain Communities in Northern California.

Yards need to be useable year-round

The previous year has been tough with having to stay at home 24/7.  Getting outdoors and enjoying nature is a great way to improve wellness. A good way to go about this is to turn part of your backyard into a functional room. Building an outdoor kitchen, a covered patio or a play area are all great ways to use your outdoor space for play, entertaining and cooking. Todd Pyatt, President of Pyatt Homes, agrees. “Motorized, retractable screens, heaters and fans, now considered luxury options, will become more essential because they allow families the freedom to be outside across the seasons.”

When everything happens at home, there’s more to store

Everyone staying at home has caused more of a footprint.  When you are eating every meal at home, your pantry space becomes a bigger issue. Builders are incorporating larger pantries in new homes. Closets can now serve as multi-purposes throughout the day. They can work as a home office, gym and even a classroom.

To make sure you find the right home that fits your wish list for a fair price, contact a Realtor in your area.

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Tips On How To Budget For Home Renovations

 

Whether it is a full renovation or just some minor updates, it is always important that you budget for your home remodel. The rule of thumb is that most upgrades or renovations increase your home’s value but this is not always the case if you do not stick to your budget and renovation plan. Here are five things to do when determining your budget for the project.

 

Estimate home renovation costs

Just like any other investment you do not want to put more money into the project than you can get in return. First, determine the value of your home.  If you are updating specific rooms, you will want to determine the percentage of worth of the room.

A kitchen accounts for 10 to 15 percent of the home’s total value. For example, if your home is worth $200,000 you will want to spend no more than $30,000 on the total kitchen project. If you are looking for the biggest bang for your buck, then a mid-range bathroom remodel will get you the best return on your investment.

Consider home remodeling loan options

It can take a lot of cash to do a big renovation and this can sometimes detour homeowners. There are many loans that are available for this specific purpose.

One option is to refinance your home. Right now mortgage rates are at an all-time low, so you have the option of refinancing for an amount higher than you currently owe. You will be able to pay off your current loan and have cash left over for your home improvements.

Another option is to Cash-out refinance by taking your existing loan and refinancing it for more than you currently owe. You will then have enough money to pay off your original mortgage and make your renovations.

Many homeowners do not want to take the refinancing option, but they still have options. A home equity line of credit (HELOC) that works like a credit card is a way to go. You are given a set limit that you can borrow against.

A home equity loan can also get you the money you need for your projects. With this option, you take out all of the cash at one time. This will be in addition to your original mortgage.

Get home renovation quotes from contractors

It is always a wise decision to go into a project with some sort of estimate on how much the project will cost. A contractor will be able to give you an estimate based on your project. You will want to allow for more cost because a project usually costs more than what the estimate states. The more information you are able to give a contractor the closer the estimate can be to the true cost.

Just like shopping around for the best price or best product, it is always wise to get several quotes from several different contractors. Never just take the lowest bid, make sure you know what materials are being used and the process the contract will take to complete your project. Lower bids tend to be a sign that the contractor cuts corners.

Stick to the home remodeling plan

Just like a trip to the grocery store, to stay on budget you have to stick to your grocery list. It is always a temptation to add little projects here and there to your current remodeling project. These last-minute additions can add up. Remember that every time you change your mind even little changes can be costly to your budget.

Account for hidden home renovation costs

As mentioned before an estimate is only an estimate. The project might look like an easy fix, but there might be other issues lurking beneath the surface. Always give yourself a cushion upfront. Every contractor can agree that most renovation projects usually cost more due to hidden imperfections. Add 10 to 20 percent to your estimated project cost.

Home improvements are in most homeowners’ reach, the trick is figuring out how to plan a home renovation that doesn’t break the bank. It is best to consult with professionals such as a mortgage lender and contractor to help with estimated cost and obtaining the money to give the go-ahead.

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The Before, During and After Questions To Ask a Home Inspector About a Home Inspection

A home inspection is an important step in the process when purchasing a home.  Whether it is new construction or resale, you want to make sure the home is in tip-top shape.  Here is a list of questions to ask before, during and after the home inspection.

Questions To ask before the inspection

1. What do you check?

“A lot of people don’t know exactly what a home inspector is going to do,” says Frank Lesh, executive director of the American Society of Home Inspectors.

According to Lesh a home inspector checks 1,600 features on a home!  This includes most everything from the roof to the foundation.  It is a bonus to know what an inspector can and can’t do.

2. What don’t you check?

Even though it seems like an inspector inspects most everything, this is not the case. There are limits to the job. For example, a wall can only be visually inspected and not cut into. If an inspector thinks there is an underlying problem, they can flag the potential problem so you can hire an expert to look into it.

3. What do you charge for a home inspection?

There is a range of pricing when it comes to a home inspection.  They usually cost between $300 to $600 depending on the location of the house, the size of the house and the inspector. Remember ask what forms of payments are accepted as you will have to pay the inspector the day of the inspection.

4. How long have you been doing this?

The more experience the inspector has, the more likely he will have seen many different scenarios.  A newer inspector doesn’t mean a less qualified inspector, they just might not have as much experience especially with an older home that might have some unusual features.

5. Can I come along during the inspection?

An inspector should expect you to be there. A good inspector will explain some of the home’s systems and how they work when inspecting your home. Sometimes explaining things in person might help with understanding the report. It is a bad sign when an inspector does not want you present at the inspection.

6. How long will the inspection take?

If you work, then you will need to know how long it will take for the inspection because they usually take place during the workweek. It might only be a ballpark figure because it will depend on the condition of the home.

7. Can I see a sample report?

Sometimes a report can be overwhelming especially for a first-time homebuyer. A sample report can be beneficial because it can get you familiarized with what you can expect to see on your home’s inspection report.

Questions to ask during a home inspection

1. What does that mean?

When an inspector is going through your home they will go slowly to make sure they double-check that everything is in working order.  If there is a problem, the inspector will point it out and explain what is wrong and needs to be fixed.

An inspector does this every day so they are very familiar with the lingo.  If you do not understand something they are explaining ask questions. If the inspector points out a problem, ask how difficult it is to repair and how much it will cost. Sometimes the buyer can go back to the seller and ask for things the inspector finds to be fixed.

2. Is this a big deal or a minor issue?

Purchasing a home is a big investment and commitment.  When an inspection report points out problems whether big or small it can make you second guess your decision. An HVAC system that is not up to code can sounds awful to you but it might not be as bad as you think.  Before panicking, ask the inspector if they believe the problem is a big deal. If they do, you can walk away or negotiate repairs with the seller.

3. What’s that water spot on the ceiling, and does it need a repair?

Anything you see that you think might be off, ask the inspector about it. This is a big purchase and you should not shy away from asking an inspector for explanations. A good inspector will ask you if there are any concerns you have with the home before they start their inspection.

4. I’ve never owned a house with an HVAC/boiler/basement. How do I maintain them?

“Inspectors are used to explaining basic things to people. If you have an inspection question, ask it,” Lesh says. “Don’t expect your inspector to teach you how to build a clock, but we are happy to answer and explain how things work.”As mentioned before, this is a perfect time for a professional to explain how things work.

5. What are your biggest concerns about the property?

When the inspector has finished, they should give you a general summary of their findings. The written report which will come later will be more thorough.  This is a great time to ask the inspector their thoughts and concerns on the problems found. If an electrical issue is found, it might be a good idea to have an electrician come and inspect the problem.

Questions to ask after the inspection is completed

1. I don’t understand…can you clarify?

You will receive the report a day or two after the inspection. The report will be a detailed list of problems that are found along with photos of the problem areas. If you do not understand any of the photos or explanations ask the inspector to explain.

2. Is there any problem in this house that concerns you, and about how much would it cost to fix?

Most problems found in an inspection should not be a deal-breaker.  An inspector can help you determine if it is a minor problem with any easy fix or if it is something drastic that would make a buyer walk away.

“The inspector can’t tell you, ‘Make sure the seller pays for this,’ so be sure you understand what needs to be done,” says Lesh.

3. Should I call in another expert for a follow-up inspection?

If there is a major issue, a second opinion from an expert in the field would be a good idea. If an electrical issue has been flagged, an electrician can come in and see exactly what the problem might be and how much it will cost to fix it. A Realtor can then negotiate with the seller to see if the seller would be willing to fix it.

4. Is there anything I’ll need to do once I move in?

An inspection report not only tells you the problem areas but also gives you suggestions on things you should fix in the first couple of months of living in your home.

“I had a couple call and tell me they had seepage in the basement,” Lesh says. “I pulled up their report and asked if they’d reconnected the downspout extension like I recommended. Nope. Well, there’s your problem!”

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