Why 2015 Might Be the Year You Finally Sell Your House
Why 2015 Might Be the Year You Finally Sell Your House Martin Barraud/Getty Images Home price gains are slowing, credit is thawing, and more first-time buyers may be hitting the real estate market in 2015. Better balance in the housing sector is “in” next year, as far as trends go. That’s likely to put buyers and sellers on a more even footing. Some prospective sellers sound especially bullish on housing. In a recent Trulia survey, the biggest chunk of consumers, 36%, said they expect next year to be much or a little better than 2014 for selling a home. To be sure, like politics, all real estate is local. Some sellers have stayed on the sidelines in recent years, investing in improvements amid a dearth of buyers. For others, low inventory and rising home prices meant a bidding-war bonanza. The landscape next year’s sellers are likely to encounter depends a lot on where they live. But here are a few broad trends to bear in mind. Bringing Back Buyers Mortgage credit is becoming more available as lenders scale back requirements. The average FICO score on a conventional purchase loan in October was 754, according to Ellie Mae. That’s a five-point drop from last year’s average. (You can check your credit scores for free on Credit.com to see where you stand.) Tough credit and underwriting requirements have been a huge hurdle for many would-be buyers. So is liquidity, but there’s also good news on that front: Fannie Mae and Freddie Mac recently rolled out a mortgage option that allows for a 3% down payment. These two government-sponsored behemoths purchase about two-thirds of all new mortgages. If conventional lenders get on board, the new low-down-payment option could pull more first-time buyers into the marketplace. During a time of tight credit and stagnant wages, this crucial group of buyers has been all but absent from the housing picture. “If access to credit improves, we could see substantially larger numbers of young buyers in the market,” Jonathan Smoke, chief economist for Realtor.com, noted in his 2015 housing forecast. “However, given a high dependency on financial qualifications, this activity will be skewed to geographic areas with higher affordability, such as the Midwest and South.” Affordability May Be a Concern Lower credit and down-payment thresholds are causes for optimism. But rising home values and mortgage rates will impact affordability, especially in costlier housing markets. Realtor.com’s Smoke expects affordability to decline 5-10% next year. Job and wage growth will play a big role in shaping homebuying activity. Gains in both may offset the price and rate increases likely on the horizon. Sellers in more affordable housing markets, especially those with improving economies, are likely to see more buyers. Home Prices & Inventory Home price growth is slowing after years of big gains. Zillow’s chief economist predicts home values will rise about 3% next year, about half the current clip. More listings are hitting the market each month, too, although inventories are still tight in some places and price ranges. Housing inventory nationwide jumped nearly 16% in October year over year, according to Zillow. The combination of cooling prices and more inventory means the balance of power is tilting back toward buyers in some markets. “Sellers have had their day in the sun for several years in a row now,” Zillow’s economist, Stan Humphries, told U.S....
read moreWhat Real Estate Trends to Expect in 2015
What Real Estate Trends to Expect in 2015 Experts predict investors will exit the market, clearing the way for traditional buyers and millennials. couple choosing paint swatch for new home Many millennials have held off on buying a home, but experts expect that to change in 2015. By Susan Johnston Dec. 9, 2014 | 9:48 a.m. EST More As housing recovers, prices in many markets across the U.S. have shot up. In fact, RealtyTrac reported that the median sale price of U.S. single-family homes and condos in October had reached its highest level since September 2008. Price appreciation and the lure of foreclosures created a feeding frenzy for real estate investors willing to pay cash and made it harder for traditional buyers to compete. But experts say that 2015 will be marked by a return to normalcy and balance for real estate markets across the country. Stan Humphries, chief economist for Zillow.com, predicts that home value growth will slow to around 3 percent per year instead of the 6 percent seen recently, and that will make real estate less attractive to many investors. “It’s been a tough market for buyers,” he says. “I think it’s going to get easier in 2015. Negotiating power will move back to buyers and away from sellers. It will be a much more balanced market.” (Too many buyers and too little inventory, or the opposite, contribute to an unbalanced market.) Redfin.com’s chief economist Nela Richardson agrees. “It’s been a clear pattern that the investor activity has been shrinking over time,” she says. “Investors like to go in where they can buy low and sell high. Price growth is starting to slow dramatically, so they can’t sell much higher than what they buy. Investment property is less compelling in 2014 going into 2015.” More inventory and less competition from investors means even traditional buyers are becoming “more picky, and they’re willing to let a home go if they don’t think it’s a good fit for them,” Richardson adds. “Buyers are less worried that they’ll miss out on something. Houses are more like buses now. If you miss one, another one will come along.” Whereas buyers might waive contingencies in the recent past to make their offer more attractive to sellers, they’re now more likely to insist on contingencies for financing and inspections. That said, foreign investors may still find high-end American real estate appealing because of economic turbulence in their home countries. For instance, the U.K. is toying with a so-called “mansion tax” that would apply to those who own properties worth more than 2 million British pounds (or over $3 million), and China has placed restrictions on homebuying in large cities. Some foreign investors also worry about currency fluctuations devaluing money they hold in their home countries. “That section of the market is still all cash – people buying up these huge places because it’s safer here than in their own countries,” says Herman Chan, real estate broker with Bay Sotheby’s International Realty in San Francisco. Buyers from outside the U.S. may use their properties as a rental, a pied-à-terre (a secondary residence used for travel) or a residence for children studying at American colleges. But for buyers looking for more moderately priced homes, 2015 could offer a respite from bidding wars and all-cash...
read more10 Reasons 2015 Will Rock for Real Estate
10 Reasons 2015 Will Rock for Real Estate DAILY REAL ESTATE NEWS | WEDNESDAY, DECEMBER 31, 2014 After a slowdown in the market this year, housing analysts and economists have high hopes for 2015. The real estate market is expected to build momentum across the board nest year, mostly because of a strengthening economy. Here’s a recap of some of the real estate forecasts for 2015: Millennial force: Younger professionals are having more luck in the job market, which is expected to help more of them jump into home ownership in the new year. Overall, employment is on the rise, but jobs for Millennials — particularly those aged 25 to 29 — has risen by 3 percent. That’s one percentage point above the nationwide rate. According to some forecasts, Millennials are expected to drive two-thirds of household formations over the next five years. The forecasted addition of 2.5 million jobs next year, as well as an increase in household formation, will likely drive more first-time home buyers into home ownership, according to com® projections. Home prices stabilize: The double-digit price increases seen in 2013 have slowed, and more stable growth was the trend in 2014. As investors have retreated from the market, so have the rapid home prices in many markets. Home prices are expected to continue to edge up in 2015, with realtor.com® predicting a 4.5 percent gain. “After two years of abnormally high levels of home-price appreciation in 2012 and 2013, price increases moderated throughout 2014,” realtor.com® notes in its 2014 Housing Review. “We are now experiencing increases in home prices consistent with long-term historical performance.” Mortgage rates rising: Interest rates the last few months have been dipping below 4 percent, lowering the borrowing costs of home buyers and refinancing home owners. However, don’t expect the low rates to stick around much longer. Mortgage rates are expected to rise next year. Freddie Mac projects mortgage rates will likely average 4.6 percent but inch up to 5 percent by the end of 2015. Return of the 3 percent down payment: New programs are popping up to help more buyers break into home ownership with lower down payments. In early December, Freddie Mac and Fannie Mae announced conventional loan down-payment programs that will allow qualified first-time buyers to secure a fixed-rate mortgage with a 3 percent down payment. Prior to that, they needed at least 5 percent. Also, “there are many states as well as national programs, which offer grants that range from 1 to 5 percent to be used for a down payment or closing costs,” writes Damian Maldonado, co-founder of American Financing Corp., at CNBC. “These easing loan standards will allow more first-time buyers to enter the market.” Housing affordability declines: Affordability for homes, based on home-price appreciation and rising mortgage interest rates, will likely fall by 5 percent to 10 percent in 2015, according to realtor.com® forecasts. However, the decline in affordability could be offset by an increase in salaries next year for many households. “When considering historical norms, housing affordability will continue to remain strong next year,” realtor.com® notes in its report. New-home sales rebound: Single-family new-home starts barely budged in 2014 compared to 2013, and new-home sales remain far from normal levels. But that could finally turn around in 2015. Sales of new homes are expected to...
read moreFielding a Lowball Purchase Offer on Your Home
Fielding a Lowball Purchase Offer on Your Home By: Marcie Geffner Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale. You just received a purchase offer from someone who wants to buy your home. You’re excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond? Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal. Check your emotions. A purchase offer, even a very low one, means someone wants to purchase your home. Unless the offer is laughably low, it deserves a cordial response, whether that’s a counteroffer or an outright rejection. Remain calm and discuss with your real estate agent the many ways you can respond to a lowball purchase offer. Counter the purchase offer. Unless you’ve received multiple purchase offers, the best response is to counter the low offer with a price and terms you’re willing to accept. Some buyers make a low offer because they think that’s customary, they’re afraid they’ll overpay, or they want to test your limits. A counteroffer signals that you’re willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that you’d like to take with you. Consider the terms. Price is paramount for most buyers and sellers, but it’s not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is preapproved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work. Review your comps. Ask your REALTOR® whether any homes that are comparable to yours (known as “comps”) have been sold or put on the market since your home was listed for sale. If those new comps are at lower prices, you might have to lower your price to match them if you want to sell. Consider the buyer’s comps. Buyers sometimes attach comps to a low offer to try to convince the seller to accept a lower purchase offer. Take a look at those comps. Are the homes similar to yours? If so, your asking price might be unrealistic. If not, you might want to include in your counteroffer information about those homes and your own comps that justify your asking price. If the buyers don’t include comps to justify their low purchase offer, have your real estate agent ask the buyers’ agent for those comps. Get the agents together. If the purchase offer is too low to counter, but you don’t have a better option, ask your real estate agent to call the buyer’s agent and try to narrow the price gap so that a counteroffer would make sense. Also, ask your real estate agent whether the buyer (or buyer’s agent) has a reputation for lowball purchase offers. If that’s the case, you might feel freer to reject the offer. Don’t signal desperation. Buyers are sensitive to signs that a seller may be receptive to a low purchase offer. If your home is vacant or your home’s...
read more5 Things That Could Devalue Your Home
5 Things That Could Devalue Your Home BY DAVID BAILEY Mortgage and Lending with The Mortgage Outlet NMLS 5 Things That Could Devalue Your Home When it comes to listing your home on the market, a common concern is wanting to increase its value and allow it to stay competitive in the local area. Many people work to remodel their property or make minor upgrades to increase the selling potential of their home. Although you should take certain steps to increase what your home is truly worth, there are a few mistakes to avoid to prevent reducing its overall value. There are many different factors that determine the property value. If you know which ones are working against your home then you can prevent losing equity Using Bold Paint Colors To appeal to a larger group of buyers, use neutral paint on the walls and with the trim. Bold colors stand out like a sore thumb in neighborhoods and can allow them to look outdated or too customized. Similarly, using colors that are quirky or unpopular in the interior space can detract from the property value and is seen as an extra expense for buyer who will want to repaint the space. Stick with contemporary shades and use an accent wall in one or two rooms of the home for added detail that looks modern. A general rule of thumb is to avoid using colors that are too specific to your personal taste. Remodeled Kitchens Known as the most important room that buyers focus on when shopping for a property, kitchens are often remodeled and upgraded by homeowners in hopes of increasing their property value. Although having a kitchen that includes fancy appliances and a decorative backsplash can look appealing, it can also be overly done and appear awkward in the average house. Upgrade your kitchen to a certain degree without going overboard and causing the room to look awkward. It should still match the style and design of the rest of the home to ensure that it flows well and feels comfortable. Avoid overly customizing the space, but instead keeping it neutral to ensure that it appeals to more buyers. A Neglected Yard The yard and landscaping of your home is what ultimately makes the first impression with buyers and will determine their interest in the property. If you can’t win them over with the exterior of the home, then you likely won’t sell them on the interior space if you’ve already left a bad taste in their mouth. The lawn should be manicured and tidy without children’s toys or yard tools left out. Add shrubs, flowers, and potted plants around the house to fill in bare spots and enhance how welcoming the home looks. If the yard is well-cared for, it will assure buyers that you’ve also worked hard to maintain the property and have kept up with repairs. If the curb appeal is lacking, it will cause buyers to question how much it’ll cost them to redo the landscaping and will work against your chances of getting a higher offer. Bad DIY Projects With Pinterest and DIY Home Renovation shows a hit in today’s society, it’s common to see homes that have incomplete or poor DIY projects that were performed by the homeowners. Unfortunately, many...
read moreMarket Analysis
2015 is well on it’s way to a promising year. Please check out the current market stats to see how the real estate market is changing. Click here for the most current market analysis: http://www.gaar.com/images/uploads/statistics/February_2015_monthly_final.pdf
read moreLease-To-Buy May Be Good Option
In a tough market, it has advantages for both buyers and sellers http://www.realtor.com/home-finance/real-estate/buyers/lease-to-buy-may-be-good-option.aspx?source=web By Phoebe Chongchua Lease-To-Buy May Be Good Option Many people who are struggling to get mortgages are finding comfort in a growing trend: lease-options. This is a contract that allows renters to lease the property and, at the end of their lease, they have the option to buy the home. Hopeful buyers with poor credit are finding the rent-to-own option creates an opportunity to repair their credit while positioning them for homeownership. It’s a win-win situation. Sellers find that properties that once sat vacant now offer cash flow. The concept, while not new, is gaining momentum. There are a number of reasons buyers are finding this option appealing and it’s not just because of bad credit. Some buyers are not sure if they’re ready to own a home and take on all the responsibilities and extra costs that go with homeownership; the lease-purchase contract gives the buyers a chance to give homeownership a test drive. Individual sellers in the housing resale market are considering this method to help get their homes sold and so, too, are developers who have found they’re loaded up on properties they can’t sell. “In Boston, as is true with so of much the country, the condominium market is a little bit soft right now,” says Eric Gedstad, Corporate Communications Manager, MassHousing in Boston. So, some developers are trying the rent-to-own program in hope of getting condos sold. “There is one development where the renters sign an agreement that says ‘If they would like to purchase the unit that they are renting any time within the next year, they can do so for a fixed price and they would have first dibs on that,” says Gedstad. Understanding the lease-option is very important. There are various differences in the way this type of contract can be drafted, so it is critical to hire experts to help negotiate the process to make sure you understand the terms and are protected. Here is some basic information about leasing with the option to buy a property. Typically, in return for the landlord/seller extending the offer to buy the property after a period of time (usually one to three years) at a predetermined price, the tenant/buyer has to pay an upfront option (fee). That fee is generally non-refundable. A portion of the monthly rent may be applied toward the down payment to purchase the home. Advantages for the buyer/tenant: Under this type of lease-option contract, for the period stated, you are the only one who has the option to buy the property. Typically a portion of your rent goes toward building equity and, when you purchase the home, is applied toward the down payment. You have a contract to buy the home when the lease is up. Usually you can buy the home at any time during the contract. You can see if homeownership is right for you by testing it out. In an appreciating market, you may get a good deal if the home goes up in value and you have already locked in a specific sale price for the home that is less than how much it appreciates. However, the reverse is true too. You could end up...
read more14 Things to Consider Before Buying a Home
Don’t let your emotions cloud your judgment http://www.realtor.com/home-finance/real-estate/buyers/14-things-to-consider-before-buying-home.aspx?source=web By Diane Benson Harrington Wait! That house may seem like everything you’ve ever wanted, but before you make an offer, take some time to consider a few things beyond the size, style and price.When buying a home, it’s easy to let emotions get in the way of reality, or get sudden amnesia about factors that may make a difference. “Sometimes we want something so badly, we’re not willing to ask all the questions we should,” says Leslie Levine, author of “Will This Place Ever Feel Like Home?”For instance, she says, you may see a basketball hoop over the garage and assume the neighborhood is great for kids. But a closer inspection may show that it’s rusted and hasn’t seen a ball in a decade, and that other yards in the neighborhood have no jungle gyms or tire swings out back. 1. Visit at various times of day The windows that let in so much light during the day may be a peeping Tom’s dream at night. That seemingly quiet residential street may be a noisy, highway-feeder street during morning or evening rush hour; or it may be near impossible to get from your quiet street across traffic and onto the feeder street in the morning. The adjacent school may seem like a nice perk if you’re buying in the summer, but during the school year, daily playground noise and extra traffic may be more than you bargained for. 2. Look through recent newspaper archives “Make sure you’re getting information on what you can’t see,” Levine suggests. Perhaps the municipal water well that feeds your neighborhood has high levels of contaminants or a proposed high-voltage power line may soon be coming through your back yard. You can also check with the city or county to see if there are any proposed projects. 3. Talk to neighbors How many people in the neighborhood own their homes? Sometimes it’s hard to tell at first if you’re choosing a neighborhood that’s primarily rental houses. 4. Ask if the neighborhood has an association “Is there a newsletter for it? How often does the neighborhood get together? Do they have a block party every year?” Levine asks. “Even if you don’t plan to attend, the fact that they’re having a gathering says they care about their community, that they want to get to know each other, that they’re willing to socialize that way. People who behave that way are building a community. They’re going to look out for your kids; they’re going to look out for your house. It’s a nice, safe way to celebrate something.” 5. Quiz the sellers What problems are they aware of that the house had in the past – even if they’ve been fixed? An ice dam five years ago may have caused water damage that has since been repaired. But it’s good to know that the house may be prone to ice dams so you can take preventive measures rather than find out the hard way. Discovering the basement flooding was solved by building up the landscaping in a particular area will prevent you from leveling the ground there in later years. 6. Get a home inspection Virtually all houses have defects, according to National Association of Exclusive Buyers Agents. Some will...
read moreWelcome to my new blog
Welcome to my new real estate blog. Please check back often to see my latest posts. We would like to announce the launch of ABQ House&Home! New Mexico’s newest Real Estate Firm is open!
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