Category: Altitude Real Estate

Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 7.1%. CoreLogic, in their most recent Home Price Insights Report, reveals that national home prices have increased by 6.9% year-over-year.

The CoreLogic report broke down appreciation even further into four different price categories:

1. Lower Priced Homes: priced at 75% or less of the median
2. Low-to-Middle Priced Homes: priced between 75-100% of the median
3. Middle-to-Moderate Priced Homes: priced between 100-125% of the median
4. High Price Homes: priced greater than 125% of the median

Here is how each category did in 2016:

Bottom Line

The lower priced homes (which are more in demand) appreciated at greater rates than the homes at the upper ends of the spectrum.

The inventory of existing homes for sale in today’s market was recently reported to be at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report. Inventory is now 7.1% lower than this time last year, marking the 20^th consecutive month of year-over-year drops.

Historically, inventory must reach a 6-month supply for a normal market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellers’ market, where the demand for houses outpaces supply and prices go up.

As you can see from the chart below, the United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low.

Recently Trulia revealed that not only is there a shortage of homes on the market in general, but the homes that are available for sale are not meeting the needs of the buyers that are searching.

Homes are generally bucketed into three groups by price range: starter, trade-up, and premium.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.

Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive seller’s market in these categories. Ninety-two of the top 100 metros have a shortage in trade-up inventory.

Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyer’s market.

“It leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.”

 Lawrence Yun, NAR’s Chief Economist doesn’t see an end to this coming any time soon: 

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.”

Bottom Line

Real estate is local. If you are thinking about buying OR selling this spring, let’s get together to discuss the exact market conditions in your area.

Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Freddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters.

This has caused some purchasers to lament the fact they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows.

Here is a chart showing the average mortgage interest rate over the last several decades.

Bottom Line

Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

Every homeowner wants to make sure they get the best price when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.

1. Price it a LITTLE LOW 

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In reality, this just dramatically lessens the demand for their house (see chart below).

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house.

Realtor.com gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive, as the seller likely believes that he or she will net more money if they don’t have to pay a real estate commission. With that being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

Research posted by the National Association of Realtors revealed that:

“The median selling price for all FSBO homes was $185,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $163,800. However, homes that were sold with the assistance of an agent had a median selling price of $245,000 – nearly $60,000 more for the typical home sale.”

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.

In many areas of the country, there are not enough homes for sale to satisfy the number of buyers looking to purchase their dream homes. Experts have long proposed that a ramp-up in new, single-family home construction would be one of the many ways to overcome this inventory shortage.

According to a recent survey conducted by the National Association of Home Builders (NAHB) and Wells Fargo, housing market confidence amongst builders reached an 11-year high last month.

What Does High Confidence Mean for the Housing Market?

In a recent interview, Rob Dietz, Chief Economist and SVP for NAHB, put it this way:

“Higher market confidence will translate into more building and more inventory in 2017. We expect single-family construction to grow 10 percent next year.”

With 2016 marking the best year in real estate sales in over a decade, a 10 percent ramp-up in single-family construction will only aid in making 2017 an even greater year.

According to the latest US Census data, sales of newly constructed homes were up 3.7% over January 2016 as they reached a seasonally adjusted annual rate of 555,000. Dietz went on to comment:

“We can expect further growth in new home sales throughout the year, spurred on by employment gains and a rise in household formations. As the supply of existing homes remains tight, more consumers will turn to new construction.”

Bottom Line

With the weather and the real estate market heating up this spring, there will be a surge of new construction coming to the market soon.

Home Buyer Q & A

If we drive by a home we are interested in, review the listing details and photos on our phone, and are ready to take a closer look, do we call you to see the property or the agent whose name is on the sign?

Call me. I will be your representative throughout the home viewing process and through to closing. If there is information we need from the listing agent, I will reach out and secure that information for you. I should be the one you call for all your real estate needs if we are working together in the transaction.

What about open houses? Can we go to open houses if we have been viewing homes with you?

You can certainly tour open houses on your own. Just let the agent holding the home open know that you are working with me and I will follow up with the listing agent to get any additional information that you need or to schedule a second viewing.

The listing information indicates this property has acreage, but how do we know for sure where our property ends and the neighbors’ begins?

The only way to know for sure is with a survey. There may have already been a survey done on the property or this may be something that you want to invest in, especially if you are building a fence or outbuildings or removing trees. Otherwise, talking to the neighbors and learning if a survey was done on their property might be a way to piece together the boundary line, but only through a survey can you know for sure. The title company may have additional information on the property specifics.

What happens if I buy a house, have an inspection, but the inspector misses something that is a big deal to fix?

That is something that could happen. My advice would be to get all the inspections done that you need to feel comfortable about your purchase. For example, if you are buying a home that sits on a hill, hiring not only your general inspector for the home but also a geotech engineer to investigate the soil and rock structure to determine the soundness and possible erosion problems may be just what you need to bring you peace of mind. However, that is no guarantee that something still won’t go wrong. Every home buyer should do their due diligence and find out as much about the home as warranted before making a purchase of this magnitude.

How much notice am I given if an agent wants to show potential buyers my house?

In our area, two hours or more is typical, but if you need to be given more time, we can specify this in the listing information. However, when agents are touring buyers, they may be looking at several homes in a row. The agent will do the best he or she can to arrive at your home in the provided window, but if the tour goes quicker or longer than expected, they may arrive at your home either before or after they have specified. I know it can be difficult, but try to be as flexible as possible.

My baby naps between 10:00-12:00 noon and 3:00-4:30 pm each day. I would prefer to only have my home shown after 4:30 to not disrupt his schedule. Is that possible?

That is possible, but I do recommend having an alternative napping situation on the weekends when many buyers may be out wanting to see properties. You don’t want potential buyers having to skip seeing what could be the perfect home for their buying needs because it doesn’t fit into Junior’s schedule. The more limited the showing schedule, the fewer potential buyers, the smaller the buyer pool, which generally means a lower selling price.

What if I want to take the chandelier in the dining room and kitchen sink faucet with me when I move? Is there something special I need to do?

You have two options – replace these fixtures now before the home goes on the market or designate that these come with the house. In my experience, removing the fixtures you intend to take before the home goes on the market is the best way to avoid misunderstandings and conflict later.

What if I don’t have extra money to fix anything that the buyer has listed to be fixed after the inspection?

Fixes after the inspection can be negotiated. However, my advice is to read the request for repairs from the buyer’s point of view and keep an open mind. There may be small fixes – or even big structural repairs – that must happen before the home is allowed to change hands. Sometimes, these fixes can be paid out of your net proceeds, meaning you don’t have to come up with that money before the sale closes. The challenge with simply indicating that no changes will be done may cause the buyer to walk away and if the buyer walks away, now you have knowledge of your property’s flaws which will need to be disclosed to the next buyer. So keep an open mind and remember, we have options.

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2016 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2017, let’s get together to evaluate the opportunities in our market.