Supply Expands

The biggest challenge to today’s housing market is the shortage of housing inventory for sale. A normal market would see a six-month supply of homes for sale. Currently, that number is below four months. This is the major reason home prices have continued to appreciate at higher levels than historic averages.

The good news is that builders are now starting to build more homes in lower price ranges.

Builder Confidence is Up

The Housing Market Index from the National Association of Home Builders (NAHB) reveals that builder confidence increased last month. HousingWire quoted NAHB Chief Economist Robert Dietz about the reason for the increase in confidence amongst builders.

“The HMI measure of future sales conditions reached its highest level since June 2005, a sign of growing consumer confidence in the new home market. Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.”

Builders are Meeting the Needs of Today’s Purchaser

Builders are not only jumping into the market – they are doing a better job of matching current demand. The Wall Street Journal recently reported:

“In a shift, new households are overwhelmingly choosing to buy rather than rent. Some 854,000 new-owner households were formed during the first three months of the year, more than double the 365,000 new-renter households formed during the period, according to Census Bureau data.”

The WSJ article went on to say:

“Home builders are beginning to shift their focus away from luxury homes and toward homes at lower price points to cater to this burgeoning millennial clientele.”

The graph below compares 2016 to 2017 new construction sales by price point. As we can see, builders are slowly beginning to shift to prices more favorable to the first-time and non-luxury buyer.

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Bottom Line

There is a drastic need for a larger supply of home inventory to meet the skyrocketing demand. Builders are finally doing their part to help rectify this situation.

Unplugging "Reality" Home Buying Shows

Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV binge session? We’ve all been there, watching entire seasons of “Love it or List it,” “Million Dollar Listing,” “House Hunters,” “Property Brothers,” and so many more all in one sitting.

When you’re in the middle of your real estate themed show marathon, you might start to think that everything you see on TV must be how it works in real life, but you may need a reality check.

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Reality TV Show Myths vs. Real Life:


Myth #1: Buyers look at 3 homes and decide to purchase one of them.
Truth: There may be buyers who fall in love and buy the first home they see, but according to the National Association of Realtors the average homebuyer tours 10 homes as a part of their search.  

Myth #2: The houses the buyers are touring are still for sale.
Truth: Everything is staged for TV. Many of the homes being shown are already sold and are off the market. 

Myth #3: The buyers haven’t made a purchase decision yet.
Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy. 

Myth #4: If you list your home for sale, it will ALWAYS sell at the open house.
Truth: Of course, this would be great! Open houses are important to guarantee the most exposure to buyers in your area but are only a PIECE of the overall marketing of your home. Keep in mind that many homes are sold during regular showing appointments as well. 

Myth #5: Homeowners decide to sell their homes after a 5-minute conversation.
Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their homes and move on with their lives/goals.

Bottom Line
Having an experienced professional on your side while navigating the real estate market is the best way to guarantee that you can make the home of your dreams a reality!

The Forever Home

The Forever Home

Many believe that a large portion of homeowners are not in a house that is best for their current family circumstance; they could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple living in a one-bedroom condo planning to start a family. These homeowners are ready to make a move, and since a lack of housing inventory is still a major challenge in the current housing market, this could be great news.

Read More

Get the Max ROI with your Reno

Are you planning to update your current home to sell fast? Maybe you want to do some updates to a homes you are going to stay in for a few more years. The important thing to keep in mind is, at some point you will need to sell and you want to make sure that all of your blood, sweat and tears weren't a waste of time and money. Here is a quick list of areas that will produce the highest return at resale. 

Whether you are selling your home, just purchased your first home or are a homeowner planning to stay put for a while, there is value in knowing which home improvement projects will net you the most Return On Investment (ROI).

  • Minor bathroom renovations can go a long way toward improving the quality of your everyday life and/or impressing potential buyers.
  • Upgrading your landscaping or curb appeal helps get buyers in the door. These upgrades rank as the 2nd and 4th renovations for returns on investment.

Why do you need a Pro in your corner?

With home prices on the rise and buyer demand strong, some sellers are tempted to try and sell their homes on their own without using the services of a real estate professional. This type of sale is referred to as a FSBO [fiz-bow]. 

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Investopedia breaks this acronym down:

'For Sale By Owner - FSBO'
The most common for-sale-by-owner transaction occurs in the real estate market when a homeowner wishes to avoid paying a large commission when selling their property. By not using a real estate agent, the seller assumes all the responsibilities of completing the transaction. 

Real estate agents are trained and experienced in negotiation and, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families.

The idea of writing this Blog post came about because I called a gentleman last week that had changed his voicemail while his home was listed FSBO. I could hear the frustration in the sellers voice:

Hi you’ve reach the voicemail of James ______. If you are calling about the home on NW 81st for sale please DO NOT leave a message if you aren’t willing to pay full-price! If you are calling to get in and see the house please do not come knocking on my door because I didn’t answer the phone! This is not an invitation to trespass on my property! Leave a message and I will get back to you at a normal time. If you’re calling after 10:00 I will not be returning your call!
— James, FSBO Home Owner

It isn't hard to tell how frustrated James is with his home listing...

We spoke for a little while and I am going to be meeting with him late next week to see if I can help him. Even if he isn't interested in listing his home for sale with me, I feel it is only right to offer counsel to a man and his family if I can. 

Selling your home on your own is no easy task. Heck, selling a home as an agent is never easy... we just make it look that way! Lol. 

Before your home even gets listed for sale an agent should be investing a good portion of time in getting to know your home, the home sales and current listings in your neighborhood and compare the data to measure it against the current market. 

Listing a home for sale isn't a matter of knowing HOW MUCH a homeowner wants to make. When a agents agrees to sell your home they should be offering a certain level of expertise and professionalism.

Your agents primary concern should be: Is this the best decision for you and your family?!

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The termite company if there are challenges
  • The buyer’s lender if the structure of the mortgage requires the sellers’ participation
  • The appraiser if there is a question of value
  • The title company if there are challenges with certificates of occupancy (CO) or other permits
  • The town or municipality if you need to get the CO permits mentioned above
  • The buyer’s buyer in case there are challenges with the house your buyer is selling
  • Your bank in the case of a short sale

Bottom Line
The percentage of sellers who have hired real estate agents to sell their homes has increased steadily over the last 20 years. Meet with a professional in your local market to see the difference they can make in easing the process.

Trying to sell? Here are 5 things your buyers are looking for...

Often when a homeowner begins the path to selling their home, the thought of putting more money into a home you plan to leave is the last thing on your mind. The truth of the matter is that getting the best value for your home means that you will want to make your home appealing to the buyers that are looking in your price range. 

Upgrades increase home values by 57% of the average project’s costs.
— Remodeling magazine's 2018 Cost vs. Value report.

As a homeowner, the best way to see a great return on your investment is to make small upgrades over time. You don’t need to break the bank either. For instance, decluttering and updating paint are the least expensive and give your home the fresh look it needs. 

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Laundry Room

Percentage of buyers who want this feature: 92%
Cost to install: $1,200 to $10,000 (depending on scope of project)

Laundry Room
More than anything else, homeowners want room (other than the master bed/floor/ironing board) to stack all the clean laundry in until it finally gets put away. A separate laundry room topped the National Association of Home Builders' (NAHB) list of most-wanted home features by buyers. Buyers see the benefit of having the space to keep the mess that laundry creates. 

*Not able to make this addition? Clean out the closet! Literally.

Go through your closets and take the time to put all of the clothing, boxes, shoes that you don’t need access to all the time – and put them in to storage. When buyers see an already cluttered closet and laundry area this is a RED ALERT that you don’t have enough space in your lovely spacious home. This will tell them that they too will not have enough room in your home. 

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Exterior Lighting
Percentage of buyers who want this feature: 92%
Cost to install: $65 to $132 per fixture

Percentage of buyers who want this feature: 92%
Cost to install: $65 to $132 per fixture

Exterior Lighting
Illuminating a well-manicured lawn with exterior lighting can help grab potential buyers' attention before they even set foot in the front door. In fact, exterior lighting is the most-wanted outdoor feature, according to the NAHB. Options include spotlights, walkway lights and pendant lights.

Aesthetics aside, exterior lighting also serves as an added safety feature for your home. Motion-sensor lights, for example, turn on automatically whenever there is movement outside your house.

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Energy Efficiencies 

Percentage of buyers who want this feature: 90%
Cost to install: varies (appliances), $270 - $800 each (windows)

Energy Efficiencies (Appliances and Windows)

Buyers looking to limit utility bills will likely be drawn to properties with energy efficiencies, such as Energy Star-qualified windows and appliances. 
Energy-efficient windows can trim heating and cooling costs by 12%, while individual appliances, such as an Energy Star-certified washing machine ($500 to $1,800), can save homeowners $45 a year or more on their utility bills.

Energy Star-qualified windows have an invisible glass coating, vacuum-sealed spaces filled with inert gas between panes, sturdier weather stripping than regular windows and improved framing materials -- all of which reduce undesirable heat gain and loss in the home. An Energy Star-certified dishwasher (ranging in price from $225 to $1,664 at Home Depot) uses soil sensors to assess how dirty your dishes are to minimize water use.

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Patio, Backyard Haven

Percentage of buyers who want this feature: 87%
Cost to install: $950 per 120 square feet for a concrete patio

Patio, Backyard Haven

It's important to include value in the backyard area when prepping for resale. In today's housing market, outdoor living spaces are quickly becoming one of the most coveted home features. In South Florida, it is a large part of buyer consideration since we have year-round sunshine. 
Most buyers see a house with a nice backyard and envision themselves sitting outdoors, entertaining, BBQ-ing, celebrating, etc.

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Hardwood/Upgraded Flooring


Percentage of buyers who want this feature: 87%
Cost to install: $1,429 per 120 square feet of red oak flooring

Hardwood/Upgraded Flooring

Carpet has become more of a nuisance than a luxury for most buyers. Over 80% of buyers list carpeting as one of their "dislikes" when looking at a home. In South Florida, homeowners are replacing carpeting with wood grain tile, engineered wood too keep their home cooler and to minimize the allergens that cling to carpeting. Tile, stone and hardwood flooring offers a cleaner look, is easier to maintain and is more durable than carpet, which needs to be replaced every eight to 10 years.

Sellers on a budget may want to buy engineered wood flooring (which is a hardwood veneer wrapped around several layers of plywood, fiberboard and hardwood). The cost to install 120 square feet of engineered wood flooring is $1,239 -- about 15% cheaper than pure hardwood flooring.
 

Home Inspections: What to Expect

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So you made an offer, it was accepted, and now your next task is to have the home inspected prior to closing. Oftentimes, agents make your offer contingent on a clean home inspection.

This contingency allows you to renegotiate the price you paid for the home, ask the sellers to cover repairs, or even, in some cases, walk away. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector
Your agent will most likely have a short list of inspectors that they have worked with in the past that they can recommend to you. HGTV recommends that you consider the following 5 areas when choosing the right home inspector for you:

  1. Qualifications – find out what’s included in your inspection and if the age or location of your home may warrant specific certifications or specialties.
  2. Sample Reports – ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. The more detailed the report, the better in most cases.
  3. References – do your homework – ask for phone numbers and names of past clients who you can call to ask about their experiences.
  4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations often means that continued training and education are provided.
  5. Errors & Omission Insurance – Also known as E&O. Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human after all, and it is possible that they might miss something they should have seen.

Ask your inspector if it’s okay for you to tag along during the inspection, that way they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof or crawling around in the attic and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, the fireplace and chimney, the foundation, and so much more!

Bottom Line
They say ‘ignorance is bliss,’ but not when investing your hard-earned money into a home of your own. Work with a professional who you can trust to give you the most information possible about your new home so that you can make the most educated decision about your purchase.

5 Ways Tax Reform Has Impacted the 2018 Housing Market

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Starting late last year, some predicted that the 2018 tax changes would cripple the housing market. Headlines warned of the potential for double-digit price depreciation and suggested that buyer demand could drop like a rock. There was even sentiment that homeownership could lose its coveted status as a major component of the American Dream. 

Now that the first quarter numbers are in, we can begin to decipher the actual impact that tax reform has had on the real estate market.

1. Has tax reform killed off home buyer demand? The answer is “NO.”
According to the Showing Time Index which “tracks the average number of buyer showings on active residential properties on a monthly basis” and is a “highly reliable leading indicator of current and future demand trends,” buyer demand has increased each month over the last three months and is HIGHER than it was for the same months last year. Buyer demand is not down. It is up.

2. Have the tax changes affected America’s belief in real estate as a long-term investment? The answer is “NO.”
Two weeks ago, Gallup released its annual survey which asks Americans which asset they believed to be the best long-term investment. The survey revealed:

“More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name stocks or mutual funds.” 
— Gallup

The survey also showed that the percentage of Americans who believe real estate is the best long-term investment was unchanged from a year ago.

3. Has the homeownership rate been negatively impacted by the tax changes? The answer is “NO.”
Not only did the homeownership rate not crash, it increased when compared to the first quarter of last year according to data released by the Census Bureau.

In her latest “Z Report,” Ivy Zelman explains that tax reform didn’t hurt the homeownership rate, but instead, enhanced it:

“We have been of the opinion that homeownership is most highly correlated with income and the net effect of tax reform would be a positive, rather than negative catalyst for the homeownership rate. While still in the early innings of tax changes, this has proven to be the case.”
— Ivy Zelman, Zelman & Assoc.

4. Has the upper-end market been crushed by new State and Local Taxes (SALT) limitations? The answer is “NO.”
In the National Association of Realtors latest Existing Home Sales Report it was revealed that:

  • Sales between $500,000 and $750,000 were up 4.5% year-over-year
  • Sales between $750,000 and $1M were up 15.1% year-over-year
  • Sales over $1M were up 17.3% year-over-year


5. Will the reforms in the tax code cause home prices to tumble over the next twelve months? The answer is “NO.”
According to CoreLogic’s latest Home Price Insights Report, home prices will appreciate in each of the 50 states over the next twelve months. Appreciation is projected to be anywhere from 1.9% to 10.3% with the national average being 4.7%.

Bottom Line
The doomsday scenarios that some predicted based on tax reform fears seem to have already blown over based on the early housing industry numbers being reported.

Moving Up to Your Dream Home? Don’t Wait!

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Mortgage interest rates have risen by more than half of a point since the beginning of the year, and many assume that if mortgage rates rise, home values will fall. History, however, has shown this not to be true.

Where are home values today compared to the beginning of the year?
While rates have been rising, so have home values. Here are the most recent monthly price increases reported in the Home Price Insights Report from CoreLogic:

  • January: Prices were up 0.5% over the month before.
  • February: Prices were up 1% over the month before.
  • March: Prices were up 1.4% over the month before.

Not only did prices continue to appreciate, the level of appreciation accelerated over the first quarter. CoreLogic believes that home prices will increase by 5.2% over the next twelve months.

How can prices rise while mortgage rates increase?
Freddie Mac explained in a recent Insight Report:

“In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”
— Insight Report

Bottom Line
If you are thinking about moving up to your dream home, waiting until later this year and hoping for prices to fall may not be a good strategy.