Homeowners have been less transient the last few years. In the first quarter of 2019, homeowners who sold their homes had owned them an average of 8.05 years, down slightly from a record high of 8.17 in the fourth quarter of 2018, reports real estate research firm ATTOM Data Solutions. Still, that’s up a 7.75 year average recorded a year ago.
Prior to the Great Recession, from the first quarter of 2000 to the third quarter of 2007, homeownership tenure averaged just 4.21 years. Homeowners who stay longer, however, are seeing higher gains at resale. In the first quarter of this year, home sellers pocketed an average price gain of $57,500 since their purchase, which is an average 31.5% return on the purchase price, ATTOM Data Solutions reports.
Among large metros with populations of at least 1 million, the areas with the longest average homeownership tenure for home sellers who sold in the first quarter were:
Hartford, Conn.: 12.52 years
Boston: 12.36 years
Providence, R.I.: 11.15 years
San Francisco: 10.40 years
San Jose, Calif.: 10.27 years
Twenty-three percent—or 25 of 108 metros—that ATTOM Data Solutions analyzed are countering the national trend and seeing homeownership tenure decrease from a year ago. Researchers noted homeownership tenure is dropping in places like Kansas City, Mo.; Tucson, Ariz.; Boston; Orlando, Fla.; and Oklahoma City.
Homeowners continue to reap profits off their home sales. U.S. homeowners who sold in the first quarter of this year realized an average home price gain since purchase of $57,500. That is up slightly from an average of $56,733 a year ago, according to ATTOM Data Solutions’ Q1 2019 Home Sales Report. The gains represented an average 31.5 percent return as a percentage of the original purchase price.
Markets along the West coast saw some of the greatest dollar gains. For example, in San Jose, Calif., home sellers saw nearly a half-million-dollar gain when they sold their home. The following are the markets with the top seller gains in the first quarter, according to ATTOM Data Solutions:
San Jose-Sunnyvale-Santa Clara, Calif.: $479,500 (first quarter 2019 gain)
How effective is it for your buyers to write a personal letter to sellers to win over their hearts and get their offers accepted? Personal letters have been drawing criticism lately because of the potential for buyers to inadvertently reveal items that could hurt their negotiating position. Virginia real estate pro Daniel Bortz recently shared in a realtor.com® article some of the phrases he suggests buyers never use in an offer letter, including:
“I can see our family celebrating Christmas here.” It is illegal under the federal Fair Housing Act for a seller to discriminate based on religion. But if a buyer reveals their faith in an offer letter, it would be difficult to prove in court that it led to discrimination, Craig Blackmon, a broker and real estate attorney in Seattle, told realtor.com®. To prevent such potential for discrimination, Blackmon recommends that buyers never reveal their religion in an offer letter.
“We would do anything to get this house.” Bortz writes that buyers should never suggest they are desperate to buy the home in an offer letter. It tells the seller that the buyer is willing to pay a higher price and could encourage a higher counteroffer.
“Our lease is up soon, so we really need to close quickly.” This could hurt negotiations with a seller who is looking for a longer closing timeline. Also, this statement could weaken the buyer’s negotiating power if the seller senses desperation. Buyers may need to be reminded that real estate agents will communicate with the listing agent to find out the seller’s intentions for a move-out date.
“Your home’s fenced-in backyard will be a perfect place for my dog to run around.” This could turn off a seller who isn’t a pet lover. Bortz cautions buyers specifically against mentioning their dog’s breed since there are some stigmas around certain types, such as pit bulls. “Even though the sellers will be moving, they may be concerned about their neighbors’ safety,” Bortz writes. On the other hand, if you happen to know the seller loves dogs, mentioning your pet in the personal letter may actually help form a connection between the buyer and seller, Mindy Jensen, a real estate professional in Longmont, Colo., told realtor.com®.
Photos often make the first impression for your listing. That’s prompted real estate professionals to carefully scrutinize their listings’ online presentation to make sure their photos are giving off the right vibe.
ShareGrid – Unsplash
The extra attention is understandable: 87% of home shoppers say they relied on photos to help make their decision on whether to buy the property, according to surveys by the National Association of REALTORS®. Professionally photographed homes tend to fetch a premium, too—a 47% higher asking price per square foot, according to an analysis by Redfin.
“We are a visual society,” Sharron Jones, a real estate professional with Weichert, REALTORS®, told The Washington Post. “Go to successful retail stores like Nordstrom or Target and look at photos for ads, commercials, or merchandising displays in stores. All of them are designed to show their products at their best. Likewise, a seller should show their property at its best.”
HomeVisit, a real estate photography company, recently provided The Washington Postwith some tips for prepping a home for a photo shoot, including:
Clean all of the mirrors, floors, and surfaces. You want to ensure they are spotless and unsmudged, shining in the photos.
Check that the furniture is sized correctly for the space. Any oversized pieces will make rooms look cramped. Remove any bulkier items. Shift furniture around to open up your photographs. Get tips: Amateur vs. Pro Photos
Declutter all surfaces. Put two or three objects on counters at most. But anything you do keep on the countertops, make sure the placement is deliberate.
Open all blinds. Allow the natural light to flow in. Brighter rooms will appear larger and photograph better.
Watch contrasts. Too many colors or objects can be distracting. On the flip side, “low contrast can seem muted or boring,” HomeVisit notes. “The key is to have the right amount of contrast. Place a few framed pieces of art on the walls and try to stick to a single color scheme.”
Tend to the outside: Mow the lawn, clean the pool, and add extra props, such as a table setting on the outdoor table, towels by the pool, and potted flowers around the doorway.
Economists are sounding more upbeat toward the housing market this year. Realtor.com® has revised its 2019 housing forecast, reflecting optimism for a much stronger market. Lower mortgage rates are mostly behind the shifts in attitude.
Realtor.com® economists are projecting mortgage rates to average 4.5 percent by the end of the year—nearly a percentage point lower than they originally forecasted. The lower mortgage rates are increasing buyers’ purchasing power, despite a continued uptick in home prices.
“The 2019 housing market is different than what we predicted in fall 2018, primarily due to an unexpected drop in mortgage rates in January 2019,” says Danielle Hale, realtor.com®’s chief economist. “We believe 2019 will be characterized by lower, but still increasing, mortgage rates that will buoy home prices and sales by boosting buyers’ purchasing power beyond what we initially projected. This will create a slightly hotter, but still cooling housing market relative to the initial forecast five months ago.”
Mortgage rates have slowly been inching up over the past month, but they remain below their levels a year ago.
“Despite the recent rise in mortgage rates, both existing- and new-home sales continue to show strength—indicating the lagged effect of lower rates on housing demand,” says Sam Khater, Freddie Mac’s chief economist. “This, along with improved affordability, should push housing activity higher in the coming months.”
Freddie Mac reports the following national averages with mortgage rates for the week ending April 25:
30-year fixed-rate mortgages: averaged 4.20 percent, with an average 0.5 point, rising from last week’s 4.17 percent average. Last year at this time, 30-year rates averaged 4.58 percent.
15-year fixed-rate mortgages: averaged 3.64 percent, with an average 0.5 point, rising from last week’s 3.62 percent average. A year ago, 15-year rates averaged 4.02 percent.
5-year hybrid adjustable-rate mortgages: averaged 3.77 percent, with an average 0.4 point, falling from last week’s 3.78 percent average. A year ago, 5-year ARMs averaged 3.74 percent.
Working with tenants is stressful, landlords agree. Eighty-eight percent of landlords recently surveyed say they have experienced some stress renting out their properties, yet 80 percent say the money from being a landlord is worth the stress, according to a new survey from Porch.com, a home remodeling website.
Nearly 49 percent of landlords say they’ve had a tenant ask to break a lease early; 45 percent have had to evict a tenant; and about 41 percent have had a tenant who suddenly stopped paying rent, according to the survey. Porch.com surveyed 563 renters and 532 landlords nationwide to learn more about the renter-landlord relationship, from repairs and responsibilities to working with tenants.
“Chasing after people’s rents, having units returned to you in a dire state, tenants who refuse to respond to calls and emails … there is no end to the list of hair-tearing stressors that landlords regularly face, not to mention a ton of hoops to jump through before they can even set up shop,” the study’s authors note.
Are landlords doing enough to pick the best tenants? Twenty-seven percent of landlords say they never or rarely do criminal background checks. Nearly 18 percent say they never or rarely do credit checks.
“Credit reports are a great vetting tool for companies,” the report notes. Landlords are less likely to do a criminal check than a credit check, but a criminal check “can help reduce their liability and ensure community safety.”
Home buyers seeking an edge during offers are increasingly writing personal offer letters directly to the seller to try to win over their hearts. But a new article at realtor.com® calls into question whether this popular strategy works. In some cases, it may backfire, some agents say.
Helloquence – Unsplash
Many real estate professionals still point to the advantages of an offer letter, however. For one, buyers can share their personal story in the hopes of connecting with the seller. Tracey Hampson, a real estate professional with Realty One Group Success in Valencia, Calif., told realtor.com® that she has a listing with three offers and favors the offer from a couple who shared that they’re having their first child and want to raise him in a safe neighborhood. She says she can relate, since she and her husband were in the same situation when they first moved into the home.
The personal letter can also be used to address any questions or concerns the seller may have about the buyer’s ability to finance the home. The buyer can use the letter to offer reassurance of their intention to close and get the purchase financed.
But some real estate agents say that personal offer letters can jeopardize a sale.
“There’s a belief that a letter tips the scales to the seller when negotiating the price and the inspection,” Karen Kostiw of Warburg Realty in New York City told realtor.com®. “The seller may interpret the letter as the buyers ‘showing their hand,’ and it could weaken their position to negotiate.”
Other real estate agents say they’re advising their clients not to write one for the fear that it could lead to discrimination. “Most letters consist of the buyers explaining their lives to add a touch of emotion to their otherwise dry contact, which is why it has worked so long,” April Macowicz, a broker associate and team lead at the MAC Group RE in San Diego, told realtor.com®. However, buyers may reveal personal information that could even prejudice the sellers against them.
“The Fair Housing Act states that buyers and sellers cannot discriminate on the basis of race or color, sex, religion, national origin, disability, or familial status,” Macowicz notes. But this doesn’t mean that discrimination won’t occur, she notes.
Homes near charging stations for electric vehicles command higher sales prices, according to a new analysis from realtor.com®. Researchers found that the combined median listing price for areas that are most accommodating to electric vehicles is $782,000—1.5 times more than their surrounding areas and 2.6 times higher than the rest of the country.
“Our data shows there’s definitely a link between the prevalence of electric vehicle charging stations and higher home prices,” says realtor.com® Chief Economist Danielle Hale. “But there’s a difference between correlation and causation. The trend we’re seeing in the data is most likely a result of the fact that wealthier homeowners are more likely to purchase expensive electric vehicles. But regardless of the cause, if you’re shopping for a home in a ZIP code with an abundance of electric-vehicle charging stations, you’ll likely pay a premium.”
Realtor.com® used data from OpenChargeMap to track 19,743 charging stations across 6,980 ZIP codes. They then analyzed the housing markets of the top 20 areas with the most electric vehicle charging stations. Irvine, Calif., had the most charging stations.
Existing-home sales fell 4.9 percent in March, with all four major regions of the U.S. seeing a decline, the National Association of REALTORS® reported Monday. The drop follows a surge in sales the previous month. “It is not surprising to see a retreat after a powerful surge in sales in the prior month,” says NAR Chief Economist Lawrence Yun. “Still, current sales activity is underperforming in relation to the strength in the job markets. The impact of lower mortgage rates has not yet been fully realized.”
Total existing-home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 4.9 percent from February to a seasonally adjusted annual rate of 5.21 million in March. Sales are down 5.4 percent from a year ago, NAR’s data shows.
Yun notes that sluggish housing inventories and tax policy changes may also impact housing. “The lower-end market is hot while the upper-end market is not,” Yun says. “The expensive home market will experience challenges due to the curtailment of tax deductions of mortgage interest payments and property taxes.”
Here’s a closer look at some key indicators from March home sales, according to NAR’s latest housing report.
Home prices: The median existing-home price was $259,400 in March, up 3.8 percent from a year ago.
Days on the market: Forty-seven percent of homes sold in March were on the market for less than a month. Properties remained on the market an average of 36 days in March, up from 30 days a year ago.
Housing inventories: At the end of March, inventories rose to 1.68 million, a 2.4 percent increase from a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace. “Further increases in inventory are highly desirable to keep home prices in check,” says Yun. “The sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”
Cash sales: Deals in which the buyer paid cash comprised 21 percent of all transactions in March, up from 20 percent a year ago. Individual investors tend to account for the bulk of cash sales. They purchased 18 percent of homes in March, up from 16 percent a year ago.
Distressed sales: Foreclosures and short sales represented 3 percent of sales in March, down from 4 percent a year ago. One percent of sales last month were short sales.
