Category: Real Estate

Why Were Fewer Contracts Signed in August? | Realtor Magazine

Pending home sales continued to fall last month, marking the eighth consecutive month for annual decreases, the National Association of REALTORS® reported Thursday. The drop in contracts may be a sign of a growing number of buyers who are being priced out of the market, economists warn.

 

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NAR’s Pending Home Sales Index—a forward-looking indicator based on contract signings—fell 1.8 percent to a reading of 104.2 in August. Contract signings are now 2.3 percent lower than a year ago.

The largest declines last month were in the West, where home prices have risen the most. “[This] clearly indicates that affordability is hindering buyers and those affordability issues come from lack of inventory, particularly in moderate price points,” says Lawrence Yun, NAR’s chief economist.

The decline in sales contracts has also coincided with fewer homes on the market. But that may soon change—a record high of Americans now say it’s a good time to sell their home, according to NAR’s third-quarter Housing Opportunities and Market Experience survey. 

“Just a couple of years ago about 55 percent of consumers indicated it was a good time to sell; that figure has climbed to 77 percent today,” Yun says. “With prices having risen so quickly, many consumers were deciding to wait to list their homes hoping to see additional price and equity gains. However, with indications that buyers are beginning to pull out, price gains are going to decelerate and potential sellers are considering that now is a good time to list and bring more properties to the market.”

 

© National Association of REALTORS®

First-Time Home Seller | Steps to Selling a House | Tips for Sellers

Selling, a famous salesman once said, is essentially a transfer of feelings.

You love and cherish your home. You want the next owner to fall in love with it, too — through photos, through words, and through the experience of walking through your front door. But, perhaps most, you want to get the price you want.

This isn’t a small task. Selling a home requires work. It requires time. The journey isn’t always easy. There will be frustrations. But when you seal the deal and move on to your next chapter  — wow, what a blissful, boss feeling.

Below, we preview and link to each step in your journey.  We’ll discuss how to know what you want (and what your partner wants, if you’re selling together). How to understand the market, and ways to make a plan. And most importantly? How to create relationships with experts and trust them to help you get the job done.

Now, let’s talk about selling your house.

Jump to a specific home selling step using these links:

Know What You Want | Do Your Research | Interview and Select an Agent | Price Your Home | Prep Your Home for Sale | Market Your Home | Showcase Your Home | Receive Offers | Negotiate With the Buyer | Negotiate Home Inspection Repairs | Close the Sale

Know, Exactly, What You Want

First things first: You need to know what you want (and what your partner wants) in order to sell your home with minimum frustration. Why are you moving? What do you expect from the process? When, exactly, should you put that For Sale sign in the yard? We can help you get your thoughts in order with this home selling worksheet.

Do Your Research

Unless you bought your home last week, the housing market changed since you became a homeowner. Mortgage rates fluctuate, inventory shifts over time — these are just a few of the factors that affect the state of the market, and every market is unique. Educate yourself on what to expect. Start with our study guide on the market. 

Related Topic: Sell a Home: Step-by-Step

Interview and Select an Agent

This is the most important relationship you’ll form on your home selling journey. Pick the right agent and you’ll likely get a better sales price for your house. Here’s how to find and select the expert who’s right for you.

Price Your Home

How much is your home worth? That’s the … $300,000 question. Whatever the number, you need to know it. This is how your agent will help you pinpoint the price.

Prep Your Home for Sale

Today, home buyers have unfettered access to property listings online, so you have to make a great first impression — on the internet and IRL. That means you’ll have to declutter all the stuff you’ve accumulated over the years, make any necessary repairs, and get your home in swoon-worthy condition. Here’s how to stage your home. 

Market Your Home

Home buyers look at countless listings online. The best-marketed homes have beautiful photos and compelling property descriptions, so they can get likes — which can amount to buyer interest — on social media. Some agents are even using videos, virtual tours, texts, and audio messages. It’s time to consider how to promote your property.

Showcase Your Home

One of the best ways to get buyers in the door is to have an open house. This is your chance to show off your home’s best assets, and help buyers envision themselves living there. Know how your agent will organize, advertise, and host the event to ensure it’s a success.

Receive Offers

Yes, you might get offers plural, depending on your market. Assuming you’ve collaborated with your agent, you’ve likely positioned yourself to receive attractive bids. Your agent will review each offer with you to determine which is best for you. (Read: The offer price isn’t the only factor to consider: Here’s why.)

Negotiate With the Buyer

To get the best deal for you, you’ll likely have to do some negotiating. Your agent will help you craft a strategic counteroffer to the buyer’s offer, factoring in not only money, but contingencies, etc. Let’s talk about how to ask for what you want.

Negotiate Home Inspection Repairs

Ah, the home inspection. It’s as much a source of anxiety for buyers as it is for sellers. Nonetheless, most purchase agreements are contingent on a home inspection (plus an appraisal, which will be managed by the buyer’s lender). This gives the buyer the ability to inspect the home from top to bottom and request repairs — some even could be required per building codes. The upshot: You have some room to negotiate, including about certain repairs. Once again, your agent will be there to help you effectively communicate with the buyer.

Close the Sale

Settlement, or closing, is the last step in the home selling process. This is where you sign the final paperwork, make this whole thing official, and collect your check. Before that can happen though, you’ll have to prepare your home for the buyer’s final walk-through and troubleshoot any last-minute issues. We’ve got you covered with this closing checklist. 

Homeowners Reveal Their Top Nonnegotiable Amenities | Realtor Magazine

Home shoppers are unwilling to negotiate on certain amenities, and prime among them are central air conditioning and a private patio or backyard, according to a new survey of more than 1,000 homeowners conducted by remodeling site Porch.com. On the other hand, prospective buyers are less likely to consider stainless steel appliances or a swimming pool as deal-breaking must-haves.

Renters and homeowners differ quite a bit in their priorities, the survey found. While homeowners ranked central air, private backyard areas, and guest bedrooms as high priorities, renters ranked central air, an in-unit washer and dryer, and pet-friendly building policies as their top amenities.

 

© Porch.com

 

Flooring matters to many homeowners. More than one in four consider hardwood floors to be the most essential amenity in their house, according to the survey. So what are homeowners most willing to splurge on? It differs by age group, according to the chart below.

 

© Porch.com

Fall Brings Price Drops for a Quarter of Homes | Realtor Magazine

The fall season is cooling down more than the temperature outside; it’s also putting a much-needed chill on hot housing markets, where home prices have become unaffordable to the average buyer. More than one in four home sellers dropped their asking price last month, according to a new report by real estate brokerage Redfin. With inventory starting to inch up, sellers are facing stiffer competition in the market and adjusting their price expectations, according to the report.

 

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Nearly 27 percent of homes that were listed in the four weeks ending Sept. 16 saw a price drop, according to the report. Redfin defines a price drop as a reduction in the home’s value between 1 percent and 50 percent. The areas seeing some of the biggest price drops year over year are Las Vegas; San Jose, Calif.; Seattle; Atlanta.

“After years of strong price growth and intense competition for homes, buyers are taking advantage of the market’s easing pressure by being selective about which homes to make an offer on and how high to bid,” says Redfin Senior Economist Taylor Marr. “But there are some early signs of a softening market, and the increase in price drops may be another indicator that sellers are going to have trouble getting the prices—and the bidding wars—that they may have just months ago. Instead, many are finding their homes are sitting on the market without much interest until they start reducing their prices.”

When Is it OK to Tap Home Equity? | Realtor Magazine

As home prices continue to rise, homeowners are finding they’re sitting on record amounts of home equity. People have mostly been shy about tapping into that wealth—but a new survey Bankrate.com survey of 1,000 consumers shows they have plenty of reasons they may want to take out a loan to unlock it.

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Consumers’ “growing penchant toward debt might make it tempting to tap into their home’s value,” says Greg McBride, Bankrate’s chief financial analyst.

Nearly three quarters of homeowners recently surveyed say that home improvements or repairs are an acceptable reason to access the equity they have in their homes. In fact, more than half of those surveyed say that is the best reason to apply for a cash-out refinance loan or home equity line of credit (HELOC).

Survey respondents also cited other reasons they’d be tempted to use their home equity, including to consolidate debt (44 percent); pay for tuition or other educational expenses (31 percent); keep up with regular household bills (15 percent); and make other investments (12 percent). Nine percent of homeowners say they believe it would be a good idea to use home equity to purchase big-ticket items, such as appliances and furniture.

People with lower incomes were more likely than those who earn more to say it’s OK to tap into home equity to meet ordinary expenses, the survey found. Meanwhile, millennials seem more willing to tap into home equity than older generations, the survey found. Twenty-two percent of millennial respondents say that borrowing from home equity to pay day-to-day bills is a viable option, compared with 12 percent of members of older generations.

Many households may be overstretched financially, which could heighten the temptation to borrow. Forty-four percent of Americans say they could not cover a $400 emergency expense out of pocket, according to a recent Federal Reserve report.

“With the sorry state of emergency savings and increasing levels of consumer debt in a rising interest rate environment, it’s a matter of ‘when’ not ‘if’ more homeowners turn to home equity to fund home improvements and repairs, or consolidate debt,” McBride noted in the survey’s report.

Using equity to pay for home improvements that increase the value of your home can help rebuild any of the equity taken out, McBride says. The new tax law, that went into effect this year also allows homeowners to deduct the interest they pay on home equity loans and HELOCs if the proceeds are used to finance improvements that add significant home value.

Still, financial experts recommend caution for homeowners who are thinking of borrowing against their home equity, especially because using your home as collateral for a loan means you could lose it if you are unable to repay the lender.

“For a disciplined homeowner, using home equity to consolidate debt at a lower interest rate can be a savvy way to cut interest costs and accelerate debt repayment,” McBride says. “But for undisciplined homeowners, it ties up an asset that is put at further risk of foreclosure while the temptation to run up high-cost debt all over again proves difficult to resist.”

Report: Market Could Stabilize as More Homes are Listed | Realtor Magazine

Existing-home sales remained mostly flat in August, bringing relief to markets following four consecutive months of decreases. Sales gains in the Northeast and Midwest helped to offset downturns in the South and West last month, according to the National Association of REALTORS®’ existing-home sales report, released Thursday.

 

© Witthaya Prasongsin – Moment/Getty Images

 

Existing-home sales—which are completed transaction for single-family homes, townhomes, condos, and co-ops—remained at a seasonally adjusted annual rate of 5.34 million in August, the same as July. Sales are 1.5 percent below a year ago, NAR reports.

“Strong gains in the Northeast and a moderate uptick in the Midwest helped to balance out any losses in the South and West, halting months of downward momentum,” says Lawrence Yun, NAR’s chief economist. “With inventory stabilizing and modestly rising, buyers appear ready to step back into the market.”

Here’s a closer look at some of the findings:

• Home prices: The median existing-home price for all housing types was $264,800—up 4.6 percent from a year ago.
• Inventory: Total housing inventory at the end of August was at 1.92 million existing homes for sale, up from 1.87 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace.
• Days on the market: Properties stayed on the market an average of 29 days in August, down from 30 days a year ago. Fifty-two percent of homes sold in August were on the market for less than a month. “While inventory continues to show modest year over year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” Yun says. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory—especially moderately priced, entry-level homes—would propel sales.”
• All-cash sales: All-cash sales comprised 20 percent of transactions in August, unchanged from a year ago. Investors tend to make up the biggest bulk of all-cash sales. They made up 13 percent of home sales in August, down from 15 percent a year ago.
• Distressed sales: Foreclosures and short sales accounted for 3 percent of sales in August, the lowest reading since NAR began tracking such data in October 2008. Broken out, 2 percent of sales were foreclosures and 1 percent were short sales.

“We are probably seeing a reaction to the uncertainty around how sustainable recent price increase will be in the near future,” says Ruben Gonzalez, chief economist at Keller Williams. “Nationally, we expect sales to continue to track slightly below last year’s levels as inventory starts to move upward.”

30-Year Mortgage Rates Reach Highest Level Since May | Realtor Magazine

 

 

© REALTOR® Magazine

 

For the fourth consecutive week, mortgage rates continued to climb as home buyers face higher borrowing costs.

“Mortgage rates are drifting upwards again and represent continued affordability challenges for prospective buyers—especially first-time buyers,” says Sam Khater, Freddie Mac’s chief economist. “Borrowing costs are moving right now for three main reasons: the very strong economy, higher U.S. government debt issuances, and global trade tensions.”

Khater says despite the uptick in rates, mortgage applications for home purchases have managed to increase on an annual basis for five consecutive weeks. “However, given the widespread damage caused by Hurricane Florence in the Carolinas, the next few months of housing activity will likely be somewhat volatile,” he adds.

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 20:

• 30-year fixed-rate mortgages averaged 4.65 percent, with an average 0.5 point, rising from last week’s 4.6 percent average. Last year at this time, 30-year rates averaged 3.83 percent.
• 15-year fixed-rate mortgages averaged 4.11 percent, with an average 0.5 point, increasing from last week’s 4.06 percent average. A year ago, 15-year rates averaged 3.13 percent.
• 5-year hybrid adjustable-rate mortgages averaged 3.92 percent, with an average 0.4 point, dropping from last week’s 3.93 percent average. A year ago, 5-year ARMs averaged 3.17 percent.

Property Managers Cut Down on Late Rents with ACH | Realtor Magazine

A data-driven analysis of 13,000 property managers and 135,529 tenants by Rentec Direct, property management software company, found that scheduled automatic monthly payments is the most effective way to prevent late fees and save renters money.

Of the 10,450 renters who have ACH currently enabled, 3,480 renters with ACH enabled and scheduled monthly rent payments were charged a late fee in 2017 (33%), while 4,932 renters with ACH enabled but did not have scheduled monthly rent payments were charged a late fee (47%). Meanwhile, of the 125,080 renters analyzed without ACH rent payment options, 77,299 were charged a late rent fee in 2017 (57%).

“The outcomes of the study showed significant differences in timely rent payments based on the implementation of automatic payment technology,” the report states. This is largely due to the fact that ACH online payment systems eliminate the need to manually initiate a payment each month. However, only 7 percent of the property managers in Rentec Direct’s study offered tenants an automatic rent payment option.

“Our data shows that those who are actively using ACH to pay their monthly rent had a 24 percent lower rate of paying late fees than those not using ACH at all,” according to the report. “Without any ACH set up at all, the rate of late fees skyrockets to nearly 60 percent.”

Down Payments Jump to Record Highs | Realtor Magazine

Home buyers are putting more money down on a home purchase than ever before. The size of down payments during the second quarter climbed to a median of $19,900, a record high, according to ATTOM Data Solutions’ research, which dates back to the first quarter of 2000. What’s more, this marks a 19 percent jump from $16,750 in this year’s first quarter.

 

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The median down payment was 7.6 percent of the median sales price of homes purchased with finances during the second quarter, according to the report. That percentage is at a nearly 15-year high.

With higher home prices, California buyers tend to bring the highest down payments. Among 103 metro areas, the places with the largest median down payments in the second quarter were: San Jose, Calif. ($306,000); San Francisco, Calif. ($220,000); Los Angeles, Calif. ($130,000); Oxnard-Thousand Oaks-Ventura, Calif. ($115,400); and Boulder, Colo. ($107,750).

“Buyers are upping the ante when it comes to down payments, evidenced by the record-high median down payment for homes purchased in the quarter, and an increasing number of buyers are getting help from co-buyers,” says Daren Blomquist, senior vice president at ATTOM Data Solutions.

The number of loans with co-buyers—which is multiple, nonmarried buyers—that were listed on the sales deed is climbing. A down payment on a co-buyer loan averaged 16.3 percent of the purchase price, which is more than double the average percentage for other buyers. The average down payment with a co-buyer is 51 percent higher than loans without co-buyers ($63,117 versus $41,749).

 

Labor Shortages Push New Construction Costs Higher | Realtor Magazine

Builders are being forced to raise home prices and are having a more difficult time meeting project deadlines because of the ongoing labor shortage in the construction industry, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. Eighty-four percent of builders say they have had to pay higher wages to subcontractor bids, 83 percent say they have had to raise home prices, and 73 percent say they can’t complete projects on time without more manpower. The number of single-family builders reporting labor and subcontractor shortages reached a record high in July.

 

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“The steepest upward trend has been in the share of builders saying the labor/subcontractor shortages are causing higher home prices, which increased by 22 percentage points between 2015 and 2018—to the point where it is now nearly tied with higher wages/sub bids as the most widespread effect of the shortages,” NAHB reports on its Eye on Housing blog.

The survey also shows other effects of the labor shortage, such as builders saying that, in some cases, they’ve been forced to turn down projects. The share of builders who have slowed down on accepting incoming orders has doubled between 2015 and 2018, from 16 percent to 32 percent. The share of lost or canceled sales due to labor shortages also has been on the rise, up to 26 percent in July. “Shortages are having a significant impact on production levels,” according to the report.