Thinking of Selling? Now May Be the Time.

Thinking of Selling? Now May Be the Time.

The housing market has started off much stronger this year than it did last year. Lower mortgage interest rates have been a driving factor in that change. The average 30-year rate in 2019, according to Freddie Mac, was 3.94%. Today that rate is closer to 3.5%.

The Census Bureau also just reported the highest homeownership rate since 2014 for people under 35. This is evidence that owning their own home is becoming more important to Millennials as they reach the age where marriage and children are part of their lives.

According to the latest Realtors Confidence Index Survey from the National Association of Realtors (NAR), buyer demand across the country is strong. That’s not the case, however, with seller demand, which remains weak throughout most of the nation. Here’s a breakdown by state:

Demand for housing is high, but supply is extremely low. NAR also just reported that the actual number of homes currently for sale stands at 1.42 million, which is one of the lowest totals in almost three decades. Additionally, the ratio of homes for sale to the number purchased currently stands at 3.1 months of inventory. In a normal market, that number would be nearly double that at 6.0 months of inventory.

What does this mean for buyers and sellers?

Buyers need to remain patient in the search process. At the same time, buyers must be ready to act immediately once they find the right home.

Sellers may not want to wait until spring to put their houses on the market. With demand so high and supply so low, now is the perfect time to sell your house for the greatest dollar value and the least hassle.

Bottom Line

The real estate market is entering the year like a lion. There’s no indication it will lose that roar, assuming inventory continues to come to market.

Opportunity in the Luxury Market This Year

Opportunity in the Luxury Market This Year

Homes priced in the top 25% of a price range for a particular area of the country are considered “premium homes.” At the start of last year, many of the more expensive homes listed for sale hadn’t seen as much interest, since much of the demand for housing over the past few years has come from first-time buyers looking for starter homes. It looks like buyer activity, however, is starting to show a shift in this segment.

According to the January Luxury Report from the Institute for Luxury Home Marketing (ILHM):

“In a snapshot of 2019, despite pessimism at the start of the year, the last quarter showcased a strengthening, with an upswing in the luxury market for sales in both the single family and condo markets.”

Momentum is growing, and those looking to enter the luxury market are poised for success in 2020 as well. With more inventory available at the upper-end, historically low interest rates, and increasing average wages, the stage is set for buyers with an interest in this tier to embrace the perfect move-up opportunity.

The report highlights the increase in buyer activity in this segment, resulting in growing sales toward the end of 2019:

“According to reports from many luxury real estate professionals, the significant increase in number of properties bought at the end of 2019 versus 2018 is reflective of an early 2019 holding pattern.

Many of early 2019’s prospective luxury buyers held off while waiting to see how prices would react to new tax regulations and other policy changes. Buyer confidence returned in late spring and compared to 2018, above average sales were reported in the final quarter of 2019.”

With evidence of strong buyer confidence, this is great news, as more homeowners are building equity and growing their net worth throughout the country:

“Many homeowners are now diversifying their wealth, owning several properties rather than a single mega mansion. In addition, there have been an increase number of home purchases taking place in smaller cities, reflecting the rising number of people relocating from major metropolises. Their property equity wealth or ability to pay high rental costs have afforded them the opportunity to purchase luxury properties in…secondary cities throughout North America.”

With a strong economy and a backdrop set for moving up this year, it’s a great time to explore the luxury market. Keep in mind, luxury can mean different things to different people, too. To one person, luxury is a secluded home with plenty of property and privacy. To another, it is a penthouse at the center of a bustling city. Knowing what characteristics mean luxury to you will help your agent understand what you’re after as you define the scope and location for the home of your dreams.

Bottom Line

If you’re thinking about upgrading your current house to a luxury home, or adding an additional property to your portfolio, let’s get together to determine if you’re ready to make your move.

2020: Expecting Another Banner Year for the DFW Market

Experts are Expecting Another Banner Year for the DFW Market

Featured image: Ryan Michalesko / Staff Photographer for DMN

The Texas housing market had a “banner year” in 2019, and looks to be heading for another one, a top economist said at a recent seminar at the Federal Reserve Bank of Dallas.

Nine years after the housing market’s downturn, housing sales in Texas have returned to their pre-recession peak, said Jim Gaines, chief economist at the Real Estate Center at Texas A&M University.

“That prior peak was back right before the Great Recession,” Gaines said. “It was very artificial. It’s pretty easy to have a lot of home sales when anybody who could walk into a bank and fog a mirror got 110 percent financing.”

The Real Estate Center is predicting an increase in home sales in Texas of about 6 percent in 2020, which would beat the 4 percent increase in 2019, Gaines said. Home prices statewide are predicted to rise 5 percent to 6 percent in 2020, after increasing about 3 percent in 2019.

“We’ve had an outstanding decade, and the market is still really strong,” he said.

Population projections for the next 10 years call for the addition of 5.2 million Texans, including 1.6 million in Dallas-Fort Worth, 1.7 million in the Houston metro area, 622,000 in Austin and 563,000 in San Antonio, and the population and job growth are driving the housing market, Gaines said.

Last year, job growth weakened slightly in Texas, from 2.4 to 2.2 percent, as the energy industry declined and labor market constraints continued to suppress job growth, Gaines said. This year, less trade uncertainty is a positive, although the energy sector will remain a drag, he said. Election uncertainty may restrain business investment, he added.

Texas unemployment is at 3.5 percent, a tick lower than the 3.6 percent national rate, Keith Phillips of the Federal Reserve Bank of Dallas said at the seminar. The low national rate is making it harder for Texas companies to lure workers from other states, Phillips said.

“It’s a great time to be a worker,” Phillips said. “Not so much to be an employer.”

Article source: Dallas Business Journals

‘Sale Pending’ Explained: How Long Will It Take Before You Can Finally Get the Keys?

‘Sale Pending’ Explained: How Long Will It Take Before You Can Finally Get the Keys?

If you’re in the process of buying a home, there’s no doubt you’ve seen the term “Sale Pending” or “Pending Offer” on more than a few real estate listings—perhaps even on the very home you’re trying to buy!

But how long does an offer stay in “Pending” status before the keys are handed over? We spoke with real estate agents from coast to coast to bring you the answers. But first, a little background.

What does ‘pending offer’ mean?

The terms of a pending offer can vary quite a bit. But a pending offer almost always means there’s an “accepted and binding contract” between buyer and seller, according to real estate agent Carrie George of Keller Williams Top of the Rockies. It means that both parties have signed a contract and are ready to move forward.

But there are often boxes that need to be checked (on both sides) in order for the sale to go through.

“An offer is ‘pending’ because there are some items that have not yet been completed in order for the contract to close,” explains real estate agent Chantay Bridges of Los Angeles Real Estate Now. “This can be anything from contingencies of the purchase, repairs, inspections, court approval, or reports.”

“No time limit negates a contact,” says Benjamin Ross, a Realtor® with Mission Real Estate Group. “The contract must be terminated, or adhered to and fulfilled (by both parties). Courts will decide legal disputes if the parties involved can’t come to a cooperative resolution, but until then—the property sits in limbo.”

How long do pending offers take?

In other words, how long does this crazy limbo period usually last?

“There’s no hard or fast answer, but typically if a buyer is getting a loan, the total under contract time is about 30 to 60 days,” George explains. “If a buyer is paying cash, the closing can take place in as little as a week.”

The amount of time an offer remains pending will often depend on exactly what terms each party is trying to meet, and how straightforward they are.

“In the event the contract close date is delayed for funding or repair issues, the pending status would continue until there’s a resolution— or the contract is terminated,” Ross says. “This can go on for a long time.”

The bottom line? Pending offers (on average) tend to last anywhere between a week and two months, but delays do happen. Here are a few of the most common reasons why.

Reasons why pending offers can take longer

There are a lot of mundane reasons a pending offer can just sit in limbo for months on end. Those include things like inspections, or a delay with the survey, appraisal, or even the homeowner insurance. Here are a few other issues to be aware of.

Repairs

“Repairs can definitely cause the pending status to stretch out for a longer period of time,” Ross says. “Most of the time, both parties are in agreement. However, there are times when hostility arises, and parties seek legal counsel. During this time, the property will remain pending.”

Financing issues

“Pending offers can go longer than 30 to 60 days if the buyer and seller agree to a longer term due to financing issues,” says Michelle Sloan, a Realtor with Re/Max Time Cincinnati. “One example is if a seller is building a home and requests a longer period between contract to closing in order for them not to move twice—but the buyer would have to agree to those terms in the offer.”

Missing paperwork or special loans

Missing paperwork situations include title issues, “such as a missing deed or a signature on a deed from a long-lost family member,” says Chris McDermott, principal broker of McDermott Realty.

Another thing to consider is the type of financing being used, since the red tape surrounding certain types of loans can also lead to longer close times.

“Areas where FHA, state, and local-led financing, and/or USDA loans are more prominent, are likely to have longer transaction times, resulting in longer pending times,” says McDermott.

What can you do to speed things up?

The answer might sound simple, but being organized and having a great real estate agent helps a lot.

“Having a good and attentive real estate agent can actually make or break a pending status,” says Denise Supplee, a Realtor with Long & Foster. “Throughout the sale process, both sides of the sale have tasks to complete, and often these tasks must be conveyed by the agent.”

So be sure to hire a real estate agent who has the expertise to see the deal through—both by helping you to complete your half of the contractual to-do list, and by keeping on top of the other party if things fall behind.

 

*Article source: Larissa Runkle for Realtor.com.

How the Housing Market Benefits with Uncertainty in the World

How the Housing Market Benefits with Uncertainty in the World

It’s hard to listen to today’s news without hearing about the uncertainty surrounding global markets, the spread of the coronavirus, and tensions in the Middle East, just to name a few. These concerns have caused some to question their investment plans going forward. As an example, in Vanguard’s Global Outlook for 2020, the fund explains,

“Slowing global growth and elevated uncertainty create a fragile backdrop for markets in 2020 and beyond.”

Is there a silver lining to this cloud of doubt?

Some worry this could cause concern for the U.S. housing market. The uncertainty, however, may actually mean good news for real estate.

Mark Fleming, Chief Economist at First American, discussed the situation in a recent report,

“Global events and uncertainty…impact the U.S. economy, and more specifically, the U.S. housing market…U.S. bonds, backed by the full faith and credit of the U.S. government, are widely considered the safest investments in the world. When global investors sense increased uncertainty, there is a ‘flight to safety’ in U.S. Treasury bonds, which causes their price to go up, and their yield to go down.”

Last week, in a HousingWire article, Kathleen Howley reaffirmed Fleming’s point,

“The death toll from the coronavirus already has passed Severe Acute Respiratory Syndrome, or SARS, that bruised the world’s economy in 2003…That’s making investors around the world anxious, and when they get anxious, they tend to sell off stocks and seek the safe haven of U.S. bonds. An increase in competition for bonds means investors, including the people who buy mortgage-backed bonds, have to take lower yields. That translates into lower mortgage rates.”

The yield from treasury bonds is the rate investors receive when they purchase the bond. Historically, when the treasury rate moves up or down, the 30-year mortgage rate follows. Here’s a powerful graph showing the relationship between the two over the last 48 years:

How might concerns about global challenges impact the housing market in 2020? Fleming explains,

“Even a small change in the 10-year Treasury due to increased uncertainty, let’s say a slight drop to 1.6 percent, would imply a 30-year, fixed mortgage rate as low as 3.3 percent. Assuming no change in household income, that would mean a house-buying power gain of $21,000, a five percent increase.”

Bottom Line

For a multitude of reasons, 2020 could be a challenging year. It seems, however, real estate will do just fine. As Fleming concluded in his report:

“Amid uncertainty, the house-buying power of U.S. consumers can benefit significantly.”

How to Avoid a Gender Gap When Investing in the Housing Market

How to Avoid a Gender Gap When Investing in the Housing Market

When buying a home, we all want to feel like we’re making the right decision, paying a fair price, and making the best investment of our lives. According to a recent gender-based study, men and women can unknowingly walk away with very different financial outcomes when the deal closes. Thankfully, if you follow some simple ways to arm yourself with the information you need to prepare in advance, you’re more likely to feel like you’ve won when the keys to your new house are in your pocket.

Kelly Shue and Paul Goldsmith-Pinkham of the Yale School of Management showed in their recent study The Gender Gap in Housing Returns, when single women invest in the housing market, they’re generally losing out compared to their male counterparts. The report explains,

“We find that single men earn one percentage point higher unlevered returns per year on housing investment relative to single women…The gender gap grows significantly larger after adjusting for mortgage borrowing: men earn 6 percentage points higher levered returns per year relative to women. Data on repeat sales reveal that women buy the same property for approximately 2% more and sell for 2% less.”

On National Public Radio (NPR), Kelly Shue elaborated by saying,

“Women are losing about $1,370 per year relative to men because they tend to buy the same house at a higher price and sell for a lower price.”

In the grand scheme of things, $1,370 a year could be as much as an entire month’s mortgage payment for many households in the United States.

How can you make sure this doesn’t happen to you?

The good news is, it doesn’t have to be this way for anyone, regardless of gender. Here are a few tips on how to make sure you’re prepped and ready to enter the housing market with your best foot forward.

1. Work with a Trusted Real Estate Professional

You need someone on your side who’s going to have your best interest in mind and support your unique homeownership goals. Hiring an agent who has a finger on the pulse of the market will make your buying experience an educated one. You need someone who’s going to tell you the truth, not just what they think you want to hear.

2. Understand the Homebuying Process

Know the key homebuying steps in advance, so you have the best context for how the process works from pre-approval to budgeting, inspections, and more. Have a price range in mind that you can realistically afford, too, so you’re ready to make an offer that positions you for success. Ask your agent questions along the way, and partner together so you feel confident and prepared at every turn.

3. Research the Current Market

Make sure you know the current trends and insights of the housing market as well. When you find a home that’s the perfect fit, determine what other homes are selling for in the neighborhood. These numbers can vary over time based on market conditions such as inventory, appreciation, and many other economic factors. A great agent will provide you with this information and guide you through every step from start to finish.

Bottom Line

When you have a trusted advisor on your side and you’re confident you know exactly what’s happening in the market, you’ll be in a great position to negotiate effectively. Let’s get together today to make sure you’re ready to win the homebuying deal.