1. Rates are rising
In 1981, when mortgage rates hit 18% and seemed to rise every day, single-digit rates seemed like an impossible dream.
Last August, however, rates on 30-year mortgages bottomed out at 3.55%. Now that the Federal Reserve finally decided to raise its key interest rate, mortgage rates have been climbing slowly. Today, the average rate is just above 4%; by 2019 or 2020, rates could easily climb to 6%.
“All signs point to this trend continuing,” says Richard DeNapoli, managing director for Coral Gables Trust and a former Florida real estate commissioner.
Before you freak out, take heart: Rising rates aren’t necessarily a deal breaker for buyers. The National Association of Realtors® calculated that a rise from 4.2% to 5% would increase average monthly mortgage payments by $90—not nothing, but not a catastrophe, either. And if you take the long view, those higher rates are still historically low.
“For buyers there still is opportunity,” says Danielle Hale, managing director of housing research for the NAR. “For those who are still able to get into the market, these low rates continue to be helpful.”
Another upside: When rates go up, competition and prices often go down.
“I’d tell buyers not to panic, because higher mortgage rates eventually cause sellers to be more flexible on pricing,” DeNapoli says.
2. Inventory is shrinking
In November 2016, there were only 1.85 million homes for sale. That’s a nearly 10% drop from the year before. And it continues a trend of steady decline since just before the housing crash, when inventory peaked.
Real estate experts predict that inventory will continue to shrink, at least for the foreseeable future. That means that in most areas of the country, buyers have more homes to choose from today than they will next year.
Or even next month. If you get moving now (during the winter, which is largely considered to be real estate’s off-season), you’ll have less competition for those homes than you will in the peak spring and summer months.
Bottom line: Every day you wait to start looking for a new home, you face stiffer competition for fewer homes.
3. Home prices are still rising
The bad news for buyers is that home prices now stand higher than before the 2007 crash, increasing 5% from 2015 to 2016. And housing experts expect an additional 2% to 3% jump in 2017, DeNapoli says.
“Prices continue to go up; we have yet to see that ceiling,” says Trevor Levin, a real estate agent with Nourmand & Associates in Los Angeles. “I think they have room to grow.”
How high prices will rise and how long they’ll remain high is anyone’s guess. Rising mortgage rates and the new Trump administration have introduced “uncertainty” into the real estate market, Levin says.
“And uncertainty is never ideal,” he says.
The good news? If you jump into the market pronto, you just might make it before those doors close.
1. Dirty House: “The No. 1 biggest mistake is not getting the home in the best possible condition. Nothing will turn off a homebuyer faster than showing a house with filthy floors and kitchen counters where new life-forms are evolving. The home should be neat and clean and free of all debris. 2
2. Smelly House: Remove all traces of pets, not just pet odors. It’s important to get rid of pet paraphernalia and have a “pet plan” to make sure the animals are not around when the house is shown.A lot of times, people will leave pet items out — dog dishes, cat litter boxes, etc.,That immediately turns off a buyer because they wonder, ‘What has that animal done in the house?’ Also, some people really don’t like dogs. The minute they walk in and see this big, old dog bowl, they immediately won’t like the house.The same rules hold true for smokers: Remove all ashtrays, clean all curtains and upholstery, and consider smoking outdoors while your house is on the market.
3. Outdated Fixtures & Appliances:
Buyers are not impressed by tarnished doorknobs, disco-era light fixtures or old ceiling fans. You need to change out old fixtures in your house. New cabinet hardware and doorknobs will probably cost all of $400 or $500, but it makes a huge difference.he same holds true for dated ceiling fans, light fixtures and kitchen appliances.Homes that have old fans, lights, ovens, microwaves, ranges and dishwashers can really turn a buyer off. Sellers may think the buyers can take care of it, but you won’t get the highest price.
4. Wallpaper: Wallpaper is difficult to remove and simply adds another chore to a buyer’s to-do list.
5. Popcorn Ceilings: It dates the Home and should be scraped
6. Personal Items: remove personal items, including family photos, personal effects and even unique colors
7. Sellers hang around the home: Generally speaking, buyers don’t like it when sellers meet them at the door, follow them around, eavesdrop and make unsolicited comments.
8. Misrepresenting your home online/ MLS: Sellers use photos and words to make their homes enticing on the multiple listing service. But sometimes the words and pictures paint a false portrait. Buyers don’t like that.
9. Poor curb appeal: Seeing a house for the first time is like meeting a person for the first time: Appearance counts. That first-glance impression of a house is called “curb appeal. Trim and edge your yard to get it into the most immaculate condition you can, freshly mulch the beds and trim the trees. Every little detail counts.
10. Clutter: Your closets should be half-full, with nothing on the floor. Why? Because most people looking for a house have outgrown their previous house. Showing them that you’ve still got room to grow gives them a reason to buy. Kitchens and bookshelves should showcase spaciousness . For kitchens, no more than 3 countertop appliances. Meanwhile, bookshelves should be divided into thirds: one-third books, one-third vases and pictures, and one-third empty.
The millennial generation has emerged as a dominant force in the housing market. According to the National Association of Realtors’ 2016 study of generational housing trends, millennials (or Generation Y) — those born between 1980 and 2000 — comprise the largest segment of the buyer market (35%), ahead of Generation X (26%), which covers those born between 1965 and 1979.
Together, these 2 generations represent today’s younger buyers, and broadly speaking, they tend to fall into 1 of 2 categories, says Margie Gundersheim, a Realtor with Keller Williams in Newton, Massachusetts.
“They’re young professionals who prefer a turnkey home that needs little or no work,” she says. “(Or they’re) creative/romantic buyers who want to invest sweat equity and money over time, and put their personal stamp on the property and add value for the future.”
But while those 2 groups may seem like they want entirely different things from a home, many agents say that younger buyers of all stripes have a lot of the same “must-have” features on their lists.
1.Updated kitchen and bath
We all want to buy a home with new kitchen and bath fixtures, but new fixtures are especially important for today’s young, budget-conscious buyers, says Jack Curtis, a Keller Williams real estate agent in Dublin, Ohio.
“The primary reason younger buyers seek updated kitchens and baths is because they have limited budgets,” Curtis says. “Most of their savings will go toward the down payment and furnishings. Kitchens and bathrooms are also the most expensive parts of a home to update, and young homeowners cannot afford to sink a lot of money into those areas.”
While updated kitchens and bathrooms may bring in a younger crowd, remodeling costs should give a seller pause. After all, if those updates aren’t in a young buyer’s budget, they probably aren’t in a seller’s budget either.
Unlike a new roof or plumbing, bathroom and kitchen fixtures are also a matter of taste, so not every buyer will like what you pick, says Curtis.
2.Big kitchen, open-floor plan
A generation ago, formal dining rooms may have been on every buyer’s wish list. But today there really isn’t much appeal to the formal dining room, according to Lou Cardillo of The Lou Cardillo Home Selling Team in Yorktown Heights, New York.
“The kitchen has become the hangout room along with the family room,” says Cardillo. “An open space that can easily transition from kitchen to TV room is high on the list of the perfect home for young buyers. In essence, the kitchen is the new living room.”
Along similar lines, Curtis says today’s young buyers are also more attracted to an open floor plan, rather than a layout that compartmentalizes the home. Again, the reason has a lot to do with how younger homeowners entertain.
“They want people to flow through the home during gatherings, rather than be sectioned off in rooms,” Curtis says.
More than 13 million Americans work from home, according to the most current U.S. Census data, and all signs point to that trend continuing. That makes a home office important for many buyers.
“Home offices have vast appeal,” says Paige Elliott, a Realtor with Dave Perry-Miller Real Estate in the Dallas area. “Most agents will point out that a room could be used as an office or other flex living space, especially if it is currently used or staged as a bedroom.”
Home offices aren’t just for those who work from home full time, according to Cardillo.
“As technology continues to make us more mobile, young buyers have more options than ever to work from home, depending on their job,” he says. “Having a dedicated space is important because it will help keep them focused and concentrated on work while they are at home on a Skype call, planning a presentation, setting up their workday or simply paying bills.”
4. Good location
Younger buyers tend to see location differently from their parents, who didn’t face high gas prices and traffic, says Allison Charlton, managing broker at North Pacific Properties in Seattle.
“My younger buyers look for properties that are in proximity to public transportation and that have a good walking score,” Nichols says.
But there are young buyers, and then there are young buyers with children. The former group may prefer to be close to the action of the city, while the latter might prefer something more residential.
Most young buyers look for homes that are low maintenance, says Cardillo, of The Lou Cardillo Home Selling Team. He points out that low-upkeep features such as wood floors (as opposed to carpet) and granite countertops are seen as positives for this generation because they’re both attractive and relatively hassle-free.
Cardillo says he sees a generational shift toward a society that’s more “disposable,” where homeowners prefer to replace rather than repair.
“Most young homebuyers grew up watching their parents spend weekends with their honey-do lists, or they had chores to do on the weekends,” he says. “Most young buyers are not going to follow in their (parents’) footsteps. They don’t want to do that stuff. … They want their weekends to themselves and don’t really want to be cleaning gutters or cutting the grass.”
A generation ago, buyers didn’t care about a home’s technological capabilities. Either it had cable hookups or it didn’t. Today, buyers want to know about tech. They want to hear about wireless service and internet, not cable and telephone.
“Most young homebuyers laugh at a landline phone, and even if they buy a house that has a jack, it is rarely used,” Cardillo says.
In some cases, a house’s appeal can be increased or diminished because of the strength of a mobile carrier’s signal or its internet service provider options. While cellphone and internet services are out of the seller’s hands, Cardillo says sellers or their agents should be prepared to field questions on that front.
“Internet and cell service matters a lot to this generation, and they’re going to ask, so you need to have answers,” he says.
© Diyana Dimitrova/Shutterstock.com
With energy costs on the rise and growing interest in protecting the environment, young buyers are conscious of buying homes that are green. They may not be alone, says Jeff Hyland of Hilton & Hyland real estate agency in Beverly Hills, California.
“Today, not only younger buyers, but buyers in general, are looking for energy-efficient homes,” he says. “And if they are not already set up (for energy efficiency), then the buyers will often factor those costs into their budgets so they can do it after the close of escrow.”
Before sellers green-wash their homes, Elliott — of Dave Perry-Miller Real Estate — offers a caution: “I am not seeing the energy efficiency of a home as a top selling feature that attracts young buyers,” she says. “They seem to be savvy on insulation levels, seasonal energy-efficiency ratios and other energy-efficiency factors, but (energy efficiency) still isn’t the top reason for a home purchase.”
Oftentimes, young buyers ask about these things and then update them after they close on the house.
8.The reality TV effect
Whether or not we admit it, we’ve all seen at least a few of the home reality shows on channels such as TLC and HGTV. Those shows can be fun and informative, but they also do a lot to shape buyer expectations.
“Real estate shows on TV have impacted all buyers on the way they look at houses,” Elliott says. “But young buyers will often comment on how a house is, or isn’t, staged.”
Either way, staging is a critical part of selling your home, Hyland says.
“Staging a home is always helpful as it helps people to feel at home the moment they walk through the door, as opposed to having to imagine what it could look like once they move in,” Hyland says. “Buyer expectations are often met — and at times, exceeded — by staging a home.”
9.Keep HOA costs down
Young buyers tend to get caught in a trap when gauging the affordability of condos or townhomes, says Charlton, of North Pacific Properties. The asking price often fits their limited budgets, but home owners association dues and the possibility of large assessments can sink the purchase.
“When it comes to condo buildings, my younger buyers are looking for properties with no special assessments,” Charlton says. “These can be as high as $10,000, and young or first-time buyers don’t necessarily have this in their budget. Likewise, they want to maximize their monthly housing budget by finding a property with low monthly assessments.”
The possibility of a hefty assessment or high HOA dues deters some young buyers, but a building that’s eligible for FHA financing can be attractive, she says.
If you’re serious about attracting young buyers, you need to think about how your property shows online, Elliott says.
“Younger buyers start their searches online,” Elliott says. “The home must have professional photography that shows the home in its best light, or they will move on before ever stepping foot in the door.”
Looking at the data, it’s hard to underestimate the importance of a quality online listing. According to the most recent analysis from the National Association of Realtors, 88% of buyers use the internet to search for homes, including 94% of millennials. By comparison, real estate agents are the second-most common resource for finding a home, with 87% of all buyers citing an agent’s help as a key factor.
The most telling piece of data may be what happens after buyers see an online listing. According to the NAR, 64% of buyers in 2014 said they walked through a home after viewing the listing online, and 76% said they at least drove by the home because of an online ad.
What a Wonderful Year in Costa Mesa Real Estate
Get the most with what you got.
Market is tipping… Find out what’s going on.
Get ready for a fun summer in Real Estate and community events.
We are at it again. The 2nd of our 4 movies in the park this year will be GooseBumps! We are really excited to play this movie at TeWinkle Park June 29th at dusk.
Our massive screen will be set up by the Angels Playground between the restrooms and the parking lot.
The food trucks and games will start at 6:30 pm and the movie should start around 8:30.
Bring your blanket, chairs to save your spot early, then get out and enjoy the fun.