Have you been thinking about putting your house on the market? What about moving-up to the house of your dreams? With supply and demand continuing to raise prices, now may be the perfect time! Let’s get together to discuss why you should list your house for sale this fall!
We all realize that the best time to sell anything is when the demand for that item is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that right now continues to be a great time to sell your house.
Home prices are at the top of everyone’s minds. Can they maintain their current pace of appreciation? Will rising mortgage rates negatively impact home values? Will the next economic slowdown cause prices to crash?
Let’s try to answer these questions based on what has happened in the past as well as what we know about the current real estate market.
The Impact of Rising Interest Rates
We explained earlier this year that rising mortgage rates have not negatively impacted home prices in the past and probably wouldn’t this time either. Freddie Mac’s comments were very direct:
“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.”
They were correct. So far this year, home values have continued to appreciate above normal historic percentages and it appears the gradual increase in rates has had little impact on prices.
The Impact of an Economic Slowdown
Many people fear that when the economy turns, we may see the same depreciation in home values as we did a decade ago.
However, we recently reported that the same group of economists, real estate experts, and investment & market strategists who predicted the next recession will occur in the next 18-24 months have also projected that house prices will continue to appreciate for the next five years, albeit at smaller percentages.
It Comes Down to Supply and Demand
As always, home prices will be determined by the demand to purchase compared to the available inventory of homes for sale. For the last six years, demand has far exceeded the available supply which has resulted in the average annual appreciation to top 6% since 2012. That is far greater than the historic norm of 3.6% annual appreciation that we saw prior to the housing boom.
There are currently small signs that housing inventory is slowly beginning to increase. Months supply of houses for sale matched last year’s numbers for the last two months after 37 consecutive months of decreasing inventory. New construction data has also shown positive signs that inventory will be increasing.
As inventory begins to meet demand, we will see appreciation return to more normal levels. We are already seeing projections coming in lower than the 6.2% annual average we have seen more recently.
CoreLogic is predicting that home values will appreciate by 5.1% over the next twelve months and the Home Price Expectation Survey calls for values to increase by 4.2% in 2019.
Bottom Line
Mark Fleming, Chief Economist at First American, explained it best:
“We’re seeing the first indications that price appreciation may be slowing, but the underlying fundamental housing market conditions support a natural moderation of house prices rather than a sharp decline.”
In the ten years since the so-called Great Recession, home values have risen to record highs in many markets and foreclosures have fallen to historic lows. NAR Chief Economist, Lawrence Yun, said “Today, even as mortgage rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory and accompanying unsustainable home price increases.” He forecasts that existing home sales and home prices will rise in 2019.
The Senate approved a bill Tuesday to keep the National Flood Insurance Program operating for four more months.
Whether you are a rookie homebuyer or have gone through the process many times, having a local real estate expert who is well versed in the neighborhood you are looking to move to, as well as the trends of that area, should be your goal while home shopping.
One great example of an agent who is in your corner and is always looking out for your best interests is one of the main characters on ABC’s Modern Family, Phil Dunphy.
For those who aren’t familiar with the character, Phil is a REALTOR® with a huge heart who always strives to do his best for his family and his clients.
In one episode, he even shared an oath that he created and holds himself accountable to:
“On my honor, I promise to aid in man’s quest for shelter, to recognize I’m not just in the business of houses — I’m in the business of dreams in the shape of houses. To disclose all illegal additions, shoddy construction, murders, and ghosts. And to put my clients’ needs before my own.”
While this might seem silly, as it was definitely written with humor in mind, the themes of helping someone achieve the American Dream and putting a client’s needs above his own are not to be taken lightly.
Bottom Line
When you make the decision to enter the housing market, as either a buyer or a seller, make sure you look for an agent who exemplifies these values and will help you through every step of the process
The National Association of Realtors (NAR) released the results of their latest Existing Home Sales Report which revealed that home sales declined 0.6% to a seasonally adjusted annual rate of 5.38 million in June from 5.41 million in May, and are 2.2% below a year ago. Some may look at these numbers and think that now is a bad time to sell their house, but in fact, the opposite is true.
The national slowdown in sales is directly tied to a lack of inventory available for the buyers who are out in the market looking for their dream homes! In fact, the inventory of homes for sale had fallen year-over-year for 36 consecutive months before posting a modest 0.5% gain last month and has had an upward impact on home prices.
NAR’s Chief Economist Lawrence Yun had this to say,
“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels. Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”
The few houses that are on the market are selling fast! According to NAR’s Realtors Confidence Index, properties were typically on the market for 26 days.
Bottom Line
If you are one of the many homeowners who is debating listing your house for sale this year, the time is now! Let’s get together to discuss the specifics of our market!
For some, assisted living facilities and continuing care retirement communities — and the benefits and conveniences they offer — are the right choice. But it’s not the right fit for everyone, and for many there’s just no place like home.
That’s why renovating existing homes to make them into safe, comfortable and convenient residences for seniors over the long term is one of the hottest segments of the home construction and remodeling industry.
“This is huge and it’s a very big deal,” says Greg Rehm, CGR, CAPS, CGP, the owner of Liberty Hill Construction LLC in Bedford. “We’re seeing a lot of projects in this category and the need keeps growing and growing.”
It’s called aging in place or sometimes home-based living, independent living or preferred aging living. No matter the semantics, a recent AARP survey found that 90 percent of Americans aged 50-plus want to remain in their own homes even if they start to need some day-to-day assistance with basic living tasks.
“The single most important element driving this big movement of aging in place is: Who doesn’t want to stay in their home?” says Rehm, whose CAPS designation means he is certified as an aging-in-place specialist from the National Association of Home Builders.
The US Census Bureau projects that by 2030 there will be about 71.5 million citizens over the age of 65, which is double the number of what it was in 2000. Consider that New Hampshire is the second-fastest aging state in the nation.
That sets up the scenario for an awful lot of older people living in much older homes. In this case, older isn’t wiser.
Smart homes now incorporate what the building trade terms universal design, which is the design of environments to satisfy the needs of many types of users. Universal design allows aging owners to stay put, but their needs are many. Moreover, as their physical and mental capabilities lessen, those needs will change.
With increased age comes reduced vision and hearing. Muscle strength, mobility and endurance are decreased, as is the capacity for mental processing and decision-making. What increases are balance issues and the risk of falls.
“We do a lot of this type of remodeling for people who want to age in place gracefully, and we think about all those things,” says Russ Collins, who owns Home Innovations Corp. in Epping and is a member of the National Association of Home Builders.
“Think about the little things that make a big difference, like making sure floors are all the same height so there are no trip points as you go from a tile floor to a wood floor,” says Collins. “We make sure there are no bumps and nothing to catch your feet if you’re not picking them up as high as you used to. Everything is smooth. We also use a lot of the new, nonslip flooring,” he adds.
There are many improvements that can make a big difference, including widening doorways to accommodate wheelchairs, removing walls to create open space, replacing entry and exit steps with ramps, changing countertop height in kitchens and bathrooms, replacing door knobs with lever handles, installing better lighting and task lighting, switching to open and easily accessible shelving, replacing old appliances with state-of-the-art models that come with safety measures, and installing roll-in showers and walk-in bath tubs.
“The topic isn’t very sexy,” says Rehm, mostly because people incorrectly picture an institutional setting that reminds them of hospitals rather than a home. But today, he adds, there are better products that are both functional and beautiful.
One of the biggest segments of this booming market is the creation of a first-floor master bedroom and en suite bath. But what if that’s not what the owner of a multilevel home wants?
Elevators are an option, says Collins, but if an elevator isn’t in your budget, he suggests a smaller dumbwaiter for food or other items so you don’t have to carry trays up flights of stairs.
The other big trend in the industry is adding an in-law apartment, now also called an accessory dwelling, to the home of a family member or to the home of the senior as a residence for a live-in caregiver.
While that can be an expensive project, compare it to the expense of moving to an assisted living facility or continuing care retirement community with an initial buy-in and then monthly fees and charges. Aging in place often makes economic sense.
But the experts advise it’s best to start planning for your golden years even if you’re not close to them yet.
“Even if you’re in your mid-50s, have a plan,” says Rehm. “If you want to stay in your home and intend to age in place, you want it to look good and be safe and functional. It’s not too early to plan for the future. This stuff is really good stuff that helps people. And it can look great too.”
Even better, it has a positive effect on quality of life.
“It’s fun and it’s gratifying to do this for people. I get to feel good about helping people stay in their homes and enjoy their lives. We’re doing something that adds value to their lives,” Collins says.
There are currently 25 builders and remodelers in the Granite State who have achieved CAPS certification from the National Association of Home builders. To find them, visit nahb.org/capsdirectory or check out the website for the New Hampshire Home Builders Association at nhhba.com.
However, it’s likely that when you bought your house, it was designed for a much younger and more able-bodied version of you. Home builders and remodelers, especially those who have achieved certification as an aging-in-place specialist (CAPS), work wonders when it comes to rehabilitating, redesigning and restoring dwellings, but the projects tend to be both intensive and expensive.
Here are 10 tips from AARP’s Home Fit Guide for initial easy fixes to make your space safer prior to tackling a major renovation:
1. Install handrails on both sides of all steps (inside and outside).
2. Secure all carpets and area rugs with double-sided tape.
3. Install easy-to-grasp handles for all drawers and cabinet doors.
4. Use brighter bulbs that do not produce excessive glare in all settings.
5. Install nightlights in all areas of night activity.
6. Add reflective, nonslip tape on all noncarpeted stairs.
7. Install lever handles on all doors.
8. Place a bench near entrances for setting down purchases and resting.
9. Install closet lights, as well as adjustable, pull-down rods and shelves.
10. Install rocker light switches; consider illuminated ones in select areas
NAR has been administering its annual Profile of Home Buyers and Sellers survey since 1981. The survey has grown from 59 to 131 questions, and gives us great insight into the trends, wants and needs associated with the most significant financial decision of most people’s lives: purchasing a primary residence for themselves and their families.
In this article, we’re going to dig in a little deeper into the findings from the 2018 version of the survey to focus on sellers:
Sellers Are Staying in Their Homes Longer
In the last 30 years, sellers have remained in the same home for longer periods of time. From 1987-2008, sellers stayed in their homes for a median of six years, with the only exception being 1997, when the median tenure bumped up to seven years. After 2008, the median tenure began to increase by one year each year.
By 2011, the median tenure reached nine years, where it remained for three consecutive years, and jumped up again in 2014 to 10 years. It decreased to nine years in 2015, but rose in 2016 to a median of 10 years, where it remained in 2017, effectively doubling since data collection started three decades prior.
It’s not necessarily clear why sellers are staying in their homes longer, but one possibility for some is that they are waiting for their equity to increase, especially given the economic downturn.
Seller Relationships With Agents Are Steady and Strong
Eighty-nine percent of home sellers worked with a real estate agent to sell their home. In addition—same as last year—90 percent of sellers listed their homes on the Multiple Listing Service (MLS), which is the No. 1 source for sellers to list their homes. Only 4 percent opted not to list on an MLS.
Client referrals and repeat business are the predominant ways sellers find their real estate agent. Most sellers—85 percent—said that they would definitely (67 percent) or probably (18 percent) recommend their agent for future services.
Sixty-two percent of sellers were “very satisfied” with the selling process; 26 percent were somewhat satisfied. Only 13 percent were dissatisfied with the process.
Key Skills Sellers Want in Their Agents
Sellers place high priority on the following five tasks: market the home to potential buyers (21 percent); sell the home within a specific timeframe (20 percent); price the home competitively (18 percent); find a buyer for home (15 percent); and help fix the home to sell better (15 percent).
The reputation of the real estate agent was by far the most important factor when sellers selected an agent to sell their home (34 percent). Sellers also place value on the agent’s trustworthiness and honesty (18 percent) and whether the agent is a friend or family member (16 percent).
FSBOs Are Decreasing
In 1981, FSBO home sales accounted for 15 percent of all sales, and agent-assisted sales accounted for 85 percent. FSBO sales have declined over time, and in 2017, FSBOs accounted for 8 percent of total home sales again for the third year in a row. This is the lowest share since data collection began.
FSBOs typically sell for less than the selling price of other homes. For FSBO sellers, those who know the buyer tend to have higher median household incomes compared to those who did not know the buyer. Where FSBO sellers knew the buyer, the time on market for the home was usually a week, and sellers received 100 percent of the asking price.
According to new findings, the ideal age for most Americans to buy their first home is 28. A recent Bankrate study touted this number as the sweet spot.
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