Are You Really Ready to Sell Your Home?

Listing just to see what happens may seem like a good idea, but putting a home on the market too soon can backfire in a big way.

Selling a home does not happen overnight. Typical sellers reach out to a real estate agent or start researching their home’s value online many months — sometimes even years — before they are ready to put the “For Sale” sign in their yard.

Often, a home sale is the result of some life event: a marriage, divorce, death in the family, retirement or another child. It’s typically hard to “time” these events; therefore, it’s not easy to time a real estate transaction. Here are some points a potential home seller should consider before deciding to list their home.

If you’re not certain, you’re not ready

If you don’t have a new home to move into or a plan once you sell your home, it’s not a good time to list your home for sale. Sellers without a real and concrete plan are not serious sellers, but only opportunistic.

A seller without a plan will likely be “testing” the market, and that translates into overpricing the home. If the seller overprices the home, it’s not going to do her any good. The market is smart, and rarely will a knowledgeable and active buyer overpay for a home.

Ask yourself, “If I get an offer and sign a contract for a 45-day close, do I know what I will do?” If the answer is no, you should simply not list, or you will do yourself more harm than good in the long run.

Once you list, the clock starts ticking

Today, with access to so much information online, buyers will know the good, bad and ugly when it comes to listing history and data.

If you list your home at too high a price or in poor condition, you risk sitting on the market, without offers and likely without any showings or potential buyers.

That lack of interest will follow you. Once you’re ready to sell your home at the right price or in the right condition, every buyer will know your history. They’ll see the series of price reductions, the old photos, or the previous listing when you were not ready to sell.

All of the old listing activity sends a message to buyers that there is something wrong with the home or with you. Buyers will hold back on such a stigmatized home, and instead focus on a newer listing that is priced right and shows well.

You can plan for the market, not time the market

If you know that your third child is on the way, or that your new job is too far from your current home, you’ll have the luxury of not being under the gun. This allows you to take advantage of market conditions, as opposed to timing the market.

Knowing that you will list the home in the spring or the fall or in February will enable a smart seller to prep the home, make the necessary improvements and get the property market-ready.

Working with a good local real estate agent, you should watch the inventory come and go, see the competition and get the word out at the right time. If a comparable home gets three offers in less than a week, then you know two other buyers are out there. Being ready to go, you can then capitalize on the market conditions.

Real estate transactions happen all year long

Some of the most successful sales happen in the dead of winter when inventory is low, but buyers are still out. Have a sales plan months in advance. Never list your home before you (or the home) are ready.

Many homeowners are emotionally attached to their homes, but listing it at a high price or not making the necessary improvements sabotages their ability to sell it. If you find yourself struggling with the process, don’t list your home yet. Take a step back and wait. The right time will come, and waiting will ensure that you get the most from your investment.

 

 

Written By: Brendon DeSimone
Source: Zillow

Spring Housing Season Kicks Off with Short Supply

Open House signage is displayed outside of a home for sale in Redondo Beach, California.
Patrick T. Fallon/Bloomberg/Getty Images

On a snowy Tuesday in early February, Jessie and Mark Sciulli toured a home in the northern suburbs of Washington, D.C., that wasn’t listed for sale yet. Relocating their family back home from overseas, the couple was in town for just two days and had to see as much as possible. Their agent didn’t have enough active listings to show, so she went after homes she knew were coming soon.

It is the same story for home buyers nationwide: There is precious, record little for sale.

“I feel like there is not a lot of inventory right now, so that does make us a little bit nervous, because we think there is going to be a lot more offered in two or three weeks, so I’d say for sure we feel that stress,” said Jessie.

Presidents Day weekend is traditionally seen by real estate agents and homebuilders as the start of the spring housing market — the busiest time of year for home sales. The number of listings always rises, and it will this year as well, but inventory is already so low to begin with that even the new listings will not be nearly enough.

“I think inventory is going to remain tight. The closer you are to urban centers, the tighter the inventory, because the demand is strong, and a lot of that stuff gets scooped up before it hits the market,” said Jane Fairweather, a real estate agent in Bethesda, Maryland.

The latest numbers paint an empty picture. Inventory at the end of December nationally was down nearly 4 percent from the previous December, but sales were up nearly 8 percent, according to the National Association of Realtors. The supply of homes for sale was the lowest since the start of 2005, and back then there were far more homes being built to add to overall supply. As for January, the NAR’s listing site, Realtor.com, reported that listings were down a sharper 4.4 percent from a year ago.

In local markets, the January readings are coming in even tighter. Total listings in Charlotte, North Carolina, dropped nearly 24 percent in January from a year ago, with the number of new listings down 6 percent. In Denver, more than 4,000 homes came onto the market in January, but total inventory remained at historically low levels. Buyers scooped up more than came on.

January inventory was down nearly 17 percent in Philadelphia from a year ago, and Washington, D.C., had so few listings it would take less than two months at the current sales pace to exhaust supply. A healthy housing market traditionally has four to six months’ worth of inventory for sale.

“Half the [D.C.] homes sold in January were on the market for 26 days, and the competition among buyers pushed the average percent of asking price received at sale up to 98.6 percent,” according to the Greater Capital Area Association of Realtors. “The $504,250 median price for the month was slightly higher than last year (1.9 percent) and marked the highest January level on record for the District.”

“The inventory question is a puzzle,” said Chris Herbert, managing director of Harvard’s Joint Center for Housing Studies. “If you drill down and say, what’s happening at the lower end of the market, what’s happening in more affordable neighborhoods, those places had a much more dramatic boom-bust in house prices. Even though prices have come back there pretty strongly, they are much more likely to be underwater or low equity, so I think part of it is even though we think we have seen the market heal, there’s still a lot of healing left to do.”

Herbert also points to younger baby boomers, who lost home equity and more in the recession, and who are not trading up as much as their age group historically does. They are staying put in their homes, not adding to much-needed inventory. Add it up and it comes out to less — less inventory, which in turn puts upward pressure on prices.

Sellers, however, appear to be seeing a limit. They are not pricing their homes as aggressively as they did last fall, according to real estate brokerage Redfin. While homes are selling fast, not everything sells, especially if it’s overpriced. Sellers know the only thing worse than not getting top dollar is sitting on the market and becoming a “stale” listing.

“Even with surging home prices, listings were still down in January from a year ago,” said Redfin chief economist Nela Richardson. “Sellers are worried that today’s buyers won’t pay enough for their current home to finance their next-level house.”

Back in suburban D.C., after an exhausting two days and 19 home tours, the Sciullis left without making any offers.

Several of the homes they saw were not listed yet, including their top choice. That home will go on sale soon, but at a price the Sciullis think may be a little high for the market.

“We just have to make sure we’re getting it at a price point that we’re comfortable with and that we can manage,” said Mark.

The Sciullis are going to wait and see if it gets any other offers; if not, they’ll jump on it fast.

Written by Diana Olick of CNBC

(Source: CNBC)

 

Here’s a Part of the Housing Market That’s Really Booming

Mike Blake/Reuters

The turmoil in the stock market hasn’t hurt homeowners’ plans to spend on their properties this year, according to a new Angie’s List survey.

The survey found that among homeowners who’ve already set their spending budgets for 2016, nearly 79 percent plan to spend as much or more on home improvement projects compared to last year.

That’s good news for service providers, who are also optimistic about 2016. More than 90 percent of them said they expect homeowners to spend as much or more on projects as they did last year.

The survey found that millennials plan to spend as much as or more than older homeowners on home improvements.

The Angie’s List findings confirms a report issued by the Joint Center for Housing Studies at Harvard University last month, which projected that home remodeling would pick up this summer. The Leading Indicator of Remodeling Activities projected that annual spending on home improvement projects in 2016 could surpass its 2006 peak, on nominal terms.

The report shows expected home improvement spending of $148 billion in the second quarter of this year, followed by $155 billion in the third quarter.

Home-improvement projects are making more sense as an investment than they have in recent years. While most renovations don’t pay off dollar-for-dollar when you sell a home, the return on investment for remodeling projects in 2015 increased to 64.4 percent in 2016, up from 62 percent in 2015 and the second-highest return in the past eight years, according to Remodeling magazine. 

Written by Beth Braverman of Fiscal Times

(Source: Fiscal Times)

 

10 States Where Foreclosures Are Stubbornly High

© Knoxville News Sentinel, Michael Patrick/AP Photo
© Knoxville News Sentinel, Michael Patrick/AP Photo

The foreclosure crisis in the U.S. is dying a very slow death. Even though there are many fewer homes entering the foreclosure process now than there were before the housing bubble burst, two-thirds of all home loans in some state of foreclosure were originated between 2004 and 2008, according to the most recent foreclosure report from RealtyTrac. Of the foreclosures in progress in the first half of the year, the average foreclosure took 629 days to complete — that’s the longest the foreclosure process has been since RealtyTrac started tracking the metric in 2007.

The good news is foreclosure starts (a first notice of loan default or notice that a lawsuit has been filed regarding the ownership of a property) are at a 10-year low. The bad news is it’s taking forever to get those bad, crisis-era loans through the system. In New Jersey, a state with a consistently high foreclosure rate, foreclosures completed in the first half of 2015 took an average of 1,206 days from the notice of default to the bank sale or repossession of the home. That’s more than three years. Even once that long process comes to an end, the financial repercussions continue. It takes years to rebuild your credit after something like defaulting on a mortgage, but you make an action plan for doing so and get your free credit score every 30 days on Credit.com.

Overall, the national foreclosure rate in the first half of this year was down slightly (3%) from where it was from January through June of 2014, with one in every 221 housing units in some state of foreclosure (notice of default, scheduled auction or bank repossession). Homes that entered the foreclosure market years ago continue to linger and keep that rate above pre-crisis levels. Here are the states where foreclosure rates remain particularly high:

10. Tennessee
Total properties with foreclosure filings from January through June 2015: 14,846
Foreclosure rate from January through June 2015: 1 in every 190 housing units
Change from January through June 2014: up 156%

Changes in the way RealtyTrac collects data in Tennessee may have driven up the number of reported foreclosures, hence the large change since last year’s data was collected, the report notes. Tennessee had some spikes in foreclosure activity earlier in the year, but from May to June, its foreclosure rate fell to 62% to rank 15th in the country.

9. South Carolina
Total properties with foreclosure filings: 11,479
Foreclosure rate: 1 in every 187
Change from last year: down 13%

Despite an overall decline in the first six months of the year, South Carolina’s foreclosure activity increased a bit in June, up nearly 3% from May and up 13% from June 2014. A large portion of those homes are scheduled for auction.

8. Indiana
Total properties with foreclosure filings: 15,227
Foreclosure rate: 1 in every 184
Change from last year: down 13%

Like South Carolina, Indiana’s foreclosure rate in the first half of 2015 was down from last year but spiked in June, up more than 16% from June 2014.

7. Ohio
Total properties with foreclosure filings: 29,821
Foreclosure rate: 1 in every 172
Change from last year: down 16%

Ohio’s foreclosure rate fell in June, down 14% from June 2014 and down 11% from May.

6. Delaware
Total properties with foreclosure filings: 2,503
Foreclosure rate: 1 in every 163
Change from last year: down 9%

Foreclosure activity in Delaware is down significantly (26%) in June from the same month last year, as well as a 17% decrease from May.

5. Illinois
Total properties with foreclosure filings: 39,107
Foreclosure rate: 1 in every 135
Change from last year: down 9%

Illinois is one of 19 states where foreclosure starts have reached or fallen below where they were prior to 2006. At the same time, Illinois had a city in the top-10 metro areas (with a population of 200,000 or more) with the highest foreclosure rates in the first half of the year. Rockford, Ill., had the nation’s seventh-highest metro foreclosure rate, with 1 in every 87 housing units in some state of foreclosure.

4. Nevada
Total properties with foreclosure filings: 9,328
Foreclosure rate: 1 in every 126
Change from last year: up 10%

Nevada had the sixth-highest increase (76%) in home repossessions in June, compared to June 2014. It also had the sixth-highest increase (28%) in foreclosure starts over the same time period.

3. Maryland
Total properties with foreclosure filings: 21,880
Foreclosure rate: 1 in every 109
Change from last year: down 1%

Foreclosure activity hasn’t changed much in Maryland since the first half of last year, though it declined 18% from May to June. Its foreclosure rate is only slightly lower than New Jersey’s.

2. New Jersey
Total properties with foreclosure filings: 32,713
Foreclosure rate: 1 in every 109
Change from last year: up 24%

Atlantic City, N.J., posted the highest foreclosure rate of any metro area (1 in every 59) in the first half of 2015. New Jersey also had the largest increase in activity, third behind New York (up 31%) and Massachusetts (up 43%). On top of that, New Jersey has the longest timeline for foreclosure completion: In the first half of 2015, completed foreclosures took an average of 1,206 days to get to that end point.

1. Florida
Total properties with foreclosure filings: 95,129
Foreclosure rate: 1 in every 95
Change from last year: down 22%

Despite a large decrease in foreclosure activity from the first half of 2014, Florida remains the poster child of foreclosure in the United States. Eight of the 10 metro areas with the highest foreclosure rates were in Florida and it has the fifth-longest timeline from foreclosure start to completion (an average of 989 days).

Written by Christine DiGangi of Credit.com

(Source: Credit.com)

‘Housing Bubble 2’ has Bloomed into Full Magnificence

© Wolf Street
© Wolf Street

The current housing boom has Dallas solidly in its grip. As in many cities around the US, prices are soaring, buyers are going nuts, sellers run the show, realtors are laughing all the way to the bank, and the media are having a field day. Nationwide, the median price of existing homes, at $236,400, as the National Association of Realtors sees it, is now 2.7% higher than it was even in July 2006, the insane peak of the crazy housing bubble that blew up with such spectacular results.

Housing Bubble 2 has bloomed into full magnificence: In many cities, the median price today is far higher, not just a little higher, than it was during the prior housing bubble, and excitement is once again palpable. Buy now, or miss out forever! A buying panic has set in.

And so the July edition of D Magazine – “Making Dallas Even Better,” is its motto – had this enticing cover, sent to me by David in Texas, titled, “The Great Dallas Land Rush”:

Dallas Land Rush

© Provided by Business Insider Dallas Land Rush

“Dallas Real Estate 2015: The Hottest Market Ever,” the subtitle says.

That’s true for many cities, including San Francisco. The “Boom Town,” as it’s now called, is where the housing market has gone completely out of whack, with a median condo price at $1.13 million and the median house price at $1.35 million. This entails some consequences.

The fact that Housing Bubble 2 is now even more magnificent than the prior housing bubble, even while real incomes have stagnated or declined for all but the top earners, is another sign that the Fed, in its infinite wisdom, has succeeded elegantly in pumping up nearly all asset prices to achieve its “wealth effect.” And it continues to do so, come heck or high water. It has in this ingenious manner “healed” the housing market.

But despite the current “buying panic,” the soaring prices, and all the hoopla round them, there is a fly in the ointment: overall homeownership is plunging.

The homeownership rate dropped to 63.4% in the second quarter, not seasonally adjusted, according to a new report by the Census Bureau, down 1.3 percentage points from a year ago. The lowest since 1967!

home ownership

© Provided by Business Insider home ownership

The process has been accelerating, instead of slowing down. The 1.2 percentage point plunge in 2014 was the largest annual drop in the history of the data series going back to 1965. And this year is on track to match this record: the drop over the first two quarters so far amounts to 0.6 percentage points. This accelerated drop in homeownership rates coincides with a sharp increase in home prices. Go figure.

The plunge in homeownership rates has spread across all age groups, but to differing degrees. Younger households have been hit the hardest. In the age group under 35, the homeownership rate in Q2 saw a slight uptick to 34.8%, from the dismal record low of 34.6% in the prior quarter. Either a feeble ray of hope or just one of the brief upticks, as in the past, to be succeeded by more down ticks on the way to lower lows.

This chart by the Economics and Strategy folks at National Bank Financial shows the different rates of homeownership by age group. The 35-year and under group is where the first-time buyers are concentrated; and they’re being sidelined, whether they have no interest in buying, or simply don’t make enough money to buy (represented by the sharply descending solid black line, left scale). Note how the oldest age group (dotted blue line, right scale) has recently started to cave as well:

homeownership rates

© Provided by Business Insider homeownership rates

The bitter irony? In the same breath, the Census Bureau also reported that the rental vacancy rate dropped to 6.8%, from 7.5% a year ago, the lowest since 1985. America is turning into a country of renters.

This chart shows the dynamics between homeownership rates (black line, left scale) and rental vacancy rates (red line, right scale) over time: they essentially rise and dive together. It makes sense on an intuitive basis: as people abandon the idea of owning a home, they turn into renters, and the rental market tightens up, and vacancy rates decline.

homeownership rate v rental vacancy rate

© Provided by Business Insider homeownership rate v rental vacancy rate

This too has been by design, it seems. Since 2012, private equity firms bought several hundred thousand vacant single-family homes in key markets, drove up prices in the process, and started to rent them out. Thousands of smaller investors have jumped into the fray, buying homes, driving up prices, and trying to rent them out. This explains the record median home price across the country, and the totally crazy price increases in some key markets, even as regular Americans are trying to figure out how to pay for a basic roof over their heads.

This has worked out well. By every measure, rents have jumped. According to the Census Bureau’s report, the median asking rent in the US rose 6.2% from a year ago, and 17.6% since 2011. So inflation bites. But the Fed is still desperately looking for signs of inflation and simply cannot find any.

And how much have incomes risen over these years to allow renters to meet these rising rents? OK, that was a rhetorical question. We already know what has been happening to incomes.

That’s what it always boils down to in the Fed’s salvation of the economy: people who can’t afford to pay the rising rents with their stagnant or declining incomes should borrow the money to make up the difference and then spend even more on consumer goods. After us, the deluge.

But the party may not last much longer, as a “decades-long tailwind will shift to a housing headwind.”

Written by Wolf Richter of Business Insider

(Source: Business Insider)

These 2 Industries are Bullish for the U.S. Economy

Provided by Getty Images
Provided by Getty Images

With all the hand-wringing about how weak this economic recovery has been, with the second-quarter GDP growth rate of 2.3% being hailed as a triumph, the U.S. consumer economy has quietly emerged as a real source of strength.

Automotive and housing sales have once again begun to fulfill their traditional role as twin pillars of an economic recovery. And, unlike a few years ago, average middle-class people, not just the wealthy, are buying.

Even millennials, those supposed denizens of Uber, rentals and their parents’ basements, are starting to loosen their purse strings to pursue these two key components of the American Dream.

“I don’t see anything in the immediate horizon that will derail this,” said Charles Chesbrough, senior principal economist with IHS Automotive, an analytical and consulting service based in Northfield, Mich.

He’s particularly impressed with July auto sales. General Motors reported a 6.4% year-over-year increase in U.S. retail sales, and Fiat Chrysler Automobiles and Ford Motor were only slightly behind. Nissan Motor and Honda Motor did even better.

And the hottest vehicles were some of the priciest: crossovers, SUVs and pickup trucks. Luxury marques like Lexus and Infiniti also outperformed. That means higher average prices and fatter profits for car companies.

But it also means car buyers are letting it rip, which Chesbrough attributed to lower gasoline prices and more appealing products.

As crude prices drop again amid oversupply, weak demand from emerging markets and the winding down of the summer driving season, Chesbrough estimates the average U.S. household is saving $800 to $900 a year at the pump.

“They’re using those savings from the low gas prices and they’re buying big cars, pickup trucks, SUVs,” he added.

And not just basic models. Instead, “they’re loading them up” with extras, technology and navigation packages, what have you. “Consumers really want new technology,” he said.

Also, some loosening of credit standards has broadened demand beyond the affluent. “Now it’s all buyers who are getting into the market,” he said.

Chesbrough projects 17.1 million vehicles will be sold in the U.S. this year, the most since before the financial crisis, and “by next year, we may reach a new, all-time high” above 2000’s 17.4 million record.

Housing sales are a long way from their bubble peak in 2006, when 2.1 million new and existing homes changed hands. But the recovery has been striking. Some markets that had been left for dead have come roaring back, with enormous price gains as vulture investors bought foreclosed homes in bulk.

Lately, price increases in those former boom towns have moderated, said Svenja Gudell, senior director of economic research at Seattle-based real estate marketplace Zillow.

“I think overall the recovery in housing is continuing, but we are starting to go back to more normal rates of appreciation,” she said.

Still, recent data have been strong:

Existing-home sales jumped 3.2% in June to an annual rate of 5.49 million, the highest since 2007.

New-home sales soared 18% in June, although new construction simply hasn’t recovered from the housing bust.

The Standard & Poor’s/Case-Shiller 20-city index of home prices rose 4.9% year-over-year in May.

Gudell said price increases are heavily concentrated in strong markets like San Francisco, Miami and Denver. Overall, she sees the base of buyers broadening beyond the affluent to the middle class.

“The low end is starting to pick up, but … unfortunately, conditions are extremely competitive” amid low inventory, bidding wars and all-cash sales in some markets.

Despite some short-term obstacles in both housing and cars, there’s plenty of pent-up demand.

IHS Automotive estimates that Americans have owned their vehicles for an average of 11.5 years. Sure, they’re made a lot better now, but that’s a record.

And a survey by Zillow in January found 5.2 million renters expect to buy homes this year.

Millennials, who have faced more financial constraints than previous generations, nonetheless are starting to buy cars and homes.

“One of the largest groups of new homeowners will be millennials,” said Gudell, adding that they’re buying in their 30s instead of their late 20s. Added Chesbrough: “Millennials have been coming back to the [auto] market,” although student debt may reduce their purchasing power, he cautioned.

Both see the dangers from higher interest rates, which Chesbrough calls “the one thing we know that’s coming down the pike that could have a negative impact on consumers.”

But “it’s not like rates are going to shoot up tremendously,” said Gudell. Federal Reserve Chairwoman Janet Yellen has repeatedly said that the Fed would raise rates gradually, and they likely wouldn’t go as high as they have in the past.

So, as the broad middle class and especially millennials start buying houses and cars again, this recovery could last longer than many think, and keep this bull market running well past its sell-by date too.

Written by Howard Gold of MarketWatch

(Source: MarketWatch)