Dec 11, 2019 | Real Estate
“Baby Boomers,” defined as people who were born between 1946-1964, are the wealthiest generation to ever retire, as well as the largest. According to U.S. Census Bureau projections, the population of people 65 and older will increase by 36% between 2013-2023 and is expected to outnumber children by 2034 — for the first time in U.S. history.
Interestingly, in the decade since the Great Recession,people aged 50-59 are increasingly bucking tradition and moving to urban areas. As Boomers retire en masse, they are headed for major cities, favoring amenities-loaded condos over large single-family homes with manicured lawns. What is responsible for this change in older adults?
Home Maintenance Considerations
One of the largest factors causing boomers to migrate to cities is home maintenance. Once adult children are out of the home, many people downsize into more manageable houses. Larger suburban homes take a lot of work between routine home maintenance, not to mention larger emergency repairs.
It makes sense then, that people 55 and older accounted for the largest increase in the rental home segment from 2007-2017, with a 38% rise in those older than 55 and a 43% increase in people older than 65. In stark contrast, the increase in rentals in people aged 54 and under in the same time period was less than 10%.
Creature Comforts
Another thing responsible for older adults moving away from the suburbs and into more urban areas is the abundance of amenities large cities can offer them. Exceptionally walkable cities such as those where universities are located tend to cluster upscale condos and apartments near major shopping outlets and public transportation lines, as well as a multitude of options for shopping, dining, cultural experiences, and medical services.
Cities like Lawrence, Kansas and Bloomington, Indiana have taken note of the trend — and the fact that boomers have about 70% of all disposable income in the United States — and have taken steps to lure retirees in, offering recreation opportunities specific to seniors and making public transportation and preventive healthcare more accessible.
This trend of boomers moving back into large cities, while fascinating, makes perfect sense and is expected to continue for the foreseeable future as cities make themselves more and more appealing, as well as accessible.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Dec 10, 2019 | Real Estate
A “seller’s market” happens when there are more potential buyers than homes for sale. In a seller’s market, people looking for a home may feel frustration and not easily find the home that they want. When they find a home for sale that they like, the seller of the home may receive multiple competitive offers at the same moment.
The seller is in an excellent position when this happens. Sellers can pick from the purchase offers to choose the one they like the most. Even if an offer is the same as another one, sometimes it is not the offer chosen by a seller.
Causes Of A Seller’s Market
Seller’s markets arise because a particular area is very desirable. There can also be limitations that do not allow any further development of residential properties in an area. Well-established neighborhoods in up-scale market areas are typically likely candidates for becoming a seller’s market. Easy credit financing is another contributing factor.
Check the median sales price as a percentage of the listing price for an area. If it is greater than 100%, this is a seller’s market.
Buying A Home In A Seller’s Market
If you must live in a certain area, and there are extremely compelling reasons for buying a home in a seller’s market, then expect to pay more and work harder to get the type of home that you want. Here are some tips about how to buy a home in a seller’s market:
1. Work With A Top Real Estate Professional: You want to go into this challenge along with the best professional help that you can find. You want to choose a top real estate agent that specializes in the market area that you desire. They should know the neighborhood intimately and represented both buyers and sellers in that market.
2. Pre-Approved Credit Commitment: Apply for mortgage approval before looking for a home to buy. Request more than the amounted needed and pay for a written loan commitment that guarantees the financing is both approved and legally-committed for the time, plus a little more, that you need to find a home to buy.
3. Move Fast: Make a purchase offer as quickly as possible when a new home listing comes up that meets your criteria.
4. Cash Earn Money Deposit: Offer the seller earnest money in cash that is a significant amount to accept the purchase price you offer. By cash, we mean physical dollar bills of around $5,000 or more. Cash makes people sign a deal.
5. Offer More Money: If you want a specific home, make your purchase offer 1% or more than the asking price. Also, offer in writing to match any other competing offers plus a bit more. You may get into a bidding war and have to pay much more to get the home.
6. Off-Market Properties: Seek to buy a property that is not yet for sale. Ask your agent to call people who they sold a home to before. Ask everyone in the local area if they know of one that is like the one you want. Knock on doors of homes that are one you might like to buy and ask the owner if they will sell the home.
Summary
To get the home you want, try to be flexible with the basic criteria of what type of home it is. Work with a great real estate agent. Move fast and use our tips to be competitive with other potential homebuyers.
Dec 9, 2019 | Financial Reports
Last week’s economic reports included readings on construction spending and multiple labor sector reports including private and public sector jobs and the national unemployment rate. Weekly reports on average mortgage rates and first-time jobless claims were also released.
Construction Spending Falls 0.80 Percent in October
Commerce Department reports on construction spending said that spending fell by 0.80 percent to a seasonally-adjusted annual rate of $1.29 million. Analysts expected construction spending to increase by 0.40 percent based on September’s original reading of 0.50 percent growth, which was later revised to -0.30 percent.
Less construction of multifamily homes and apartments caused a decrease in October construction spending. Private construction spending fell by -1.00 percent in October; residential construction fell 0.90 percent as multi-family construction spending fell 1.60 percent after a 2.10 percent dip in September. Construction spending on single-family homes increased by 1.60 percent.
Low mortgage rates, a strong job market, and rising wages contributed to a strong demand for homes. Short inventories of available homes continued to pressure home builders to build more homes; construction of homes jumped 3.80 percent in October.
Mortgage Rates, Mixed, New Jobless Claims Fall
Freddie Mac reported no change in the average rate of 3.68 percent for 30-year fixed-rate mortgages; rates for 15-year fixed-rate mortgages averaged 3.14 percent and were one basis point lower than for the prior week.
Rates for 5/1 adjustable-rate mortgages fell four basis points on average to 3.39 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed-rate mortgages and 5/1 adjustable-rate mortgages.
First-time jobless claims fell from the prior week’s reading of 213,000 claims to 203,000 claims filed last week. ADP reported 67,000 private-sector jobs added in November.
The federal government’s Non-Farm Payrolls report offset the dismal reading for private-sector job growth. 266,000 public and private sector jobs were added in November and surpassed expectations of 180,000 public and private sector jobs added.
Approximately 55,000 were accounted for as auto workers returned after a strike. 156,0000 public and private sector jobs were added in October. The national unemployment rate dropped to 3.50 percent in November and matched the reading for unemployment posted at the end of 1969.
What’s Ahead
This week’s scheduled economic reports include readings on inflation, retail sales and the post-meeting statement from the Federal Reserve’s Federal Open Market Committee. Fed Chair Jerome Powell is scheduled to give a press conference after the FOMC statement. Weekly readings on mortgage rates and new jobless claims will also be released.
Dec 6, 2019 | Mortgage
There are a lot of steps that people need to take when buying a home. One of the most common issues that people discuss is the down payment. Most banks will require a down payment so that they aren’t the only ones taking on the risk of buying a home. The common question people have is how much of a down payment they should apply.
The Rule Of Thumb
Most people have heard about placing 20 percent down on a house as a solid rule of thumb. This number has been passed down from prior generations who purchased houses with similar down payments.
On the other hand, the price of housing has risen over the past few decades and this down payment might not be possible for some people. While 20 percent down might work for some people, it might not be feasible for others.
Other Considerations
There are several additional factors that homebuyers need to think about. First, how big of a down payment is the bank requiring? Some banks might not lend to someone at all if they don’t reach a certain threshold. In other cases, the lender might ask someone to purchase something called private mortgage insurance, often abbreviated PMI.
This is an insurance policy that the borrower will have to purchase for the lender. If the borrower loses the home in foreclosure, the lender gets its money back through this insurance policy. Obviously, borrowers do not want to have this added expense. This is where the down payment is important.
In addition, banks might also be willing to lower the interest rate on the mortgage if the borrower increases the size of the down payment. With a lower interest rate, this can save someone a substantial amount of money down the road. Try to see if the lender will lower the interest rate in exchange for a larger down payment.
Deciding The Down Payment
These are a few of the many factors that homebuyers should think about when thinking about the down payment. While nobody wants to pay more than they should, the down payment is only one of the financial aspects people need to consider.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Dec 5, 2019 | Real Estate
When considering buying a home in an “as-is” condition, the buyer takes all the risk of anything needed to bring the property back up to current building codes and make it ready for occupation or re-sale. There can be bargains in as-is properties if you know how to hunt for one.
How To Find As-Is Bargain Properties
To find these properties, look for those that sell at auction for tax liens or other reasons for governmental asset-seizure. The might be distressed as-is properties that are foreclosures, short-sales, or estate sales.
A popular home-flipping strategy is to buy an as-is property at a price that is far below market value, make the repairs necessary, and then resell the home for a price that covers the repair costs plus makes a profit.
Tips On Buying As-Is Properties
It is a guessing game when buying an as-is property. There may be very unpleasant surprises for repairs that are very costly and are not obvious. Hidden problems include major plumbing troubles, severe electrical system repairs, shifting or broken foundations, dry rot, and termite infestations.
Here are some tips about how to improve the chances of getting a better deal when buying an as-is property:
Home Inspection: Conduct a professional home inspection. This is insurance to avoid a serious mistake. It is worth the few hundred dollars to pay for one, even if you do not get the property.
Work With A Contractor: Being a contractor yourself is great. Many contractors buy and flip houses when not working on projects for others. The next best thing is working or partnering with a contractor. Just doing a walk-through with a remodeling contractor helps identify things that need to fix. Then, the estimates for the renovation can be done more accurately.
Major Systems: Assume the major systems will need work or replacement. The biggest unknown expenses in a renovation come from the heating, cooling, and other major systems.
Check Drains: Running water into the sinks for a few minutes is an easy way to see if the drains are blocked.
Roof: Based on the home’s age, assume the roof needs replacement if the roof is more than 20 years old. Inside the home look for evidence of roof leaks that left behind stains on the ceilings and walls that are signs of water damage.
Probe For Termites: Drill tiny deep holes into wood, in an inconspicuous area, to test for termite infestation and/or pay for a pest control inspection.
Foundation Problems: Go into the crawl space under a home to look for foundation problems, such as major cracks and shifting. Another indicator of ground movement and settling, which may be a problem, is that the doors in the home are not level or plumb and do not close properly.
Summary
It is possible to get a bargain when buying an as-is property; however, it is not a certainty. If you are just starting with flipping houses, it is better to partner with professionals to get helpful guidance. Work with a qualified real estate agent who specializes in distressed properties and partner with a reputable building contractor to increase the chance of success.
