Over the last several years, many “baby boomers” have undergone a metamorphosis. Their children have finally moved out and they can now dream about their own future. For many, a change in lifestyle might necessitate a change in the type of home they live in.
That two-story, four-bedroom colonial with three bathrooms no longer fits the bill. Taxes are too high. Utilities are too expensive. Cleaning and repair are too difficult. When they decide to travel to be with friends and family, locking up the house is too time-consuming and worrisome.
Instead, a nice ranch home with 2-3 bedrooms and two baths might better fulfill their new needs and lifestyle. The challenge many “boomers” have faced when trying to downsize to the perfect new home has been a lack of inventory.
The average number of years a family stays in their home has increased by fifty percent since 2008, causing fewer houses to come to the market. During the same time, new home builders were concentrating most of their efforts on large, luxury, expensive houses.
However, that is starting to change.
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes rose to a seasonally adjusted annual rate of 692,000 units in March. The great news is that more of those homes were sold at the lower end of the price range.
In a press release last week, the National Association of Home Builders (NAHB) explained that:
“The median sales price was $302,700, with strong gains in homes sold at lower price points. The median price of a new home sale a year earlier was $335,400.”
NAHB Chief Economist Robert Dietz offered further detail:
“We saw a large gain at lower price points where demand is strong. In March of 2019, 50% of new home sales were priced below $300,000, compared to 39% in March of 2018.”
If you are a “boomer” thinking of selling your old house in order to buy a new home that better fits your current lifestyle, now may be the perfect time!
There are many reasons why a homeowner decides to sell their house and move. The latest Generational Trends Report from the National Association of Realtors asked recent home sellers to share their reason for moving.
The younger the respondents, the more likely their top response centered around needing a larger home (ages 29 to 53). Relocating for a job was the top reason for those ages 54 to 63 and the second most popular response for those under 53. The chart below shows the breakdown for these two reasons.
For homeowners over the age of 64, wanting to be closer to friends and family served as the top motivator to move. Downsizing to a smaller home or moving due to retirement came in as a close second and third.
Have you outgrown your current house? Are you a homeowner who can relate to wanting to be closer to family and friends? Is your house becoming a burden to clean now that the kids have moved out?
Let’s get together to set you on the path to selling your current house and finding the home that fits your needs, today!
In a recent Insights Blog, CoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased.
“CoreLogic’s national rent index was up 36% in December 2018 compared with December 2005, while the typical mortgage payment was down 4% over that period.”
Why the difference between the costs of renting versus owning?
It makes sense that rents have risen. However, how did mortgage payments decrease? CoreLogic explained:
“It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018.
The national median sale price in December 2005 – $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher back then – $941 – compared with $904 in December 2018.”
Additionally, a recent report by the National Association of Realtors (NAR) showed that purchasing a home requires less of your monthly paycheck.
According to the Economists’ Outlook Blog, NAR’s February 2019 Housing Affordability Index showed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months.
- November – 17.3%
- December – 16.9%
- January – 16.2%
- February – 15.9%
What does this all mean to the current housing market? We think First Americansaid it best in a post last week:
“The mortgage rate-driven affordability surge has arrived just in time… Rising affordability has already benefited home buyers and, if the lower rate environment persists, we’re in for a great spring home-buying season.”
Real estate agents are trained and experienced in negotiation while, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families.
Here is a list of just some of the people with whom the seller must be prepared to negotiate if they decide to For Sale by Owner (FSBO):
- The buyer, who wants the best deal possible
- The buyer’s agent, who solely represents the best interests of the buyer
- The buyer’s attorney (in some parts of the country)
- The home inspection companies, which work for the buyer and will almost always find some problems with the house
- The termite company, if there are challenges
- The buyer’s lender, if the structure of the mortgage requires the sellers’ participation
- The appraiser, if there is a question of value
- The title company, if there are challenges with certificates of occupancy (CO) or other permits
- The town or municipality, if you need to get the CO permits mentioned above
- The buyer’s buyer, in case there are challenges with the house your buyer is selling
The percentage of sellers who have hired real estate agents to sell their homes has increased steadily over the last 20 years. Let’s get together to discuss all that we can do to make the process of selling your house easier for you.
Last fall, some predicted that the 2019 residential real estate market would be a disaster. There was even belief we might experience a housing crash like the one that occurred during the last decade.
However, according to two separate reports*, buyer demand dramatically increased over the last three months, leading into this spring buyers’ market (the March data is not yet available).
Both the ShowingTime Showing Index and the National Association of REALTORS Buyer Traffic Index show that buyer demand has increased in each of the last three months.
Why the increase in demand? Increased buying power.
According to the National Association of Realtors’ Economists’ Outlook Blog, purchasing a home has become more affordable, which has led to increased demand.
“Due to the combination of falling home prices and mortgage rates, the income needed to make an affordable mortgage payment (mortgage no more than 25% of income) on a median-priced home with 10% down payment and 30-year fixed rate mortgage decreased from $60,425 in June 2018 to $53,783 as of February 2019, and the difference of $6,642 represents a gain in buying power because one can afford a home purchase at a lower level of income.”
It appears the spring buyers’ market is going to be much stronger than many had projected. Whether you are selling or buying, this is important news.
Interest rates for a 30-year fixed rate mortgage have been on the decline since November, now reaching lows last seen in January 2018. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates came in at 4.12% last week!
This is great news for anyone who is planning on buying a home this spring! Freddie Mac had this to say,
“Mortgage interest rates have been steadily declining since the start of 2019. These lower mortgage interest rates combined with a strong labor market should attract prospective homebuyers this spring and could help the housing sector regain its momentum later in the year.”
To put the low rates in perspective, the average for 2018 was 4.6%! The chart below shows the recent drop, and also shows where the experts at Freddie Macbelieve rates will be by the end of 2019.
If you plan on buying a home this year, let’s get together to start your home search to ensure you can lock in these historically low rates today!