Is Now a Good Time to Buy or Sell Real Estate?
Traditionally, spring is one of the busiest times of the year for real estate. However, the coronavirus outbreak—and subsequent stay-at-home orders—led many buyers and sellers to put their moving plans on hold. In April, new listings fell nearly 45%, and sales volume fell 15% compared to last year.1
Fortunately, as restrictions have eased, we've seen an uptick in market activity. And economists at Realtor.com expect a rebound in July, August, and September, as fears about the pandemic subside, and buyers return to the market with pent-up demand from a lost spring season.2
But given safety concerns and the current economic climate, is it prudent to jump back into the real estate market?
Before you decide, it's important to consider where the housing market is headed, how it could impact your timeline and ability to buy a home, and your own individual needs and circumstances.
WHAT'S AHEAD FOR THE HOUSING MARKET?
The economic aftermath of the coronavirus outbreak has been severe. We've seen record unemployment numbers, and economists believe the country is headed toward a recession. But people still need a place to live. So what effect will these factors have on the housing market?
Home Values Projected to Remain Stable
Many Americans recall our last recession and assume we will see another drop in home values. But the 2008 real estate market crash was the cause—not the result—of that downturn. In fact, ATTOM Data Solutions analyzed real estate prices during the last five recessions and found that home prices actually went up in most cases. Only twice (in 1990 and 2008) did prices fall, and in 1990 it was by less than one percent.3
Many economists expect home values to remain relatively steady this time around. And so far, that's been the case. As of mid-May, the median listing price in the U.S. was up 1.4% from the same period last year.4
Demand for Homes Will Exceed Available Supply
There's been a shortage of affordable homes on the market for years, and the pandemic has further hindered supply. In addition to sellers pulling back, new home starts fell 22% in March.5 In fact, Fannie Mae doesn't foresee a return to pre-pandemic construction levels before the end of 2021.6
This supply shortage is expected to prop up home prices, despite recessionary pressures. Fannie Mae and the National Association of Realtors predict housing prices will rise slightly this year7, while Zillow expects them to fall between 2-3%.8 Still, that would be a far cry from the double-digit declines that occurred during the last recession.9
Government Intervention Will Help Stabilize the Market
Policymakers have been quick to pass legislation aimed at preventing a surge in foreclosures like we saw in 2008. The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress gives government-backed mortgage holders who were impacted by the pandemic up to a year of reduced or delayed payments.10
The Federal Reserve has also taken measures to help stabilize the housing market, lower borrowing costs, and inject liquidity into the mortgage industry. These steps have led to record-low mortgage rates that should help drive buyer demand and make homeownership more affordable for millions of Americans.11
HOW HAS THE REAL ESTATE PROCESS CHANGED?
As the pandemic hit, real estate and mortgage professionals across the country revised their processes to adapt to shifting safety standards and economic realities. While these new ways of conducting business may seem strange at first, keep in mind, military clients, international buyers, and others have utilized many of these methods to buy and sell homes for years.
New Safety Procedures
The safety of our clients and our team members is our top priority. That's why we've developed a process for buyers and sellers that utilizes technology to minimize personal contact.
For our listings, we're holding online open houses, offering virtual viewings, and conducting walk-through video tours. We're also using video chat to qualify interested buyers before we book in-person showings. This enables us to promote your property to a broad audience while limiting physical foot traffic to only serious buyers.
Likewise, our buyer clients can view properties online and take virtual video tours to minimize the number of homes they step inside. Ready to visit a property in person? We can decrease surface contact by asking the seller to turn on all the lights and open doors and cabinets before your scheduled showing.
The majority of our "paperwork" is also digital. In fact, many of the legal and financial documents involved in buying and selling a home went online years ago. You can safely view and eSign contracts from your smartphone or computer.
Longer Timelines and Higher Mortgage Standards
The real estate process is taking a little longer these days. Both buyers and sellers are more cautious when it comes to viewing and showing homes. And with fewer house hunters and less available inventory, it can take more time to match a buyer with the right property.
In a recent survey, 67% of Realtors also reported delays in the closing process. The top reasons were financing and buyer job loss, but appraisals and home inspections are also taking more time due to shifting safety protocol.12
Securing a mortgage may take longer, too. With forbearance requests rising, lenders are getting increasingly conservative when it comes to issuing new loans. Many are raising their standards—requiring higher credit scores and larger down payments. Prepare for greater scrutiny, and build in some extra time to shop around.13
IS IT THE RIGHT TIME FOR ME TO MAKE A MOVE?
The reality is, there's no "one size fits all" answer as to whether it's a good time to buy or sell a home because everyone's circumstances are unique. But now that you know the state of the market and what you can expect as you shop for real estate, consider the following questions:
Why do you want or need to move?
It's important to consider why you want to move and if your needs may shift over the next year. For example, if you need a larger home for your growing family, your space constraints aren't likely to go away. In fact, they could be amplified as you spend more time at home.
However, if you're planning a move to be closer to your office, consider whether your commute could change. Some companies are rethinking their office dynamics and may encourage their employees to work remotely on a permanent basis.
How urgently do you need to complete your move?
If you have a new baby on the way or want to be settled before schools open in the fall, we recommend that you begin aggressively searching as soon as possible. With fewer homes on the market and a lengthier closing process, it's taking longer than usual for clients to find and purchase a home.
However, if your timeline is flexible, you may be well-positioned to score a deal. We're seeing more highly-incentivized sellers who are willing to negotiate on terms and price. Talk to us about setting up a search so we can keep an eye out for any bargains that pop up. And get pre-qualified for a mortgage now so you'll be ready to act quickly.
If you're eager to sell this year, now is the time to begin prepping your home for the market. A second wave of infections is predicted for the winter, which could mean another lockdown.14 If you wait, you might miss your window of opportunity.
How long do you plan to stay in your new home?
The U.S. real estate market has enjoyed steady appreciation since 2012, which made it fairly easy for owners and investors to buy and sell properties for a profit in a short period of time. However, with home values expected to remain relatively flat over the next year, your best bet is to buy a home you can envision yourself keeping for several years. Fortunately, at today's rock-bottom mortgage rates, you can lock in a low interest rate and start building equity right away.
Can you meet today's higher standards for securing a mortgage?
Mortgage lenders are tightening their standards in response to the growing number of mortgage forbearance requests. Many have raised their minimum credit score and downpayment requirements for applicants. Even if you've been pre-qualified in the past, you should contact your lender to find out if you meet their new, more stringent standards.
Is your income stable?
If there's a good chance you could lose your job, you may be better off waiting to buy a home. The exception would be if you're planning to downsize. Moving to a less expensive home could allow you to tap into your home equity or cut down on your monthly expenses.
WHEN YOU'RE READY TO MOVE—WE'RE READY TO HELP
While uncertain market conditions may give pause to some buyers and sellers, they can actually present an opportunity for those who are willing, able, and motivated to make a move.
Your average spring season would be flooded with real estate activity. But right now, only motivated players are out in the market. That means that if you're looking to buy, you're in a better position to negotiate a great price. And today's record-low mortgage rates could give a big boost to your purchasing power. In fact, if you've been priced out of the market before, this may be the perfect time to look.
If you're hoping to sell this year, you'll have fewer listings to compete against in your neighborhood and price range. But you'll want to act quickly. Economists expect a surge of eager buyers to enter the market in July—so you should start prepping your home now. And keep in mind, a second wave of coronavirus cases could be coming in this winter. Ask yourself how you will feel if you have to face another lockdown in your current home.
Let's schedule a free virtual consultation to discuss your individual needs and circumstances. We can help you assess your options and create a plan that makes you feel both comfortable and confident during these unprecedented times.
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
We're in the midst of the longest economic expansion in U.S. history, and economists think there's still room to grow. A recent survey by the National Association for Business Economics found that experts believe the U.S. economy will remain positive throughout 2020.1
Still, given that recessions are a natural (and necessary) part of a business cycle, we know this period of growth will inevitably end. So you may be wondering … how will an eventual recession impact the real estate market?
Many Americans assume a recession would lead to a decline in housing prices like we saw during the Great Recession of 2008. But the real estate market crash we experienced wasn't typical. In fact, the last recession wasn't typical at all. It was the worst economic downturn since the Great Depression of the 1930s.
ATTOM Data Solutions analyzed real estate prices during the last five recessions and found that, in the majority of cases, home prices actually went up. Only twice (in 1990 and 2008) did prices decline, and in 1990 it was by less than one percent.2
So what can historical precedent—combined with today's data—tell us about the future of real estate? Here's where experts predict the housing market is headed in 2020 and beyond.
HOME PRICES WILL KEEP RISING
Economists predict U.S. housing prices will continue to rise, regardless of a recession. In fact, property data firm CoreLogic forecasts a faster rate of growth for home prices in 2020 than we saw in 2019, with the biggest gains at the lower end of the market.3
Arch MI Chief Economist Ralph DeFranco expects entry-level home prices to increase faster than incomes this year, making it even more difficult for many first-time buyers to afford to enter the market.4
"Low interest rates and a shortage of starter homes will continue to push up prices," predicts DeFranco. "This is especially the case for lower price points, since builders have tended to focus on more expensive, higher-profit houses and less on replenishing low inventories of entry-level homes."4
"Real estate is on firm ground with little chance of price declines," said National Association of Realtors Chief Economist Lawrence Yun. "However, in order for the market to be healthier, more supply is needed to assure home prices as well as rents do not consistently outgrow income gains."5
What does it mean for you? If you have the ability and desire to buy a home now, don't let a fear of recession or falling prices hold you in limbo. Economists expect home values, as well as rent prices, to continue rising. So you'll likely pay more the longer you wait.
INVENTORY CONSTRAINTS WILL CONTINUE
According to Redfin, Americans are staying in their homes longer. In 2019, the average homeowner had resided in their home for 13 years, up from just eight years in 2010. That means there are fewer homes available today for those who want to buy.6
It's possible that an increase in new construction could offer some relief. The National Association of Realtors (NAR) expects single-family housing starts to total one million this year, the highest level since 2007. And NAR Chief Economist Lawrence Yun predicts the average price of new construction will decline slightly as builders shift to building smaller, more affordable homes.7
However, these efforts may not be enough to meet current demand. "Despite improvements to new construction and short waves of sellers, next year will once again fail to bring a solution to the inventory shortage," predicts Realtor.com Senior Economist George Ratiu. "In 2020, we expect inventory to struggle to grow and could instead reach a historic low level."8
What does it mean for you? If you're looking to buy a starter home, be prepared to compete for the best listings. Start your search early, and if you're up against a deadline (like a new baby), build in plenty of time to find the right home. We can help you assess your options, including new construction and up-and-coming developments.
MORTGAGE RATES WILL REMAIN LOW
Mortgage rates have declined more than a full percentage point since November 2018, when they hit a recent peak of 4.94%.9 The Mortgage Bankers Association predicts rates will remain low, at around 3.7%, through mid-2021.10
While it may not seem significant, on a $200,000 30-year fixed-rate mortgage, that lower rate means buyers could save around $145 on their monthly payment and more than $52,000 over the life of their mortgage. Lower mortgage rates make homeownership more accessible and affordable for buyers.
Although economists expect mortgage rates to stay low, they caution against waiting to act. Economic factors, shifts in supply and demand, or unforeseen impacts of the November election could cause rates to rise unexpectedly. "We recommend borrowers with long-term plans of staying in their homes to lock in a low rate now because there's no telling how long these low rates will last," warns Preetam Purohit, a capital markets trader at Embrace Home Loans.11
What does it mean for you? If you're looking to buy a home, act soon to lock in a historically low mortgage rate. It will minimize your monthly payment and could save you a bundle over the long term. And if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today's lower rates.
MILLENNIALS WILL DRIVE THE MARKET
Millennials are expected to account for more than half of all mortgages this year, outnumbering Generation X and Baby Boomers combined. It's not surprising, considering their age and stage of life. In 2020, the largest cohort of millennials will turn 30, and the oldest millennials will turn 39.8
"Family changes tend to drive home-buying decisions," explains Realtor.com Chief Economist Danielle Hale. "Millennials are going to be active in the housing market not just because they're just at the age when they're thinking about becoming first-time home buyers, but they're also in the age range when they're having kids."12
Younger millennials flocked to urban centers that offered easy access to work, shopping, and restaurants. But high prices, lack of square footage, and subpar schools are driving millennials out to the suburbs as they begin to marry and expand their families.
In response, a new model for suburban living has emerged. "Hipsturbias," or mixed-use communities that bring the live/work/play concept to the suburbs, were recently named one of the top real estate trends for 2020 by the Urban Land Institute.4
What does it mean for you? If you're a millennial who has been priced out of urban living or is looking for more space for your growing family, a number of suburbs in our area have a lot to offer. We can point you towards the communities that will best meet your needs. And if you're a homeowner with plans to sell, give us a call. We know how to market your home to millennials … and can help you sell quickly for top dollar by appealing to this leading market segment!
WE'RE HERE TO GUIDE YOU
While national real estate numbers can provide a "big picture" outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.
If you're considering buying or selling a home in 2020, contact us now to schedule a free consultation. We'll work with you to develop an action plan to meet your real estate goals this year.
START PREPARING TODAY
If you plan to SELL this year:
Everything You Need to Know About iBuyers
and the "Instant Cash Offer"
Technology is changing the way we do almost everything, and real estate transactions are no exception. In fact, a new crop of tech companies wants to revolutionize the way we buy and sell homes.
iBuyer startups like Opendoor, Offerpad, and Properly are rapidly expanding into new territories, and now established players, like Zillow, are starting to get in on the action. Also known as Direct Buyers, these companies use computer algorithms to provide sellers with a quick cash offer to buy their home.
While the actual market share of iBuyers remains small, their big advertising budgets have helped create a noticeable buzz in the industry. This has left many of our clients curious about them and how they work.
In this article, we explain their business model, weigh the pros and cons of working with an iBuyer, and share strategies you can use to protect yourself if you choose to explore this new option to buy or sell your home.
FIRST, HOW DOES THE iBUYER PROCESS WORK?
While each company operates a little differently, the basic premise is the same. A seller (or seller's agent) completes a brief online form that asks questions about the size, features, and condition of the property. Some also request digital photos of the home.
The iBuyer will use this information to determine whether or not the home fits within their "buy box," or set of criteria that matches their investment model. They are generally looking for houses they can easily value and "flip." In most cases, their ideal property is a moderately priced, single-family home located in a neighborhood with many similar houses. The property shouldn't require any major renovations before listing.1 These qualities make it easier to assess value (lots of comparable sales data) and help to reduce risk and minimize carrying costs.
Once the iBuyer has used their algorithm to determine the amount they are willing to pay, they will email an offer to the seller, usually within a few days. The offer should also disclose the company's service fee, which is typically between 7% and 12% of the purchase price.2
If the seller accepts, an in-person visit and inspection are scheduled. The iBuyer will ask for a reduction in price to cover any defects they find during the process. Once the sale closes, they will make the necessary updates and repairs and then resell the home on the open market.
WHAT ARE THE PROS AND CONS OF SELLING TO AN iBUYER?
Of course, the biggest benefit of selling your home to an iBuyer is convenience. For some homeowners, the stress and disruption of preparing and listing their home can feel overwhelming. And what busy family with kids and pets wouldn't want to skip the hassle of keeping their house "show ready" for potential buyers? Additionally, many sellers like the predictability of a cash buyer and the flexibility to choose their closing date.
However, this added convenience does come at a cost. An iBuyer is an investor looking to make a profit. So their purchase offer is usually below true market value. When you tack on service fees of up to 12% and deductions for updates and repairs, studies show that sellers who work with iBuyers net a lower amount than those that list the traditional way.3
In fact, a MarketWatch investigation found that transactions involving iBuyers net the seller 11% less than if they would have sold their home with an agent on the open market.2
WHAT ARE THE PROS AND CONS OF BUYING FROM AN iBUYER?
Buying a home from an iBuyer is a lot like buying a home from any investor. The pros are that it's usually clean, neutral, and moderately updated. You'll often find fresh paint and modern finishes. And because it's uninhabited (no one is living there), you don't have to work around a seller's schedule to see the home.
However, there are some pitfalls to avoid when working with iBuyers. Speed is of the essence, so sometimes the renovations are rushed and the quality can suffer. Also, their investment margins don't leave much room for negotiating a price reduction or additional repairs. That leaves buyers —who have already invested hundreds of dollars in an inspection—little recourse if any issues are uncovered.4
That's one of the reasons we always recommend viewing properties with an agent. During your visit, a real estate professional can point out any "red flags" at the home, provide background information about the neighborhood, and help you assess its true market value. That way, you don't invest time and money in a high-risk or overpriced property. Safety is also a concern. Some companies allow buyers to access their homes via a smartphone app. While it may seem convenient, it provides an easy way for squatters and others to enter the home illegally.5
Luckily, since most iBuyers (and traditional sellers) pay a buyer agent's commission, you can benefit from the guidance and expertise of a real estate professional … at no cost to you!
HOW CAN I PROTECT MYSELF IF I CHOOSE TO WORK WITH AN iBUYER?
While it may seem like the "quick and easy" way to go, working with an iBuyer can present some unique challenges. For example, they are notorious for presenting a strong initial purchase offer and then whittling it down with a long list of costly updates and repairs once they complete their inspection.2 And unlike a traditional buyer who is incentivized to make a deal work, iBuyers can easily walk away if you don't meet their demands.
Just like you wouldn't go to court without a lawyer, you shouldn't enter into a real estate transaction without an advocate to represent you. Having a professional agent on your side can be especially important when negotiating with an iBuyer. Remember, they employ sophisticated representatives and a team of lawyers who are focused on maximizing their profits, not yours. You need someone in your corner who has the skills and knowledge to ensure you get a fair deal and who understands the terms of their contracts, so you don't encounter any unpleasant surprises along the way.
Overall, we think the emergence of new technology that helps to streamline the real estate process is exciting. And if we believe a client can benefit from working with an iBuyer, we present it as an option. But there is—inevitably—a cost to the convenience. After all, most iBuyers eventually list the properties they acquire on the open market, which is still the best place to find a buyer if you want to maximize the sales price of your home.
EXPLORE YOUR OPTIONS
Do you want to learn more about iBuyers and other options currently available in our area to buy or sell your home? We can help you determine the best path, given your unique circumstances. Contact us to schedule a free, no-obligation consultation!
The U.S. unemployment rate is at a 50-year low, and consumer confidence remains high. In fact, the University of Michigan's latest Surveys of Consumers found that Americans have their most positive personal finance outlook since 2003.1
However, if you follow national news, you've probably heard speculation that we could be headed toward a recession. Global trade tensions and a slow down in the GDP growth rate have sparked volatility in the stock market, leading to economic uncertainty.
Given these differing signals, you may be wondering: How has the U.S. housing market been impacted? Where is it headed? And more importantly … what does it mean for me?
MORTGAGE RATES ARE NEAR HISTORIC LOWS
In August, Freddie Mac reported that the average 30-year fixed mortgage rate hit its lowest level since November 2016, falling to 3.6%, down a full percentage point from a year earlier.2 Variable mortgage rates also fell when the Federal Reserve cut interest rates at the end of July for the first time since 2008.3
This was welcome news for many in the real estate industry. Freddie Mac predicts that low interest rates and a robust job market will help the housing market remain strong despite the threat of recession.
"There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment," said Sam Khater, Freddie Mac's chief economist. "Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall."2
What does it mean for you? If you're looking to buy a home, now is a great time to lock in a low mortgage rate. It will shrink your monthly payment and could save you a bundle over the long term. Or if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today's lower rates.
PRICES CONTINUE TO RISE AT A MODEST PACE
According to the S&P CoreLogic Case-Shiller Indices, housing prices continue to rise. But the rate at which prices are rising is slowing down. For May 2019, the National Home Price Index rose by 3.4%, down from 3.5% the previous month.4
Of course, national averages often don't present the whole picture. Some markets have seen modest declines, while other areas are witnessing double-digit increases. The key differentiating factor in most cases? Housing affordability.5
Since 2012, home prices have increased at about three times the pace of wages, according to National Association of Realtors chief economist Lawrence Yun.6
"Housing unaffordability will hinder sales irrespective of the local job market conditions," said Yun. "This is evident in the very expensive markets as home prices are either topping off or slightly falling."5
But what about all this talk of a recession? Will we see housing values plummet like they did in 2008? Economists say no.
If we look at history, the real estate crash experienced during the Great Recession isn't typical.
The recent Housing and Mortgage Market Review report from Arch Mortgage Insurance provides data to support this. "What we found is that the next recession is likely to be far less severe on the housing market than the last one. It's not that this time is different; it's that last time was really different from historic norms."6
"A large decline in national home prices is unlikely in the next recession," Arch economists write. "A persistent housing shortage should help cushion home price declines."6
What does it mean for you? If you have the ability and desire to buy a home now, don't let the threat of a recession hold you in limbo. The market is cyclical, and it will experience ups and downs. But over the long term, real estate has consistently proven to be a good investment.
STARTER INVENTORY REMAINS TIGHT WHILE LUXURY MARKET SOFTENS
As we've seen in the past, it's become a tale of two sectors.
The low-end of the market remains highly competitive as buyers compete for affordable housing. A lack of new construction during the last recession led to an undersupply of starter homes. This trend continues—despite growing demand—due to a lack of skilled workers, rising land and material costs, and a slow permitting process in many areas.7
The result? There's a shortage of homes for sale that Americans can actually afford to buy.
The luxury market, on the other hand, has softened. Economic uncertainty, changes to tax laws, and rising prices have slowed demand. Plus, to recoup their higher costs, builders flocked to this segment—causing an overabundance of supply in some areas.
"If you're selling an entry level home, you're probably still looking at a pretty competitive market in most places," according to Danielle Hale, chief economist at Realtor.com. "But if you're selling a more expensive home you probably have to adjust your expectations."8
What does it mean for you? Move-up buyers, you're in luck! If you're ready to trade in your starter home for something more luxurious, you may get the best of both sectors. We're still witnessing strong demand for entry-level homes, giving sellers the upper hand. At the same time, buyers of high-end homes are finding a greater selection (and more negotiating power) than they've had in years.
INVESTORS ARE BUYING HOMES AT RECORD LEVELS
There's one group that hasn't been slowed down by lack of affordability or economic uncertainty: investors.
According to CoreLogic, investors are purchasing homes at a record pace. In 2018, the share of U.S. homes bought by investors reached 11.3%—the highest level since the company began tracking nearly 20 years ago.9
Notably, this increased activity wasn't led by institutional investors, but instead by small and individual investors focused on the starter-home segment.7 Declining interest rates and an uncertain stock market have led investors to flock to real estate as they seek out greater stability and higher returns.
"With declining mortgage rates … they're searching for a better return for their money," said NAR chief economist Lawrence Yun.10
What does it mean for you? If you're looking for a way to "recession proof" your money, you might want to consider investing in real estate. People will always need a place to live, and (unlike the stock market) a rental property can provide a steady source of cash flow during uncertain economic times.
WE'RE HERE TO GUIDE YOU
While national real estate numbers can provide a "big picture" outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.
If you have specific questions or would like more information about how market changes could affect you, contact us to schedule a free consultation. We're here to help you navigate this shifting real estate landscape.
In our "bigger is better" culture, there's an expectation that each home should be larger and grander than the last. But life changes like divorce, kids leaving for college, or even the simple act of growing older can prompt us to find a smaller home that better suits our shifting needs and lifestyle.
In fact, the advantages of downsizing are being increasingly recognized. A "tiny house movement" has gained passionate advocates who appreciate the benefits of living simply at any age and stage of life. Not only does a smaller home typically cost less, it also takes less time and effort to maintain.1
Whatever your reasons are for downsizing, the process can seem overwhelming. That's why we've outlined five steps to guide you on your journey. And in the end, we hope you'll find that less is more … more comfort, more security, and more time and energy to spend on the activities and the people that you love.
5 STEPS TO DOWNSIZING SUCCESS
The first step is to figure out your goals for your new living environment. Do you want to live closer to family? Are you hoping to cut down on home maintenance? Are you looking for a community with certain amenities?
You should also consider any limitations that will impact the home you choose. For example, are stairs an issue? Do you need access to medical care? In the case of divorce, are there child-custody issues you need to take into account?
Estimate how long you plan to stay in your new home. Do you expect your needs to change during that time?
Make a "wish list" of features and prioritize them from most to least important. If you'd like any assistance with this process, give us a call! We'd be happy to sit down with you for a free consultation. We can also help you assess the value of your current home so you can set a realistic budget for your new one.
Once you've established your "wish list," we can begin the search for your new home. As local market experts, we know the ins and outs of all the top communities in our area. We can help you determine the neighborhood and type of home that will best fit your wants and needs.
From family neighborhoods to retirement communities, we serve clients in all stages of life. If you or a loved one are in need of extended support, we can also share our knowledge of the assisted living facilities in town and help you identify those that offer the optimal level of care.
Are you planning to relocate out of town? We can refer you to a trusted real estate professional in your target area who can help you with your search.
If you're ready to sell your current home, we'll begin the process of preparing to list it as we search for your new one.
We have a special interest in helping homeowners who are facing major life transitions, and we offer a full-service real estate experience that aims to remove as much of the stress and hassle of selling your home as possible. We also understand that many of our clients choose to downsize for financial reasons, so we employ tactics and strategies to maximize the potential sales revenue of your home.
We do this by employing our proven three-part approach, which focuses on optimum preparation, pricing, and promotion. As part of that plan, we invest in an aggressive marketing strategy that utilizes online and social media platforms to connect with consumers and offline channels to connect with local real estate agents. This ensures your property gets maximum exposure to prospective buyers.
Even before you find your new home, you can begin preparing for your move. A smaller home means less space for your furniture and other possessions, so you will need to decide what to keep and what to sell or donate. Sorting through an entire house full of belongings will take time, so begin as early as possible.
Parting with personal possessions can be an extremely emotional process. Start with a small, unemotional space like a laundry or powder room and work your way up to larger rooms. Focus on eliminating duplicates and anything you don't regularly use. If you have sentimental pieces, family heirlooms, or just useful items you no longer need, think about who in your life would benefit from having them. For large collections, consider keeping one or two favorite pieces and photographing the rest to put in an album.2
Make sure the items you keep help you achieve the goals you outlined in Step 1. For example, if you want a home that's easier to clean, cut down on knickknacks that require frequent dusting. If you're moving to be closer to your grandchildren, choose the shatterproof plates over the antique china.
Allow yourself time to take breaks if you start to feel overwhelmed. If you're helping a loved one with a move, try to be a patient listener if they want to stop and share stories about particular items or memories throughout the process.3 This can be therapeutic for them and an opportunity for you to learn family history that may otherwise have been forgotten.
Moving is stressful in any situation. But if you're downsizing due to health issues or a major life change, it can be an especially tough transition. Don't be afraid to ask for help.
Seek out friends and family members who can assist with packing and decluttering. If that's not an option, or if you need additional help, consider hiring a home organizer, full-service moving company, or even a senior move manager, which is a professional who assists older adults and their families with the physical and emotional aspects of relocation.4 You can find one accredited by the National Association of Senior Move Managers at https://www.nasmm.org/find/index.cfm.
If financial constraints are holding back, let us know. We can help you explore the possibility of tapping into the equity in your current home now. That way you can afford to get the assistance you need to make your transition as smooth as possible.
ARE YOU LIVING YOUR BEST LIFE?
If your current home no longer suits your needs, maybe it's time to consider a change. We would love to help you explore your options. Contact us today to schedule a free, no-obligation consultation.
Most new homeowners have something about their property that they want to change. And as family needs and design trends shift over time, many will eventually choose to remodel. Some homeowners make updates to their property before listing it to maximize their potential sales revenue.
Whatever your reasons are for taking on a home improvement project, it's wise to consider how the money you invest will impact your home's value.
We've taken a look at six popular home renovations and identified those that—on average—have the best and worst returns on investment. So before you lift a hammer or hire a contractor, take a look at this list and see if your remodeling efforts will reward you when it comes time to sell.
RENOVATIONS THAT PAY OFF
These three common home improvement projects not only add function and style to your home, but they also offer a strong return on investment. Making strategic upgrades to your property will help you increase its value over time.
Minor Kitchen Remodel
The kitchen is often referred to as the "heart of the home," and for good reason. Traditionally used for preparing food, it has morphed into so much more. Many of us now eat our family meals in the kitchen, it serves as a favorite spot for homework and kids' art projects, and it's the place guests tend to gather when we host events.
Because we spend so much time in our kitchens, it's natural that we will eventually want to make updates and upgrades to better suit our needs and changing style preferences.
Luckily, a minor kitchen remodel is one of the best investments you can make in your home. According to Remodeling Magazine's annual Cost vs. Value Report, it has an average 80.5% return on investment.1
The key to making a kitchen remodel pay off is to keep it modest in scale. Spend too much on custom or high-end selections, and you are less likely to recoup your investment. Instead, make an effort to keep your existing layout if it works for you and your family. Paint or reface cabinets instead of replacing them. Update countertops with low-maintenance quartz and swap out old light fixtures with modern alternatives. Replace outdated appliances with energy-efficient models. The average cost for a minor kitchen remodel is $22,500, and it's likely to recoup more than $18,000 at resale.1
Wood Deck Addition
A deck addition is a popular way to extend and enhance the use of your outdoor space. It's the perfect spot for grilling, dining alfresco, and entertaining. In fact, 81% of surveyed homeowners said they have a greater desire to be home since completing a deck addition.2
For a 16 x 20-foot wood deck, you can expect to spend around $13,000. Fortunately, the money you invest offers an average return of 76%.1
Decks made of composite material are a popular alternative these days, as they don't require the regular sanding and staining that wood decks need. However, at an average cost of $19,000 for a 16 x 20-foot composite deck, they are significantly more expensive. Plus, the expected return on investment is only 69%.1 Still, if you plan to hire someone to provide regular maintenance to a wood deck, then a composite deck may offer cost savings over time.
Everyone knows good curb appeal is important when selling your home. And while it may not be the most exciting way to spend your remodeling budget, new siding can make a big impression on buyers … and your selling price.
Your home's exterior is one of the first things buyers see when they view your home. It sets the tone for what they are going to see inside. It also gives an impression of how well the property has been maintained. Worn, peeling, or rotted siding can be a major red flag for buyers.
Replacing 1,250 square feet of siding costs around $16,000 and will net you an average of 76% at resale.1
For an even greater impact, consider replacing a portion of your siding with manufactured stone veneer. It can have a dramatic effect on the visual appeal of your home. A 300 square foot area will run you around $8,900, but you can expect to see a nearly 95% return when it comes time to sell.1
RENOVATIONS WITH WEAK RETURNS
These three popular remodeling projects are homeowner favorites. However, don't expect to see a high rate of return at resale. Instead, consider them an investment in your current quality of life. Just make sure you'll be living in the home long enough to make them worthwhile.
Major Kitchen Remodel
If there's one room the majority of homeowners dream about making over, it's their kitchen. From custom cabinetry to high-end appliances, the possibilities are endless. But those dreams can come at a cost.
An upscale kitchen remodel with high-end cabinetry and countertops, commercial-grade appliances, and designer features can cost upwards of $130,000. And unfortunately, you'll only get back around 60% at resale. Even a mid-range kitchen remodel that includes new semi-custom wood cabinets, laminate countertops, and energy-efficient appliances could run you around $66,000 and net you a mere 62% at resale.1
Of course, an outdated or non-functional kitchen could turn buyers off from your home completely … and keep you from enjoying it yourself! So if your kitchen needs a major remodel, you shouldn't necessarily scrap your plans. Just go in with the realization that you may only get back a fraction of what you invest. Then you can decide which upgrades are worth the splurge.
Few additions deliver more entertainment or enjoyment than an in-ground pool. It brings families and friends together, provides a break from the summer heat, and offers a fun and convenient way to stay fit. Plus, you'll be the envy of your neighbors! But before you dive into a pool addition, consider whether the benefits outweigh the (substantial) costs.
The average expense to install a standard 18 x 36-foot in-ground pool is $57,500. And the estimated return at resale is only or 43%.2 In addition to the installation cost, plan to spend money each year on maintenance, repairs, and additional insurance.
However, 92% of surveyed homeowners said they "have a greater desire to be home" since installing a pool, and 83% have "an increased sense of enjoyment when they are at home." For you and your family, the perks of a pool may be priceless.2
Master Suite Addition
If you own a house built before the 1980s, there's a good chance it lacks a master suite, which is a feature that has become commonplace in most newly constructed homes.3
Master bedrooms have evolved from a simple place to sleep into a homeowner's retreat—often featuring a sitting area, his-and-hers walk-in closets, and an attached bathroom with double vanities, a soaking tub, and a walk-in shower.
And master suite additions have become increasingly popular—both in homes that lack one as well as those with aging owners who can no longer accommodate stairs to an upper-level bedroom.
But what's the typical return at resale? Unfortunately, a master suite addition offers one of the lowest returns of any remodeling project. With a median cost of $125,000, most sellers will only recoup around 52% of their investment. Nevertheless, in a survey of homeowners, the majority were satisfied with their decision to add a master suite, giving it a "Joy Score" of 10 out of 10.4
WEIGHING COST VS. BENEFIT
It's always wise to enter into a remodeling project with knowledge of how it will impact your home's value. In most cases, upscale or highly-customized upgrades are less likely to offer a high rate of return. That said, home renovations that improve your quality of life and enhance your enjoyment may be worthwhile no matter the cost.
GET A CUSTOMIZED ANALYSIS OF YOUR PROJECT
We've been talking averages. But the truth is, the actual return you can expect on a home improvement project will vary depending on your particular home and neighborhood. If you have plans to remodel, call or send us the details. We'd be happy to conduct a free analysis to determine how the renovations will impact the value of your home!
Top 8 Home Design and Remodeling Trends for 2019
If you're a current homeowner, or in the market to buy, you're probably curious about the latest trends in home design.
Sellers who make strategic updates before listing a property can generate increased interest from buyers and, in some cases, a premium selling price. And buyers should consider which features of a home will need updating immediately (or in the near future) so they can factor renovation costs into their overall budget.
Even if you have no immediate plans to buy or sell, we advise our clients to be thoughtful about the colors, materials, and finishes they select when planning a remodel. Making over-personalized or unpopular design choices could hurt a home's value when it does come time to sell. And selecting out-of-style or overly-trendy elements could cause your renovation to feel dated quickly.
To help, we've rounded up eight of the hottest home design trends for 2019. Keep in mind, not all trends will work well in every house. If you plan to buy, list, or renovate a property, consult a professional who can help you realize your vision and maximize the impact of your investment.
White and grey aren't going anywhere, but expect to see warmer tones and more earthy neutrals popping up in 2019. Cold whites are being replaced by warmer, softer whites. And warmer tones of grey have become a popular alternative to the cooler grays we were seeing earlier in the decade. Dove grey—with a lilac undertone—is a particular favorite with designers this year.
Sherwin Williams chose Cavern Clay, a warm terracotta, as its 2019 color of the year, while Behr selected Blueprint, a mid-tone blue. Benjamin Moore's selection is Metropolitan, a sophisticated grey.
If you're preparing to sell your home, consider a light, neutral paint color. Neutral colors provide a blank canvas upon which a buyer can envision placing their belongings, and lighter colors make a room appear larger and brighter.
Don't feel limited to using one metallic finish throughout your home—or even throughout a single room. Designers are mixing metals in 2019, and their favorites include copper, brass, pewter, gunmetal, and matte black.
Experts suggest picking one metal hue to dominate your color palette and a contrasting tone to complement it. If your room has a warm color palette, choose a warm-hued primary metal, such as brass or copper. For cool palettes, choose a cool-toned metal, like pewter or stainless steel. You can also experiment with mixing finishes, such as polished and hammered copper.
From faucets to cabinet pulls to accent pieces, swapping out your old or dated fixtures is an easy—and relatively inexpensive—way to modernize your decor. Mixing metals adds depth and gives your room a more curated look.
Bringing outdoor elements into the home can help warm up a sterile space. And natural materials can soften a modern design esthetic.
Homeowners are increasingly looking for ways to incorporate these materials throughout their home. Especially popular right now: stone, copper, concrete, and wood. From concrete showers to agate stone tiles, designers are finding unexpected ways to bring the outside in.
One notable exception: granite countertops. Engineered quartz—a combination of ground quartz and resin—overtook natural granite stone as the most popular countertop material in 2018. This durable, low-maintenance, highly-customizable product has won over homeowners and designers alike.
Stainless steel has been the industry standard for years, but the market is trending toward variety and fresh alternatives. Homeowners have more options available than ever to personalize their kitchens with vibrant colors, black stainless, or modern white appliances. Another favorite? Integrated appliances that blend seamlessly into cabinetry. Built-in column refrigerators, which allow you to customize the design and size of your freezer and refrigerator, are becoming a "must-have" in high-end homes.
Advancements in technology have also brought a new wave of appliances to the market. Induction cooktops are replacing commercial gas ranges as a gourmet favorite. And french door ovens and steam ovens are also gaining in popularity—especially ones with smart features you can control from an app on your smartphone.
White will always be a classic choice, but color is finally coming back to kitchens. More homeowners are choosing cabinets in alternative neutrals like black, cream, and grey, along with colorful options like green and blue. Also popular? Wood cabinets in stains like warm chestnut and fruitwood.
Two-tone kitchen cabinets remain a homeowner favorite, as well. To incorporate this trend, try pairing darker lower cabinets with lighter upper cabinets or a colorful kitchen island with neutral-colored perimeter cabinets.
Swapping upper kitchen cabinets for open shelves continues to be a popular choice in 2019. It's a cost-effective update that can make a kitchen feel larger and brighter. However, it's not a practical option for everyone. Before you commit, test it out by removing your cabinet doors for a few weeks. See how it feels to have your glasses and dishware on display.
Not ready to give up all your upper cabinet storage space? Replace just one or two upper cabinets with open shelves for a lower-commitment but still-updated look.
The ubiquitous white subway tile is finally fading in popularity. In 2019, homeowners are gravitating toward more colorful choices, creative textures and finishes, and alternative shapes. Especially hot right now: hexagons, arabesques, diamonds, and Moroccan fish scales.
Natural stone remains a favorite, including marble, quartzite and river rock. But advancements in porcelain tile that mimics stone, and even concrete, has made it an attractive, affordable, and low-maintenance alternative.
Once an afterthought, ceilings are taking center stage. While 2018 was all about statement walls, statement ceilings are shaping up to be the darling of 2019. Designers are using bold paint colors, wallpaper, intricate moldings, fabric, and other materials to transform a ceiling into something truly special.
Want to incorporate this trend without going too bold? Choose a classic design, like coffered or wooden beams. Or stick with wood paneling or tin tiles for a more timeless look. Even something as simple as painting a ceiling the same color as the walls can make your space feel more modern.
DESIGNED TO SELL
Are you contemplating a remodel? Want to find out how upgrades could impact the value of your home? Give us a call for a free consultation!
Buyer preferences can vary greatly by neighborhood and price range. We can share the insights we've gathered from working with buyers in this market … and offer tips on how to maximize the return on your remodeling investment. And if you're in the market to sell, we can run a Comparative Market Analysis on your home to find out how it compares to others in the area.
Want to learn more about how to stage your home to sell? Contact us here to request a free copy of our report: 10 Staging Secrets From the Pros for a Quick Sale at Top Dollar!
"How's the Market?"
What's Ahead for Real Estate
While no one can predict the future with certainty, most experts expect to see modest growth in the U.S. housing market for the remainder of this year and next. Inventory will remain tight, mortgage rates will continue to creep up, and affordability will remain a major issue in many parts of the country.
So what does that mean for home buyers and sellers? To answer that question, we take a closer look at some of the top indicators.
CONTINUED GROWTH IN HOUSING MARKET
There's good news for homebuyers! In many markets across the country, prices have begun to stabilize after a period of rapid appreciation. Nationwide, home sales experienced a slight decline of 1.6 percent in the second quarter, primarily due to higher mortgage rates and housing prices combined with limited inventory.
However, buyers who have been waiting on the sidelines in anticipation of a big price drop may be disappointed. Demand remains strong across the sector and prices continue to rise. The Case-Shiller U.S. National Home Price Index reported a 6.2 percent annual gain in June, a healthy but sustainable rate of appreciation.1
In its latest Outlook Report, Freddie Mac forecasts continued growth in the housing market due to a strong economy and low unemployment rate, which dropped to 3.9 percent in July.2
"The housing market hit some speed bumps this summer, with many prospective homebuyers slowed by not enough moderately-priced homes for sale and higher home prices and mortgage rates," according to Sam Khater, Chief Economist at Freddie Mac. "The good news is, the economy and labor market are very healthy right now, and mortgage rates, after surging earlier this year, have stabilized in recent months. These factors should continue to create solid buyer demand, and ultimately an uptick in sales, in most parts of the country in the months ahead."3
INVENTORY TO REMAIN TIGHT, NEW CONSTRUCTION MAY HELP
Experts predict that demand for housing will continue to outpace available supply, especially in the entry-level price range.
"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 accompanying unsustainable home-price increase," said National Association of Realtors (NAR) Chief Economist Lawrence Yun in a recent release.
"The answer is to encourage builders to increase supply, and there is a good probability for solid home sales growth once the supply issue is addressed," said Yun. Additional inventory will also help contain rapid home price growth and open up the market to prospective homebuyers who are consequently—and increasingly—being priced out. In the end, slower price growth is healthier price growth."4
With so much demand, why aren't more builders bringing inventory to the market? According to the National Association of Home Builders, a crackdown on immigration and tariffs on imported lumber have made home construction more difficult and expensive. Those factors—combined with the rising cost of land and increased zoning requirements—have put a damper on the industry overall.5
Still, there's evidence that a modest rise in the rate of new building projects may be on the way. Freddie Mac predicts new housing construction will increase slightly after a stall last quarter.2 And a recent report by Freedonia Focus Reports forecasts an annual increase in housing starts of 2.4 percent through 2022, led by an uptick in single-family homes.6 The boost in inventory should help drive sales growth and relieve some of the pent-up demand in tight markets.
While the current lack of inventory is generally preferred by sellers because it means less competition, a combination of high prices and rising interest rates has narrowed the pool of potential buyers who can afford to enter the market. Sellers should seek out real estate agents who utilize technologically-advanced marketing tactics to reach qualified buyers in their area.
AFFORDABILITY REACHES LOWEST LEVEL IN A DECADE
According to a recent report by Morgan Stanley, Americans are paying the most in monthly mortgage payments relative to their incomes since 2008.7 And prices aren't expected to come down any time soon.
"We believe that the current supply and demand environment will continue to push home prices higher, just at a decelerating pace," said John Egan, Morgan Stanley's Co-Head of U.S. Housing Strategy.
Fortunately, economists aren't concerned about affordability levels triggering another housing crisis, as lending standards are much higher today than they were during the run-up before the recession. According to credit reporting agency TransUnion, the share of homeowners who made mortgage payments more than 60-days past due fell in the second quarter to 1.7 percent, the lowest level since the market crash.7
NAR Chief Economist Lawrence Yun agreed with this assessment in a recent statement. "Over the past 10 years, prudent policy reforms and consumer protections have strengthened lending standards and eliminated loose credit, as evidenced by the higher than normal credit scores of those who are able to obtain a mortgage and near record-low defaults and foreclosures, which contributed to the last recession."4
MORTGAGE RATES EXPECTED TO CONTINUE RISING
The Federal Reserve has taken measures to help keep the housing market—and the overall economy—from overheating. It has raised interest rates twice this year so far, causing mortgage rates to surge in the first half of the year.
Economists predict that the rise in mortgage rates will continue at a more gradual rate through this year and next. The U.S. weekly average mortgage rate rose from 3.99 percent in the first week of January to as high as 4.66 percent in May. Freddy Mac forecasts an average rate of 4.6 percent for 2018 and 5.1 percent in 2019.2
The good news is, mortgage rates still remain near historic lows and a whopping 14 points below the recorded high of 18.63 percent in the early 1980s.8 Buyers who have been on the fence may want to act soon to lock in an affordable interest rate ... before rates climb higher.
"Some consumers may be thinking that because mortgage rates are higher than they were a year ago, maybe I should just wait until rates fall down again," said NAR's Chief Economist Lawrence Yun in a recent speech. "Well, they will be waiting forever."9
WHAT DOES IT ALL MEAN FOR ME?
If you've been waiting to buy a home, you may want to act now. A shortage of available homes on the market means prices are likely to keep going up. And a lack of affordable rental inventory means rents are expected to rise, as well.
If you buy now, you will benefit from appreciating property values while locking in an historically-low interest rate on your mortgage. Waiting to buy could mean paying more for your home as prices increase and paying higher interest on your mortgage as rates continue to rise.
And if you're in the market to sell your home, there's no need to wait any longer. Prices have begun to stabilize, and rising interest rates could decrease the number of available buyers for your home. Act now to take advantage of this strong seller's market.
LET'S GET MOVING
While national real estate numbers and predictions can provide a "big picture" outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.
If you have specific questions or would like more information about where we see real estate headed in our area, let us know! We're here to help you navigate this changing real estate landscape.
We frequently get questions from clients who are taking on decorating and remodeling projects and want to ensure their dollars are invested wisely.
Which looks will last for years to come, and which ones will feel dated quickly? What colors and styles are most popular among buyers in our area? How can I add the most value to my home?
So we've rounded up some of the hottest trends in home design to help guide you through the process. Whether you've planned a simple refresh or a full-scale renovation, making smart and informed design choices will help you maximize your return on investment … and minimize the chance of "remodeler's remorse" down the road.
WHAT'S HOT NOW
While 2017 was all about millennial pink, brass fixtures and bright white kitchens, this year we expect to see a move toward warmer, cozier elements throughout the home.
A cool color scheme has dominated home design in recent years, but this year warm neutrals like brown and tan are back, along with rich jewel tones. While the pastel craze of last year is still hanging on, expect to see alternative color palettes featuring deep, saturated shades of red, yellow, green and navy. Grey will remain popular, but in warmer tones, often referred to as "greige."
Along with warmer colors, we can expect to see a shift from stark, modern design to cozier looks. Velvet upholstery, woven textures and natural elements, like wood and stone, will heat things up this year.
It used to be considered gauche to mix finishes, however the look of mixed metals will be very big in 2018. Brass will continue to trend, along with matte black and classics like polished chrome and brushed nickel.
Expect to see a lot of bright, bold patterns in the form of geometric shapes and graphic floral prints. These will be featured on everything from furniture to throw pillows to tile.
Look for the use of natural elements throughout the home, including wood, stone, plants, flowers and grass. Botanical patterns will also be seen in prints, wallpaper and upholstery. Concrete accents will complement these additions in an effort to bring the essence of the outdoors inside the home.
Also called an accent wall, a feature wall is one that exhibits a different color or design than the other walls in the room. Expect to see an increased use of feature walls showcasing rich paint colors, bold patterned wallpaper, and textures brought in through millwork and shiplap.
Lighting will take center stage with distinctive fixtures, including local artisan and vintage pendants and chandeliers. And smart lighting technology will enable homeowners to customize their lighting experience based on time of day, activity and mood.
Hardwood floors will continue to dominate the market. The trend is toward either very dark stains paired with light-colored walls or light stains with darker walls. Greyish tones will remain popular, as will matte finishes, which are easier to maintain than high gloss. Expect to see frequent use of wider and longer wood planks, as well as distressed and wire-brushed finishes, which add texture and dimension.
Everything is getting "smarter" in homes, from locks and lights to thermostats and appliances. And with devices like Google Home and Amazon Alexa, you can control many of these with voice activation from a central hub. We will see continued integration of and advancements in smart-home technology in 2018.
While white kitchens will remain popular in 2018, expect to see more color this year in everything from cabinets to tile to appliances.
Two-toned cabinets are quickly overtaking the white-on-white look that has dominated kitchen design for the past few years. While white remains a classic, grey and bleached-wood cabinet variations are surging in popularity, along with darker neutrals like navy and green.
Granite reigned as the top countertop choice for many years, but quartz is now king. It's highly durable, low-maintenance and comes in a wide variety of styles and colors. It's also heat resistant, scratch resistant and non-porous (unlike granite and marble) so it doesn't need to be sealed.
After years of dominating backsplash design, the white subway tile is officially on its way out. Expect to see it replaced with more elaborate shapes, patterns, colors and textures. Tile that mimics the appearance of wood, concrete and wallpaper is also gaining in popularity.
While stainless steel and white porcelain are always safe bets, the trend is moving toward sinks that make more of a statement. Look for unexpected pops of color and materials like natural stone and copper. Touch-free faucets are expected to gain favor with homeowners this year, too.
Brass fixtures came back in a big way over the past couple of years and will continue to be a popular choice in 2018 along with matte black, black nickel, polished chrome and brushed nickel. Missing from the list? Rose gold, which is decidedly "out" this year.
Kitchen islands have evolved from simple prep-stations into the "workhorse" of the kitchen. Many feature sinks, built-in appliances and under-counter storage while also serving as a casual dining area. They have become the focal point of the kitchen, and we expect to see more of them in 2018 and beyond.
Black stainless steel is the hot new finish option for appliances, and it's hitting the market in a big way. It offers a cutting-edge look and is easier to keep clean than traditional stainless steel. However, it's harder to match finishes amongst different brands, so it's probably only feasible as part of a complete appliance package.
Appliance garages are counter-level compartments designed to house small appliances like blenders, toasters and stand mixers. They make it convenient to have these items readily accessible, without the look of a cluttered counter.
Expect to see many of the same kitchen design preferences carry over into bathrooms this year, including two-tone cabinets, quartz countertops and brass fixtures.
Neutral shades will continue to dominate in the master bathroom as homeowners seek a soothing and relaxing retreat atmosphere. But expect to see more options than just white. Shades of brown, grey, blue, green and tan will help to warm things up.
Natural materials are particularly hot right now in bathroom design. This includes the use of wood and stone on walls, cabinets, counters and backsplashes, as well as the incorporation of botanical design elements.
We expect to see a lot more large and slab-sized tiles in bathrooms, which have less grout so they are easier to clean and maintain. Wood-look porcelain tiles are also a favorite in wet areas, as they offer the warmth and rustic appeal of wood with the durability of tile.
Sinks will continue to be an area where homeowners like to exhibit creativity, and hand-carved stone sinks are especially fashionable right now. These may be more suited to powder rooms, where functionality isn't as crucial.
There's been a tub resurgence in bathroom design after years of preference for stand-alone showers. Modern tastes are gravitating toward freestanding tubs that serve as a showpiece for the bathroom.
Smart technology has entered the bathroom with the addition of features like wireless shower speakers and high-tech toilets, as well as digital shower controls that automatically adjust to your preferences in temperature and spray intensity.
Style trends come and go, so don't invest in the latest look unless you love it. That said, highly-personalized or outdated style choices can limit the appeal of your property for resale.
For major renovation projects, it's always a good idea to stick to neutral colors and classic styles. It will give your remodel longevity and appeal to the greatest number of buyers when it comes time to sell. It will also give you flexibility to update your look in a few years without a total overhaul. Use non-permanent fixtures – like paint, furniture and accent pieces – to personalize the space and incorporate trendier choices.
If you'd like advice on a specific remodelling or design project, give us a call! We're happy to offer our insights and suggestions on how to maximize your return on investment and recommend local shops and service providers who may be able to assist you.
As we head into a new year, the most common question we receive is, "What's the outlook for real estate in 2018?"
It's not just potential buyers and sellers who are curious; homeowners also want reassurance their home's value is going up. The good news is that a strong U.S. economy, coupled with low unemployment rates, is expected to drive continued real estate growth in 2018. However, changes on the horizon could significantly impact you if you plan to buy, sell or refinance this year.
HOME VALUES WILL CONTINUE TO RISE
Get ready for another strong year! U.S. home values and sales volume will continue to rise in 2018.
Experts agree that home prices will increase in 2018, but predict a slower rate of appreciation than 2017, which clocked in at nearly 7 percent nationwide. National Association of Realtors (NAR) Chief Economist Lawrence Yun predicts a growth rate this year of 5.5 percent,1 while Freddie Mac's September Outlook Report forecasts a rate of 4.9 percent. Either way, all indicators point towards continued growth in 2018.2
What does it mean for you? If you're a current homeowner, congratulations! Real estate proves once again to be a solid investment over the long term. And if you're considering selling this year, there's never been a better time. Contact us to request a free Comparative Market Analysis to find out how much you can expect your home to sell for under current market conditions.
If you're in the market to buy this year, there's good news for you, too. Although prices continue to rise, the rate of appreciation has slowed. Still, don't wait any longer. Prices will continue to go up, so you'll pay more six months from now than you would today. Call us to setup a free, no-obligation property search and get notified about listings that meet your criteria as soon as (or before) they hit the market.
NEW CONSTRUCTION WILL MAKE REAL ESTATE MORE ACCESSIBLE
Lack of inventory in the housing market has been a primary impediment to homeownership for many Americans. "Ten years ago, the problem in the housing market was lack of buyers," says Yun. "Today, the problem is lack of sellers. Inventory levels are near historic lows."3
Yun also notes, "The lack of inventory has pushed up home prices by 48 percent from the low point in 2011, while wage growth over the same period has been only 15 percent. Despite improving confidence [in 2017] from renters that now is a good time to buy a home, the inability for them to do so is causing them to miss out on the significant wealth gains that homeowners have benefitted from through rising home values."1
The good news? Yun expects a 9.4 percentage point increase in single-family new home construction starts.4
Economists at Freddie Mac make a similar prediction. "Existing home sales are unlikely to increase much going forward. Limited inventory will remain a consistent problem … Growth in home sales will be primarily driven by new home sales, which should continue to grind higher with single-family construction."2
Robert Dietz, chief economist at the National Association of Home Builders, agrees. "The markets that are going to grow are ones where builders can add that entry level product."5
What does it mean for you? If you've been frustrated by lack of inventory in the past, 2018 may bring new opportunities for you to find a budget-friendly home that suits your needs. Give us a call to discuss options for new construction in our area.
MILLENNIALS WILL MOVE TO THE SUBURBS
The new entry-level construction will come with a catch though … it will be located in the suburbs, where the availability of land and fewer zoning requirements make it more cost-effective to build. Economists predict that's where millennials and first-time buyers will flock for the greater variety of homes at affordable prices.6
Rising home prices, a sluggish job market, and an increase in student loan debt made homeownership largely unattainable for many millennials in past years. However, there's significant evidence that this trend is turning around. For the fourth year a row, the National Association of Realtors' 2017 Home Buyer and Seller Generational Trends survey found that millennials were the largest group of homebuyers.7
As millennials age, they are settling down and having families, which has prompted an increasing demand for larger but affordable homes. Thus, many are flocking to the suburbs, with 57 percent of millennial buyers opting for a suburban location.
What does it mean for you? If you're a millennial who has been priced out of urban living, or is looking for more space for your growing family, a number of suburbs in our area have a lot to offer. We can point you towards the communities that will best meet your needs.
And if you're a suburban homeowner with plans to sell, give us a call. We know how to market your home to millennials … and can help you sell quickly for top dollar by appealing to this growing market segment!
BOOMERANG BUYERS WILL RETURN TO THE MARKET
"Boomerang buyers" comprise the nearly 10 million Americans who lost their homes to foreclosure or short sales during the housing recession of 2006 to 2014.
According to MyFico.com, a foreclosure remains on a credit report for seven years. It takes many boomerang buyers at least that long to raise their credit score and save up enough cash to qualify for a new mortgage.8
With this "seven-year window" in mind, RealtyTrac predicts that the largest wave of boomerang buyers – more than 1.3 million – will be eligible to re-enter the housing market in 2018.9
Markets likely to see the highest influx of boomerang buyers are those that had a high percentage of foreclosures AND have remained affordable. The majority of boomerang buyers are middle-class Gen Xers or Baby Boomers. Expect to see even more competition for entry-level homes in those markets.
What does it mean for you? If you're a boomerang buyer, we understand your unique circumstances. We can help you navigate the real estate process and write competitive offers that will play to your strengths. Contact us to discuss your options.
NEW TAX LEGISLATION WILL IMPACT HOMEOWNER DEDUCTIONS
The "Tax Cuts and Jobs Act" passed at the end of 2017 nearly doubles the standard deduction, so far fewer Americans are expected to itemize this year. For those who do, however, it could mean less homeowner deductions are available than in the past.
Previously, homeowners could deduct interest paid on the first $1 million of mortgage debt, but that threshold has been lowered to $750,000 for new mortgages. (Existing mortgages will not be impacted.)
Additionally, taxpayers will no longer be able to fully deduct state and local property taxes plus income or sales taxes. The new legislation restricts this deduction to $10,000. It also eliminates the deduction for moving expenses (except for members of the Armed Forces) and interest on home equity loans unless the proceeds are used to substantially improve the residence.10
It's yet to be seen how the tax bill will impact the real estate market overall. While some economists predict a price reduction in certain markets, Republican lawmakers project the bill will increase take-home pay and stimulate the economy overall. According to Realtor.com Senior Economist Joseph Kirchner, "Some house hunters—particularly wealthy buyers—will see an increase in after-tax income, making an already tough housing market even more competitive. This increased demand could drive prices up even higher than they are already."11
What does it mean for you? If you're an existing homeowner, be sure to consult a tax professional if you're concerned about the impact the new tax bill could have on you.
And if you're planning to buy or sell this year, we can help you determine how the tax bill could affect demand in your current or target neighborhood and price range.
INTEREST RATES WILL RISE
No one knows exactly what will happen with mortgage rates this year, but the Mortgage Bankers Association anticipates the Federal Reserve will raise rates three times in 2018, with Freddie Mac's 30-year fixed rate mortgage reaching 4.8 percent by the end of Q4, up from around 4 percent at the end of 2017.12
Kiplinger.com Economist David Payne also predicts interests rates will rise this year, with short-term rates outpacing long-term rates as the Fed aims to curb inflation in a tightening job market. He predicts the bank prime rate that home equity loans are based on will increase from 4.25 percent to 5 percent by the end of 2018. 13
What does it mean for you? If you're in the market to buy, act now. Rising interest rates will decrease your purchasing power, so act quickly before interest rates go up. Give us a call today to get your home search started.
And if you're a current homeowner who is considering refinancing or a home equity loan, don't wait. We can help you estimate your property's fair market value so you'll be prepared before contacting a lender.
2018 ACTION PLAN
If you plan to SELL this year:
WE'RE HERE TO HELP
While national real estate numbers and predictions can provide a "big-picture" outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market, and the local issues that are likely to drive home values in your particular neighborhood. If you have specific questions, or would like more information about where we see real estate headed in our area, please give us a call! We'd love to discuss how issues here at home are likely to impact your desire to buy or a sell a home this year.