Monthly Archives: May 2017

The Best Is Yet To Come For Homebuyers

Source: RISMedia

It’s a seller’s market out there, and for homebuyers, the struggle this spring is real: few affordable options, and price growth that just won’t quit.

Another issue’s working against them, too: timing.

According to a recent analysis by Zillow, the best time for buyers isn’t spring, but summer—the end of summer, that is. Why? There’s more supply as the season winds down, specifically in August, and sellers who weren’t so lucky earlier on become anxious to unload, cutting prices before the weather changes and the school year starts.

In the analysis, August had more listings than any other month (8,000 more in L.A., for instance), and saw the highest share of listings with lowered prices. Comparing reductions over the spring and summer months:

Zillow_Buy_Reductions

“In such a competitive housing market, it’s easy for buyers to get frustrated when they are putting in multiple offers without success,” says Dr. Svenja Gudell, chief economist at Zillow. “Buyers who start their home search in the spring may still be looking months later—but for those who can wait it out, the end of summer will bring more favorable conditions. Homes that may have been overpriced earlier in the year are more likely to have a price reduction, and those listings passed over in earlier months may look better with a fresh perspective.”

For more information, please visit www.zillow.com.

Report: Homeownership Is More Than Just the Facts

Source: RISMedia

Homeownership is the epitome of the American Dream not only for its advantages as a financial asset, but also for its sociocultural value—in fact, most renters associate owning a home with the ultimate ideal, despite having some difficulty affording it.

A recent report by cost information website HowMuch.net reveals the goal is within reach—for some—and most are set on realizing it regardless of cost.

In a side-by-side analysis of monthly housing costs, the slimmest gaps between owning and renting are shown to be in the Rust Belt and the Southeast. Homeownership in West Virginia is the most easily achievable, requiring only $297 above and beyond the cost of renting. A home in Indiana, Arkansas, Florida and South Carolina is also relatively attainable.

Credit: “Buying vs. Renting a Home by State” by HowMuch.net

Many states favor renters expense-wise—the Garden State having the starkest contrast between renting and owning—but the intangible implications of homeownership, such as privacy and security, are outweighing cost barriers. The report cites recent Census data showing that although the homeownership rate is idling, owner household formation is occurring faster than renter household formation.

Still, the monthly cost of owning is, for many would-be homeowners, a non-issue. The report concludes:

That ideal vision of “home” is strong enough to convince over half of all Americans to stretch their budgets in search of the yard with white picket fences. In all, no amount of data can overcome the perfect image of the ideal home.

Source: HowMuch.net

Shrinking inventory putting “stranglehold” on sales around Western Washington

Source: NWMLS

May 4, 2017
Shrinking inventory putting “stranglehold” on sales around Western Washington
as brokers continue grappling with challenges of multiple offers

KIRKLAND, Washington (May 4, 2017) – “Frustrating” is how brokers are summarizing the mood of
buyers, brokers – and industry professionals – during the current housing market frenzy. New statistics
from Northwest Multiple Listing Service show declines in inventory and sales, while prices continue their
upward trajectory, but those numbers only tell part of the story.

“The real estate market is going absolutely gangbusters,” remarked OB Jacobi, president of Windermere
Real Estate. “The remarkably low number of homes for sale can be blamed for the drop in sales,” he
emphasized, adding, “The uptick in interest rates at the end of last year has clearly done nothing to slow
things down.”

Inventory fell nearly 25 percent from the volume of active listings being offered a year ago. At the end of
April, MLS brokers reported 10,679 homes and condos for sale across a 23-county area, which compares
to the year-ago selection of 14,235 listings.

Viewed another way, there is only about 1.5 months of supply (about six weeks), which compares to
twelve months ago when supply totaled about 1.85 months. (In general, four-to-six months is considered
a balanced market.) There has not been more than two months of supply since September 2016.
MLS members continue to struggle to keep pace with demand. Brokers added 10,648 new listings to their
database last month, down from 11,939 during April 2016, and they reported 10,514 pending sales. That
total was down 893 transactions for a drop of year-over-year drop of 7.8 percent.

The near-match in new listings and pending sales meant little change in the number of total active listings,
although inventory edged up slightly from March, growing from 9,774 listings to 10,679.
“Without a doubt this is the most frustrating market for both buyers and sellers that we’ve experienced in
24 years of business,” stated George Moorhead, designated broker at Bentley Properties. He said the
frustration of low inventory is prompting sellers who haven’t been able to find their next home to look
into undertaking major remodels instead of moving, thereby putting even more pressure on buyers who
are struggling to find a home. Although buyers are being aggressive, Moorhead believes offer prices are
starting to plateau. “Educated buyers cannot justify many of the home prices,” he reported.

Prices area-wide shot up 10.4 percent from a year ago, from $325,990 to $360,000. The four-county
Puget Sound region, which accounted for more than 77 percent of last month’s 7,276 closed sales,
reported a price hike of nearly 14.7 percent, led by Snohomish County at 16.7 percent. In Snohomish
County, the median price for single family homes and condos (combined) eclipsed the $400,000 mark,
climbing to $416,668.

Stop Believing These 6 Home Appraisal Myths

Source: Pemco Ltd.

The home appraisal is the one real estate-related process that can provoke a variety of emotions, ranging from positive to negative. While many are aware of what an appraisal is and its purpose, that awareness doesn’t always translate to a clear understanding of what is factored into the appraisal process. At the end of the day, an appraisal is an opinion derived from housing and neighborhood data.

PEMCO Valuations has managed over 132,000 appraisals nationwide since 2004 and based on feedback from some of our appraisers, we’ve decided it was time to shed some light on home appraisal myths.

Myth # 1: Home Appraisal = Home Inspection

This is probably the biggest myth and it’s understandable: home inspections and home appraisals are both used to determine a property’s condition as safeguards for the buyer and buyer’s lender. Appraisers and inspectors both inspect the property, but the similarities end here. The home inspector’s job is to poke and prod to uncover any and everything that’s problematic or potentially problematic. The appraiser’s job is to find the objective market value based on the condition of the home.

Myth # 2: The bigger the list of amenities, the higher the valuation

An investment of $100,000 in upgrades doesn’t equal to a $100,000 bump in appraisal value, especially when the amenities don’t exist in surrounding homes because appraiser simply doesn’t have nearby sales data to decide on the value of the amenities. This also applies to décor and staging, these are subjective and doesn’t get factored into the valuation. Their value judgement will come from quantifiable aspects: square footage, room count and other measurable data.

Myth # 3: More square footage means the higher the valuation

The value of the home is determined as if something like the surrounding homes were built on the appraised home lot. This means there’s no guarantee that a super-sized house on an average-sized lot in a modest neighborhood will appraiser for much more than neighboring homes.

Myth # 4: Amenities are the same

For instance, take two houses with similar square footage. Both have the same additions: a mother-in-law suite or home gym. One home has a two-car garage, the other has a garage that was converted into the mother-in-law suite or home gym. Removing one amenity (the garage) and replacing it with another amenity (the mother-in-law suite or home gym), isn’t an apple to apple comparison. Buyers look for homes with a garage for a reason, to use it as a garage, which the appraiser might assign a higher value to.

Myth # 5: Appraiser will match what the buyer will pay

Appraisals are not the result of exact science, it’s an opinion of the value of the home. This has nothing to do with what the buyer will pay or what the seller should accept. Buyers can not hire appraisers and therefore speak to them about valuation opinions on a house they are purchasing. This would undermine appraiser independence. The Dodd-Frank Act addresses appraiser independence, requiring arm length transactions between appraisers, lenders and buyers.

Myth # 6: The appraiser works for the buyer

Often, the appraiser works for an Appraisal Management Company (AMC) and the lender orders appraisals from these companies. Regardless if the seller and buyer have agreed on price, the appraisal would have to reflect the fair market value and cannot be influenced by any party.

Home-Buying Confidence Springs Back

Source: RISMedia

Confidence in home-buying is springing back, with more buyers optimistic about their ability to move off the fence and into the market, according to the recently released Fannie Mae Home Purchase Sentiment Index® (HPSI) for April.

The HPSI bounced back 2.2 percentage points to 86.7 last month, up from 84.5 in March. Those surveyed for the Index who reported it being “a good time to buy a house” climbed 5 percentage points to 35 percent—but those who reported it being “a good time to sell” shifted 5 percentage points in the opposite direction, down to 26 percent.

“The Home Purchase Sentiment Index returned to its longer-term tread line after reclaiming ground lost last month,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “Historically strong inflation-adjusted house price gains are tempering consumer sentiment, whereas consumer optimism regarding the ease of getting a mortgage reached a survey high.”

Those surveyed who believe home prices will rise inched up one percentage point to 45 percent. More of those surveyed believe mortgage rates will go down in the next 12 months, ticking up three percentage points to -57 percent.

On a wider level, just 13 percent of those surveyed reported that their earnings are “significantly higher” than one year ago. In many housing markets, incomes have yet to catch up to home prices.

Seventy-seven percent of those surveyed, however, are “not concerned about losing their job”—a sense of security that can be a prerequisite for home-buying or -selling.

“On balance, housing continues on a gradual track,” Duncan says.

Source: Fannie Mae

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