When homebuyers begin their research, they want to see all their available options! In many cases, they will include both new construction and existing homes in their search; but is a new construction home really the house of their dreams?
According to a recent survey by Zillow, of the 38% of total buyers that added new construction to their list, only 11% ultimately purchased a newly constructed home!
They added that 71% of these buyers are repeat buyers who are financially secure, with 45% using the money from the sale of their previous homes to make a purchase.
Below are some reasons why buyers are interested in purchasing a new build:
Everything in the house is new/never used (49%)
To be close to family (41%)
The home is the best value for their money (37%)
Appealing home features (34%)
Desirable location (34%)
So, then why did most of the buyers surveyed choose not to purchase a new home?
Buyers could not find new construction in the desired neighborhood, and some felt that new construction is not established (e.g., landscaping, community, neighbors).
Buyers face the end of a lease or sale of their previous property and could not wait for a house to be built.
Some buyers felt that new construction base prices were deceiving. Adding upgrades and HOA fees no longer made the home fit in their price range.
For some buyers, new construction homes are too “cookie cutter,” and models are limited. Others feel that the charm and uniqueness of an existing house trumps one that’s never been lived in.
Not all buyers are looking for a newly built house! There are many buyers looking for “the charm and uniqueness” of an existing home. If you are considering selling your house, don’t wait! Let’s get together to come up with a plan to feature the charming details of your house to future buyers.
Home values have risen dramatically over the last twelve months. In CoreLogic’s most recent Home Price Index Report, they revealed that national home prices have increased by 6.2% year-over-year.
CoreLogicbroke down appreciation even further into four price ranges, giving us a more detailed view than if we had simply looked at the year-over-year increases in national median home price.
The chart below shows the four price ranges from the report, as well as each one’s year-over-year growth from July 2017 to July 2018 (the latest data available).
It is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor which determines how much your home has appreciated over the course of the last year.
Lower-priced homes have appreciated at greater rates than homes at the upper ends of the spectrum due to demand from first-time home buyers and baby boomers looking to downsize.
Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV binge session? We’ve all been there, watching entire seasons of “Love it or List it,” “Million Dollar Listing,” “House Hunters,” “Property Brothers,” and so many more all in one sitting.
When you’re in the middle of your real estate themed show marathon, you might start to think that everything you see on TV must be how it works in real life, but you may need a reality check.
Reality TV Show Myths vs. Real Life:
Myth #1: Buyers look at 3 homes and decide to purchase one of them. Truth: There may be buyers who fall in love and buy the first home they see, but according to the National Association of Realtors the average homebuyer tours 10 homes as a part of their search.
Myth #2: The houses the buyers are touring are still for sale. Truth: Everything is staged for TV. Many of the homes being shown are already sold and are off the market.
Myth #3: The buyers haven’t made a purchase decision yet. Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy.
Myth #4: If you list your home for sale, it will ALWAYS sell at the open house. Truth: Of course, this would be great! Open houses are important to guarantee the most exposure to buyers in your area but are only a PIECE of the overall marketing of your home. Keep in mind that many homes are sold during regular listing appointments as well.
Myth #5: Homeowners decide to sell their homes after a 5-minute conversation. Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their homes and move on with their lives/goals.
Having an experienced professional on your side while navigating the real estate market is the best way to guarantee that you can make the home of your dreams a reality!
Back in 2005, Federal Reserve Chairman Alan Greenspan described the dramatic increases in residential real estate values as a “froth in housing markets.” Greenspan went on to say:
“The increase in the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages are developments of particular concern…some households may be employing these instruments to purchase homes that would otherwise be unaffordable, and consequently their use could be adding to pressures in the housing market.”
Greenspan was warning that the loosening of lending standards could lead to disaster. And it did.
With home prices again appreciating at percentages well above historic norms, many are wondering whether the market is again becoming “frothy.” Mortgage standards are much stricter now, however, than they were in 2005.
The Urban Institute’s Housing Finance Policy Center issues a monthly index which measures the percentage of home purchase loans that are likely to default. A lower score indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards. A higher score indicates that lenders are willing to tolerate defaults and are taking more risks.
“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”
Here is a graph depicting the UrbanInstitute’s findings:
Though it may be slightly easier to get a mortgage today than it was a year ago, lending standards are nowhere near where they were during the build-up to the housing bubble.