COVID-19 Is Pushing Home Buyers to Move Sooner

Sometimes you need a little push to get things going, especially when it’s a big something like purchasing a home.

Well, it turns out a pandemic can be that driving force, as evidenced by a new survey from real estate brokerage company Redfin.

The company said 25% of the 1,000 home buyers it polled are moving (or moving sooner than planned) due to COVID-19.

COVID-19 Induced Low Mortgage Rates Are Getting Buyers Off the Fence

changing plans

In terms of what’s getting people moving, literally, it’s the record low mortgage rates currently on offer.

Thanks in part to COVID-19, mortgage rates have hit new record lows eight different times this year (so far and it’s only August), as economic uncertainty often has a positive effect on interest rates.

Some 55% of respondents cited the “low mortgage rates” as reason to change or speed up their plans.

The second biggest factor (52%) was “spending more time at home,” something I think we’ve all done a lot of lately.

When you’re home all the time, you have more time to think, and more time to complain about your surroundings too.

Third was the work from home angle (40%), which is changing living preferences for prospective home buyers.

It tends to mean buying more house so a home office can be designated in one of the bedrooms.

It also means moving out of the city to the more spacious and affordable suburbs.

Home Buyer Preferences Aren’t What They Used to Be

home buyer preferences

While 25% of respondents said COVID-19 hasn’t changed their plans or preferences, a home office and outdoor space are now at the top of the list for many prospective home buyers.

Additionally, there’s a desire for a bigger yard, a pool and/or hot tub, a designated learning space for children, and a bigger home in general.

In other words, a lot of today’s home buyers expect to be holed up in their properties for a while, and are planning accordingly.

Others said they delayed their plans to move, or want a less expensive home, perhaps due to uncertainty regarding income or employment.

Still, despite a surge in unemployment and a very shaky economy, real estate appears to be firing on all cylinders.

Per Redfin, pending home sales were up 12% year-over-year during the four weeks ending July 26th, while the median sale price was up 11%, the largest increase since 2014.

Additionally, more than half of Redfin offers involved a bidding war for the third consecutive month in July.

Anecdotally, I know of two families offhand that have sold or are in the process of selling their homes during the pandemic.

Interestingly, both families had lived in their homes for many years and thought of them as forever-homes. Amazing what a pandemic will do, eh?

One is upgrading to a larger home to account for the wife now working from home.

And the other is moving out of the city and into the suburbs, both for more space and to get out of the less-desirable urban center, something they thought they’d never do.

It’s basically an about-face from the trend we saw before COVID-19 hit – everyone and their mother (literally) wanted to live in a city center, walk to bars and restaurants, live with less space, etc.

That’s all changed very quickly, as folks realize it’s nice to have some breathing room when you spend most, if not all, of your time in one place.

Both homes went pending in about a week, at high asking prices, which tells you how much demand there is right now for residential real estate.

Whether it will last remains to be seen, but at the moment it seems to be all systems go.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

Homie’s Utah Housing Market Update January 2021

The Utah real estate market continues to see new peaks and valleys. Here’s your monthly update on what’s happening.

Data from Utah MLS from January 1, 2021 to January 31, 2021.

Sale Price

In January, Utah real estate prices leveled out from their previous upward trend. Median home prices settled at $380K, down $4K or 1% from December. The annual trend, however, shows a stark contrast. Median home prices rose $55K, or 16.9% from the previous January. The 2020-21 trendline has been mirroring the 2019-20 trendline for several months, albeit at a higher level.

UT Median Sale Price Jan 21

Data from Utah MLS

Days on Market (DOM)

When it comes to days on the market, the Utah market has stayed steady. For the fourth month in a row, the average home spent nine days on the Utah market. That’s a full 30 day difference from January 2020, a 76.9% year-over-year decrease. Homebuyers may feel the heat of competition for fast-moving homes in this seller’s market.

UT DOM Jan 21

Data from Utah MLS

Inventory

Inventory has fallen to new lows. Only 2,383 active listings were on the Utah market in January, compared to 2,920 available units in December. The month-over-month decrease was an on-trend 18.4%. Annually, the market saw a rather steep drop from 6,811 active listings in January 2020. That’s a year-over-year inventory decrease of 65%. With that level of scarcity, it’s no wonder that Utah homes are selling so quickly.

UT Inventory Jan 21

Data from Utah MLS

Monthly Sales

January saw a sharp decline in monthly sales from December, down by 1,528 units or 35.3%, following the seasonal trend. Monthly sales have followed the seasonal pattern, down one tenth of a percent from November 2020. A mere six fewer homes were sold in December than in the previous month. Observing the annual trend, home sales came up just slightly from the previous January. Only 90 more homes sold in January 2021 than January 2020, an increase of 3.3%. It is likely that market seasonality is largely responsible for the dip. However, the low level of inventory may be affecting the number of homes sold as well.

UT Monthly Sales Jan 21

Data from Utah MLS

Turn to a Homie

Homie has local real estate agents in all of our service areas, including Utah. These agents are pros in everything they do, including understanding the local real estate market, so they can help you regardless of market conditions. Click to start selling or buying and to get in touch with your dedicated agent.

Source: homie.com

Buyer’s vs. Seller’s Market: What Do They Mean?

When you’re buying a house, it’s important to know what type of market you’re in: a buyers market or a sellers market. Each type of housing market offers its own set of unique opportunities and drawbacks depending on what side of the equation you’re on.

In a buyers market, the market is more favorable toward buyers due to an abundance of inventory, a low demand for housing or other factors that cause home sales to be slower than normal. This type of market works in the buyer’s favor because they can ask for extra concessions, lowball the offer or generally push the purchase to be more favorable to them. A sellers market, on the other hand, means that you’ll be competing with other buyers for the homes on the market. In this case, the seller calls the shots due to high demand for homes.

Though much of the country would be considered a sellers market right now due to extremely low interest rates on mortgage loans, that could always change in the near future. The pendulum swings constantly, and it’s not always clear where it will stop. So, if you’re considering a new home purchase in the near future, here’s what you need to know about a buyers or sellers market to make the most of the market you happen to be in.

In this article

What is a buyer’s market?

A buyers market is when there are more houses for sale than there are buyers. People aren’t buying at a fast enough rate to keep the market from flooding with inventory — which drives the market to be more friendly to the buyers that do exist.

[Read: Mortgage Rates Hit Another 50-Year Low. Should You Buy?]

In a buyers market, sellers must often lower the asking price on their homes to be competitive. If they don’t, they run the risk of their house sitting on the market for too long, which can cause financial issues or issues with getting a loan for the house they’re moving to. Therefore, not only do homebuyers get to enjoy deflated prices in a buyer’s market, but they also stand a good chance of having their lowball offers being considered.

What is a seller’s market?

A sellers market is the opposite of a buyer’s market, and occurs when there are more buyers than there are sellers. When this happens, sellers obviously have the upper hand. Any reasonably priced house is likely to get multiple offers or even instigate a bidding war in highly desirable neighborhoods or cities.

In this type of market, most homes don’t last long before being snatched up by buyers — especially if mortgage loan interest rates are as low as they are right now. Many homes are sold as is and could even get an offer that’s well above asking price. If you have a home to sell, putting it on the market during a seller’s market will likely get you more than you paid for it and help propel you to your next home.

[Read: How to Negotiate Mortgage Closing Costs]

How to determine if it’s a buyers market or a sellers market

If you want to determine whether you’re in a buyers or sellers market, there are a few tricks you can use to figure it out. These include:

  • Analyze the inventory. Use a listing website and look at the county, neighborhood or area you plan to purchase in. Pay particular attention to information like time on the market and the final sales price. If you see a large number of homes are being sold as soon as they hit the market, you are most likely in a sellers market. If sold homes are few and far between, you’re in a buyers market. It’s possible to get even more precise. You can divide the number of homes on the market by the number of homes sold the last 30 days. If the quotient is over seven, you’re in a buyer’s market. Five sold homes or below equals a sellers market.
  • Determine the amount of time homes are sitting. Homes sell quickly in a sellers market if they are priced right and are in good condition — or in some cases, they may sell even if they need a ton of work and aren’t priced as low as you’d expect. The opposite is true of a buyers market.
  • Determine market trends. Are home prices rising or falling? A downward trend suggests a buyers market while an upwards trend indicates a sellers market. The good news is that you don’t have to do the research yourself. You can easily find market reports online or ask a licensed real estate agent to pull some comps for you.
  • Figure out whether the homes are selling for asking price. If a lot of the offers in the area you’re looking at are selling for more than their asking price, that is obviously good news for sellers and bad news for buyers. If the comps indicate that the homes are selling for well below the list price, then you know you’re in a buyers market. You can also look at current listings to determine whether you’re in a buyers or sellers market. Do you notice a lot of listed homes with price cuts? This suggests that homes in this area have sat on the market for longer than expected and that buyers are in control.

Tips for a buyer’s market

A buyer’s market offers unique perks for would-be homeowners. However, if you’re a seller, you’ll have to both lower your expectations and clear a few hurdles along the way.

[Read: 5 Tips for Navigating the Mortgage Underwriting Process During Covid-19]

Tips for sellers:

  • Don’t ask for too much. If your home is priced in the right range, you could still get a buyer in a reasonable amount of time. However, don’t price your home too low to try and unload it, since buyers will still push the envelope in this type of market, no matter what you list your home at.
  • Tackle needed repairs that won’t break the bank. With so many options to choose from, buyers won’t have a reason to take on a fixer-upper unless you’re selling it at a huge discount. Any decent agent will be able to tell you what your house needs to get attention — so listen to them and make repairs or upgrades when possible.
  • Be prepared for lowball offers. Don’t take lowball offers personally and be prepared for them. Figure out what you’re willing to negotiate on before you list your home. If you aren’t willing to negotiate, your home may sit there for a while.

Tips for buyers:

  • Be aggressive: Don’t be afraid to make an offer that’s well below the asking price — especially if the home has been on the market for a while. All the buyer can do is turn you down — and if you’re in a buyers market, it’s less likely that would happen.
  • Negotiate with the seller. You have nothing to lose by negotiating. There are tons of other options on the market if this offer falls through. So, unless you’re at risk of losing the house of your dreams, you can go back and forth with the seller without worrying that you’ll kill the deal over bad feelings.
  • Ask for repairs and closing costs. The worst thing that might happen is the seller will say no. At the very least, you can expect a reasonable counter offer to come of it — and best case, you’ll end up with some contributions from the seller to make your home purchase cheaper.

Tips for a seller’s market

A seller’s market is a great time to cash in if you’re a seller. If you’re a buyer, be prepared to compete with tons of other buyers and maybe offer more than you originally intended.

Tips for sellers:

  • Don’t worry about cosmetic repairs. As long as your home is in decent condition, it’s very likely to get multiple offers. You don’t need to dump a bunch of money into painting the bathroom a neutral color or upgrading the siding. Buyers will still likely be interested in your home.
  • Test the waters on the price. Believe it or not, you can scare buyers away with an overly ambitious listing price, but that doesn’t mean you shouldn’t test the waters a little bit. Try listing your home for over what you think it’s worth. Even with a high listing price, you may get a bidding war from buyers — especially if you’re in a highly desirable area and also in a sellers market.

Tips for buyers:

  • Check listing sites every day. It’s not uncommon for homes to get offers on the first day of listing in a sellers market. Be prepared to live on sites like Realtor and Zillow — and employ the help of a real estate professional who can send you the new listings as soon as they hit the market.
  • Work with a top notch agent. In a sellers market, you’ll need an aggressive agent who is able and willing to drop to show you a house. If you don’t have an agent like this, you’re going to miss out.
  • Get preapproved. You need to be able to make an offer at any time to be competitive with other buyers. Speak with a lender before you speak with an agent to get preapproved — this will strengthen your offer and make you stand out against others.
  • Know your maximum price. Bidding wars are common in a sellers market. Your emotions can put you in financial ruin if you aren’t careful, so you need to know when to back out. Set a maximum price cap and stick to it. Also keep in mind that you can refinance later on if you need to.
  • Don’t ask for too much. You’re competing with a lot of buyers in this type of market. Asking for too much in closing costs and repairs will likely result in the seller not considering your offer.

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We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Redfin: 2020 Home Sales Will Be Highest Since 2006

While 2020 continues to surprise us, somehow, someway, home sales are expected to hit their highest point since 2006 this year.

This, despite an ongoing worldwide pandemic and a contentious U.S. presidential election that’s less than a month away.

You’d think those types of events would give prospective home buyers pause, but they could actually be accelerating peoples’ plans.

6.2 Million Home Sales Expected for 2020

2020 home sales

  • The total includes both newly-built homes and existing home sales
  • Would be the highest total since 2006, around the time home prices peaked
  • Their low-end estimate is 6.08 million home sales, still 1% above last year
  • Their high-end estimate is 6.4 million home sales, 6% above last year

While the year 2020 certainly got off to a rocky start, and resulted in obvious disruptions during the traditional spring home buying season, we appear to be back on track.

In fact, some 6.2 million homes are expected be sold by the end of 2020, per Redfin’s model forecast, a 3% increase from 2019.

That’d make 2020 the best year for home buying since 2006, back when real estate was flying high, and only years before it all came crashing down and ushered in the Great Recession.

This doesn’t mean we’re doomed once again – things were a lot different back then, namely mortgage underwriting guidelines.

In 2006, you could buy a house with zero down, stated income, and a subprime credit score. In fact, you could by a 4-unit investment property with zero down. Yikes!

Today, there are still zero down mortgage options, but they require full doc underwriting that takes into account your income, assets, and employment.

Of course, there are still lots of loan programs out there that only require questionably-low credit scores, like FHA loans and VA loans, but I digress.

Redfin actually has a few different outcomes for home sales, including a low-end forecast of 6.08 million homes sold, which would still be 1% more than 2019.

And a high-end forecast of 6.4 million, which would be 6% more than 2019. It’s all pretty impressive given the year we’ve had.

What’s Driving Higher Home Sales in 2020?

  • The pandemic may have actually accelerated home buyers’ plans
  • Renters living in urban areas are craving more space in the suburbs
  • There are also 45 million first-time home buyers coming of age
  • And of course, the record low mortgage rates don’t hurt either

The obvious answer might be record low mortgage rates, which are making it more appealing (at least emotionally) to purchase a home.

The other reason might be the desire to move somewhere that offers more space, such as a home in the suburbs versus an apartment in the city.

It seems the pandemic has caused folks to take a hard look at their situation, and perhaps seek out more stable living conditions.

Home sales had also been trending higher for the past few years, and with millions of Millennials and Gen-Zs coming of age, there are lots of tailwinds.

As I wrote a while back, 45 million Americans are going to reach the typical first-time home buyer age of 34 over the next decade.

This, coupled with limited inventory, will make home buying competitive for the foreseeable future, and supports my argument of skipping the starter home.

That might be especially true now that “more space” is high up on the list of home buyers wants and needs.

With regard to how the presidential election could affect home sales, Redfin notes that past elections have had minimal impact.

Since 1980, home sales actually increased an average of 0.4% in October and November of presidential election years versus non-election years.

But in the December of election years, the month where sales would likely close for offers made during November, sales typically fell an average of 1.5%, but quickly recovered by the same amount in January.

Of course, this isn’t just any year, so we’ll see how things play out.

Redfin surveyed home buyers and found that only 13% of respondents said the upcoming election has made them more hesitant to buy or sell a home, which was down from 20% in November 2019.

Read more: 2020 home buying tips

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

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Good Financial Cents, and author of the personal finance book Soldier of Finance. Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.