First-Time Home Buyer Confessions: ‘How We Beat 32 Offers and Got the House’

First-time home buyers have it harder today than ever. Caught between high real estate prices, low housing inventory, and a pandemic that has many of us nervous about leaving our house, home shoppers might be wondering: Is it even possible to buy right now—and how?

If you’re curious about what it takes to purchase property in today’s marketplace, look no further than this new series, “First-Time Home Buyer Confessions.” We’ll profile home buyers who’ve successfully navigated a variety of obstacles to close a real estate deal during these challenging times. We’ll also hear what they’ve learned in the process that might inspire other hopeful first-time buyers to get out there and follow in their footsteps.

Our first tale from the trenches comes from Julie Migliacci, a virtual events planner near Boston, and her husband, Mark, a banker who specializes in affordable housing. In June, they beat out 32 other offers (yes, 32!) and purchased a 1,627-square-foot, three-bedroom house in Wakefield, a Boston suburb. Here’s how they pulled it off, along with the many mistakes and lessons learned along the way.

The Migliaccis paid $50,000 over asking price for their first home.
The Migliaccis paid $50,000 over asking price for their first home.

realtor.com

Location: Wakefield, MA

House details: 1,627 square feet, 3 bedrooms, 2.5 baths

List price: $599,000

Price paid: $650,000

What made you decide to buy a house in the middle of a pandemic?

Three years ago, Mark and I moved from New York City to Boston and rented a 900-square-foot apartment in Belmont with our two daughters, Chloe and Rose.

We’d always known we wanted to buy a home. But once COVID-19 hit and we were all working and schooling from home, our tiny apartment felt like nothing anymore.

At one point I looked at my husband and said, “I love you, but I really don’t like being with you right now.” So we agreed to put our house hunt in hyperdrive.

The Migliaccis' rental, a second-floor apartment in Belmont, MA, was affordable enough that they were able to save to buy a house.
The Migliaccis’ rental, a second-floor apartment in Belmont, MA, was affordable enough that they were able to save to buy a house.

Julie Migliacci

How much did you put down on the house—and how’d you save for it?

We put down 20%. We’d been saving for three years. We’d made sure our rent was low enough that we could really sock a lot away. We could have paid higher rent for a bigger place, but wanted every extra cent we had going to our house fund.

The Migliacci daughters, Chloe and Rose
The Migliacci daughters, Chloe and Rose

Julie Migliacci

What were you looking for in a house?

COVID-19 definitely shifted what we were looking for in a home. We always had a goal of finding a place with about 1,700 square feet. But now I found myself wanting a yard more than ever. I’m a city kid, so originally I never thought that was something I needed. I also wanted to find a house that was close to the city, in case we ever needed to commute back in.

The back of the home with a large yard.
The back of the home with a large yard.

realtor.com

How many homes did you see in person?

Starting in April, over the course of five weeks, we visited about 10 homes—alone, in masks, with plenty of hand sanitizer of course. With COVID-19, there were no open houses.

How many offers did you make before you had one accepted?

We put in offers on five different houses.

Why do you think your first four offers didn’t pan out?

At the beginning, we had this HGTV idea of what a home-buying experience would be like. We thought we’d go $10,000 above asking and be fine. But what we realized is we weren’t even in the running. It was a waste of time and paper. I was surprised at how competitive the market is right now because of COVID-19. We kept making offers on houses after seeing them for just a few minutes, and we still kept getting outbid. I guess you could say our learning curve was steep.

Every time we got denied, we asked who won the house instead. The offers that kept winning were those that waived all contingencies. So we did what everyone tells you not to do: We waived the financing contingency and the home inspection in order to even have a shot. We crossed our fingers, read all of the disclosures very carefully, and hoped it would all work out.

How did you know this house was the one?

We thought this house was nuts! It has a two-story rock formation out front that, at first glance, looked like a death trap for my two kids.

The rock formation at the Migliacci home
The rock formation at the Migliacci home

Julie Migliacci

At the time we put in an offer, we’d actually had an offer in on another house as well. That house checked all the boxes, but needed a bit more work. This house, despite the rock, was move-in ready.

As we waited to hear back on these offers, we actually tried to talk ourselves out of the house. We kept saying, “It’s an empty-nester home, not a home for a family.” And then, of course, that’s the house we ultimately got. We’re really happy, though. It’s definitely our dream home now.

The Migliacci family all smiled when they first entered this home.
The Migliacci family all smiled when they first entered this home.

Julie Migliacci

How’d you manage to beat out 32 other offers on this house?

I don’t know honestly! In addition to waiving contingencies, we were very aggressive with our price point, offering $50,000 over the asking price. And that wasn’t even the highest offer!

It may have also helped that I wrote a very heartfelt letter to the sellers. I wrote letters to every house we put an offer on, where I described a tiny detail that I thought would resonate with the owners. For the house we ultimately bought, I wrote a letter where I joked that our whole family smiled when we first walked into the home, except for our fish. My husband was against using that line, but I think it worked!

Their heartfelt offer letter may have helped them get the house.
Their heartfelt offer letter may have helped them get the house.

Julie Migliacci

What surprised you about the home-buying process?

I think it’s crazy that we’d see a house for five or 10 minutes before deciding to put in an offer. With houses staying on the market for a matter of days or even hours, we knew we had to act as fast as possible.

Yet after our offer was accepted, the process slowed down, a lot. We closed in 30 days. I was surprised that it was considered lightning-fast. I wanted to move right away! It takes a few hours to buy a car.

Although they now have a lot more space, they still sometimes work at the same table—old habits are hard to break!
Although they now have a lot more space, they still sometimes work at the same table—old habits are hard to break!

Julie Migliacci

What’s your advice for aspiring home buyers?

If you decide to buy during COVID-19, I’d recommend doing as much research as possible. Get to know the neighborhood. Because once you find a house you like, you’ll likely have to jump on it as soon as possible.

Some markets right now are aggressive, and if you aren’t ready for that, then it’s going to take you a long time to find the right home. So be ready for a lot of heartache. If you’re crazy enough to be a buyer right now, then that must mean you’re motivated—which is good!

The newest member of the Migliacci household seems to like his new digs, too.
The newest member of the Migliacci household seems to like his new digs, too.

Julie Migliacci

Source: realtor.com

Is It a Bad Idea to Buy a Home During a Pandemic?

A recent op-ed said buying a home during a pandemic was a terrible idea.

The author, Teresa Ghilarducci, noted that both home prices and uncertainty are high.

Her basic message – we’re maybe acting irrationally due to the COVID-19 pandemic, and that it could be smart to hunker down until the dust settles.

While I totally get the author’s point of view, I never agree with blanket rules, especially when it comes to real estate and/or mortgages.

Ultimately, we are all different people in unique situations, and what benefits one individual may not work for another, and vice versa.

Simply put, it could be a great time to buy a home right now, and also a very bad one. It just depends…

Do You Have a Solid Home Purchase Plan?

  • Don’t buy a house just because everyone else is
  • Don’t buy a house because you don’t want to miss out
  • Don’t buy a house due solely to speculation
  • Don’t buy a house sight unseen or on a whim
  • Don’t buy a house without knowing your exit strategy

No matter what’s going on in the world, you should have a clearly thought out plan when venturing into the world of real estate.

Purchasing a home is a big commitment, and a costly one at that. Even if you get cold feet and decide to sell shortly after, there are lots of closing costs on both ends of the transaction.

You might be able to break even if home prices continue to rise after purchase, but if the timing just isn’t favorable, you could be caught holding the bag.

The good news is you can generally always sell the property if you have second thoughts, especially during a seller’s market, which the author and I agree we’re in at the moment.

Why is it a seller’s market right now? Well, because housing inventory continues to be very limited and mortgage rates are at record lows.

Combined, that makes it pretty easy for a prospective home seller to list their property for top dollar, considering the lack of competition from other sellers, and the increased purchasing power enjoyed by buyers at the moment.

The big question here is how long will sellers control the market, and also what’s more important, a low mortgage rate or a low purchase price?

I explored that very question a while back, with the main takeaway being you only pay for a house once, while the mortgage rate can be refinanced pretty much at any time if you qualify.

In other words, someone who pays $500,000 for a house can’t change that fact, whereas someone who purchased a home with an interest rate of 4% last year might be able to refinance it down to 3% or lower this year.

So purchase price does matter a lot, and can’t be taken back, but it doesn’t necessarily make or break the deal, nor does the mortgage rate.

Don’t Buy a House Because Financing Is Cheap

  • Purchases shouldn’t be dictated by the cost of financing
  • You should either want to buy a house or not want to buy a house
  • The same goes for any other product on the market
  • While cheap mortgage rates are a plus, they shouldn’t totally drive the decision

Let’s just think about the financing piece for a minute. Would you go out and buy something just because a store is offering 0% APR for X number of months?

Car dealers are constantly offering no interest for X months, but that doesn’t mean I rush out to buy a car.

The same goes for a refrigerator or a washing machine – just because it’s a good deal to finance it doesn’t mean I need it or want it.

Yes, it’s a popular and successful sales tactic, but it’s also just that.

While a low mortgage rate incentivizes a home purchase, it shouldn’t dictate the home purchase itself.

Similarly, a pandemic shouldn’t be the deciding factor in whether you should buy a home or not.

You shouldn’t rush out and buy a home in the sticks just because you fear the collapse of city living, nor should you necessarily put the purchase on hold because of the unknown.

Ultimately, COVID-19 should just make us all think a little more thoughtfully about major life decisions, not speed them up or postpone them.

So again, a blanket rule doesn’t work for me here, even in the face of uncertainty.

If you feel strongly about a home purchase and you’ve done your homework, it shouldn’t matter what tomorrow holds.

Conversely, if you’re rushing into a home purchase simply because mortgage rates are low and you’re abandoning the city, you might want to pump the brakes and give everything a little more thought.

While timing can make a real estate purchase very lucrative (or a horrible decision in hindsight), there are many reasons to purchase a home that aren’t at all financially driven.

In summary, there’s always going to be uncertainty in the world, and there’s never going to be a perfect time to buy a home. That’s just life.

Read more: Buying a Home in 2020? 11 Tips to Get It Done!

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

Value of U.S. Housing Market Hits Another All-Time High

Posted on October 29th, 2020

In the second quarter of 2020, the U.S. housing market hit an all-time high of $32.8 trillion, per The Federal Reserve’s Flow of Funds Report, as referenced in the latest Monthly Chartbook from the Urban Institute.

That was up from roughly $32.4 trillion in the first quarter of 2020, thanks to an increase in home equity from $21.1 trillion to $21.5 trillion.

Meanwhile, outstanding mortgage debt remained steady at $11.3 trillion, which tells us most borrowers are paying down existing mortgages and/or applying for rate and term refinances to lower monthly payments.

And that’s a good thing because it means most homeowners aren’t overleveraged like they were back in 2006, before the housing crisis ushered in the Great Recession.

Looking at it a different way, American homeowners have a collective loan-to-value ratio (LTV) of about 34%.

The Housing Market Appears to Be Healthy Despite Record Home Prices

value of housing market

  • U.S. property values continue to rise as mortgage debt keeps falling
  • American homeowners have a collective loan-to-value ratio (LTV) of about 34%
  • Mortgage debt is essentially unchanged from 2006 while home values have risen nearly $8 trillion
  • This means today’s homeowners are in good shape overall, but it’s harder for new buyers to enter the market

While one could always express caution when prices hit all-time highs, you’ve got to consider more than just the price.

More important is to look at housing affordability and the debt held by existing homeowners.

Fortunately, U.S. homeowners only carry a collective $11.3 trillion in mortgage debt, which appears to be flat or even lower than total housing debt back in 2006.

There are several reasons why today’s homeowners are carrying a lot less mortgage debt. For one, most haven’t tapped their equity.

Very few homeowners these days have applied for cash out refinances or pulled equity via home equity line of credit or home equity loan.

cash out share

Instead, they’ve been paying down their home loans each month, enjoying tailwinds propelled by record low mortgage rates.

Simply put, homeowners owe less and pay more in principal with each monthly payment, creating a housing market that is less leveraged.

This is a good thing for individual households and for the housing market as a whole because it means borrowers aren’t overextended, and have options if they’re unable to keep up with monthly payments.

A decade ago, mortgage payments often weren’t affordable because of so-called exploding ARMs that reset much higher after the borrower enjoyed an initial teaser rate.

And because they didn’t have any skin in the game, aka home equity, they couldn’t refinance to seek out payment relief.

That led to a flood of short sales and foreclosures, and eventually the creation of widespread loan modification programs such as HAMP and HARP.

Today, even if a homeowner falls behind due to COVID-19 or another setback, they could potentially sell for a tidy profit and move on.

This protects both that individual and their local housing market, which might otherwise suffer from declining property values due to the presence of distressed home sales.

In summary, this is why today’s housing market is very different than the one we experienced more than a decade ago, despite some economists seeing home prices in “bubble territory.”

But What About Housing Affordability Today?

  • Mortgage affordability has actually improved in recent years despite surging home prices
  • Existing homeowners typically spent 17.5% of household income on their monthly housing payments in September, down from 19.6% two years ago
  • Low mortgage rates are improving affordability, but rising down payments are hurting prospective buyers
  • Property values have grown at 2X rate of incomes over the past six years, and typical U.S. home now worth 3.08 times median homeowner household income

It’s great that existing homeowners are enjoying record low mortgage rates and equally affordable housing payments, but what about prospective home buyers?

Well, housing affordability has actually improved since 2018 due to the ultra-low mortgage rates available, per a new analysis from Zillow.

This is despite the fact that home values have grown at about double the rate of incomes over the past six years.

While households typically spent just 17.5% of income on monthly housing payments in September, down from 19.6% two years earlier, the typical U.S. property is now worth 3.08 times median homeowner household income, an all-time high per Zillow.

In other words, monthly payments are cheap for existing homeowners, but their properties are valued well above their incomes.

They remain affordable because many of these homeowners have small mortgage balances and super low mortgage rates.

But if these same folks were to buy their homes today, it might not work out, which brings us to those prospective buyers, or Gen Z home buyers.

Zillow noted that home values have increased a whopping 38.3% since September 2014, while homeowner incomes have gone up just 18.8% over the same period.

If a home buyer puts down 20% on a median-priced property they would have only needed about $36,600 at the start of 2014, or 6.4 months of income for a median homeowner household.

Today, they’d need a $52,000 down payment, which is 7.5 months of income for that 20% down payment to avoid PMI and obtain a more favorable interest rate.

Even worse for those still renting, Zillow expects home prices to rise a further 7% over the next year, which would increase that required down payment another $3,600 to about $55,600.

This is essentially going to steer more new home buyers into low down payment mortgages, such as FHA loans that only require 3.5% down, or Fannie Mae HomeReady and its mere 3% down requirement.

While it at least gives them an option, they’re going to have higher mortgage payments as a result, due to a larger loan amount, higher mortgage rate, and compulsory mortgage insurance.

Additionally, they’ll have very little skin in the game, which could present a problem if home prices take a turn for the worse, as they did a decade ago.

The good news is the bulk of homeowners are sitting pretty on mounds of equity, so assuming cash out refis don’t become the next big thing, the overall housing market should be relatively safe.

Could Existing Homeowners Afford to Buy Their Properties at Today’s Prices?

One last thing. We’ve basically got this weird situation where a lot of existing homeowners probably wouldn’t be able to afford their same properties if they were to purchase them today.

However, they’ve got a ton of home equity that is only growing each month thanks to regular payments of principal and rising home prices, meaning more money is essentially locked in their properties.

At the same time, it makes a move difficult because even a lateral purchase would be pricey from an affordability standpoint when you factor in stagnant incomes and higher property taxes.

Or the fact that some of these owners are retired or not making peak income.

In the end, it further exacerbates an already difficult situation in terms of housing inventory, which has been on the record low end of things for quite a while.

That just points to even higher home prices and lots of equity accrual, which buffers the housing market, but makes it increasingly difficult for new homeowners to get into the game.

Source: thetruthaboutmortgage.com

Factors Driving The Housing Market Moving into 2021

According to a study done by Eyul Tekin, “after adjusting for inflation over time the future of the American Dream seems rather gloomy. Median home prices increased 121% nationwide since 1960, but median household income only increased 29%.” This is rather disturbing.

Thankfully, we have companies like Fannie Mae and Freddie Mac who have mandates to keep housing affordable for Americans.

In response to this disparity between the rise in wages versus home prices, Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae said “the rise of women in the workforce has changed the dynamics of house prices to reflect an expectation of two incomes. If you look at median house price in a market relative to median income of a two- person household, it’s at long term normal levels. If you have only one income, that is where the affordability problem is.”

So, it’s not so gloomy, it is societal trends running their course.

The accelerated increase in house pricing is being driven by several factors:

  • The cost of the big three components – land, labor and lumber – have all increased. Lumber cost is at an all-time high. With lower levels of immigration, labor costs have increased and, with strict zoning regulations, especially in urban settings, land has been limited and the price driven up.
  • Low interest rates, which are expected to remain at existing levels though this year, have made borrowing more affordable. That same monthly payment can now buy more house, driving up buyers’ bids.
  • The supply/demand imbalance, which is perhaps the biggest factor. On January 22nd, the National Association of Realtors announced that unsold housing inventory sits at an all-time low of 1.9 months based on the current sales rate. That’s down from 3 months a year ago. Demand, driven by low interest rates and societal shifts due to Covid-19, has outpaced supply.

Why the shortage of houses for sale?

Many people, especially older people driven by COVID-19 concerns, who own homes don’t think now is a good time to sell. In December, the Fannie Mae  Home Purchase Sentiment Index® (HPSI) declined for the second consecutive month and fell to its lowest level since May 2020 as consumers adjusted to the worsening COVID-19 conditions of the first few weeks of December.

“Both the ‘Good Time to Sell’ and ‘Good Time to Buy’ components fell significantly, with respondents overwhelmingly noting the unfavourability of economic conditions,” Duncan said. “In particular, the sell-side component fell for the first time since April and by 18 points, reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes. If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales.”  When supply falls more sharply than demand, prices increase.

Supply is Expected to Increase Going Forward

The U.S. Commerce Department announced that housing starts jumped 21.4% on a year-over-year basis and building permits soared 9.2%, the highest level in 13 years. “The good news about the house rise is that markets are performing the way you would expect. When prices go up and profits go up that is a signal for others to enter production and increase supply, and that’s certainly happening,” Duncan said. However, it might take a while for the supply to catch up with demand. Experts say that homebuilders and construction companies will have to continue these increased efforts though 2022 to meet demand levels.

It’s Not Just About Building More Houses

More people may be putting their houses on the market as well. As the HPSI indicates, there is pent up demand on the sell side.

Also, the MBA estimates that 5.54% of mortgage loans are in forbearance. When forbearance ends, some homeowners will be faced with a tough choice, either sell or get foreclosed upon. Unless they bought very recently, chances are they have built up enough equity to make selling the best option. This too will add to inventory levels.

The impact of the end of forbearance on the housing market is a matter of debate, but Fannie Mae sees the impact as one reason it is forecasting housing appreciation in 2021 to be 4.5% rather than the 10% of 2020. (Note: the historical norm for annual price increase is 3.75%)

Millennials were already starting to move from urban to suburban areas. During the financial crisis Millennials were looking for jobs and the places they were available was in the urban centers. This meant many lived in apartments. Now that they have children that are reaching school age they are moving out to areas with more land, more sports, good schools and other amenities.

They are moving from urban areas to the suburbs. When COVID-19 hit, the plans these people had for the next three years accelerated. The recent housing starts data support this, showing single family housing starts rose 12% while multi-family fell 13.6%.

How sustainable this movement is remains to be seen. If this is just an acceleration of buying that would have happened anyway, it implies that the supply/demand balance would move toward more supply, less demand a few years out.

There are a lot of factors at play when it comes accessing the cost of housing. It seems that the house prices will continue to rise in the short term and have the potential to grow at a slower pace, or even decline slightly, a few years out. With that said, if you have to borrow to buy a house, now is a good time to buy. You might just have to be more patient or more aggressive than you would have been otherwise given the competition.

Source: themortgageleader.com

How We Bought a House That Wasn’t for Sale (and How You Can, Too)

While trying to buy a house this summer, I assumed our real estate options were limited to homes that were officially for sale.

Well, guess what? We ended up buying a house that wasn’t even listed—and learned that this home-buying strategy wasn’t just possible, but often preferable if you’re purchasing property in a competitive market.

Here’s how we pulled it off, and how you can, too.

How we bought an unlisted house

The backstory: My husband and I had been house hunting for months in Alabama, and had fallen in love with one particular property in the highly desirable historic district of Florence. We made an offer the same day we toured the house, only to be heartbroken upon learning that it went to another buyer (a relative of the seller).

Feeling at a loss, we scoured Florence for other options, but nothing else was for sale—which made sense, because it’s a coveted area of the Shoals region.

Disappointed and tired of waiting for listings that seemed to sell within days of their going live, we asked our real estate agent, Jody Lanier with MarMac Real Estate, if he had any ideas.

That’s when he introduced the idea of looking beyond what was available on real estate listings sites.

We were game to try it out. So our real estate agent put out feelers, and soon found a 1917-built home that was on our perfect street. My husband and I fell in love with it the moment we set foot on the front porch and felt giddy stepping inside.

Basically, the sellers had named their asking price, and if we were interested, we could put in an offer for that amount—take it or leave it. Since the price was within our budget, we went for it, signing and submitting a typical home buyer’s contract that evening.

In the morning, we had more good news: They’d accepted!

It was a thrill to know that we’d gone under contract without having to compete against other buyers, saving us a lot of worry and disappointment in the offer process.

How to buy a house that isn’t on the market

Buying an unlisted house appears to be a growing trend in heated markets. According to Pamela Ermen, president of Real Estate Guidance in Norfolk, VA, it’s called “going under the market,” which means digging into the housing inventory in a particular area to find unlisted gems where the owners might be up for selling if they receive the right offer.

It’s just smart to “introduce yourself as a buyer to [a home] before you have to compete with other people for it,” says Ermen, who specializes in such listings.

Here are a few tactics that will help make this needle-in-haystack process a success.

Find a real estate agent willing to do some digging

Buying a house that isn’t for sale takes more legwork on the agent’s end than usual. So for starters, you’ll want to make sure you have an agent willing to go the extra mile. Here are a few of the steps agents take.

  • Review expired listings: This is where your real estate agent digs through expired listings to see who once had their home on the market, checking to see if it ever sold. If it hasn’t, your agent can then reach out to the sellers and see if they’re open to selling now.
  • Check tax records: Your agent can also research tax records in a particular neighborhood to see who has a different address for tax returns than the property address. This suggests that the house is vacant or an investment property.
  • Send direct mail: This involves a real estate agent sending postcards to homeowners in the neighborhood or ZIP code you want to live in, inviting them to get in touch if they’re open to receiving offers on their home. Since part of the appeal might be that the sale could be easy and practically painless—no home staging or open houses needed—the postcard should emphasize that the agent has “fully qualified buyers” (like yourself) who are interested in a “quiet sale.”
  • Prospecting neighborhoods: This is where you and your agent drive around a particular neighborhood, writing down addresses of homes that, if they were on the market, you’d love to see. During the COVID-19 pandemic, buyers can also do this on their own, then pass the list of addresses to their agent, who can then reach out to these owners.

While a real estate agent will have to do many of the above tactics, there’s plenty home buyers can do as well to improve the odds of finding an unlisted property they’d love to purchase. Here are a few tactics we tried.

Commit to buying a house in a particular area

If a real estate agent is willing to go the extra mile to find you an off-market home, pledging your commitment to that person is a no-brainer. Stay loyal to that agent so his or her work will pay off.

In our case, our real estate agent showed us about 15 homes this summer, so we knew we’d work only with him on a sale to make it worth his time.

Be flexible

When an agent finds you an off-market home, be ready and willing to go see it at a moment’s notice. In our case, our agent urged us to go ASAP, before the sellers potentially changed their mind about selling. Ermen says she once showed an off-market home at 10 p.m.

Work out your mortgage ahead of time

Ermen says it’s a good idea to get pre-approved for a home loan, and have that letter from the bank in hand to submit with your offer. This proves you’re serious, and can put your money where your mouth is.

Decide what you’re willing to do

Get crystal-clear on your budget and what you’re willing (and not willing) to do to get a home before going the route of an off-market listing, says Ermen.

The nice part about buying a home this way means that you’ll hopefully avoid lots of back-and-forth negotiating, as in a typical sale, and the worry that you’re competing with other buyers. But that doesn’t mean you can necessarily go in with an offer far below asking. If you’re in a competitive market, you’ll need to ask yourself: What am I willing to do to buy this house?

Don’t assume your seller won’t play the field

Even if you’re the first buyer to come knocking at a homeowner’s door, don’t assume things will stay that way once you’ve piqued the seller’s interest in selling.

“You have to assume that a seller is astute enough to know that they might get more money with more competition,” explains Ermen.

You’re also going to have to be prepared to make an offer quickly, as we did. Be fair, legitimate, and direct in your offers.

“You know what they say,” Ermen says. “If you’re going to sleep on it, you won’t sleep in it.”

Source: realtor.com

Gauge of U.S. pending home sales declines to a six-month low

A gauge of U.S. pending home sales fell to a six-month low in January as buyers competed for a limited number of properties.

The National Association of Realtors’ index of pending home sales decreased 2.8% from the prior month to 122.8, according to data released Thursday. December data was revised to a 0.5% gain after a previously reported decline. The median estimate in a Bloomberg survey of economists called for no change in January.

The decline is the latest sign that the housing boom may be starting to cool amid soaring prices, a lack of inventory and rising mortgage rates. The residential real estate market has been a bright spot in the economy as it recovers from the pandemic. Contract signings are still up 8.2% from a year ago on an unadjusted basis.

“There are simply not enough homes to match the demand on the market” Lawrence Yun, chief economist at the NAR, said in a statement. Still, Yun said he expects inventory to rise in the coming months.

The lack of inventory thus far has driven prices upwards, putting homeownership out of reach for some, said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting.

“Various other data sources have pointed to higher median sales prices and record-high purchase mortgage loan sizes, all of which have started to create affordability challenges in many parts of the country,” he said. “While home building has picked up to attempt to meet the high demand, increased listings of existing homes will be needed in the coming months to alleviate this shortage of housing inventory.”

By region, contract signings fell in the West, Northeast and Midwest. In the South, the index for pending home sales rose to the highest since August.

Source: nationalmortgagenews.com

Berkeley considers ending single-family zoning by December 2022

Berkeley is considering ending single-family zoning by December 2022 in an effort to right the wrongs of the past and address the region’s housing crisis, city leaders say.

The City Council will vote on a symbolic resolution that calls for an end to single-family zoning in the city. But the controversial proposal has already upset some residents who’ve expressed concern that the change could ruin their neighborhoods.

Berkeley is the latest city looking at opening up these exclusive neighborhoods to more housing as the region struggles with exorbitant rents and home prices and increasing homelessness. Sacramento recently took a big step in allowing fourplexes in these neighborhoods and one San Francisco politician is pushing a similar plan.

Berkeley may also allow fourplexes in city neighborhoods. Next month, the council will consider that proposal, which will likely spark pushback from tenants groups fearful it could fuel displacement if more protections aren’t included.

For Berkeley, which has historically been anti-development, the moves are the latest shift as the city slowly embraces more density, including plans to add housing around the North Berkeley and Ashby stations.

Councilwoman Lori Droste, who is introducing the resolution, said she’s trying to undo the legacy of racism that created single-family neighborhoods, which cover 50% of the city.

In 1916, single-family zoning was born in Berkeley’s Elmwood neighborhood, forbidding the construction of anything other than one home on each lot. At the time, an ordinance stated that its intent was to protect “the home against the intrusion of the less desirable and floating renter class.”

“I live in the Elmwood area where it is sort of the birthplace of single-family zoning,” Droste said. “I thought it was incumbent upon me as representing this neighborhood to say that I want to change something that I think is detrimental to the community.”

Dean Metzger, the founder of the Berkeley Neighborhoods Council, a collective of nearly 40 neighborhoods, said he wants the opportunity to give more input before the city changes any zoning laws. He said he worries that if a developer builds a multistory building next to a single-family home, it could obstruct views, block solar panels and clog available parking.

Metzger said it’s hard to specify what kind of design would be most appropriate for Berkeley’s single-family neighborhoods. He said he wants developers to be required to seek input from neighbors before building.

“They’ve labeled us anti-growth; it’s really not true,” he said. “We are trying to find ways to accommodate the development and make our neighborhoods livable. (The council) just wants to build whatever they want to build.”

After a year of racial reckoning, the same criticism of law enforcement practices should be applied to housing policies, said Councilman Terry Taplin, one of the authors of the resolution.

“This is really a historical moment for us in Berkeley because now the racial justice reckoning really has come home,” Taplin said.

As the state grapples with a housing crisis, many housing advocates say city leaders have to undo decades’ worth of anti-density housing policies. They say Berkeley’s efforts are a necessary step in addressing the region’s crisis even if it takes time. If the resolution passes, it will take years before the city sees a change in its housing stock.

“It will take time,” said Grover Wehman-Brown, a spokesperson for East Bay Housing Organizations, which represents nonprofit builders. “It’s many, many decades and centuries in the making. Building housing takes time, especially in areas like ours where there are not just wide open lots that you can drive large equipment up to and start digging to build one house.”

David Garcia, the policy director at UC Berkeley’s Terner Center for Housing Innovation, said the proposal was a “big deal.”

“It wasn’t that long ago when Berkeley wasn’t considered the most forward-thinking on housing,” he said.

But he added that it’s crucial these policies don’t jeopardize existing housing. Outreach to residents is key, he said.

“It’s important to be thoughtful about these decisions because they cannot be easily reversed,” Garcia said. “Creating such a significant change of land use in such a large part of the city is going to involve a lot of planning and critical thinking on how to ensure the best policy outcome. You’re going to want to make sure the policy itself does result in the kind of housing city leadership wants to see.”

Eliminating single-family zoning is changing a status quo that has long favored wealthy, white property owners, and opposition can often stall change, said Jassmin Poyaoan, the director of the Community Economic Justice Clinic at East Bay Community Law Center.

She said local, state and federal officials have to focus on shifting a culture and mind-set around housing policies that focuses on “housing is a human right.” She emphasized that policy changes must focus on creating housing for very low-income residents, protecting rent-controlled units and fortifying tenant protections. This includes Berkeley’s future efforts to allow fourplexes.

But change is coming. Recently, the Berkeley council approved rezoning the Adeline Street corridor and even added an extra floor of height to what builders could do there. The plan allows 1,450 new housing units, about half for low-income families in an area that was once a thriving Black, working-class community, but has become increasingly white as the high cost of housing has driven out many families. Officials are now trying to undo that.

“I think it’s really easy to look at racism and injustice in other cities and other places, but it takes a lot more courage, introspection and vulnerability to look at the mistakes that we’ve made in these areas,” Taplin said. “We have to really take an honest look at our shortcomings and be open to changes that might make us uncomfortable.”

Sarah Ravani is a San Francisco Chronicle staff writer. Email: sravani@sfchronicle.com Twitter: SarRavani

Source: nationalmortgagenews.com

U.S. existing-home sales unexpectedly rise to three-month high

Sales of previously owned U.S. homes unexpectedly rose to a three-month high in January as Americans sought to take advantage of ultra-low mortgage rates that have powered the boom in housing.

Contract closings increased 0.6% from the prior month to an annualized 6.69 million, after a downwardly revised 6.65 million in December, according to National Association of Realtors data released Friday. The median forecast in a Bloomberg survey of economists called for a 6.6 million rate in January.

Low borrowing costs paired with a desire for single-family homes with more space during the pandemic has propelled demand, even as other parts of the economy lag. Sales of existing homes last year were the strongest since 2006. Still, prices are rising, inventory is limited and expectations of higher mortgage rates may weigh on buyer demand going forward.

“We have to get more inventory,” Lawrence Yun, NAR’s chief economist, said on a call with reporters. “Sales could be even higher,” if more homes were put on the market, he said.

Single-family homes with rooftop solar panels and backyard pools are seen in this aerial photograph taken over a Lennar Corp. development in San Diego, California.

Bing Guan/Bloomberg

While low mortgage rates have helped make buying a home more affordable, prices are soaring. The median selling price increased 14.1% from a year earlier to $303,900 in January, a record for the month.

Properties remained on the market for 21 days in January, compared with 43 days in the same month last year.

There were a record-low 1.04 million homes for sale last month, down 25.7% from a year earlier. At the current pace, it would take 1.9 months to sell all the homes on the market, down from 3.1 months in January of last year. Realtors see anything below five months of supply as a sign of a tight market.

Recent data also suggest the housing market will remain a bright spot for months to come. While home-construction declined in January for the first time in five months, permits to build single-family houses rose at the fastest pace since 2006. The number of one-family dwellings authorized but not yet started increased to the highest in more than 13 years.

Source: nationalmortgagenews.com

Miami-Dade Total Home Sales Continue Surging in January 2021

Miami-Dade County total home sales posted a double-digit increase for the fifth consecutive month in January 2021 as pent-up demand and record-low mortgage rates continue fueling transactions, according to the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.

Miami-Dade County total home sales jumped 19.1% year-over-year in January 2021, from 1,857 to 2,211. Miami single-family home sales rose 9.1% year-over-year, from 887 to 968. Miami existing condo transactions increased 28.1% year-over-year, from 970 to 1,243.

“Double-digit home sale increases for five consecutive months speaks to the resiliency of the Miami real estate market, the global pent-up demand for South Florida properties, record-low mortgage rates, purchases from home buyers in tax-burdened states, the importance of the home as a hub in our daily lives and increased interest from international buyers,” MIAMI Chairman of the Board Jennifer Wollmann said.

Miami real estate accounted for 12,918 total home sales in the five-month stretch from September 2020 to January 2021. That is a 18.4% increase in the number of total transactions compared to the five-month stretch from September 2019 to January 2020.

Lack of inventory in certain price points is impacting sales, particularly for single-family homes. Increased housing starts and more sellers listing properties in 2021 should help alleviate the lack of supply.

Miami Luxury Condo Sales Surge 130.6% in January 2021
Miami single-family luxury ($1-million-and-up) transactions jumped 114.1% year-over-year to 167 sales in January 2021. Miami existing condo luxury ($1-million-and-up) sales increased 130.6% year-over-year to 113 transactions.

Luxury months of supply continues to trend downward for all property types, month-over-month, and year-over-year.

Miami single-family homes priced between $400K to $600K surged 51.5% year-over-year to 294 transactions in January 2021. Miami existing condo sales priced between $400K to $600K increased 64.5% to 153 transactions.

Record-low interest rates; a robust S&P 500; the appeal of stable assets in a volatile economy; homebuyers leaving tax-burdened Northeastern states to purchase in Florida (no state income tax); and work-from-home and remote-learning policies have all combined to create a robust market for luxury single-family properties.

110 Consecutive Months of Price Appreciation in Miami
Strong demand coupled with limited supply continue to drive price appreciation in Miami-Dade.

Miami-Dade County single-family home prices increased 25.2% year-over-year in January 2021, increasing from $375,000 to $469,500. Miami single-family home prices have risen for 110 consecutive months, a streak of more than 9 years. Existing condo prices increased 14.3% year-over-year, from $245,000 to $280,000. Condo prices have increased or stayed even in 112 of the last 116 months.

Miami, where the median price is still comparable to 2007 figures, remains a bargain compared to other global cities. In Miami, $1 million can net homebuyers 93 square meters of prime property, according to Knight Frank’s 2019 The Wealth Report. Monaco (16 square meters), Hong Kong (22), New York (31), Los Angeles (36) and others offer significantly less prime land for $1 million.

Single-Family Home and Condo Dollar Volume Increases
Single-family home dollar volume increased 86.4% year-over-year, from $471.7 million to $879.2 million. Condo dollar volume increased 69.4% year-over-year, from $393.9 million to $667.1 million.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.74% in January, up from 2.68% in December. The average commitment rate across all of 2020 was 3.11%.

Lack of access to mortgage loans continues to inhibit further growth of the existing condominium market. Of the 9,307 condominium buildings in Miami-Dade and Broward counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to Florida Department of Business and Professional Regulation and FHA.

A better condo approval process is expected to increase sales. The guidance, which went into effect in October 2019, extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The changes, many of which MIAMI and NAR have championed, are expected to generate increased homeownership opportunities.

Miami Distressed Sales Stay Low, Reflecting Healthy Market
Only 1.8% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 5.9% in January 2020. In 2009, distressed sales comprised 70% of Miami sales.

Total Miami distressed sales decreased 64.5%, from 110 to 39.

Short sales and REOs accounted for 0.7% and 1.1% year-over-year, respectively, of total Miami sales in January 2021. Short sale transactions decreased 37.5% year-over-year while REOs decreased 72.1%.

Nationally, distressed sales represented less than 1% of sales in January 2021, down from 2% in January 2020.

Miami Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 96.8% in January 2021, up 1.3% from 95.6% last year. The median percent of original list price received for existing condominiums was 94.3%, up 1% from 93.4% last year.

The median number of days between listing and contract dates for Miami single-family home sales was 28 days, a 44% decrease from 50 days last year. The median number of days between the listing date and closing date for condos was 63 days, down 23.2% from 82 days.

The median time to sale for single-family homes was 80 days, a 18.4% decrease from 98 days last year. The median number of days to sale for condos was 111 days, a 9.8% decrease from 123 days.

National and State Statistics
Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.6% from December to a seasonally-adjusted annual rate of 6.69 million in January. Sales in total climbed year-over-year, up 23.7% from a year ago (5.41 million in January 2020).

In January, closed sales of single-family homes statewide totaled 21,587, up 18% year-over-year, while existing condo-townhouse sales totaled 9,608, up 24.6% over January 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

Nationally, the median existing-home price for all housing types in January was $303,900, up 14.1% from January 2020 ($266,300), as prices increased in every region. January’s national price jump marks 107 straight months of year-over-year gains.

The statewide median sales price for single-family existing homes was $305,000, up 15.1% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $230,000, up 15% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Miami’s Cash Buyers Top National Figure
Miami cash transactions comprised 33.1% of January 2021 total closed sales, compared to 33.8% last year. The national figure for cash buyers is 19%.

Miami’s high percentage of cash sales reflects South Florida’s ability to attract a diverse number of international homebuyers, who tend to purchase properties in all cash.

Condominiums comprise a large portion of Miami’s cash purchases as 43% of condo closings were made in cash in January 2021 compared to 20.4% of single-family home sales.

Seller’s Market for Single-Family Homes, Buyer’s Market for Condos
Inventory of single-family homes decreased 45.8% in January 2021 from 6,277 active listings last year to 3,401 last month. Condominium inventory decreased 15.4% to 12,608 from 14,902 listings during the same period in 2020.

Inventory of active listings has decreased the last 17 months for single-family homes.

Months supply of inventory for single-family homes decreased 44.6% to 3.1 months, which indicates a seller’s market. Inventory for existing condominiums decreased 9.6% to 11.3 months, which indicates a buyer’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.

Months supply of inventory is down since July 2019 for single-family, reflecting strong demand.

Total active listings at the end of January 2021 decreased 24.4% year-over-year, from 21,179 to 16,009. Active listings remain about 60% below 2008 levels when sales bottomed.

New listings of Miami single-family homes decreased 13.7% to 1,541 from 1,785. New listings of condominiums increased 1.3%, from 2,468 to 2,500.

Nationally, total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million). Unsold inventory sits at a 1.9-month supply at the current sales pace, equal to December’s supply and down from the 3.1-month amount recorded in January 2020. NAR first began tracking the single-family home supply in 1982.

To access January 2021 Miami-Dade Statistical Reports, visit http://www.SFMarketIntel.com

Source: realtybiznews.com