Timely Real Estate News………………………………….1 August 2015
Myths abound in real estate — here are few you need to think about
We grow up knowing that “location, location, location” is a key mantra for real estate buyers. And when the right location just doesn’t seem doable, we look for the next best option. Experienced real estate agents, like Carole, know there are many misconceptions about where, when, and how to purchase a home…or selling one. Here are a few of the myths that pervade our world of real estate.
Myth: A lot of people think that to get into the best school districts, you have to buy in the most expensive neighborhoods.
Well, that’s not always true. T here’s a wide variation of home prices within the same school boundaries. You can probably find homes you can afford within a good school boundary. And with all the data and information proliferating on the Internet these days — and having a smart agent — can place you where you want to be.
Myth: Don’t take risks on “non-cool” neighborhoods.
Our real estate world is being turned upside down by millennials and other younger folk who are willing to gentrify a former not-so-good neighborhood — because they have to. They don’t have the big bucks to move into fancy neighborhoods just yet….and rather than buying a premium location where the cool folks are, they buy, improve, and wait for the cool folks to find them. This is a pattern happening all over America today.
Myth: When selling a house, make sure you have great photos. That’s all you need.
Wrong. What has influenced buyers most are the words and descriptions of how great a home is or that you really can move into a “nice” neighborhood. Picking the right words and pictures. One of the no-no words is “unique”. In a recent survey, homes described as “unique” sold for 36% less than you would expect otherwise.
“Nice” is a filler word, but the signal you’re sending is that you don’t have much else to say about the house. Buyers aren’t stupid. They’re reading that and saying, “Wow, if all you have to say is that it’s nice, that’s not much.” Words that were really helpful were words that describe things that offer real differentiating value in your home. So “stainless steel,” “granite,” if you have a view or beautiful landscaping — any of those descriptive things were really powerful. Also, remember, the impact of first impressions! Make sure your home is in great marketing condition, clean up that clutter, freshen it up, get rid of those pesky pet smells that never smell, but our guests do.
Myth: Overprice your home….you can always come down but can’t go up!
Big mistake. Data shows that if you overprice your home, often you end up having to chase the price down, because the longer it stays on the market, the more people think there’s something wrong with it. Homes that were priced pretty correctly
sold for about two percent more than you would expect.
Millennials seem to find comfort at home…many return (or never leave)
According to the report released last week by the Pew Research Center, the nation’s 18- to 34-year-old population is less likely to be living independently of their families and establishing their own households than they were during the recession.
In early 2015, the report said about 42.2 million Millennials, or 67%, lived independently, compared with 42.7 million Millennials, or 71%, before the recession in 2007. Since 2010, the percentage of Millennials moving back in with their parents has increased from 24% to 26%.
This comes as the millennial population is growing. In 2015, there are nearly 3 million more young adults between the ages of 18 and 34 than there were in 2007, according to the report. The stagnation in millennial households has a significant effect on the housing market, from Realtors to landlords to construction firms to cable companies, said Richard Fry, senior economist at the Pew Research Center and author of the report.
“It’s contributing to why the housing market has been a real laggard in the recovery,” he said. “There’s a lot of spending that is associated with forming your own households.”
Full-time employment is up, unemployment is down and wages are marginally higher, according to the report. The report doesn’t go into more detail about why Millennials are choosing to live with their parents, but Fry said rising rents in metropolitan areas, along with a change in attitudes about moving back home, could be part of it.
On another Millennial note…there is help on the way for buying a home. Federal agencies tasked with boosting home ownership may have finally found their silver bullet when it comes to getting first-time and millennial home buyers off the fence.
Earlier this year, the Federal Housing Administration began reducing mortgage insurance premiums on its loans by an average of $900 a year. While the FHA loans typically come with low down payment requirements, they often have higher monthly payments as a result of the mortgage insurance that, unlike conventional loans, continues for the life of the loan, even when 20% equity is reached. Now it appears the mortgage insurance premium reduction is having the desired effect.
An interest rate hike is “in the air”….good economic news is the culprit
The possibility that the first increase in a key interest rate since 2006 picked up pace as Federal Reserve policymakers indicated Wednesday that economic conditions are improving. So is that good news? Well, it depends.
After a two-day meeting last week, officials voted to keep the central bank’s benchmark short-term rate near zero, as expected. Their monetary policy statement, however, pushed the door open a little wider to a rate hike at the next meeting in September, though they didn’t lock in a decision in case upcoming economic data fall short of expectations.
“They’re closer … than they were at the last meeting,” said John Silvia, chief economist at Wells Fargo Securities. “I think the labor market has improved enough. That’s not the issue. The make-or-break issue is inflation.”
The Fed’s policy statement, approved by a 10-0 vote, said recent data suggest that the economy “has been expanding moderately in recent months” and that the housing market “has shown additional improvement.” The policymakers’ view of the labor market improved from last month; their statement cited “solid job gains and declining unemployment.”
And they made “a subtle but potentially important shift” in a key condition to an interest rate hike, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
In June, Fed officials said a rate hike would be appropriate when there was “further improvement in the labor market.” Wednesday’s statement said central bank officials would raise the so-called federal funds rate when there was “some further improvement in the labor market.”
Policymakers attributed the lower inflation rate partly to declines in energy prices as well as the lower cost of imports caused by the rising value of the dollar. A government index for what consumers pay for goods and services rose just 0.2% for the 12 months that ended May 31.
Inflation has been the second condition for raising the rate. Policymakers said Wednesday that they would have to be “reasonably confident” that the low rate would move back toward the Fed’s annual goal in the next few years before acting.
The central bank has kept its benchmark federal funds rate near zero since December 2008 to help boost economic growth during and after the Great Recession. As the economy has strengthened, pressure has built on the central bank to start raising the rate.
Here is some good news….for now!
Average long-term U.S. mortgage rates fell for a second straight week, with the key 30-year rate slipping below 4 percent. Mortgage giant Freddie Mac says the average rate on a 30-year fixed-rate mortgage declined to 3.98 percent this week from 4.04 percent a week earlier. The rate on 15-year fixed-rate mortgages eased to 3.17 percent from 3.21 percent.
As in recent weeks, mortgage rates followed the yield on the key 10-year Treasury note, which fell. Bond yields for Treasury’s were pushed lower by a rise in bond prices, as investors sought safety in U.S. Treasury bonds amid steep declines in global stock markets. The yield on the 10-year note declined to 2.29 percent Wednesday from 2.33 percent a week earlier. It held steady in trading Thursday morning at 2.29 percent.
This is good news for buyers (and sellers) who are looking for better rates before the Fed possibly raises rates in the Fall. My advice to clients: Jump into the market and take advantage of these lower rates before they disappear for some time.
More good news that makes up for last quarter…..
Total economic output, or what we affectionately call our gross domestic product, increased at a 2.3% annual rate from April through June, the Commerce Department said Thursday. The figure — the first of three estimates by the government — fell short of economists’ forecasts of 2.9% annualized growth. But it sure beat the original negative GDP rate for the first quarter.
New data is also showing the economy did not contract in the first quarter as originally reported. Taken together, the growth in the first half of the year probably keeps Federal Reserve policymakers on track to hike their benchmark interest rate in September, analysts said.
“The economy seems to be gathering momentum,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics. “Unusually bad winter weather, a labor dispute at West Coast ports and lower energy prices combined to hinder growth in the first quarter of the year.” However, the hit was not nearly as bad as initially believed.
In its final estimate for the quarter, the economy expanded at a 0.6% annual rate from January through March, the Commerce Department said. Unusually bad winter weather, a labor dispute at West Coast ports and lower energy prices combined to hinder growth in the first quarter of the year.
Taken together, the new data indicate that the economy expanded at about a 1.5% annual rate in the first half of the year. The weak performance is well below the economy’s potential and worse than last year’s tepid 1.9% first-half growth.
I don’t know about you, but all of these numbers and economic studies makes my head spin. I am just trying to “do my thing”, advise my clients, enjoy life and keep moving forward. Working on various projects keeps me busy and “off of the streets”. Please do let me know how I can assist you with any and all of your real estate needs. Enjoy the summer! Please check out my web site, caroleschiffer.com, and my facebook page, caroleschiffer/realtor at facebook.com. Talk to you soon.