Selling Your House (Part II)

Putting Home In Best Light 300x199 Selling Your House (Part II)Last week’s blog focused on maintenance and remodeling to help boost the value of your home before you put it on the market to sell.  This week we will take a look at choices a seller has when deciding to list their home and other things to consider before it hits the market.

  1. Decide whether to hire an agent or to sell yourself – A real estate agent (for a commission) can handle the marketing of your property and also help you set a price for you house.  Selling yourself can save you the commission but might miss out on the experience that a real estate agent brings to the table.
  2. Prelisting inspection – If you decided to do this, it may save you time by identifying potential problems with the house that a buyer might find later.  This gives you an opportunity to repair any issues before listing the house.
  3. Set a price – It’s important the seller decide if they want to sell quickly or wait for the best offer.  A real estate agent can provide a market analysis to help in this step.  If you don’t have an agent, look at comparable real estate listing in your area to help determine a fair market value.  You may also choose to hire an appraiser for a complete analysis of the house.
  4. Get your home ready to show – This includes cleaning/tidying your home and staging it so that it will look appealing to potential buyers.

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Selling Your House – Ways to Boost Home Value (Part I)

UpdateHome.2b 300x199 Selling Your House – Ways to Boost Home Value (Part I)It’s been a seller’s market for quite some time now and home prices have continued to hold steady.  This has left many homeowners wondering if now is the right time to put their house on the market and take advantage of the upswing in property values.  But how can you squeeze the most value out of your home?

  1. Create more space by knocking out a non-structural wall.  Buyers desire wide open floor plans and this option will cost you a few hundred dollars.
  2. Prune, overgrown limbs and update landscape around your home to make it look more appealing.  Landscaping is one of the top three investments that can bring the biggest return when selling.  Spending around $400-500 on this can reap returns of four times your investment.
  3. Don’t put off maintenance or repairs that your home is in need of as this can greatly affect the value of your house.  Make sure all leaks are repaired, fix leaky windows, and replace rusty rain gutters.  Deferred maintenance can cost more in the long run if issues are not addressed as they arise.
  4. Update the floors.  Hardwoods are trending and it doesn’t have to cost a lot of money to update.  Spending an extra $600-$900 on updated floors and can increases your homes value by $2,000.
  5. Update the bathrooms.  This also can be done inexpensively by updating the sink and shower hardware.  Deep clean the shower, apply fresh caulk where needed and get rid of the frosted glass shower door with clear glass, a more updated look.
  6. Repaint and touch up walls.  Fix and paint any chips or scratches and if you have any walls painted a bold color, consider repainting these to a neutral tone.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

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Pay Your Mortgage Off Quicker

PayQuicker 300x199 Pay Your Mortgage Off QuickerAs people inch closer towards retirement, owning their home outright can help give a since of financial security.  Especially for those that have lived through a financial crisis and/or the recent foreclosure crisis.  About two-thirds of the nation’s homeowners are paying on a mortgage while more than 20 million own their homes free and clear.  What are some ways you can get closer to making that last mortgage payment?

  1. Pay more than you owe – You can do this monthly or once a quarter.  Paying a few extra dollars a month or making an extra payment each quarter can help you get closer to your goal.  When you pay more than you owe, the extra amount goes towards the principal which effectively decreases the amount of interest you will owe over the course of the loan.
  2. Refinance your mortgage or pretend you did – Obtaining a 15-year fixed rate mortgage will have higher payments than a 30 year fixed rate but you won’t have to pay twice as much.  If you are unable to refinance you can act like you did by making payments as if your loan were a 15-year mortgage.  This can lead to a lot of interest savings.
  3. Split up your payments – By taking your regular monthly payment and breaking it up into 2 monthly payments or weekly payments during the month you avoid paying extra interest since interest accumulates daily.  If you made biweekly payments on a 30-year mortgage you could end up paying off the loan six years earlier depending on your loan’s terms.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

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Pocket Listings on the Rise

PocketListings 300x198 Pocket Listings on the RiseYou might be familiar with the term pocket listing by now since it has become more popular during this current housing market. A pocket listing, also known as a “quiet” or “off-market” listing, is a property for sale that an agent doesn’t officially list on the MLS (multiple listing service), but instead keeps in their “pocket.”

Pocket listings started several years ago as a way to market expensive homes or properties of high-profile people while staying under the radar. This allows the seller and agent to test the market’s reaction of the property sales price without the days-on-market clock ticking as it does when listed on the MLS.  The agent can also potentially reap commissions from both the buyer and the seller.

Housing inventories have remained low but pocket listings could be skewing the numbers since they are not tracked. Lawrence Yun, chief economist for the Realtors said, “Statistically it appears that we are getting back to very balanced market conditions.  However, the sentiment out there is that we still have a shortage of inventory, and I think that is due to the prevalence of pocket listings in some markets.”

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Foreclosures Drop Significantly

The overall health of the housing sector appears to be improving.  The foreclosure rate has been declining over the past few years and hit an 8-year low in June according to a RealtyTrac report citing 107,194 U.S. properties filed for foreclosure.  This was a 19% drop from the previous 6 months.

US Historical Foreclosure Activity thumb 500x364 23052 300x218 Foreclosures Drop SignificantlyDaren Blomquist of RealtyTrac said, “Nationwide foreclosure activity in June reached an important milestone, dropping to levels not seen since before the housing price bubble burst in August 2006. Over the next six to nine months, nationwide, foreclosure numbers should start to flat line at consistently historically normal levels.”

While this is positive news it’s important to note that there is still an abundant amount of distressed inventory in the market.

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Student Housing is Heating Up

CollegeHousing 300x199 Student Housing is Heating UpThere is a sector of real estate that has quietly been heating up and investors want in; it’s student housing.  Forget the image you have in your head of the dorms you lived in while attending college years ago.  This isn’t your stereotypical student housing of nondescript rooms with dirty carpet, linoleum floors, and equipped with only the bare necessities.  Today’s student housing is all about the comforts of home.

A large group of today’s college students have grown up living with luxury amenities at home and want the same comforts while attending school.  Some private investors and REITs (real estate investment trust) have identified this opportunity to build new housing both on and off campus.  Universities are welcoming the on campus private investment since budgets have been tightening.

These new student housing buildings could easily be mistaken for a luxury hotel or apartment building and feature flat screen TVs, state of the art fitness centers, and full kitchens and baths.  Bill Bayless, CEO of American Campus Communities, the largest student housing REIT in the U.S. commented, “Student housing isn’t just real estate. It’s really creating physical assets that are conducive to academic achievement.”  It is estimated that the student housing sector is a $4-5 billion business and still growing.

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Will Rental Prices Affect Mortgage Rates?

AptLiving 300x207 Will Rental Prices Affect Mortgage Rates?It’s no secret by now that the rental market across the U.S. is hot as rental prices are growing at their fastest pace in 5 years.  The national vacancy rate was 4.1% during the second quarter of this year and the asking rent increased to an average of $1,099 a month (0.8% increase from the first quarter).  So with the cost of renting creeping upward, will this affect those that are looking to buy instead of rent?

Some economists believe mortgage rates could increase as rent continues to rise.  Lawrence Yun, The National Association of Relator’s chief economist made a statement, “Given that housing is the biggest weight to overall consumer price inflation, if this rent trend continues, and it could easily because vacancy rates are falling and falling, then the overall CPI inflation will be higher than anticipated, which will then force the Federal Reserve to raise interest rates sooner than later.”  There are other economists; however that disagree and feel that interest rate policy will not hinge solely on apartment rents.

Mortgage rates have not seen much action over the past year (30-year fixed rate mortgage rate is 4.17%) but if they were to increase this wouldn’t be beneficial to homebuyers.  For housing to grow legs it is important to see job growth and income growth become stronger than it has been.  An increase in supply could also help push prices down.

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Real Estate Values Driven by Walkability

Walkability 300x199 Real Estate Values Driven by WalkabilityHome prices have continued to grow over the past year.  The Case-Shiller Index noted an increase of 10.8% in home prices year-over-year ending in April.  One of the factors that has been linked to the rise appears to be a city’s walkability.

George Washington University School of Business and Smart Growth America joined together to release a report ranking the walkability of 30 of the largest cities in the US.  They concluded there is a distinct correlation between real estate values and walkability for both residential and commercial properties.  Chris Leinberger,  Research Professor of Urban Real Estate at GWU commented, “Walkable, urban for-sale housing is by far the most expensive housing in the country.  The range, depends on the market, between 40% and 200% greater than driveable, suburban housing.  Twenty-five years ago that relationship didn’t exist because walkable (cities back then) was not valued.”

The younger generation of Millennials tend to prefer transportation via car ride-shares, walking, bike shares and rapid transit in an effort to be more environmentally conscious.  Washington, D.C. was ranked number 1 as the most walkable city.  Those cities boasting more walkable neighborhoods have seen home real estate values bounce back quicker and higher than those with less.

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Housing Bubbles Abroad?

With the run up in home prices in the U.S. some people are concerned about a possible housing bubble again.  But several economists have popped a hole in this belief based on market fundamentals.  Lending standards having gotten tighter and the size of down payments have increased from the pre-housing bubble burst.   However, the story aboard seems to be different.  The Deputy Managing Director of the International Monetary Fund (IMF), Martin Zhu, noted in a recent speech that housing prices were climbing in several countries.

housepricesaroundtheworld lg 1024x745 Housing Bubbles Abroad?Canada is experiencing strong home and apartment construction and has high price-to-rent and price-to-income ratios making affordability tighter.  It is also experiencing a lot of foreign investing from China.  Real home price appreciation has almost hit 20 percent.

The country of Norway has reported around a 30 percent jump in home prices since the worst of the Global Recession which is partly due to surging population and incomes as a result of immigration. A large portion of the consumer’s wealth is sitting in illiquid real estate and household debt is high, so a housing downturn could hurt the country.

housepricetoincome lg 1024x840 Housing Bubbles Abroad?

Since the beginning of 2009, Switzerland’s home prices have increased more than 20 percent and mortgage debt has jumped to 140 percent  of GDP, which for some analysts is a warning sign.  There have been efforts to tighten lending standards, as we have seen here in the U.S. after the housing collapse, and increased bank reserves.  For these countries and several others real estate is still booming but are there bubbles looming?

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Student Debt Holding Back Housing

One thing that could be attributing to the housing market’s lackluster performance is student loan debt.  It has been a topic of discussion over the past few years; the amount of student loan debt that today’s college graduates rack up is at all-time highs.  On average, college graduates have $35,000 in student debt and as college expenses increase every year, this amount is only projected to grow.  Student loan debt is in excess of $1 trillion today.

CollegeGrads 300x279 Student Debt Holding Back HousingWith such high levels of debt accumulated right out of school, this leaves typical would be first-time homebuyers with less disposable income and makes it harder to qualify for a mortgage.  Couple this with still high unemployment rates for young workers (ages 25-34) and it really impacts housing.  In April, first-time homebuyers accounted for just 29% of existing homebuyers, which is down from historical rates of around 40%, according to the National Association of Realtors.

This lack of homeownership has recent grads either renting or still living at home with mom and dad.  This is good news for the rental market which continues to show signs of strong demand.  Jed Kolko,  Trulia’s chief economist commented, “For young people, the housing recovery is still in an early stage: More jobs today means they move out of their parents’ homes and become renters, while home buying remains years away for many.”

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

 

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