The halfway point of the year is a good time to see where we are this year compared to last year. Before we look at this year compared to last I think it is important to remember how strong last year was. Both unit sales and dollar volume increased over 21% last year. This was by far the biggest year over year increase we have ever had. It is not surprising that our results this year have been much more mundane. Unit sales this year have declined by 6.3% while average prices have increased just over 2%.
While I would never say I’m happy with a reduction in sales, the truth is I’m not really that disappointed. Increases like we saw in 2013 are clearly unsustainable. A moderate decline in unit sales this year demonstrates that the market has fully recovered from the housing recession. I believe that by the end of this year we will be closer to 2013 levels than we are now. There are two specific reasons I feel this way. One is that the last two months of 2013 were very weak compared to the first ten months. The second is that the first two months of 2014 were significantly slower than the March through June period.
The two biggest factors affecting the housing market going forward are job growth and inventory levels. Job growth has clearly been sluggish for the past few years but has begun to show some improvement in recent months. Inventory levels are still significantly below historical levels. The best way to increase inventory is to build more new homes. I do believe that construction levels will continue to increase but not as fast as fast as the market demands.
Over the second half of the year I do not expect to see the dramatic monthly swings we saw earlier this year. I expect inventory levels to remain a challenge and I believe that if job growth improves, so will real estate sales.
If you are in the market to buy a home you must be prepared to make an offer on a home as soon as it is listed and you had a chance to see the home. Homes that are updated and priced right sell within days. If you are in the market to sell your home you are in a good position. We have very low inventories. In either case, if you are buying or selling, call me on my cell phone 812-499-9234 or email at RolandoTrentini@FCTE.com
When you determine to sell your house, one of the first choices that comes up is tactical: do you try to sell it yourself as a “For Sale by Owner” property—or do you enlist a real estate agent? Since your object is to maximize your profit, you might think that most thrift-minded home owners would decide to eliminate the agent’s commission and do the work themselves. But that’s not the case.
The majority of sellers ultimately team up with a real estate agent. Sometimes they go the For Sale by Owner route first, but after testing that method, change courses. The statistics show that the selling price of Realtor®-assisted home sales is higher (a $40,000 difference, according to the latest study) which certainly would explain part of the reason. But other factors come into play, too:
1.Pricing: If you aren’t immersed in the area’s real estate business five to seven days a week, there’s no way you can have the intimate knowledge about the current market that comes with daily work in the field. A real estate agent comes armed with extensive knowledge of the local market and all the changes that have brought it about. It’s extremely important to price your home correctly to sell it on the first go-round. It’s a demonstrated fact that the longer a home sits on the market, the lower its final sale price.
2.Time and Energy: A For Sale by Owner sign in the front yard means you are in charge, 24/7! That’s despite any other demands on your time—for example, your job! One of the benefits of using a real estate pro is that selling your property is our singular focus: our job! It means marketing, networking, working with buyers. Doing whatever it takes to get your house sold is our first priority. Lacking the same kind of time and resources, a For Sale by Owner seller is at a clear disadvantage in the competition to sell houses. It’s a marketplace where one missed buyer can mean the difference between a listing that turns into a sale…and a listing that turns stale.
3.Objectivity: The house is yours: you designed or decorated it; you’ve fixed and painted and mowed and swept it. If you took your work seriously, you feel at least some pride in how it’s presented. Unfortunately, that’s a problem. Lacking objectivity in the sales milieu can be one of the biggest hindrances to actually selling your house. It makes it hard for you to negotiate—to see and acknowledge the flaws a buyer sees. And it can make buyers wary of even wanting to negotiate with you in the first place. Either factor can prove costly. Separating owner from sales agent opens communication. It’s a relief for everyone!
4.Paperwork: This is the most obvious point. If you choose to wade into the paperwork/deadline process yourself, you’d be wise to count on needing a bit of extra attention from a good real estate attorney—if only to avoid potential litigation down the line.
5.Security: It’s unfortunate, but putting your house up For Sale by Owner in can make you a target. Less-than-honest folks are out there—creeps who may specialize in sellers who might not follow the proper measures for letting people into their homes.
If you are looking into selling your own home this summer, I’d like to offer you a complimentary property evaluation. Whether or not you decide to go the For Sale by Owner route, it’s sure to be well worth discussing what to expect from today’s market! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
Wasn’t it just yesterday that we seemed locked into a classic home buyer’s market in Evansville? Bad economy, bad job numbers, tanked real estate values were all we heard about…until it eventually shifted. Over the past year or so, it’s become a very different landscape. If you’ve been out looking to become a home buyer, it’s possible that you’ve found yourself putting in offers on multiple houses…and also possibly watching from the sidelines as another home buyer walked away with a deal. If this isn’t a true seller’s market, to you the difference may not be apparent.
In any case, when a prospective home buyer in Evansville finds themselves vying for one of the plum homes that are now appearing in this summer’s listings, there’s no need to passively watch as others get the nod. If you are sure of the value of the property you are going for, there are straightforward tactics for improving your chances of winning the day:
-Offering at or above list price is the time-tested way to give you the best shot of getting your contract accepted over bidders who offer less than list. Real estate prices are again on the rise, increasing your likelihood of being able to recoup the extra money if you decide to sell several years down the road. Look at the comps with your agent to determine what an aggressive—yet realistic price—will be.
-Ask your real estate agent what the recommended earnest money amount would be; then double or triple that deposit amount. It’s a sure way to signal that you’re a serious and financially able home buyer. This tactic has the advantage that it doesn’t really cost you anything in the long run, assuming you hold up your end of the contract. It is a way to stand out from other home buyers without actually spending more.
-In a buyer’s market, it’s almost expected to ask for add-ons like fixing a staircase or leaving the swing set. But in a seller’s market, you can beat the competition by not asking for extras beyond what is offered in the listing. Home sellers may be fully occupied with many outside details (like looking for their own next home!) and often assign high value to an offer that looks uncomplicated.
-Along the same lines, another way to set yourself apart from every other home buyer is to offer to give the seller more than the usual time to move out of their house. Many other bidders won’t think of this—but it can make the deal if the sellers are having to cope with difficult deadlines for their own move.
Above all, don’t let yourself get discouraged. The right house is out there, and you will get an offer accepted! Particularly in a seller’s market, any home buyer will be rewarded by just remaining patient and cool-headed. First step if you will be looking to buy this summer: call me today to get started! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
For real estate investors (that includes homeowners and soon-to-be homeowners of all stripes), there’s some long wished-for news: the solid reputation of real estate as an investment is back! After years of falling off, the latest Gallup poll on the economy and personal finance finds that Americans are now convinced that their best long term investment is in the housing market. Real estate won out against all other alternatives: bonds, gold, stocks, mutual funds and CDs.
For the past few years, gold had been investment #1—but see-sawing gold price movements have whiplashed public sentiment. Just as takes place everywhere in the nation, whenever real estate market improves, so does its reception by potential buyers who view their home as a savings vehicle as well as a place to hang their hat. As Gallup Economy’s headline put it, Americans Sold on Real Estate as Best Long-Term Investment.
Public sentiment by itself is, of course, not reason enough to change long-term investment strategies. But when any investment class is on the rise in public’s estimation, the effect is to create competition among buyers—and further price improvement often follows. It can make a difference when it comes to real estate.
One possibility for those selling real estate this summer might be to consider capitalizing on the investment trend by including a marketing approach: one that targets investors. You can have your agent or a local property manager provide a rental evaluation for the property, along with approximate leasing fees and property management fees. Having such an evaluation at the ready lets investment-minded prospects evaluate the potential cash flow and return. It’s even possible to post the information on your sales website, and to display it along with other marketing materials at showings and open houses.
In many neighborhoods, real estate prices have a lot further to go to near their previous high water marks; if you look at neighborhoods individually, you can find some plum opportunities to make a sound investment. If you are thinking of buying or selling in Evansville this summer, contact me to discuss your ideas—and how you will make the most of America’s new Number One investment opportunity! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
Homeowners who had been bracing themselves for sharp rises in mortgage interest rates must now be scratching their heads. As the online Mortgage News Daily put it last week, “…rates have been extraordinarily sideways, and right in line with the lowest levels in 11 months.”
Since historical averages are still significantly higher, it’s no wonder that most observers still believe the greater likelihood is for rate increases. But recent Fed happenings show a crack in their avowed determination to let that happen by tapering off purchases of mortgage-backed securities. The hemming and hawing is notable. It’s all pretty much up in the air.
In any case, one thing I can guarantee is that mortgage holders will benefit if they take advantage of savings opportunities when they present themselves. Among current possibilities—
1. Refinance Your Mortgage
Mortgage holders who haven’t already refinanced should at least consider doing so. Refinancing means taking advantage of the still historically low interest rates—often the most meaningful step in reducing your monthly mortgage payments. Before deciding to refinance, make sure that the mortgage costs involved will be less than the resulting savings. If you agree with the prevailing wisdom that it’s unlikely we will see a significant drop in interest rates in the near future, today’s levels still look inviting.
2. Cancel Private Mortgage Insurance (PMI)
According to the National Association of Realtors®, mortgage down payments have fallen over the past decade. Their figures show that the average mortgage down payment in 2013 was 10% – compared with 16% just ten years earlier. Homeowners who put down less than a 20% deposit are typically required to take out Private Mortgage Insurance. But once the Loan-to-value (LTV) ratio falls below 80%, homeowners can ask for the PMI insurance to be removed—and they should, because the lender isn’t responsible for keeping track of that for them. If you are close to the 20% threshold, it may be worthwhile to make a one-time payment that will reduce the principal below 80%.
3. Extend the Length of the Mortgage
Many homeowners have made significant reductions in their principal by opting for shorter-term mortgages. But should rising interest rates make a property you are trying to buy unaffordable, extending the length of the mortgage can reduce monthly payments to a more comfortable level. Although over the long term this will end up costing significantly more in interest, moving from a 15-year mortgage to a 30-year can sometimes be the right move—especially when the property at stake represents one of the terrific values currently out there.
While interest rates in Evansville may rise or fall or, as we’ve seen lately, hold surprisingly steady, sudden leaps or plummets are unlikely…and with a little preparation, unpleasant future surprises in interest rates are avoidable. Thinking of buying a home in Evansville this summer? Call me today to start laying the groundwork! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
When Evansville residents hear about floods, images of homes tumbling into the sea or half-submerged along the banks of a raging river probably leap to mind. But the risk of flooding isn’t confined to those headline-grabbing catastrophes—which is why the recent passage by Congress and signing by the President of the Homeowner Flood Insurance Affordability Act (HFIAA) will be of interest to many people thinking of buying a home.
Sellers are required by law to disclose if a property is in an officially-designated flood zone; and banks typically check this information as well. While it can certainly be off-putting to be informed of this when buying a home, the availability of flood insurance can keep it from being a deal-breaker. But “available” doesn’t necessarily mean “affordable”—which is where HFIAA comes in.
Many prospective homebuyers are only vaguely aware that flood and water damage are not covered under traditional homeowner policies, something that’s newly relevant when buying a home. Part of the reason is because only 5% of the U.S. population lives in an officially designated “Coastal Flood Plain”—so it’s not a much-discussed issue in most parts of the country.
But the coastal areas that do get attention whenever disaster strikes are not the only kinds of flood plains that are relevant. FEMA assesses and maps areas that are subject to flooding, and assigns them letters denoting the likelihood of flood damage. Some of the provisions of the new HFIAA deal with overhauling those procedures, but the most immediately significant parts deal with (you guessed it) cost.
Here a little history will be helpful. In 1968, the National Flood Insurance program was created to help some property owners secure insurance in areas where it had been prohibitively expensive. But, as one might expect, the cost of the program soon became a problem. That in turn triggered passage of another Act—the Biggert-Waters Flood Insurance Reform Act of 2012—intended to allow premiums in covered areas to rise to offset their real costs.
The new HFIAA now partially reverses that yet again, because policy-makers fear the effect on the housing market. The new act delays some of the price rises for four years and allows homeowners who sell their homes to pass the lower premiums on to the new homeowners. It’s also relevant that there are two different types of coverage available: dwelling only and dwelling/property. Although dwelling only coverage is cheaper, as you might expect, there’s a good reason: it doesn’t cover the personal belongings that a flood could destroy.
Some zones, like Zone X, are as inexpensive as a few hundred dollars per year. The zones that flood more regularly can run into thousands…and all flood insurance premiums are in addition to the regular home insurance costs. For those buying a home in an area where properties might be classified as within a flood zone, it’s a good idea to check with one of the local insurance companies that offers flood coverage. When all is said and done, only you can decide if it’s worth the risk or not.
If you are thinking of buying a home in this summer, flood insurance is only one of the details you’ll want to consider. Call me today and we can begin by putting together a list of your search criteria. You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
Market Watch April 2014
As you may be able to tell from your allergies, spring has certainly sprung in Southwestern Indiana. The real estate market is heating up right along with the warmer temperatures. We are witnessing a significant increase in sales activity and anticipate that will continue through the spring. Lawrence Yun, the chief economist for the National Association of Realtors, said a gain was inevitable, following a dismal winter. (We certainly agree here!) On a national level, showing activity is increasing and sales activity is expected to follow suit as more inventory reaches the market. And in our office, the homes that are priced right and in good condition are getting lots of attention and in some cases, multiple offers.
The key challenge will continue to be inventory. We continue to see a shortage of homes for sale, with inventory rates near record lows. While this shortage will drive an increase in median existing-home price, continued positive momentum is dependent on the availability of homes for sale. Opportunity’s knock is getting louder on the doors of potential sellers, who at this point will dictate the performance of the local housing markets for the next couple of months.
While need for listings is high, sellers must present a home that is in good condition and priced right. Working with a real estate agent from the beginning ensures you have a knowledgeable professional that knows the market and can help get your home sold in the shortest amount of time.
If you’ve considered selling your home, now is the time. With many active buyers, you don’t want to miss this market surge! And if you’re ready to buy, I’d encourage you to visit www.TheTrentiniTeam.com , where you can use our interactive map search to perfectly define your search area. Until next month!