Market Watch December 2014
I realize that Thanksgiving has passed us this year but I wanted to mention several real estate specific results and other factors for which we should all be thankful.
Although 2014 is not yet finished, our local market is certain to close more real estate volume than we did in 2013 and that is on top of the huge recovery we made in 2012. In fact, our multiple listing service will close more dollar volume in sales than the previous year for the 4th consecutive year and sales volume will be 36% higher than it was in 2010. In addition, our average sales price has increased 6.2% this year and will be a whopping 15% higher than it was in 2010.
I believe that this slow, but steady, recovery is a result of both increased consumer confidence and a similar slow, but gradually improving job environment. The housing market is tied directly to qualified homeowners. A job is the first step in qualification and with over 300,000 net new jobs created last month, I’m confident that some will soon be first time buyers.
Another positive development is that the Federal Housing Finance Authority recently issued new more clear rules which will allow lenders to be more confident about the types of residential mortgage loans they make. I expect more buyers will qualify for loans in the future than the recent past. Clearly this helps the housing market.
From a strictly local perspective, I’m very excited about the new convention hotel and the Medical Center coming to Southwest Indiana. Both of these projects will provide a significant economic boost to our area for years to come. All of these give me plenty of reasons to be thankful and optimistic about real estate.
Finally, I can’t wait to give you a taste of what’s coming in January! Although FCTuckerEmge.com is already the area’s dominant real estate website we are launching a newer upgraded FCTuckerEmge.com next month. The enhanced site will have bigger, brighter pictures, a really cool mapping function and lots of other features I’m sure you will like.
Kathy and I extend our best wishes for a joyous holiday season.
If you had to come up with a single characteristic that the most effective home listings have in common, there are several good candidates:
A really well-crafted listing catches your eye with superior photography, for sure. But that’s not possible with every property. Good photographers know how to select the best angles, use light effectively, and eliminate distracting details (or at least downplay them). But since all homes aren’t equally photogenic, there are built-in limits to how even the most skillful listing creator can count on visuals to make a listing stand out.
Careful attention to detail is common in superior listings. The best listings don’t skimp on the details, or on brief adjectives that further enhance them—especially when they serve to differentiate a home from the pack. You can test this for yourself by scanning through some of today’s listings in Evansville. The best ones often have one or two relatively insignificant details that give a property character; that make it memorable. “Spacious walk-in closet” may not be nearly as important as “completely remodeled kitchen,” but for a certain number of prospective buyers, that can turn out to be the one detail that strikes a responsive chord (and creates a mental note to check this one out!).
Descriptions that employ proven advertising principles almost always make superior listings. One standby: arouse curiosity (headline writers are experts at this). An example might be “Brick barbecue center.” ‘What the heck is that?’ prospective buyers will ask themselves. Even if outdoor cooking isn’t even on their list of priorities, they might not be able to resist scheduling a home tour to find out…and sometimes a buyer is created!
But if I had to pick the one single characteristic most likely to be found in truly effective local listings, it would be this: The best listings in some way tell a story—add character to the cold facts. They stand out from other listings by engaging more of the reader’s imagination than others which are merely an illustrated bunch of data.
The ‘story’ may be a phrase that hints at a property’s interesting past: its historical origin or that of the neighborhood; a prominent previous owner; or an unusual construction history. For a fixer-upper, the story might be an expansive invitation to imagine how a creative Do-It-Yourselfer will be able to transform the property. For a luxury listing, the story might be an appeal to experience the full array of lavish trappings as the suitable reward for the accomplishments of a lifetime. The story may be fleshed out or merely hinted at by a well-worded phrase—but when listings contain the elements of a story, they add memorability.
Creating a stand-out listing is only one of the many elements that go into a successful home-selling campaign. I hope you will give me a call when it comes time to get your own home into the hands of a new owner! You can reach me on my cell phone: 812-499-9234 or email: Rolando@RolandoTrentini.com
For anyone who has looked into to buying a home several times—but kept getting discouraged every time because of a negative credit report—read on!
You probably already know that you are not alone—but so what?—it’s small consolation, especially when you consider how much financial ground you lose every year you continue to pay rent (the entire amount of which has zero tax deductibility). Many people mishandle credit in their teens and 20s, not knowing how it can come back to bite them when credit reports determine their credit worthiness. We see the fallout in the form of mortgage application turndowns or discouraging interest rate proposals.
But that just makes it all the more important that you stop letting past errors continue to keep you from getting the loans and rates you want. You can choose to take action now to clean up that credit score. Not only will it speed the moment when you become eligible for the significant benefits of home ownership—the actions you take now will serve to set you in the driver seat when it comes to credit management. You will become aware of any apparently minor oversights that can depress your credit score for years to come. It will put you ‘in the game’ of credit report management, instead of continuing to be a passive outsider.
Steps consumers can take now:
Review your credit file for accurate information
The credit reporting bureaus’ job is to report the most accurate information possible, but in the past the Federal Trade Commission has found that 5% of reports have at least one mistake. Get your current credit report from any number of services (start with a free one: you can always subscribe to a paid service later). Check all the accounts and verify that the amounts reported and the account statuses are correct. If a creditor reported your information incorrectly, file a dispute through the credit bureaus’ online sites to get the inaccuracy fixed. The same FTC report says that 13% of consumers who reported an error saw a boost in their credit score.
Get old negative accounts removed
Credit reports carry negative information like missed payments or a collection account for seven years, but are required to delete it after that. If an account is lingering past the seven year mark, use the dispute tools available on credit bureaus’ websites to mark the account as too old for reporting. Note that the seven-year time period is calculated from the date of first delinquency, not the date the account was first opened.
Talk to collection companies about their input
Even when you pay off collection accounts, that history continues to hurt your credit score. Some lenders look solely at those details when starting the process, so even paid collections can disqualify you for a loan. Instead of dealing with this frustrating problem, while you are negotiating with collection agencies to pay off a debt, ask that they put in writing that they will remove their report as part of their part of the bargain for your satisfaction of the debt. Some agencies will and some won’t (but it can’t hurt to ask).
Once you have acted, and begun to see the negatives dropping off your current credit report, your path to local home ownership will open up markedly. Then it’s time to give me a call! You can reach me on my cell phone: 812-499-9234 or email:Rolando@RolandoTrentini.com
Despite what just feels like the right answer, buying a home in Evansville can be significantly cheaper than renting one. It’s one of those rare cases where, if you stop and make common sense judgments about the factors at play, the ‘just feels like’ conclusion is the opposite of the one common sense leads you to. Much of the reason has to do with short-term versus long-term considerations (buying a home starts with paying a sizeable down payment, after all); but over the long haul, the amount of cash at stake is so great it’s worth taking a hard look at this fundamental housing choice.
Four leading factors that currently come into play:
· Increased Demand Has Made Rentals More Expensive
After the subprime mortgage mess-between 2007 and 2013—something like 6,200,000 people were added to the number of tenants. That boost created enough extra demand for rental units that owners had no trouble increasing monthly rates. It’s a simple case of too little supply chased by too much demand.
· Low Interest Rates Make Homes Cheaper in the Long-Run
The current unusually low interest rates makes the tradeoff with renting an easier call. This fall, home buyers can expect to find 30 year mortgage packages at rates in the low 4% range. If interest rates rise considerably—which just about everyone expects—rental rates can be expected to rise proportionately as landlords cover the added expense. But those who buy a home lock in the lower interest rate: the ‘price of money!’
- Buying a Home Yields Predictable Cash Flow
When you buy a home, your mortgage comes with a repayment schedule that shows you exactly how much you are required to pay each month until the end of the loan’s term. With a fixed rate mortgage, the monthly payment amount is an iron-clad guarantee of what you will need to budget. With a fixed rate loan, the dollar amount will usually stay the same (or even fall as the mortgage nears its end). Conversely, unless a major change occurs in the rental market, rental prices will continue going up. And the common sense of consumers knows what to expect, reflected in last month’s Mortgage Reports headline:
“Consumers Expect Rents to Rise 2x Faster Than Home Prices in 2015”
· Buying is a Long-Term Investment for Stability
In addition to the price rise factor, renters will have to keep paying rent for a lifetime—while homeowners eventually get to stop making mortgage payments. Anyone buying a home in their 30’s can expect to have paid for it before they reach retirement. That’s very good news, because their living expenses will go down around the same time they start making less money. In contrast, renting just keeps getting more expensive…which can put extra financial pressure on retirees.
If you find yourself on the cusp of renting or buying a home in Evansville, today’s rates should weigh heavily in your decision. If you find that it makes financial sense to buy, the next step is easy: give me a call! You can reach me on my cell phone 812-499-9234 or email: Rolando@RolandoTrentini.com
Having a home for sale as autumn swings into full bloom has more than one advantage. First off, this is definitely not looky-loo season—the majority of home shoppers this time of year tend to be serious-minded (perhaps because many are hoping to be comfortably moved in by the holidays). Whatever the reason, because many other owners will wait until spring to put up their own home for sale, if you are listing now, you can usually count on a narrower amount of competition.
A subtler reason why fall is an exciting season to put up a home for sale has to do with what can be a presentation advantage—the same reason home décor professionals like this time of year. It’s the Autumn Advantage: a time of year loaded with eye-catching decorating ideas. When the leaves start to change, it’s time to take advantage of the autumnal decorations that can make any home for sale extra inviting.
- Pumpkins aren’t Just for Jack-o’-Lanterns
Modern Man may have cracked the atom and devised telescopes that can see to the very edge of the Universe, but it has still failed to come up with a way to spruce up a home for fall without adding a pumpkin or two. Why fight it? There are a thousand ways to use the ubiquitous squash in arresting placements. One example is to cut a generous hole in the top, then drop a fall-appropriately planted pot (think gold, red, orange and brown) through it, flowers and all. This “pumpkin plant pot” can work to add color both inside and outside any home for sale.
· Re-purpose an old Window
Where a rustic touch is appropriate, another autumnal planter idea is to find a discarded wooden window (the more thoroughly weathered, the better: decorators call it ‘up-cycling’), secure a potted plant to it, then hang it on the wall in place of a family picture (remember: when you have a home for sale, it’s recommended to remove as many of the personal mementos as possible). This “outside inside” décor trick creates a seasonal feel you can add to by embellishing further with dried leaves and berries.
· Scents of Autumn
Using scents can be central to fall decorating. These seasonal aromas can be counted upon to trigger positive memories for the visitors to your home. Scented candles are an appropriate way to add ambiance to your house. You can go further by tying cinnamon sticks around your candles, or adding a few drops of clove and cinnamon oil to your potpourri or fall arrangements (just don’t overdo it)!
· Fall: a Season for Comfort
If you’re thinking warm fires, plump cushions and plush throws to emphasize the coziness of the season, you’ll make it happen. A comfortable home highlighted with fall colors sets a scene that boosts the beauty of a home for sale unlike any other time of the year.
Whether you have already listed your home for sale, or are just now setting the stage, give me a call to put together a marketing blitz that will use the season to make that sale happen! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
Market Watch October 2014
I have a lot of interesting information and statistics for this month’s Market Watch, but before I start that discussion I think I should share some basic real estate concepts. First, basic economic concepts apply to real estate. For example, increased supply results in decreased demand, which lowers prices. Conversely decreased supply results in increased demand, which increases prices. The catch to this basic principle is that other factors such as the general state of the economy, the job market, interest rates and consumer optimism also affect prices as well as buyers and sellers desire to buy or sell homes. With this most basic background let’s now explore some interesting trends in the market.
First, according to The Wall Street Journal, new home sales (as opposed to previously owned homes) were at their highest level in August since May of 2008. These sales were up 33% compared to August of last year. Although this is clearly good news, I think we should view this in context of very low new home construction over the past few years. Good numbers in August suggest full year totals of between 400,000 and 450,000 new home sales for all of 2014. Although this is clearly an improvement from less than 250,000 sales a few years ago, it still falls far short of the 1 million new homes that sold at the height of the real estate boom. Increased new home sales have left only a 4.8 month supply of new homes on the market.
A second fact, according to RIS Media, is that prices increased for the 30th consecutive month when compared to the previous year. This statistic seems pretty clear. Home prices continue to rise at what has remained a pretty steady pace. The median price of a home nationwide is now $219,000.
My third fact, again according to RIS Media is that in the 2nd quarter of 2014, 950,000 homes returned to a positive equity situation, meaning that these homes are now worth more than the outstanding mortgage balance on those homes. As you may recall, when the real estate market was adversely affected by the last recession many homes nationwide lost value and owners owed more in mortgage loans that their homes were worth. RIS claims that as of today, 14.9% of homes nationwide are still in a negative equity situation but that represents 2 million fewer homes underwater than just a year ago.
I think we can draw several conclusions from this data. First, the real estate market is on sound ground and continues to improve. Second, new home construction continues to recover. Third, prices continue to rise slowly. And finally inventory levels are still lower than normal and there is demand for more listings.
All of the information in this month’s Market Watch is national data although I believe that the same trends I’ve just discussed apply locally. As is always the case with real estate, demand and price for homes is always specific to one individual home. Please give me a call if you would like to discuss the value of your house or the home you are considering buying. You can reach me on my cell phone 812-499-9234 or email: Rolando@RolandoTrentini.com
If you want to do some research before we talk, the most accurate information on our local real estate market is always at FCTuckerEmge.com.