10-Year Housing Surge on the Horizon?

Daily Real Estate News | Wednesday, August 26, 2015

The housing market is poised for one of its largest expansions in history. By 2024, demographic and economic changes are forecasted to bring 15.9 million additional households on board, according to a new study released by the Mortgage Bankers Association.

That means an average of 1.6 million additional households per year, sparking “housing market growth over the next decade that would be among the strongest the U.S. has ever seen,” according to the report.

The MBA report says the bulk of that growth will be from increases in the number of households who are headed by those age 60 and older and households headed by age 45 and younger. Those age group increases are expected to mitigate the decline among households age 45 to 60.

“An aging population should gradually increase demand for home ownership, partially offsetting the influence of a more racially and ethnically diverse population on home ownership rates,” the MBA report notes.

The Census Bureau projects the following breakdown in ages emerging in 2024, as compared to 2014:

  • 20 million more people age 60 and over than there are today (as Baby Boomers age),
  • 4 million fewer people age 45 to 59 (as the large Baby Boomer cohorts are replaced by smaller Generation X cohorts) and
  • 18 million more people age 18 to 44 (as smaller Generation X cohorts are replaced by larger Millennial cohorts)

Household growth is also expected to be driven by 5.5 million additional Hispanic households. For other races, 3.4 million additional non-Hispanic White households are expected to form by 2024, 2.4 million additional black households, 1.8 million more Asian households, and 730,000 additional other households.

Source: “Housing Demand,” Mortgage Bankers Association (2015)

“Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission”

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08-24-15 Distinctive Real Estate Statistics

08-24-15 Weekly Real Estate Statistics

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6 Misperceptions About Home Staging

By Patti Stern, PJ & Co. Staging and Interior Decorating

Staging your home involves creating an environment that house hunters can envision themselves living in and can help to facilitate a speedy sale and for top dollar. Quite simply, if potential buyers don’t feel an emotional connection with your home, they won’t feel like they belong there and they’ll be inclined to look elsewhere.

That said, why would home owners make the selling process more difficult for themselves by choosing NOT to stage their property in order to make the best impression? The following are some misconceptions that sellers have about home staging.

1. It’s too expensive.

Staging is an investment in getting a house sold for top dollar and always less than the first price reduction on a home. According to the Association of Staging Professionals (ASP), 95 percent of staged homes sell in 11 days or less and sell for 17 percent more than homes that are not staged. When compared with the carrying costs of a home that lags on the market (monthly mortgage, utilities, landscaping/snow removal, etc.), the cost of staging is far less.

2. Our home has been professionally decorated.

Decorating and staging are completely different. Although home owners may love the way their house looks and it suits their needs perfectly, it may not appeal to the tastes and style of today’s buyers. An accredited home stager has the experience and objectivity to prepare a home for mass appeal in the current marketplace to engage as many buyers as possible — no matter what their personal style.

 

3. We don’t need a stager to declutter and clean.

Although these may seem like easy tasks, there is a lot of emotion that goes into depersonalizing a home after so many years of accumulating personal belongings. An accredited stager will provide a detailed action plan to neutralize and remove any items that will distract from the home’s features to get the house sold.

4. We can’t stage the house if we’re living in it.

Staging is absolutely not just for vacant homes. Every home can be staged while it’s occupied and a professional stager will provide home owners with tips for keeping the home in show-ready condition while the home is on the market — and still feel comfortable in their own home.

5. We can wait and then stage later if needed.

There is a lot of truth to the popular phrase “you never get a second chance to make a good first impression.” If you don’t stage before you list, you will inevitably lose time and money.

 

6. Staging won’t hide all the problems.

Before beginning the staging process, sellers should address basic repairs such as leaky faucets and broken lights first so buyers won’t have a reason to turn away as soon as they walk into a home. Once this is done, a staging company will handle superficial imperfections such as repainting walls and removing outdated wallpaper to make the home aesthetically inviting and comfortable.

 

“Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission”

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Distinctive Real Estate Statistics 08-17-15

08-17-15 Weekly Real Estate Statistics

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Designers, Builders Reveal Hot Trends for 2015

January 2015 | By Meg White

At the combined International Builders Show and the Kitchen & Bath Industry Show in Las Vegas last week, REALTOR® Magazine picked up three key trends to watch for in the coming year and beyond.

Designers and builders are starting to realize this foodie thing isn’t just a passing phase, and many are thinking about how best to serve a growing niche in kitchen design.

“Think about different questions to ask home owners about their food acquisition,” says Judith A. Neary, principal of Roadside Attraction Design Studio LLC in Vashon Island, Wash. “Do you have a garden? Do you do canning? Where do you store that? I have to have these conversations with them. We’re trying to plan a kitchen solution for that.”

These changes are also reflected in appliances, with foodies demanding high-temperature cooking options—in excess of 700 F. There’s also been an increase in interest in induction cooking, which heats pots using strong magnets, according to chef and author Jan D’Atri.

“I don’t think the technology was there before. Now it is, and it’s a great option.”

D’Atri also predicts high-end consumers will soon expect newer cooking options, such as the combi ovens (a steam and convection oven rolled into one) instead of a traditional second oven.

But small changes can make a big difference in the foodie kitchen of tomorrow, too. “It’s all about being really thoughtful about the things that are going to make a difference,” says Karman Hotchkiss, executive editor for Better Homes and Gardens’ Special Interest Media. She notes that a niche within the larger foodie niche, the “baker’s kitchen,” often includes a surface with “little divots for bringing eggs up to temperature. That’s really thoughtful.”

This year’s show was buzzing with talk of smart home technology. But builders and designers were also told to be cautious in their embrace of emerging smart home technology.

“Be careful about who you hitch your wagon to,” says Jacob Atalla, vice president of sustainability initiatives at KB Home. He notes that there are a lot of relatively unknown companies serving up new home technology products, and there’s no guarantee how long they’ll be around or how well their products will work. “There could be some disappointments in the future, so we shouldn’t rush into it.”

Chad Davis, senior director of digital media at the National Association of Home Builders, says that while this new technology—which includes products that control a home’s HVAC, entertainment systems, and appliances from the cloud—is overhyped and destined for a reality check, that doesn’t mean that it’s not here for the long haul.

“You’re going to hear in the next few years, ‘This didn’t work. This is a disappointment.’ Don’t buy that,” Davis says. “This is a fundamental shift in what is going to happen with our industry.”

Which colors are residential designers gushing over most?

“Warm Stone is my new favorite paint color,” says Kay Green, president of Kay Green Design Inc. in Winter Park, Fla., of the Sherwin-Williams neutral shade. “Chocolate brown is the new black and gray is the new beige.”

Stephanie Moore, principle of Moore Design Group in Dallas, agrees. “Everything in color terms is going more gray,” she says, though “white is huge in this industry now; I didn’t think it would ever come back.” Moore suggests using light, medium, and dark elements when staging to implement these trends in an eye-pleasing way.

Gray has been popular for a while, but Green says there’s been a change in how grays are fitting into the residential color palette.

“Now we’re using it with teal and straw yellow,” she says. “It’s a much more interesting color than it used to be.”

One color trend that surprises Green is the popularity of avocado with millennials.

“I’m thinking, ‘Why are you so excited about this color?’” She says she later realized that it was a generational thing: “It’s because they didn’t have a refrigerator that color growing up!”

“Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission”

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Take the Stress Out of Homebuying

Buying a home should be fun, not stressful. As you look for your dream home, keep in mind these tips for making the process as peaceful as possible.

  1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.
  2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make that much difference in price, and a good home won’t stay on the market long.
  3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.
  4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.
  5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.
  6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.
  7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
  8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.
  9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.
  10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is to serve as a comfortable, safe place to live.

“Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission”

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Distinctive Real Estate Statistics for 08-10-15

08-10-15 Weekly Real Estate Statistics

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Does Moving Up Make Sense?

 

These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.

  1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.
  2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.
  3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district.
  4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.
  5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.
  6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

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No Housing Bubble in Sight

Surging home sales and prices raise affordability questions

Statistically speaking, housing is on a roll. Year-to-date home sales are up 6.3 percent and prices in May were 7.9 percent higher than a year earlier. The trends are expected to stay positive and are likely to boost business dollar volume by as much as 15 percent in 2015. These statistics don’t even include new-home construction, which is growing at a strong clip as well.

But this rosy picture does raise concerns about affordability. After all, wages are rising by only 2 percent annually and renters are getting squeezed, having to endure 4 percent rate hikes while home prices accelerate more quickly. In addition, mortgage rates have notched their highest level of the year, reaching about 4 percent in June, and should continue to rise well into next year.

Some armchair analysts have suggested that we’re entering a new housing market bubble. But hard facts suggest otherwise. Underlying conditions today are fundamentally different from the bubble of a decade ago. Back then, credit was easy to obtain and home sales were running at more than 8.5 million a year (existing and new homes combined). New-home construction volume topped 2 million annually.

By comparison, credit today is extremely tight, which has led to an unusually high level of all-cash sales. Home sales are barely over 5 million and new-home construction is barely scratching 1 million units. Meanwhile, for the past eight years, total mortgage balances have fallen. The reasons show what’s changed from 10 years ago: Home owners are paying their mortgages on time and few are seeking cash-out refinances.

It’s fair to ask, though, whether at some point affordability problems will choke off home buying. That’s possible. But here’s my thinking about what could neutralize those fears. After running various scenarios, I expect home prices to rise continuously as long as mortgage rates remain under 6 percent. Early in the summer, the average rate was 4 percent. It may rise to 5.5 percent by the end of next year. Should mortgage rates cross the 6 percent mark, maybe two years down the road, then either home prices will be flat or other forces will be evident. Going forward, keep in mind that robust job creation and meaningful increases in income levels will help propel home prices. For now, though, no bubble or impending crash is in sight.

“Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission”

 

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