Some Buyers Prefer Smaller Homes

Some Buyers Prefer Smaller Homes | MyKCM

Over the past year, we’ve had plenty of opportunities to reflect on what we consider most important in our lives. The place we call home is one of the biggest things many of us are reevaluating. George Ratiu, Senior Economist at realtor.com, shares:

“The very nature of the pandemic, through the health implications, social distancing, and need to isolate, has really brought a central focus on the importance of home for most Americans…In a sense, it has elevated real estate markets as a centerpiece of our lives.”

For some, this has spurred an interest in making a move to a home that better suits our changing needs. In a recent study on today’s homebuyer preferences, the National Association of Home Builders (NAHB) states:

“When asked more specifically how the pandemic may have impacted their preference for home size21% or about 1 out of every 5 buyers, do want a larger home now as a direct result of the health crisis, while another segment – 12% – would prefer a smaller one instead.”

While you might expect more time at home to lead to a need for more space, it’s interesting that a significant portion of homeowners actually want less. For those who own larger homes right now and have a desire to move, today’s housing market is full of opportunities. Danielle Hale, Chief Economist at realtor.comexplains:

“In a real estate market that is tipped in the favor of sellers, boomers and older homeowners are really the ones holding the cards…Those who are selling homes can use the profits to help them buy new ones.”

As a homeowner today, you likely have equity that can be put toward the purchase of your next home. With the equity growth homes have seen over the past year, you may have more than you think, which can help significantly as you make a move into your next home. According to a report from the National Association of Realtors (NAR):

“Home sellers cited that they sold their homes for a median of $66,000 more than they purchased it. Sellers 22 to 30 years gained the least at $33,400 in equity compared to sellers 66 to 74 years gained $100,000 in equity as they likely had lived in their homes for a longer period of time.”

Despite the benefits of growing home equity, some homeowners are still hesitant to move and could be considering remodeling or making changes to their current space instead. However, if you’ve thought about aging in place rather than downsizing, you may want to reconsider. The U.S. Census Bureau points out:

Of the nation’s 115 million housing units, only 10% are ready to accommodate older populations.”

If your house is no longer the best fit for your evolving needs, it may be time to put your equity to work for you and downsize to the home you really want.

Bottom Line

Today’s housing market favors homeowners who are ready to sell their houses and make a move. If you’re thinking about downsizing this year, let’s connect to discuss your options in our local market.

Jim Armstrong
Broker
Armstrong Field Real Estate

Don’t Sell on Your Own Just Because It’s a Sellers’ Market

Don’t Sell on Your Own Just Because It’s a Sellers’ Market | MyKCM
In a sellers’ market, some homeowners might be tempted to try to sell their house on their own (known as For Sale By Owner, or FSBO) instead of working with a trusted real estate professional. When the inventory of homes for sale is as low as it is today, buyers are eager to snatch up virtually any house that comes to market. This makes it even more tempting to FSBO. As a result, some sellers think selling their house will be a breeze and see today’s market as an opportunity to FSBO. Let’s unpack why that’s a big mistake and may actually cost you more in the long run.

According to the Profile of Home Buyers and Sellers published by the National Association of Realtors (NAR), 41% of homeowners who tried to sell their house as a FSBO did so to avoid paying a commission or fee. In reality, even in a sellers’ market, selling on your own likely means you’ll net a lower profit than when you sell with the help of an agent.

The NAR report explains:

FSBOs typically sell for less than the selling price of other homes; FSBO homes sold at a median of $217,900 in 2020 (up from $200,000 in 2019), and still far lower than the median selling price of all homes at $242,300. Agent-assisted homes sold for a median of $295,000…Sellers who began as a FSBO, then ended up working with an agent, received 98 percent of the asking price, but had to reduce their price the most before arriving at a final listing price.”

When the seller knew the buyer, that amount was even lower, coming in at $176,700 (See graph below):Don’t Sell on Your Own Just Because It’s a Sellers’ Market | MyKCMThat’s a lot of money to risk losing when you FSBO – far more than what you’d save on commission or other fees. Despite the advantages sellers have in today’s market, it’s still crucial to have the support of an expert to guide you through the process. Real estate professionals are trained negotiators with a ton of housing market insights that average homeowners may never have. An agent’s expertise can alleviate much of the stress of selling your house and help you close the best possible deal when you do.

Bottom Line

If you’re ready to sell your house this year and you’re considering doing so on your own, be sure to think through that decision carefully. Odds are, you stand to gain the most by working with a knowledgeable and experienced real estate agent. Let’s connect to discuss how a trusted advisor can help you, especially in today’s market.

Jim Armstrong
Broker -Armstrong Field Real Estate

Homeownership Is Full of Financial Benefits

Homeownership Is Full of Financial Benefits | MyKCM

Fannie Mae survey recently revealed some of the most highly-rated benefits of homeownership, which continue to be key drivers in today’s power-packed housing market. Here are the top four financial benefits of owning a home according to consumer respondents:

  • 88% – a better chance of saving for retirement
  • 87% – the best investment plan
  • 85% – the chance to be better off financially
  • 85% – the chance to build up wealth

Additional financial advantages of homeownership included in the survey are having the best overall tax situation and being able to live within your budget.

Does homeownership actually give you a better chance to build wealth?

No one can question a person’s unique feelings about the importance of homeownership. However, it’s fair to ask if the numbers justify homeownership as a financial asset.

Last fall, the Federal Reserve released the Survey of Consumer Finances, a report done every three years, with the latest edition covering through 2019. Their findings confirmed that homeownership is a clear financial benefit. The survey found that homeowners have forty times higher net worth than renters ($255,000 for homeowners compared to $6,300 for renters).

The difference in net worth between homeowners and renters has continued to grow. Here’s a graph showing the results of the last four Fed surveys:Homeownership Is Full of Financial Benefits | MyKCMThe above graph only includes data through 2019, but according to CoreLogic, the equity held by homeowners grew by $26,300 over the last twelve months alone. That means the gap between the net worth of homeowners and renters has probably widened even further over the last year.

Some might argue the difference in net worth may be due to homeowners normally having larger incomes than renters and therefore the ability to save more money. However, a study by First American shows homeowners have greater net worth than renters regardless of their income level. Here are the findings:Homeownership Is Full of Financial Benefits | MyKCMOthers may think homeowners are older and that’s why they have a greater net worth. However, a Joint Center for Housing Studies of Harvard University report on homeowners and renters over the age of 65 reveals:

“The ability to build equity puts homeowners far ahead of renters in terms of household wealth…the median owner age 65 and over had home equity of $143,500 and net wealth of $319,200. By comparison, the net wealth of the same-age renter was just $6,700.”

Homeowners 65 and older have 47.6 times greater net worth than renters.

Find out how much your Massachusetts home is worth

Bottom Line

The idea of homeownership as a direct way to build your net worth has met the test of time. Let’s connect if you’re ready to take steps toward becoming a homeowner.

Jim Armstrong
Broker – Armstrong Field Real Estate

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What Does It Mean To Be in a Sellers’ Market?

What does it mean to be in a Seller’s Market as a Homeowner?

What It Means To Be in a Sellers’ Market

If you’ve given even a casual thought to selling your house in the near future, this is the time to really think seriously about making a move. Here’s why this season is the ultimate sellers’ market and the optimal time to make sure your house is available for buyers who are looking for homes to purchase.

The latest Existing Home Sales Report from The National Association of Realtors (NAR) shows the inventory of houses for sale is still astonishingly low, sitting at just a 2-month supply at the current sales pace.

Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (See graph below):What It Means To Be in a Sellers’ Market | MyKCMWhen the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. As a result, competition among purchasers rises and more bidding wars take place, making it essential for buyers to submit very attractive offers.

As this happens, home prices rise and sellers are in the best position to negotiate deals that meet their ideal terms. If you put your house on the market while so few homes are available to buy, it will likely get a lot of attention from hopeful buyers.

Today, there are many buyers who are ready, willing, and able to purchase a home. Low mortgage rates and a year filled with unique changes have prompted buyers to think differently about where they live – and they’re taking action. The supply of homes for sale is not keeping up with this high demand, making now the optimal time to sell your house.

Bottom Line

Home prices are appreciating in today’s sellers’ market. Making your home available over the coming weeks will give you the most exposure to buyers who will actively compete against each other to purchase it.

Jim Armstrong
Broker
Armstrong Field Real Estate

Don’t Go to Open Houses…

…unless you are prepared to make an offer.

But I just want to get an idea of what’s on the market.Open Houses in Salem MA

It’s great that you want to see what’s on the market, but you can actually do that from the comfort of your own home (or apartment) on any of the real estate search websites. What happens if you see a house that you really love? Are you fully prepared to make an offer – or to be totally disappointed that you can’t make one?

Here’s what you need to know before going to an Open House.

  • Be pre-approved for a mortgage by a well-known local lender. Those internet mortgage websites are convenient, but they do not hold as much clout to the listing agent as your local bank or mortgage company. Make sure your mortgage person communicates well and is available to talk with the listing agent after you make your offer. It is a very common practice for the listing agent to verify any pre-approvals that accompany offers. If your mortgage person does not return that phone call, it gives the impression to the listing agent that he or she will be poor at communicating through the entire buying process. This could hurt your chances of your offer being accepted by the seller. If you are a cash buyer you have an advantage, but you still need to provide evidence that you have the cash with a bank statement or letter from your bank stating that you have the funds to complete the purchase
  • If possible, have your REALTOR come to the open house with you so they can get an idea of the competition, and the condition and value of the property. Though they can do that just by looking at the MLS, they may be able to get some insight on the home from the listing agent who is hosting the open house.
  •  Be prepared to make an offer shortly after seeing the property. Because of the competition, most listing agents are only giving 24 to 48 hours to make an offer.
  • Make sure your finances are in shape and you have the cash to put down with the offer, which is typically $1,000, and with the signing of the purchase and sale agreement (P&S) that occurs approximately10 days later. The second deposit is typically 5% of the purchase price but that can be negotiated, especially if you are financing more than 95% of the property.
  • Once your offer is accepted you are going to have to contact a home inspector and an attorney immediately. Your REALTOR can help you with finding each of these professionals. The home inspection is typically done within 7 to 10 days of your offer being accepted, and before signing the P&S.

Being prepared is one of the most important things you can do when making an offer. There’s typically no time after an open house to contact a lender to get pre-approved since the process usually takes 2-3 days to get a solid, verified pre-approval. So if you don’t have that pre-approval letter in hand, go get it now, and then you can start going to open houses.

Jim Armstrong
Broker/Owner
Armstrong FIeld Real Estate
978-394-6736
jarmstrong@armstrongfield.com

 

Is Right Now the Right Time to Sell Your Home?

Is today the right time to sell your home?If you’re on the fence about selling your house, now is a great time to take advantage of sky-high demand, low supply, and fierce buyer competition.
With buyer demand rising and historically low inventory for sale, if you’re in a position to move, your house may really stand out from the crowd.
Let’s connect today to get your listing process underway.

Jim Armstrong
Broker/President
ARMSTRONG FIELD REAL ESTATE
978-394-6736
jarmstrong@armstrongfield.com

Where Are Home Values Headed Over the Next 12 Months?

Where Are Home Values Headed Over the Next 12 Months? | MyKCM

As shelter-in-place orders were implemented earlier this year, many questioned what the shutdown would mean to the real estate market. Specifically, there was concern about home values. After years of rising home prices, would 2020 be the year this appreciation trend would come to a screeching halt? Even worse, would home values begin to depreciate?

Original forecasts modeled this uncertainty, and they ranged anywhere from home values gaining 3% (Zelman & Associates) to home values depreciating by more than 6% (CoreLogic).

However, as the year unfolded, it became clear that there would be little negative impact on the housing market. As Mark Fleming, Chief Economist at First American, recently revealed:

“The only major industry to display immunity to the economic impacts of the coronavirus is the housing market.”

Have prices continued to appreciate so far this year?

Last week, the Federal Housing Finance Agency (FHFA) released its latest Home Price Index. The report showed home prices actually rose 6.5% from the same time last year. FHFA also noted that price appreciation accelerated to record levels over the summer months:

“Between May & July 2020, national prices increased by over 2%, which represents the largest two-month price increase observed since the start of the index in 1991.”

What are the experts forecasting for home prices going forward?

Below is a graph of home price projections for the next year. Since the market has changed dramatically over the last few months, this graph shows forecasts that have been published since September 1st.Where Are Home Values Headed Over the Next 12 Months? | MyKCM

Bottom Line

The numbers show that home values have weathered the storm of the pandemic. Let’s connect if you want to know what your home is currently worth and how that may enable you to make a move this year.

Buyers Are Finding More Space in the Luxury Home Market

Buyers Are Finding More Space in the Luxury Home Market | MyKCM

A year ago, additional space and extra amenities had a very different feel for homebuyers. Today, the health crisis has brought to light how valuable more square footage and carefully designed floorplans can be. Home offices, multi-purpose rooms, gyms, and theaters are becoming more popular, and some families are finding the space they need for these upgrades in the luxury market.

The Institute for Luxury Home Marketing (ILHM) explains:

“With quarantine concerns still top of mind for many luxury buyers, we see large, sprawling estates making their comeback.

For instance, the last six months have seen a resurgence in the buying of mega mansions and estate-size homes – specifically properties that offer space (both inside and outside), separate home offices, gyms, and private amenities such as swimming pools, yoga studios, and recreation rooms.”

This was not the case at this time last year, as the most recent Luxury Market Report from ILHM emphasizes:

“Exactly one year ago, we reported that demand for large properties, mega mansions, private estates, and luxury ranches had reduced significantly over the previous few years; especially from the younger generation of luxury property buyers.”

For today’s buyers looking for larger homes, steady increases in equity might be what makes a move possible. Leveraging home equity makes it easier to afford the down payment on a luxury home, and current low-interest rates are making mortgage payments more affordable than they have been in years. The report from ILHM also notes:

“Luxury real estate prices may continue to strengthen further into the third quarter, as the affluent continue to see large investment returns from the currently strong stock market.

Coupled with the low interest rates, the policies granting (and insisting) on working from home implemented by many employers, and the concerns of the pandemic, all translate to the affluent increasingly trading in their city lifestyle for a home that has it all.”

Clearly, today’s strong gains in home equity paired with record-low interest rates make fall a great time to move up into the luxury market to meet those changing needs.

Bottom Line

If you’re ready to gain some breathing room in a larger home, let’s connect so you have the guidance you need to find more space in the luxury home market.

Rising Home Equity Can Power Your Next Move [INFOGRAPHIC]

Rising Home Equity Can Power Your Next Move [INFOGRAPHIC] | MyKCM
Some Highlights

  • Massachusetts’ homeowners have experienced an average gain of $14,000 in equity.
  • According to CoreLogic, homeowners across the country are gaining significant equity.
  • Over the past year, the average homeowner gained $9,800 in equity, growing their overall net worth.
  • If you’re ready to sell your house and begin looking for your dream home, let’s connect to plan how your equity can make that possible.