Posts Tagged ‘Homes’

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What is a Housing Bubble? Is One Forming?

July 7, 2015

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The recent talk of Greece and its financial challenges has some questioning whether the U.S. could also return to the crisis we experienced in 2008. Some are looking at the rise in real estate values and wondering whether we are in the middle of another housing price bubble.

What actually is a price bubble?

Here is the definition according to Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania:

“A price bubble is a rise in price based on the expectation that the price will rise. Sooner or later something happens to erode confidence in continued price increases, at which point the bubble bursts and prices drop. What makes it a price bubble is that the cause of the price increase is an expectation that the price will increase, which sooner or later must reverse itself.”

Does Professor Guttentag believe we are in another housing bubble?

In a recent article, he explained:

“My view is that we are a long way from another house price bubble. Home buyers, lenders, investors and regulators now understand that a nationwide decline in house prices is possible — because we recently lived through one.”

What are home prices doing?

Though home values are continuing to appreciate, the acceleration of the increases has slowed to year-over-year numbers which reflect a healthy housing market. Here is a chart showing year-over-year appreciation since January of last year:

Case-Shiller

We can see that appreciation rates have dropped from double digit numbers to more normal rates of 5% or lower.

Bottom Line

We think Nick Timiraos of the Wall Street Journal put it best in a recent tweet:

“Predictions of a new national home price bubble look unfounded for now, according to data.”

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Homes Sales Up in Almost Every Price Range

June 15, 2015

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The National Association of Realtors’ most recent Existing Home Sales Report revealed that home sales were up rather dramatically over last year in five of the six price ranges they measure. Only those homes priced under $100,000 showed a decline (-10.1%). The decline in this price range points to the lower inventory of distressed properties available for sale and speaks to the strength of the market. Every other category showed a minimum increase of at least 9%, with sales in the $250,000- $500,000 range up 21.2%!
Here is the breakdown:

Sales-Up-STMWhat does that mean to you if you are selling?
Houses are definitely selling. If your house has been on the market for any length of time and has not yet sold, perhaps it is time to sit with your agent and see if it is priced appropriately to compete in today’s market.

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2 Out of 3 Renters Want to Own. What’s Stopping Them?

June 9, 2015

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The Federal Reserve Bank of New York recently released the 2015 SCE Housing Survey. The survey revealed that most current renters would prefer owning and that 61.9% of them plan to buy a home within the next five years.

68.3% stated they would prefer owning (with 45.6% saying they ‘strongly’ prefer owning). When asked at what point in the future do they think they will own a primary residence:

  • 8.2% said within a year
  • 15.3% said in 1 to 2 years
  • 38.4% said between 3 to 5 years

What’s Holding Them Back?

Of the 68.3% who would prefer to own, 2 out of 3 cited difficulty in getting a mortgage for the reason they do not own. However, many believe that the reason so many think that it would be difficult to get a mortgage is not fully based on current market realities.

For example, studies have shown that there is confusion over the amount of money needed for a down payment. Research has shown that 40 to 50% of Americans believe that between 15-20% is the minimum required for a down payment. In reality, there are many programs available at 5% and even 3%. There are even some programs that don’t require any down payment (ex. VA loans).

Others fear they need a perfect credit score or believe that the overall mortgaging process has become almost impossible. Actually, the Mortgage Credit Availability Index, a report from the Mortgage Bankers Association, has shown that, over the last seven months, access to mortgages has gotten much more available.

And the NY Fed study suggests that some renters are waiting for interest mortgage rates to fall even further. Fifty percent of the renters surveyed believe mortgage interest rates will fall over the next year and almost 10% believe that they will fall by more than 1%. However, the reality of the situation is that Freddie Mac, the Mortgage Bankers Association and the National Association of Realtors are all projecting that rates will be significantly higher at this time next year. They are all predicting mortgage rates will be almost 1% higher!

Bottom Line

Many renters want to own their own home. Some are not moving forward based on misunderstandings regarding the mortgage process. If you are currently a renter who desires the benefits of homeownership, sit down with a local real estate professional to determine what your options actually are.

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Happy New Year!

March 6, 2014

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Happy New Year???????? It’s March 6th of 2014 and I have to admit…I’m a wee bit late getting this blog up and rolling again. The holidays flew by in a flurry of activities and closings. Seriously…lots of closings. I’m thrilled that 2014 was a great year in real estate but it also leaves me little time to update the blog and chat with my favorite peeps. So, I’m starting my New Year’s resolution a few days late (well, a few months late) and letting you know that I resolve to keep you updated on Orlando real estate and I resolve to be a better hunter and gatherer of information on all things real estate. I don’t take these things lightly and I LOVE what I do. I will just work on being more communicative with you about selling Florida homes. Cheers my friends.

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Show me the money – from contract to close on a home…

July 16, 2013

In today’s real estate world…financing is critical. It is often the difference between deal or no deal. So, how do you make it work? There are a number of factors to consider:

1. Is the buyer’s lender local and reputable?
2. Has the buyer been pre-APPROVED?
3. Is there a significant down payment?
4. Will the house appraise?

Without a yes answer to the above questions, your contract could be in jeopardy. It is always important to work with a lender who properly qualifies prospects, No ambiguous language allowed on that pre-approval letter (look for the “out” clauses”)! Make sure you actually talk to the lender and find out the specifics on the borrower. Is the buyer putting down some funds…money talks in this market and deals are done when the buyer has contributed to the bottom line. Finally, is the home priced right? In today’s market…we don’t want to be a part of the problem. We have to be problem solvers!

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Stumped on home upgrades??????????? Here’s some ideas…

May 16, 2013

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Stumped as to which home upgrades make sense? Interested in renovations for value, but you’re unsure what to tackle? I have a few simple guidelines I use to help clients narrow their scope and focus on the right choices.

Question #1: How long will you live in your house?

If you’re hunkering down for the next decade or two, don’t hesitate to do what you would most appreciate in your home. This is especially true of cosmetic changes, when appealing to potential buyers is a non-issue. After a decade or two, your upgrades might need upgrades, so go with projects that make the most sense for your taste and the way you prefer to live in your home.

Question #2: What have the neighbors done?

There’s wisdom in getting an idea what the surrounding homes look like. On one hand, you may get inspiration from ways in which your neighbors have transformed homes which are probably similar to yours. On the other, you’ll get an idea how much renovation you can get away with in your market. Upgrade to hard and heavy and you might not be able to get any of that money out if you’re going to sell, since the home will need to be listed far above market comparables.

Question #3: What’s a hassle in your house?

If something in your home is a hassle, it’ll probably bug prospective buyers as well. Is there limited storage space? Nowhere for guests to stay? An old-fashioned bathroom with a funky layout? There’s good reason to handle these headaches. You’ll not only enjoy the upgrade while you live in the home, but you’ll improve it for buyers when the time comes to sell.

When you get down to actual projects, there are details to consider, such as budget, timing, and design choices, but these three questions go a long way to getting your upgrade ideas organized.

I’m also available to offer my professional thoughts on possible upgrades. Get in touch if you’d like me to stop by for a walk-through of your home. I’ve seen hundreds of homes and would love to provide a helpful perspective: Call me at 407-925-7721 or email: lindahutchinson@msn.com.

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The Art of Real Estate (or any type of) Negotiation

March 19, 2013

In my mind, a successful negotiation is not where one side has pulverized the other. You don’t “win” a negotiation; you get the best possible outcome for your clients while doing the least harm. No one should leave a negotiation angry. After all, you never know when you might have to negotiate with the same people again.  When it comes to negotiating on behalf of my clients, I keep the following in mind:

 

Set the stage: I like a location that’s quiet, neutral, pleasant, and away from distractions and confusion.  It’s best if everyone turns off their devices, and refrains from calls or texts during negotiations.

 

Be prepared: I never enter without my homework. I verify any outstanding facts before the negotiation begins. (Later fact-finding can cause a negotiation to bog down!)

 

Present a united front: I represent clients and have been hired to act on their wishes. At times I may not agree with their position, but I never share that with the other side. If I feel a client’s position is less than optimal, I only discuss it with them in private

 

Leave attitudes at the door: It’s very simple… treat everyone in the negotiation with respect, regardless of personal opinions. If anyone disagrees, disagree with the idea, not the person.

 

Watch non-verbal cues and body language: (Sorry, but I can’t reveal all of my secrets here… suffice it to say I take it all in!)

 

Hold something in reserve: I discuss concessions with my clients beforehand and only offer these concessions when we absolutely need to concede something.

 

I don’t harp about points that don’t matter to my clients: Negotiations should never choke over a minor point.  I like to get agreement on major points such as price and terms and put lesser items aside to return to later.

 

Never volunteer too much information: Knowledge is power in a negotiation. Telling the other side any information, however insignificant seeming, could weaken my clients’ position. On the other hand, I learn as much about the other side as I can.

 

If you ever need someone on your side in a real estate negotiation, feel free to contact me directly: 407-925-7721 (Cell or Text) or lindahutchinson@msn.com.