Catch up with deferred maintenance

After the Great Recession, the country’s housing stock deteriorated.  Many financially strapped home owners could not afford the cost of maintaining their home.  Many of those home owners deferred maintenance thinking they would do it when their financial picture got better.  Others abandoned their homes, willing to face foreclosure to have a fresh start.

deferred maintenance
Home quality

As a result, the housing stock deteriorated as time passed. Foreclosed homes deteriorated during the foreclosure process.  And many others decided to sell their deferred maintenance home.  It wasn’t until five to seven years after the recession that “the cost of doing nothing” was realized.

However, the antithesis was the many home owners who opted to update and remodeled their homes in lieu of moving.  The decision to stay and “make do” was primarily because of the depressed home sale market. Many home owners who wanted to move couldn’t because the potential sale price would have been much lower than what the home owner needed to move.  Additionally, there were many who were “under-water,” meaning that their mortgage payoff was higher than what the home was worth at that time.

As the market improved, home sellers realized that their well maintained, renovated/updated homes, sell faster and for more. Real estate agents quickly embraced the idea of renovating prior to putting the home on the market.  The pay off for this strategy was evident in the recent sellers’ market (2020-2022), where well maintained and updated homes garnered a lot of attention, received multiple offers, and launched home sale prices to double digit increases.

Just as remodeling can increase the value of your home, deferring maintenance will decrease your home’s value. Unfortunately, many home owners, and their agents, believe that years of deferred maintenance can be overcome with simple and inexpensive renovations.  The truth is that years of deferred maintenance deteriorates the condition of your home, making it vulnerable to the elements, pests, and time.  Deferring maintenance also makes repairs and updates more costly down the road. 

If your home has deferred maintenance, it’s not too late to catch up.  If there are many projects with which to catch up, prioritize the most important.  You will find that as you catch up with deferred maintenance, your comfort and enjoyment of your home increases.  And if you’re planning a move in near future, keeping up with home maintenance will make your home sale preparation straightforward and easy.

By Dan Krell
Copyright © 2022

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Reading the housing stats

There has been lots of speculation about the economy and the housing market.  Reading the housing stats, there are a few similarities in today’s housing market compared to that of 2006-2007.  However, there are also many differences. 

Reading the housing stats
Home sale inventory is increasing

Of course, many of you reading the housing stats and bring up that this is as an indication of impending implosion. For example, the National Association of Realtors August 24th press release report on pending home sales indicated that pending home sales “…dropped slightly by 1.0% from June. It was the second straight monthly decline and the eighth in the last nine months.” There are however, regional differences, “Pending sales fell in three of four major regions, with the West posting a small increase. Compared to the prior year, contract signings declined by double digits in each region, with pending sales in the West down 30%.” Pending home sales is a measure of how many homes went under contract during a specified period of time.

Existing-home sales (resale homes) also declined according to the National Association of Realtors.  The NAR August 18th press release reported that existing-home sales “…fell for the sixth consecutive month to a seasonally adjusted annual rate of 4.81 million. Sales were down 5.9% from June and 20.2% from one year ago.

Although the contracts and sales are evening out, home prices continue to climb. As reported by the NAR, the median home sale price increased 10.8 percent from the same time last year.  According to National Association of Realtors Chief Economist, Lawrence Yun, “Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5% by the end of this year and into 2023. With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next yearThe ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June. Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers.

And for those of you who are interested in distressed sales, distressed sales (foreclosures and short sales) have been essentially unchanged over the last year. July sales comprised about 1% of distressed sales. 

By Dan Krell
Copyright © 2022

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Real estate agents have a role

real estate agents have a role
hire a professional

Last year, at the height of the latest sellers’ market, I talked to a friend about selling his property. He gleefully quipped “Haven’t you heard? Nobody uses a real estate agent anymore [to sell a home].” To be honest, I hear that every seller’s market…and it’s a false statement.  In fact, most home sellers hire a real estate agent to sell or buy a home. So, in response I asserted that Real estate agents have a role in the real estate transaction.

The National Association of Realtors’ 2021 Profile of Homebuyers and Sellers indicated that 90 percent of home sellers hired a real estate agent.  The reasons for hiring an agent to list your home apply in any market, and include assisting you to set the list price, to prepare the home, and to facilitate the sale process.

Setting the right sale price is important in any market. During a sellers’ market, it may be tempting to set a high sale price. But the fact is that you can still turn off home buyers with an unrealistic price.  A real-life example comes from a listing appointment I had last year.  The seller was disappointed in the price range I suggested for her home (her home was smaller than other homes in the neighborhood). She was clearly dissatisfied with what I shared and said, “In this market, all homes sell for more than the last one that sold.” This is also a false statement. In a market where homes sold on average 7 days, she wasted 30 days on the market only to sell for a price that was in the range I suggested based on comps and adjustments.

Home preparation is also a key factor in any market. Home preparation entails decluttering, staging and sometimes repairs.  Let’s face it, the better the home presents, the quicker it sells. In a seller’s market, a well-prepared home can elicit a bidding war, raising the sale price above list price. 

Hiring a real estate agent is not for everyone.  But the stats revealed by NAR’s 2021 Profile of Homebuyers and Sellers indicate that real estate agents have a role in the real estate transaction. Real estate agents are housing-market experts, recognizing and anticipating trends.  Agents can provide detailed market analyses to assist in formulating a home’s listing or sale price.

Furthermore, from the time your home is listed to the day of settlement, agents are facilitating the transaction. Starting with marketing your home, the agent will work to procure offers on your home and assist in negotiation. They will also assist in helping completing the sales contract and follow up on contingencies. They will also work alongside other professionals to ensure any bumps in the journey to settlement are worked out.

By Dan Krell
Copyright © 2022

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

The changing housing market is still viable

There are a number of ways to determine a changing housing market.  An obvious indicator of a changing housing market is a swelling home sale inventory.  According to the National Association of Realtors July 20th press release, “inventory of unsold existing homes rose to 1.26 million by the end of June, or the equivalent of 3.0 months at the current monthly sales pace.”  As a matter of comparison, home sale inventory rose 9.6 percent from the previous month, and 2.4 percent from the same time last year.

changing housing market
what experts are saying

Another indicator of a changing housing market is remodeling activity.  Believe it or not, there is an index for this.  The Leading Indicator of Remodeling Activity (LIRA) is a product of the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that investments in home remodeling will “decelerate” from 2022’s 17.4 percent to 10.1 percent by the second quarter of 2023.

In a July 19th press release, Project Director of the Remodeling Futures Program at the Center, Carlos Martín, stated: “Slowing sales of existing homes, rising mortgage interest rates, and moderating house price appreciation are expected to dampen owners’ investments in home improvements and maintenance over the coming year. Steep slowdowns in homebuilding, retail sales of building materials, and renovation permits all also point to a cooling environment for residential remodeling”

Although a changing market sounds ominous, it’s still a viable market. Abbe Will, Associate Project Director of the Remodeling Futures Program, stated: “While beginning to soften, growth in spending for home improvements and repairs is expected to remain well above the market’s historical average of 5 percent. In the first half of 2023, annual remodeling expenditures are still set to expand to nearly $450 billion.”

Other signs the market is still viable, is that first time home buyers are still a large part of the market, and all-cash transactions continue to be a factor as well.  As indicated in NAR’s press release, first-time home buyers accounted for 30 percent of the home sales in June, which is an increase from May, but slightly down from the 31 percent the same time last year. Additionally, buyers paying all cash accounted for 25 percent of home sales, which is an increase from 23 percent the same time last year.

A final note on the health of the housing market, NAR reported that distressed, foreclosure and short sales accounted for less than 1 percent of home sales during June, which is basically unchanged from the previous year.

By Dan Krell
Copyright © 2022

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Living with your HOA

If you’re buying a new home or a resale within a planned development (or already own is such a community), it’s very likely there is a home owners association, also known as HOA. The HOA has rules and covenants to live by, so to speak.  So, you’re not only living with your community, but living with your HOA as well.

Living with your HOA
Home buying process

Most residents and owners living under the umbrella of their HOA are interested staying within the lines of the rules and covenants. However, it’s difficult sometimes to be aware of all the rules as they sometimes change.  Getting an infraction notice isn’t the end of the world, as it’s just the HOA’s way of reminding you of the rules.  Most infractions are resolved without a fuss. 

It’s not unreasonable for you to want to live quietly in your own home.  Nonetheless, when you move into a community that has a HOA, you agreed to be living with your HOA rules and covenants.  

There may be occasions where the home owner feels that the HOA’s notice is a nuisance.  Sometimes home owners feel the HOA is unfair, they may feel singled out, and their voice is unheard.  It’s not uncommon that a home owner may feel as if the HOA is engaging in selective rule enforcement.  You may not agree with the HOA action or decisions, however seeking a resolution is mutually desirable.

Responsible community management is not a one-sided affair. It’s also the responsibility of the home owner to maintain the rules and covenants.  However, when there is a dispute, what can you do?  Fortunately in my area, there are neutral resources to assist in mediating disputes between community management companies, boards of directors and home owners. 

The Montgomery County Commission on Common Ownership Communities (housed within the Montgomery County Office of Consumer Protection) was established in 1991 and is committed to providing owners, tenants, residents, boards of directors, and community management companies with information, assistance, and impartial dispute resolution programs.  Statewide, the Consumer Protection Division of the Maryland Attorney General can receive complaints under the Maryland Condominium Act, as well as the Maryland Homeowners Association Act for resolution.

By Dan Krell
Copyright © 2022

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.