home buyer Archives - Page 22 of 41 - Real Estate News and Commentary

June 4, 2015November 23, 2021

Survey may indicate buyers need attentive agents

A recent MarketWatch report indicated that the top four reasons why millennials are not buying homes include: lack of down payment; student loan debt; credit card debt; and not knowing where to start. The reasons per se may not surprise you; however, regional differences are interesting.

Daniel Goldstein’s May 30^th report (Millennials in Texas and in California reject home ownership for vastly different reasons; marketwatch.com) tries to tie together a recent Carrington Mortgage survey and the lack of homeownership participation among millennials. Since millennials are supposed to be the heir apparent to the U.S. economy; he ponders about why there is only a 38% homeownership rate (according to CoreLogic) among millennials when mortgage interest rates are at record lows. The figure pales in comparison to the homeownership rate of 52% of the same age group in 1980 – at a time of double digit interest rates!

Millennials in the western region of the U.S. seem to be mostly concerned about down payment. This may be due to the region including many high cost metro areas. Additionally, the western region has seen much of the home price growth and hot markets we hear about in the media.

Midwestern region millennials are mostly concerned about student loan debt, which has a direct impact on their debt-to-income ratio. The midwestern region has some of the lowest cost of living areas, which influences wages and ability to qualify for a mortgage.

The top concern for millennials in the northeast is credit card debt. And while having credit card debt is not necessarily a bad thing (as long as credit is not maxed out and payments are timely); many do not understand the general concepts of credit reports, and the relation between credit scores and credit card debt.

Whereas most of the country seems to be concerned about wages, savings, and debt; southern millennials (which includes Maryland, DC, and Virginia) are reported to be generally stumped about the home buying process.

What millennials reported in the survey is what generally daunts first time home buyers – the overwhelming process of buying a home. Although not considered rocket science, buying your first home can be intimidating. And it’s not just because it is one of the most expensive purchases of a lifetime; but also because the process is multifaceted with many possible pitfalls. Recent industry trends have also made the process less personal, leaving many home buyers to “figure it out” on their own.

Millennials’ concern about the home buying process may not necessarily be economics as it is about the industry itself. It may be a telling sign that “continuity of care” in the real estate industry is lacking, and should have many professionals revisit the client centered business model.

Although recent industry trends favor real estate agent teams as a means to high volume home sales; buyers who work with a team may not necessarily be overly satisfied with communication and support. Millennials and other first time home buyers may be seeking seasoned real estate agents and loan officers who are able to listen to their needs and concerns, while being able to educate and provide guidance. Much like having the ability to talk to a physician directly, rather than communicating through messaging services and technicians; having a single Realtor® who can promptly answer phone calls and emails, may greatly increase satisfaction and quality of service.

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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.

May 30, 2015July 6, 2019

Hot regional housing markets change reliance on MLS listings

Good news for home sellers, in most US regions. Tuesday’s news release from S&P/Case-Shiller Home Price Indices indicates a nationwide home price gain. The 10-city and 20-city composites continue to show home price gains, as the composites realized a 4.7% and 5.0% year over year gain respectively (month over month gains were 0.8% and 0.9% respectively). The nearby Washington DC region was not as robust as the other US regions in the composite, however, as home prices gained about 1% year over year and about 0.8% month over month (us.spindices.com).

The S&P/Case-Shiller index seems to be in agreement with the U.S. House Price Index Report issued by the Federal Housing Finance Agency (fhfa.gov), which indicated that national home prices gained 1.3% during the first quarter of 2015. However here in Maryland, home prices did not fare as well with a 0.38% decline year over year.

Hot markets in western regions of the US, such as Washington, are making news besides strong home prices. In one of the hottest markets in the nation, a Seattle Washington broker has decided to drop out of their MLS. Counter intuitive to the idea of maximizing listing exposure, Rob Smith of the Puget Sound Business Journal reported that Quill Realty is dropping out of their local MLS (Here’s why this Seattle realty company just ditched the MLS; bizjournals.com, May 18, 2015).

Instead of MLS placement, Quill intends to place listings on a number of websites, including Zillow, Redfin, and Realtor.com. The rationale is that sellers will save money from the 1% commission that is charged by Quill; while buyers of Quill’s listings “… will become responsible for working out a financial arrangement with their own broker.”

Of course, this is not an entirely new idea. There have been a number of seller oriented business models that have been devised over the years; with new variations popping up during hot markets. Many discount brokers and MLS placement services, which have survived the housing downturn, have continued to market their business model successfully.

Innovative or not, hot markets tend to make brokers become more protective of their listings by seeking ways to make them proprietary. Low housing inventory in some markets, along with increasing home prices and buyer competition can make a home listing a hot commodity. I will remind of the recent report indicating that pocket listings are on the rise. Pocket listings are listings kept out of the MLS and shown only to a select network of contacts and clients. And although pocket listings are often associated with luxury real estate, pocket listings in hot markets can occur across all price ranges because of the increased home buyer competition.

In response to recent trends, several regional Realtor® groups and brokers have been formulating a nationwide consumer MLS to provide the consumer with up to date relevant information (brokerpublicportal.com). Board member of the Broker Public Portal, Robert Moline (Home Services America) stated, “There is a tremendous amount of support and momentum throughout the MLS and brokerage communities to create a new choice for how and where to display their listings…”

And even though many home sellers are taking advantage of a seller’s market in their respective markets, home buyers are becoming increasingly resourceful as well. Many buyers are learning how to find home for sale in places other the MLS. Besides alternative listing websites, many buyers are also relying on neighborhood listservs (internet email lists) and internet groups for home sale notifications.

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By Dan Krell
Copyright © 2015

May 13, 2015June 3, 2020

New settlement rules may facilitate much needed communication

Signed into law July 21^st, 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act (aka Dodd – Frank) was intended to improve accountability and transparency in the financial system, to protect consumers from abusive financial services practices, and to end “too big to fail.” The Act created the Consumer Financial Protection Bureau, which enforces regulations to protect consumers and implements rules such as the Qualified Residential Mortgage (also mandated by Dodd – Frank).

Five years after enactment, Dodd – Frank seems to be the Act the keeps on giving with the upcoming implantation of Sec 1098; which states that the Consumer Financial Protection Bureau (CFPB) “shall publish a single, integrated disclosure for mortgage loan transactions” in a “readily understandable language” so as to help borrowers understand the financial aspects of their loan clearly and to be nontechnical.

The new disclosure and settlement statement is intended to present important information conspicuously to help consumers decide if the mortgage is affordable and give warning about undesirable loan features. The new forms seek to standardize fee and cost disclosures so as to make shopping for a mortgage easier. One of the more important aspects of the new regulation is that the new Closing Disclosure is to be given to the borrower at least three days prior to settlement. During the three days prior to closing, changes to the Closing Disclosure that increase charges are prohibited (unless allowed by exception).

Firm timelines for closing and mortgage associated matters, have always been a crucial aspect of the home purchase contract. Not adhering to the dates specified in the contract usually has consequences. However, changes to Realtor® contracts are being considered to reflect the three day waiting period. What was once a firm timeline may no longer have the “time is of the essence” feel, as future contract revisions may not hold the buyer in breach of contract if the home does not close by contract settlement date. Carryover issues may also include implications to meeting loan commitment and appraisal contingency timelines.

If you’re buying a home, note that there are a number of situations that could cause your closing date to be rescheduled because of a “reset” to the three day waiting period, including a loan product changes, 1/8% increase in APR, and/or there is an added pre-payment penalty. Additionally, other lender actions may also require you to reschedule closing; such as a lender required repair with reinspection.

Many in the industry are also concerned about routine buyer and agent pre-settlement walkthroughs. Rather than prior to closing, they will have to be scheduled to allow for negotiation on potential issues without resetting the three day waiting period (and cross your fingers that nothing happens to the home the three days prior to closing).

However, CFPB Director Richard Cordray was quoted emphasizing “The timing of the closing date is not going to change based on the final walk-through…” in a National Association of Realtors® (realtor.org) May 12^th press release reporting on speakers at a regulatory issues forum.

The complexity and implications of the new regulations will undoubtedly cause some confusion in the first days of implementation. However, the new rules inadvertently address one of the weak links to the real estate transaction – communication. Many are beginning to recognize the necessity for everyone involved in the transaction to be proactive and communicate with each other to ensure compliance.

May 8, 2015September 24, 2018

Basements, humidity and dehumidifiers

There seems to be a misconception of the relationship between basements, humidity and dehumidifiers; which probably results in the dehumidifier being one of the most misunderstood and least respected household appliances. This is apparent because many first time home buyers are turned off to any home where they see a dehumidifier, thinking there is a moisture problem. The dehumidifier doesn’t even have to be running; it could be turned off and tucked away in a closet.

The battle that all home owners deal with is keeping moisture out of the basement. Of course, regular maintenance can retard water penetration from the exterior: having the proper grading and extending downspouts will keep rainwater away from the home’s foundation. And serious water penetration issues should be resolved by licensed professionals. However, if the home doesn’t have a foundation or water penetration issue, basement humidity is still an ongoing battle. And if your home has an in-ground basement, chances are you know what I am talking about.

Believe it or not, it’s not necessarily a water problem that dictates humidity in a basement; but rather it’s physics. More precisely: thermodynamics and entropy. Put simply: temperatures in your home seek equilibrium, and warm air will move toward cooler air. Basements tend to be cooler than the upper floors because warm air rises. However, as the temperature seeks equilibrium, the warm air will also move toward the cooler basement air. When warm air meets cold air, the air condenses and develops humidity.

Basements, humidity and dehumidifiers

Although humidity is generally thought of as the amount of moisture in the air; according to Dehumidifier Basics(energystar.gov), it is most commonly referred to as “relative humidity” or RH. “RH is the amount of water vapor actually present in the air compared to the greatest amount of water vapor the air can hold at that temperature.” An RH between 30% and 50% is considered to be optimal. When RH is above 50%, bacteria and mold may grow.

If you don’t have a dehumidifier, you might consider buying one to help maintain the optimal RH in your basement. Dehumidifiers are differentiated by capacity, which is described as pints per 24 hours (measured by the size and conditions of the area where the unit may be placed). Energy Star provides a chart to help you decide the capacity best suited for your needs.

If you already have a dehumidifier, you might be surprised to know that most units are not meant to be operated in areas that are below 65°F (according to Energy Star); however, there are models that are designed for lower temperatures. If you use your dehumidifier in temperatures below 65°F, the unit may not function properly even though you may hear the compressor running. Below 65°F, frost can form over the condensing coils inhibiting the unit from removing moisture from the air. If your unit frosts, it should be unplugged and allowed to defrost.

Although some units are designed to be placed against walls, Energy Star recommends placing your dehumidifier in an area that allows free circulation of air around the unit for optimal operation. And of course, refer to manufacture’s manual for operation and electrical safety warnings.

Maintaining a comfortable RH level in the home can be achieved, and it starts by proper home maintenance. However, a dehumidifier may be necessary for optimal comfort. Energy Star (energystar.gov) provides consumer information about selecting and safely operating a dehumidifier.

Original published at https://dankrell.com/blog/2015/05/08/basements-humidity-and-dehumidifiers-whats-the-problem/

By Dan Krell

April 9, 2015July 28, 2019

Home buyer survey predictive of spring housing market

I think it’s safe to say that many of us have been anticipating spring’s warm weather; if not for a change of pace from arctic temperatures, it’s the season that the housing market swings into top gear. However, Fannie Mae’s March 2015 National Housing Survey^™may support anecdotal reports of home buyer attitudes toward home prices and is making some re-think their estimation of the spring market.

The April 7^th Fannie Mae (fanniemae.com) press release titled, “Lackluster Income Growth Weighing on Americans’ Housing Sentiment: Share of Consumers Expecting to Buy a Home on Next Move Reaches Survey Low” might convey that not all home buyers are looking to buy a home this year. However, the news is not all gloom and doom. Although the survey indicated that 60% of respondents said they would buy a home if they were to move, which is an all-time survey low; the percentage of those who responded that it was a good time to buy a home hit an all-time survey high. Additionally, there were fewer respondents in March’s survey who felt their financial situation would improve in the next year.

The survey is described by Fannie Mae as “The most detailed consumer attitudinal survey of its kind.” It polls 1,000 Americans on their attitudes about such things that include (but is not limited to) homeownership, the economy, household finances, and overall consumer confidence. Fannie Mae senior vice president and chief economist Doug Duncan remarked about the March survey: “… results emphasize how critical attitudes about income growth are to consumers’ outlook on housing.” However, consumer sentiment should improve as income growth is realized.

Fannie Mae’s March survey is coming on the heels of news of a possible economic slowdown. The Wall Street Journal’s Kate Davidson reported on March 25^th (GDP Growth Estimates Tumble, Again: wsj.com) that the latest Gross Domestic Product estimates may be a repeat of last year. While several Wall Street economists revised lower their Q1 2015 GDP estimates from 0.9% to 1.5%, the Federal Reserve Bank of Atlanta lowered their Q1 2015 GDP estimate to 0.2%.

If last year’s pattern is being realized, the survey’s consumer sentiment and economic news is just a blip on the radar. Remember that the Q1 2014 GDP was negative as the economy retracted, however rebounding with 5% third quarter growth. Likewise, 2014 home sales rebounded later in the year only finishing the year only 3% behind 2013 (according to the National Association of Realtors®). And as the NAR reported on March 30^th that pending home sales rose during February, it is estimated that existing home sales will increase 6.4% during 2015 compared to 2014 (nar.realtor).

The upshot of this data could be that consumers are saying is that it’s a good time to buy a home, but only if you can afford it. However, it’s not just about the dollar amount; home buyers are increasingly demanding value for their money. Buyers are looking at the bigger picture of the costs of homeownership including maintenance and commute to work. And this attitude can be reflected in home buyers’ push back on home prices.

If you’re a home seller, relatively low housing inventory is good news; but pricing your home correctly may be the definitive factor. And as you might anticipate home buyers competing for your home; consider that some have reported that that low appraisals have impacted their sale.

By Dan Krell
© 2015

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Basements, humidity and dehumidifiers

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