4 Advantages Homeownership Offers Over Renting

To explain the true cost of not owning a home, I have the top four advantages homeownership provides that renting doesn’t.

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There are four main advantages to buying a home that, as a renter, you can’t enjoy. 

First, there are five great financial benefits: 

  • Homeownership is a form of forced savings. 
  • It provides tax savings. 
  • Homeownership allows you to lock in your monthly housing costs.
  • Buying a home today, on a national scale, is cheaper than renting. 
  • No other investment vehicle lets you live inside it. 

Second, studies have shown that homeowners have, on average, 44 times the amount of wealth that renters do. 

The average homeowner has 44 times the wealth that the average renter does.

Third, if you purchase a home with an average purchase price in 2017, you can build more than $48,000 in family wealth over the next five years. 

Finally, some people argue that renting eliminates the cost of taxes and home repairs, but any expenses the landlord incurs are included in the rent payment. 

If you are renting, I hope you have a greater appreciation of the value of homeownership. If you have any questions about the cost of not owning a home or you’re curious what it would take for you to buy a home, don’t hesitate to reach out to me. I’d love to help you.

The Truth Behind Rising Home Prices

Why are home prices on the rise locally and nationally? I’ll explain the real reason to you today.

Why are home prices increasing? I did a little research and am excited to uncover the real reason for you today.

Ultimately, it all boils down to supply and demand. I’m not trying to oversimplify things; this really is what’s happening at the local and national level.

As you can see in the chart in the video above, anything less than six months of inventory is considered a seller’s market. In this kind of market, home prices will go up.

A market with six or seven months of inventory is considered a neutral market. Home prices will only appreciate with inflation. We have not had a neutral market in quite a while.

Anything above seven months of inventory puts us in a buyer’s market. Since there is an oversupply of inventory, prices start to go down.

We have been in a seller’s market for the last five years.

Here in Richmond, inventory levels tend to vary by location. The further out you get from the city, the more these numbers get skewed. At the national level, however, we have been in a seller’s market for the past four or five years.

According to the National Association of Realtors, there are only 3.9 months of inventory for sale. That is the reason that home prices are going up.

It looks like we will remain in a seller’s market for the foreseeable future.

Again, here in Richmond, inventory can vary from area to area. If you have any questions about inventory levels in your specific neighborhood, just give me a call or send me an email. I would be happy to help you!

Top 5 Reasons for the Dip in Inventory

We’ve noticed that inventory is low across the country. Here are five reasons why that’s happening.

Today we’re going to talk about the top reasons for the incredible lack of inventory we’re seeing. This isn’t just happening in Richmond and the surrounding areas; it’s going on around the country. I have the unique opportunity of Masterminding with a lot of agents around the country, and this lack of inventory is definitely a national issue.

There are five points I want to touch on for this topic.

1. 47% of existing homeowners are worried they will not be able to find a home to buy. When almost half of the potential market is afraid to list their house for fear of not being able to find a new home, that’s a problem.

2. First-time buyer demand is absorbing a large share of available homes. These new buyers are driving the market right now.

When almost half of the potential market is afraid to list their house for fear of not being able to find a new home, that’s a problem.
3. 11.3% of existing homeowners’ mortgage rates are lower than the market rates are right now. They don’t want to give up the rates they’re comfortable with to move to a higher rate.

4. 10.6% of the whole market has insufficient or negative equity. It’s a small percent, but it is still impactful because those people aren’t able to sell their homes yet.

5. 4.6% of the reason is due to foreign buyer demand absorbing a share of available homes. They see real estate in the US as a really good long-term investment

All these figures together are the reason for which we’re experiencing such a lack of inventory right now.

If you’d like to dive into this further, please give me a call. I’d be happy to talk to you further about this issue, and, of course, to help you find a home. Be sure to make it a great day!

When Are You Committed to a Real Estate Agent?

When are you committed to a real estate agent? Today, I’ll answer three common questions about agent exclusivity for homebuyers.

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As a homebuyer, when are you actually committed to a real estate agent? There are three key points to consider. 

1. Why do agents demand exclusivity when representing you on the buy side?

I have eight buyer’s agent that work in our real estate company. They work really hard. Finding you a home means they are working seven days a week. They are passionate about serving you as homebuyers. 

When buyers show you houses, they use their years of expertise to find you a home. Some agents may show 20 or 30 houses to potential clients before they find one they want to make an offer on. That’s why agents have the agreement in place; they want to make sure they get paid. 

That said, the buyer’s agent does technically work for you for free. The seller actually pays their commission. The buyer’s agent just wants to get paid for their hard work.

In our market, you typically agree to work with an agent for six months.

2. Did you already sign a buyer’s agent agreement? What does that mean if you did?

Typically in our market, when you agree to work with a buyer’s agent, you will work with them for a period up to six months to find the home of your dreams. 

3. How can you terminate the agreement if you aren’t happy with the buyer’s agent’s services? 

In most cases, you can simply say, “I’m just not happy. It’s nothing personal, this is a business relationship. I would like to walk away.” 

For the most part, no Realtor wants to work with someone who is unhappy with services. Sometimes it can get ugly if the agent is not willing to terminate that agreement. In that case, you can go over the agent’s head to their broker. 

Again, that rarely happens. In most cases, you’re going to meet your buyer’s agent and have some sort of relationship before you work out the exclusivity agreement. 

Those are just a few things you should keep in mind when working with a buyer’s agent. If you have any other questions about hiring an agent or buying a home, just give me a call or send me an email. I would be happy to help you!

If you have any questions for us, don’t hesitate to give us a call or send us an email. We would love to hear from you.

5 Reasons to Sell This Fall

The fall is an underrated time to sell. Here are five reasons why it makes sense.

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Spring and summer may get all the publicity, but there are actually quite a few reasons why it makes sense to sell in the fall, especially this year. Here are five reasons why selling this fall makes perfect sense:

1. Demand is very strong. According to the NAR Buyer Traffic Report, demand remains strong throughout the vast majority of the country, including many locations in Central Virginia. Inventory below $300,000 is sparse and highly coveted.

2. There is less competition right now. With inventory down, there just aren’t a lot of homes for buyers to look at. It’s a strong seller’s market in homes priced $300,000 and below.

3. The process will be quicker. Mortgage lenders and title companies aren’t as busy during the fall months, so they’re able to get deals moved along much more quickly. Buyers are also becoming pre-qualified much sooner, which increases the speed of the process as well.

It’s a great time to be a move-up buyer.

4. There will never be a better time to move up. There is so much pressure on higher priced homes right now because the inventory for these homes is high. If you’re a move-up buyer, you can take advantage of the conditions by selling high and buying low in a higher price range. This is the best time in years to move up.

5. It is simply time to move on. This time of year could be an exceptional time for you and your family. Maybe you’ve been thinking about making a move for a while or maybe you just realized it’s time for a fresh start. Regardless, we’ll be here to help.

If you have any questions for us, don’t hesitate to give us a call or send us an email. We would love to hear from you.

The Best Way to Choose a Realtor

When selling your home it’s important to choose the right person to work with. You should always interview multiple Realtors.

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Selling your home is a big undertaking—you want to make sure that the person who helps you is qualified to do so.

So, should you interview more than one Realtor as you enter the listing process? The answer is: of course. Your home is usually your most important asset.

Last night I had a meeting with a couple about the sale of their home.

Everything went well and at the end of the night, I asked them if they felt comfortable moving forward. The wife replied with: “Absolutely!” Her husband didn’t look so sure. After looking at his wife for a moment, he spoke up to say that they had two more Realtors lined up to interview.

At that point, I offered to call the two Realtors and let them know that a decision had been reached. Again, the wife seemed enthusiastic—the husband, not so much. I of course told them I was kidding.

At that point I found out they had just had a bad experience with a previous Realtor. I absolutely understand this. As a Realtor, I fully understand the importance of talking to multiple agents before making a decision.

There are four key areas that all sellers should be comfortable with in the sale of their home.

Ultimately, there are four areas that sellers need to be comfortable with before settling on an agent.

The first and most important is price. If someone meets with three different Realtors and receives a vastly different price between the three of them, this is a bad sign. Though the prices will not be identical, there should be a general range within which all the prices fall.

Next is marketing. Finding out what a Realtor’s marketing budget will be is key. You should also ask how, specifically, an agent plans to expose your property to the public.

The third thing to consider is negotiation experience. If you were having chest pains and needed to choose a cardiologist, you would definitely seek out the professional who had spent the most time in their profession.

When something as serious as your home is on the line, you want to make sure you’re working with someone who knows what they’re doing.

A Realtor should have experience in negotiation, too. A home that sits too long on the market is likely not under the supervision of a Realtor who knows how to negotiate the best deals. A quality professional should be able to drive sales forward instead of letting things remain stagnant.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Housing Inventory Is at a 30-Year Low

Housing inventory has hit a 30-year low. How does this shortage impact you as a homebuyer or seller?

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New data from CoreLogic shows that even though buyers turned out en masse in the first quarter of 2017, homeowners did not make the jump to list their properties for sale in the second quarter.

As a result, housing inventory for the second quarter hit a 30-year low!

Sales are slowing down, but it’s not due to lack of affordability—it’s the low inventory levels.  

Unsold inventory in the second quarter was at 1.9%, which is the lowest second quarter reading we’ve had in over 30 years.

The second quarter of 2017 posted the lowest inventory we’ve seen in 30 years!

Thanks to low inventory, home prices are marching even higher, which is good news. Home prices are up 50% since the market dropped. Back when the market was shifting, I had to be very diligent when talking to potential sellers about their equity position because 50% of them—if not more—were upside down. It’s very rare to see that these days, so we are in a better equity position overall.   

Low mortgage rates are keeping the market very affordable. However, affordability will be a challenge in the years ahead until we resolve this inventory shortage.

Inventory across the United States has been down for 25 consecutive months. According to the National Association of Realtors, we now have a 4.3 months supply of inventory, which is pretty much a seller’s market.

That said, real estate is local. Here in Richmond, market conditions for start-up homes or trade-up markets are very hot right now. Homes below $250,000 are selling quickly, and homes below $200,000 are getting multiple offers. That’s great news for sellers.

Here’s the caveat: If you are a luxury or premium homeowner, the market in Richmond is following a similar pattern as the rest of the country. The luxury market is a buyer’s market. There is much less demand, and it doesn’t look like that will change anytime soon.

If you are a seller in the $250,000 and under price range, you have a great opportunity to sell in a seller’s market and move up to the luxury home market.

So, if you are thinking of selling your home, now is a great time to do so. If you would like to learn more details about your local market or you’re curious about what your home is currently worth, just give me a call or send me an email. I would be happy to help you!

Why Should You Sell Your Home This Summer?

Why should you consider selling your home this summer? I have five reasons to start.

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The summer selling season is off to a hot start. Here are five reasons why you should consider selling your home this summer.

1. Demand is really strong. I want to put a little disclaimer on this. It’s very location-sensitive. Certain areas are moving very fast and others aren’t. If you want more information about a specific market, let me know. The $250,000 and under market is absolutely nuts.

2. There is less competition. With such low inventory, the really good homes are selling quickly and for great prices.

3. The process is going to be quicker. It’s easier to sell now than it has been in years past.

4. There might never be a better time to move up. All the conditions are aligning. Home prices are predicted to go up by 5% this year, so waiting will end up costing you no matter what the price is now. You have an opportunity to sell high and buy low right now.

It might just be time to move on.

5. It might just be time to move on. My wife and I decided last November that it was time for us to move on and up into our dream home, and we’ve been happy with the decision ever since.

Maybe it’s time to reassess the reasons why you would consider selling and whether or not it’s worth looking at this point. If you have any questions about the market in the meantime, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

How the Zillow Lawsuit Impacts You

One Illinois homeowner is suing Zillow for their inaccurate Zestimate of her home’s value. This could mean big things for the industry.

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In case you haven’t heard, a woman in Glenview, Illinois has filed a lawsuit against Zillow claiming that her Zestimate repeatedly undervalued her house and created a roadblock to its sale.

You can check out the full story here.

It’s important to note that this suit is the first of its kind. Despite Zillow’s denial that they are offering appraisals, the fact that they promote the Zestimate as a tool for buyers to use when assessing the value of a property means that they do meet the definition of an appraisal under Illinois state law.

The lawsuit also argues that Zillow should be licensed to perform appraisals before running these Zestimates, and that Zillow needs to obtain the consent of the homeowner before listing the Zestimate online, which I can certainly understand.

The lawsuit asks that Zillow obtain a homeowner’s permission before posting the Zestimate.

The Zestimate in question is for Miss Anderson, who bought her townhome for $626,000 back in 2009. The property overlooks a golf course and is in a prime location, so she listed the home roughly for what she paid for it. However, the home’s most recent Zestimate was only for $562,000. She is suing Zillow to remove or amend her Zestimate; she is not seeking monetary damages at this point.

Zillow obviously has a different perspective on this website. They don’t view their Zestimates as appraisals. According to Zillow, Zestimates are simply a tool that helps people utilize proprietary formulae to assess value as a starting point.

Unfortunately, the accuracy of these Zestimates leaves much to be desired. Zestimates have a median error rate of 5%, which can translate into a lot of money lost in a home sale.

It will be interesting to see how this lawsuit plays out. Obviously, Zillow is a massive player in the real estate industry. They even purchased Trulia a couple of years ago, so this is a big deal. We’ll see if this lawsuit is just a flash in the pan or if it turns into something else.

You can hear more about this lawsuit from Barbara Corcoran, who recently appeared on “Good Morning America” to discuss the lawsuit.

Ultimately, this lawsuit should show you that you can’t rely on Zillow to come up with a home’s value. If you have any other questions about Zillow or real estate in general, just give me a call or send me an email. I would be happy to help you!

The Top Investment Vehicle in America

What is the top investment vehicle in America? According to Gallup, the answer is real estate.

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What is America’s favorite investment vehicle? Across the board, the answer is real estate.

An American family’s net worth is significantly higher when they own a home. On average, families who own some real estate are worth $225,000, while renters are worth about $5,000. Another way to look at that is a homeowner’s net worth is 45 times greater than that of a renter.

With those numbers, why would you pay someone else’s home off when you can pay for your own?

Why pay for someone else’s home when you can pay your own mortgage?

Gallup recently did a study where they asked Americans about which long-term investment vehicle is best. Real estate tops the chart at 34%, followed by stocks and mutual funds at 26%. Bonds only make up 5%.

If you break that number down by gender, men think real estate is the best long-term choice 37% of the time, while women think it is the best choice 32% of the time.

Even if you break it down by income category, real estate is still the top investment choice in America. If you check out the video above, you’ll see that people who earn over $75,000 are a bit more diversified in their investment choices. That’s because they have more assets and want to diversify their portfolio, but real estate is still at the top of the chart.

If you are interested in investing in the best investment vehicle in America, or if you have any questions about real estate in general, just give me a call or send me an email. I would be happy to help you!

What’s Happening in Our Local Real Estate Market?

Today, I’ll cover three things that you need to know about our current real estate market: price appreciation, pending sales, and inventory.

There are three main things happening in our real estate market that I want to focus on today: price appreciation, pending home sales, and our inventory levels.

However, I want to point out that in 2016, 15,616 houses sold every single day. That number is going up this year! Homes are selling at a faster clip than they have in years.

Now, home prices are up across all price points. Lower priced homes appreciated by 10%, lower-to-middle priced homes appreciated by 8.3%, middle to moderately priced homes appreciated by 7.3%, and higher priced homes appreciated by 5.5%. Homes in higher price points won’t see as much appreciation as others because once you cross the $500,000 mark, there is more inventory and less demand.

Pending home sales are the leading indicator of future performance. According to CoreLogic, last month’s index reading is 2.6% above last year’s. The number of pending sales is the highest it’s been since last April, and the second highest since May of 2006, when we were at the peak of the market.

Inventory levels are frighteningly low.

The most troubling factor in our current market is the low inventory. According to Jonathan Smoke, the chief economist at Realtor.com, the biggest challenge for buyers this spring will be finding homes.

My team and I can vouch for that; there is no inventory out there. Our nine buyer’s agents have to go knocking on doors to see if anyone is interested in selling their house. Even as inventory drops, demand keeps getting stronger and stronger. Check out the video to see one of the scariest home inventory charts that I’ve seen in awhile.

While those are the three main factors to pay attention to in our current market, I did want to quickly mention interest rates. Rates are creeping back up again and recently leveled off around 4.5%. It is yet to be determined how those rising rates will impact the market.

If you have any questions about our current market or if you are even thinking of selling your home, give us a call or send us an email. My team and I would be happy to help you!