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Flat Home Sales A Sign Of Market Challenges


New numbers from the National Association of Realtors show sales of existing homes were virtually unchanged from the month before. Down 0.7 percent from June, sales were up in the West but a drop in the Northeast negated the gains. Lawrence Yun, NAR’s chief economist, says a lack of available homes continues to hold sales back. “Listings continue to go under contract in under a month, which highlights the feedback from Realtors that buyers are swiftly snatching up moderately-priced properties,†Yun said. “Existing supply is still not at a healthy level, and new home construction is not keeping up to meet demand.†In short, there are more buyers than there are homes for sale in many markets and it’s making it challenging for buyers this summer. Fifty-five percent of the homes sold in July were on the market for less than a month and, though inventory had been seeing modest gains, it stalled in July. That means, market conditions aren’t likely to change much in the months to come, so buyers should prepare for competition this fall and make sure to be pre-approved by a lender before heading out to look at homes.

Close-up of a 'For Sale' sign outdoors.

Builders Remain Confident In New Home Market


The National Association of Home Builders’ Housing Market Index measures how optimistic builders are about the new home market. Scored on a scale where any number above 50 indicates more builders view conditions as good than poor, the survey has been conducted for 30 years and is a good indicator of where the current new home market is and where it may be headed. In August, the index fell one point but remains high at 67. Randy Noel, NAHB’s chairman, says there are some challenges but overall builders are seeing strong demand for new homes. “The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,†Noel said. “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor, and dearth of buildable lots.†Three-month moving averages show the South and West have the highest level of builder confidence with each scoring in the 70s. The Northeast and Midwest score lower, but that may be due to the fact that there are more existing homes available in those regions, leading to less demand for new homes.

A rustic wooden house under a clear blue sky with barrels and stacked bags outside.

 

Do You Need An Agent To Buy New Construction?


Buying a newly constructed house from a builder is a little different than buying an older home from its owner. To start with, you aren’t able to choose from a list of upgrades and customizations when buying an existing home. You’re also entering a transaction with someone who has an attachment to the home they’re selling and probably a different set of motivations than a builder whose livelihood depends on making a profit. In other words, it can feel, to a buyer, like the process of visiting a builder’s sales office is so wholly different than buying an existing home that they may not need an experienced real estate agent to represent them. This, however, can be a mistake. After all, you’re still entering into a major financial transaction with many variables and risks. You’ll want to have someone with experience who can look after your best interests and make sure you’re getting the best deal. Otherwise, you’ll be working with a team employed directly by the builder you’re buying from. That doesn’t mean you won’t get a good deal but it does mean you’ll be the only one whose top priority is getting what you want at a fair price. More here.

Sign indicating new construction at a site with dirt and ground visible.

 

Equity Rich Homeowners Double Those Underwater


It wasn’t long ago that the housing market suffered a foreclosure crisis. Homeowners saw their home values drop and were in the unfortunate position of owing more on their mortgage than their home was worth. Today, however, home prices have rebounded and, in some markets, surpassed previous highs. One sign of that recovery can be found in ATTOM Data Solutions’ Q2 2018 U.S. Home Equity & Underwater Report. The numbers show that there are far more homeowners who are equity rich – which ATTOM defines as owing 50 percent or less on your home’s estimated market value – than there are homeowners who are underwater. Daren Blomquist, senior vice president with ATTOM, says though there are more equity rich homeowners, the gains aren’t necessarily evenly distributed. “Nationwide the number of equity rich homeowners is more than twice the number of seriously underwater homeowners, but the gap between home equity haves and have-nots persists because home appreciation is certainly not uniform across local markets or even within local markets,†Blomquist said. More here.

A close-up of a foreclosure sign outside a house.

America’s Homes Are Growing Older

You can tell a lot about the way an area grew by the age of its homes. The pace of suburban sprawl, for example, can be mapped just by observing the way homes get newer as you get further from the city’s center. Houses built in the 1920s give way to homes from the ’50s and ’60s and so on. But that’s not all you can learn from paying attention to the collective age of the country’s housing stock. You can also tell a lot about the housing market’s ups-and-downs. One example can be found in a recent analysis from the National Association of Home Builders. According to the NAHB, the median age of owner-occupied homes is now 37 years, which is up from 31 years in 2005. In fact, more than half of our homes were built before 1980 and 38 percent were built before 1970. In other words, America’s homes are getting older. But why? One reason is that there have been fewer new homes built over the past decade, mostly due to the housing crash and financial crisis. That has caused an increase in the median age of the housing stock. It also has caused a boost to the remodeling industry, as older homes require more renovations to keep up with new technology and features desired by home buyers. More here.

How Land-Use Regulations Affect A Home’s Price


The value of a particular house has to do with many different factors. The condition of the house, the location, the school district, supply, demand, and the surrounding neighborhood’s amenities are among some of the most well known. But a recent analysis has pinpointed another, less well known, factor that may help push prices upward. According to the study, areas that have stricter land-use regulations – such as density laws and permit review times – have seen much larger increases in home values compared to areas with less restrictive regulations. What does this mean? Well, it’s fairly simple. In areas where builders have a more difficult time building new homes because of local laws and procedures, fewer new homes get built. And, during times when there are a lower-than-normal number of existing homes available for sale, that can cause price increases to accelerate, as there will be more buyers than homes for sale. However, it’s important to note that the areas with the strictest land-use regulations also tend to be major coastal cities, where available lots are already hard to come by. In other words, there are a lot of factors that go into how a home is priced and the rate at which its value rises or falls. More here.

Newly constructed house with a spacious porch and garage under a clear sky.

What Today’s New Home Buyer Wants


Naturally, home builders need to keep up with what buyers want. If they’re building homes without incorporating the features home buyers desire, they won’t be in business very long. And that’s why it’s good to check in with builders if you’re curious about the latest home design trends. For example, according to one recent survey conducted by home builder Ashton Woods, buyers no longer prefer an all-white kitchen. In fact, today’s home buyer is more likely to choose natural wood cabinets, with white cabinetry coming in second followed by distressed wood. Other trends cited in the survey include buyers’ desire for hobby rooms and home offices. Hobby rooms that provide a space for homeowners to pursue their favorite past time were named by 76 percent of participants, who said they’d pay extra for a home with a bonus space. Offices were similarly popular with large majorities of respondents. Today, we can work almost anywhere and that includes our homes. So it comes as no surprise that home builders are seeing an increase in the number of buyers who want a home office in their next house. Overall, respondents expressed a desire for customization, with two thirds saying they’d choose a builder who offers options over one that doesn’t. More here.

Large suburban house with multiple gables and a well-maintained lawn.

 

Why You Should Be Optimistic About Homeownership


Home buyers this year have faced higher prices, more competition, and rising mortgage rates. In short, it’s been a challenging year. But that’s not to say it isn’t a good time to buy a house. There are many reasons to be optimistic about homeownership, in fact – and a few that put current conditions in perspective. Take mortgage rates, for example. According to Freddie Mac, the long term average is 8.16 percent, which means today’s rates are still low historically. Also, home equity is increasing. In fact, it’s up 13% year-over-year. And rising home equity means today’s homeowners are seeing their investment grow. There is also evidence that market conditions may begin to improve. For one, new home construction has been making gains and that means more homes for buyers to choose from. It also means buyers should begin to see prices moderate and competition wane, as more new homes are built to meet today’s high level of buyer demand. In short, there are a lot of good reasons to be optimistic about buying a house this year, despite market challenges. More here.

Aerial view of a city neighborhood with roads and houses.

Mortgage Activity Mostly Flat Last Week


When the economy was struggling following the financial crisis and housing crash, interest rates were kept low to encourage economic activity. However, as the economy and job market have improved, the Fed has gradually begun to raise rates. This is part of the reason mortgage rates are higher than they were last year at this time. But, though there has been a slight upward trend, more recently, rates have been somewhat flat. Joel Kan, the Mortgage Bankers Association’s VP of economic and industry forecasting, told CNBC there’s a reason for this and it can be seen in the results of the MBA’s most recent measure of mortgage application demand. “Treasury yields were up slightly thanks to the Fed signaling more rate hikes this year, the strong economy, and low unemployment,†Kan said. “But continuing trade tensions between the U.S. and China kept Treasury rates down, which meant mortgage rates were unchanged from the week before.†In short, though the economy is strong, global economic uncertainty has been keeping rates from moving significantly higher in recent weeks. Still, despite flat rates, the MBA found demand for mortgage loans was also relatively unmoved from one week earlier. More here.

Wooden blocks spelling out 'MORTGAGE' on a wooden surface.

 

Home Buyer Must Haves Mean Compromise

Searching for a home to buy can be frustrating. Mostly because it’s not always easy to find a house in the right neighborhood with every one of the features you dreamed of. If you find the perfect kitchen, the house will have too few bedrooms. Or you’ll find a house with the right number of bedrooms and the kitchen will be too small. In other words, buying a house means compromise. And, in today’s market, buyers are having to make difficult choices. For example, a new analysis from the National Association of Realtors’ consumer website found that for 73 percent of recent buyers school district was an important factor in deciding which house to buy. But, among those buyers, nearly 80 percent said they had to give up other home features in order to find a house in their preferred district. Some of the features these buyers said they gave up included a garage, a large backyard, an updated kitchen, and an outdoor living area. In short, you might not get everything you want in one house. So prioritize your wish list and know what’s most important to you. More here.

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