Today, Americans are moving for a variety of different reasons. The current health crisis has truly re-shaped our lifestyles and our needs. Spending extra time where we currently live is enabling many families to re-evaluate what homeownership means and what they find most important in a home.
According to Zillow:
“In 2020, homes went from the place people returned to after work, school, hitting the gym or vacationing, to the place where families do all of the above. For those who now spend the majority of their hours at home, there’s a growing wish list of what they’d change about their homes, if possible.”
With a new perspective on homeownership, here are some of the top reasons people are reconsidering where they live and making moves this year.
1. Working from Home
Remote work is becoming the new norm in 2020, and it’s continuing on longer than most initially expected. Many in the workforce today are discovering they don’t need to live close to the office anymore, and they can get more for their money if they move a little further outside the city limits. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) notes:
“With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
If you’ve tried to convert your guest room or your dining room into a home office with minimal success, it may be time to find a larger home. The reality is, your current house may not be optimally designed for this kind of space, making remote work and continued productivity very challenging.
2. Virtual Schooling
With school about to restart this fall, many districts are beginning the new academic year online. Education Week is tracking the reopening plans of schools across the country, and as of August 21, 21 of the 25 largest school districts are choosing remote learning as their back-to-school instructional model, affecting over 4.5 million students.
With a need for a dedicated learning space, it may be time to find a larger home to provide your children with the same kind of quiet room to focus on their schoolwork, just like you likely need for your office work.
3. A Home Gym
Staying healthy and active is a top priority for many Americans. With various levels of concern around the safety of returning to health clubs across the country, dreams of space for a home gym are growing stronger. The Home Builders Association of Greater New Orleans explains:
“For many in quarantine, a significant decrease in activity is more than a vanity issue – it’s a mental health issue.”
Having room to maintain a healthy lifestyle at home – mentally and physically – may prompt you to consider a new place to live that includes space for at-home workouts.
4. Outdoor Space
Especially for those living in an apartment or a small townhouse, this is a new priority for many as well. Zillow also notes the benefits of being able to use yard space throughout the year:
“People want more space in their next home, and one way to get it is by turning part of the backyard into a functional room, ‘an outdoor space for play as well as entertaining or cooking.’”
You may, however, not have the extra square footage today to have these designated areas – indoor or out.
Moving May Be Your Best Option
If you’re clamoring for extra space to accommodate your family’s changing needs, making a move may be your best bet, especially while you can take advantage of today’s low mortgage rates. Low rates are making homes more affordable than they have been in years. According to Black Knight:
“Buying power for those shopping for a home is up 10% year over year, with home buyers able to afford nearly $32,000 more home than they could have 1 year ago while keeping their monthly payment the same.”
It’s a great time to get more home for your money, just when you need the extra space.
People are moving for a variety of different reasons today, and many families’ needs have changed throughout the year. If you’ve been trying to decide if now is the time to buy a new home, let’s connect to discuss your needs.
One of the bright spots of the 2020 real estate market is the growth in equity homeowners are experiencing across the country. According to the recently released Homeowner Equity Insights Report from CoreLogic, in nearly every state there was a year-over-year first-quarter equity increase, averaging out to a 6.5% overall gain.
The report notes:
“CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $590 billion since the first quarter of 2019, an increase of 6.5%, year over year.” (See map below):
This means that “In the first quarter of 2020, the average homeowner gained approximately $9,600 in equity during the past year.”
That’s a huge win for homeowners, especially for those looking to sell their houses and make a move this summer. Having equity to re-invest in your next home is a major force that can make moving a reality, especially while buyers are expressing such a high demand for homes to purchase.
Below, Frank Martell, President, and CEO of CoreLogic addresses the potential long-term outlook, and how homeowners will likely fare much more positively through the current recession than many did during the last one:
“Many homeowners will experience a recession during their lifetime, and it is reasonable to compare the current recession to those in the past. But the comparison is not apples to apples — every recession is different. Primary drivers of the Great Recession were an overbuilt housing stock, risky mortgages and the collapse of home prices, creating a massive increase in negative equity that proved difficult to recover from. Today’s housing environment has low vacancy and delinquency rates and a large home equity cushion.”
Now is a great time to consider leveraging your equity and making a move, especially while buyer interest is high. Let’s connect to explore your equity position and make your next move a reality.
DID YOU KNOW? In celebration of Pride Month, Robert will be chatting with the Executive Director of GLSEN Eliza Byard TODAY at 4pm ET and their conversation will be live-streamed in the Compass Workplace group. GLSEN is an organization recognized worldwide as a pioneering leader in the fight for educational equity and in making sure that LGBTQ students are able to learn and grow in a school environment free from bullying. Thank you to Elizabeth Ann Stribling-Kivlan, OUT at Compass and Compass Cares for pulling together this event!
DID YOU KNOW? Russian President Vladimir Putin now has a “disinfection tunnel” installed at one of his official residences to protect him from contracting the coronavirus. Could this become the next X-RAY machine we have become so accustomed to at airports?
DID YOU KNOW? Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than a year ago, the 9th consecutive week of gains and the highest volume in more than 11 years! The average interest rate for a 30 year fixed-rate mortgage decreased to 3.30% from 3.38% (CNBC)
DID YOU KNOW? Retail sales, a measure of purchases at stores, at restaurants and online, increased a seasonally adjusted 17.7% in May from a month earlier. Expect more GOOD NEWS headlines like this over the next few weeks and months after weeks/months of bad headlines. While the higher you climb the further you can fall is true.....so too is it true that when you have fallen to a deep low, chances are it's up, up, up from there! (WSJ)
DID YOU KNOW? Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading above 50 indicates a positive market. In April, it plunged a record 42 points to 30. Of the index’s three components, current sales conditions jumped 21 points to 63. Sales expectations in the next six months rose 22 points to 68. Buyer traffic more than doubled from May to June, from 22 to 43.
“The dollar is going to fall very, very sharply,” - Steven Roach, Yale University, citing growing debt and diminished savings. If this happens, could it spur a new wave of foreign buyers? Again, this is just one of many predictions/opinions.
DID YOU KNOW? The total of new COVID-19 cases from the top 5 states in the USA is 2.5X that of the next 5 states, to put things into perspective. The top 5 states have a total population of around 108 million, while the next five have almost 47 million people. So the top 5 have a ratio of 78.7 new cases per million inhabitants. The next 5 have 71.7 new cases per million inhabitants. A cheap and widely-used steroid called dexamethasone has become the first drug shown to be able to save lives among COVID-19 patients in what scientists said is a “major breakthrough” in the coronavirus pandemic.
DID YOU KNOW? Housing starts that measure how many single-family homes builders break ground on probably will fall to 770,000 this year, the lowest level since 2015, according to the NAR. The 1.47 million properties on the market at the end of April was the lowest ever recorded for the month, according to NAR data. Americans created 11.4 million households in the 10 years through 2019, according to Census data. Builders sold 5.2 million single-family homes in the same period. In the prior decade, they sold 10.4 million new houses. Supply disruptions and the COVID-19 lock downs that ensued have made the situation worse. (Housingwire)
DID YOU KNOW? American biotech company Novavax has started the first human study of its experimental Coronavirus vaccine and expects initial results on safety and immune responses in July. Last week, Moderna reported positive development on its vaccine trial: all 45 participants had developed coronavirus antibodies. Merck plans to work alongside IAVI, a non-profit scientific research organization, to develop a potential vaccine against the Coronavirus. (CNBC)
DID YOU KNOW? Lumber prices for July delivery are up 46% from a low on April 1 and 15% higher than a year ago, indicating a rebound in construction demand. With trade tensions with China worsening, don't expect construction costs to go down: the exact opposite is possible. (WSJ)
DID YOU KNOW? Current cash levels are above a historical average dating back to 2005. Cash allocations have risen to nearly 14% for Bank of America clients. Over $1 Trillion could enter the markets soon..... the S&P 500 is up more than 35% since March 23. (CNBC)
DID YOU KNOW? French GDP fell 5.8% in the three months to March, while Italy’s GDP contracted by 4.7%. In the previous quarter, their GDP fell by 0.1% and 0.3% respectively. GDP in Germany and the U.K. was down by around 2%, with GDP for the entire European Union shrinking by 3.3%. U.S. GDP fell by 1.2% in the first quarter, compared to 0.5% in the previous quarter. The second quarter could be as bad, if not worse as shutdowns extended. The World Bank has forecast a worldwide GDP contraction of 5% this year.....although I think we should always judge a year at the END of the year! After a big fall.....expect big rises! I am optimistic! (CNBC)
DID YOU KNOW? Mortgage availability has tightened sharply as lenders impose tougher income, credit-score and down-payment conditions and drop some loan types altogether, such as home-equity lines of credit. If you have any clients seeking to buy now or over the next few months, be certain to evaluate their credit scores early and connect them with a 'credit clean-up' consultant ASAP to improve their score.but a strong credit score alone may not be enough, so pre-approving buyers early may be more important now than ever. JP Morgan Chase said it wouldn’t make loans without a 20% down payment or a credit score of 700 or above. Wells Fargo stopped allowing cash-out refinancing loans. (WSJ)
There are many benefits to working with a real estate professional when selling your house. During challenging times like the one we face today, it becomes even more important to have an expert help guide you through the process. If you’re considering selling on your own, known in the industry as a For Sale By Owner or FSBO, please consider the following:
1. Your Safety Is a Priority
During this pandemic, your family’s safety comes first. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings, but your family’s health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitization during and after a showing, and even facilitating virtual tours for buyers, agents are equipped to follow the latest industry standards recommended by the National Association of Realtors (NAR) to help protect you and your family.
2. A Powerful Online Strategy Is a Must to Attract a Buyer
Recent studies have shown that, even before COVID-19, the first step 44% of all buyers took when looking for a home was to search online. Throughout the process, that number jumped to 93%. Today, those numbers have grown exponentially. Most real estate agents have developed a strong Internet and social media strategy to promote the sale of your house. Have you?
3. There Are Too Many Negotiations
Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:
- The buyer, who wants the best deal possible
- The buyer’s agent, who solely represents the best interest of the buyer
- The inspection companies, which work for the buyer and will almost always find challenges with the house
- The appraiser, if there is a question of value
As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the largest purchase of their lives.
4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage
Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress that’s being made toward a purchaser’s mortgage commitment. Further complicating the situation is how the current mortgage market is rapidly evolving because of the number of families out of work and in mortgage forbearance. A loan program that was there yesterday could be gone tomorrow. You need someone who is working with lenders every day to guarantee your buyer makes it to the closing table.
5. FSBOing Has Become More Difficult from a Legal Standpoint
The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.
6. You Net More Money When Using an Agent
Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission. A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”
The more buyers that view a home, the greater the chance a bidding war will take place.
Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, let’s connect to discuss your options.
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