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Is the Real Estate Market Starting to Turn?

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The 2019 spring real estate market is in full swing and many home owners and prospective home buyers may be wondering what this year’s market has in store for them.  Will home buyers be able to list their home and quickly receive a full-priced offer, maybe even multiple offers?  Will prospective home buyers be competing against many other buyers and have to make quick and above list price offers? 

Despite the fact that there are reports indicating we are on the horizon of another hot real estate market season, data from Trulia predicts something quite different. Trulia has collected data that reflects home prices have been in a steady decline since the beginning of 2018.  This trend is the first indicator that the housing market may be entering into a “cyclical downturn”.  In an article published by Housing Wire, Alcynna Lloyd quotes Trulia, “’Cyclical housing market downturns occur roughly every 10 years, and they typically don’t happen overnight. Instead, they play out steadily over a few years, first showing up in sales volumes and later—usually a year or two later—in prices,’ Trulia writes.”

Fear not, however, that we are in store for a declining market similar to the one that occurred a decade ago.  The article goes on to detail the findings of the Trulia analysis, indicating home prices should only slightly decline and are more likely to just see “flat-to-modest housing price growth”.  Yet, home owners should expect their home to sell not quite as quickly and should certainly be prepared to enter in more vigorous negotiations with buyers in order to finalize a sale.

Since these changes are not expected to be extreme or immediate, more likely gradual and result in slow steady declines or even flat growth, only time will tell how this potential change plays out.

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Studies reveal positive news for home buyers in 2019

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The spring real estate market is in full swing.  Sellers have begun the process of listing their homes with the hopes of a quick sale.  Buyers search listings, schedule showings and begin to decide on a home to purchase.  So far, in 2019, it appears home buyers are making the decision on which home to purchase faster than they were last year at this time.

In fact, a study completed by Redfin, revealed that in 2019 buyers’ time to close is three days less than in 2018.  According to an article published by the MReport, “Some of the factors responsible for home buyers being able to close on their homes faster in 2019 compared to previous years included, a rise in housing supply, a slower growth rate of home prices, and a less competitive market, according to Redfin.”

The fact that the supply of homes for sale has increased and there are more buyers than sellers often means that sellers will accept the first offer they receive.  Unfortunately, some sellers just have to wait longer to receive that offer while competing against a larger number of other sellers.  The article reports that homes are spending about two days more on the market compared to 2018.

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Is the Recent Dip in Home Values Cause for Concern?

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The real estate market has, for the most part, been on a steady incline for the past 5-7 years, in terms of home values.  Homeowners have been comfortably seeing the value of their house increase at a fairly consistent rate, recovering from the major decreases in value they saw about 10 years ago.

However, according to data released by Black Knight, the upward trend may be coming to an end, or at least slowing down some.  According to an article published by Housing Wire, “Home values fell 0.2% in November, down $580 for the month and marking the first time the market has seen a consecutive three-month decline since early 2012. Now, the average home is down $1,361 in value since August 2018.”

Although the growth rate varies across the United States, overall home values are still higher than they were in 2017 in 99 of the 100 markets.  So, many homeowners may still be breathing easy knowing that, over a larger span of time, the value of their home is moving in the right direction.

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No Cash for a Down Payment? New Mortgage Programs Might Offer Options

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Would be home buyers who have been held back from purchasing a home due to a lack of cash for the down payment may be able to see their dreams become a reality, even without a hefty down payment. Both Freddie Mae and Freddie Mac have introduced home mortgage programs that require as little as 3% down payment.

According to an article published by Fox Business, written by Brittany De Lea, “These new products are designed to compete with the low-down-payment options offered by the Federal Housing Administration (FHA), which offers loans for as little as 3.5 percent down for those with a credit score of at least 580.”
Freddie Mae’s program is named Home Ready and applicants can get approved with credit scores as low as 620 . The program allows parents to co-sign, even if they will not reside at the home. The product is geared toward prospective home buyers in with low to moderate income; both first time and repeat home buyers can qualify for a Home Ready Mortgage.
Similarly, Freddie Mac’s program, Home Possible, serves to offer affordable, low down payment loans specifically to “homebuyers in high-cost and underserved communities”. Either first time or repeat home buyers can qualify, even with credit scores as low as 640.
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Housing Market Predictions: Are We In Store for a Crash?

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Could a housing market slowdown, or worse a housing market crash, be looming?  If Lawrence Yun’s, National Association of Realtors chief economist, analysis is correct, the answer is a resounding “no”.   In fact, the slowdown in the housing market that some areas are experiencing is due to “insufficient supply”, not a lack of demand by buyers.

In an article published by Realtor Magazine, many positive signs for the housing market are present.  For example, the article states “home price growth remains strong in markets across the country—about 5 percent on a nationwide basis so far this year”.

However, the negative effect of the lack of housing supply is that the prices are being driven into price ranges that price some buyers out of the market.  A solution to that issue,the article notes , would be to have builders increase the supply of homes available.

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Why Should You Stage Your Home To Sell

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There are many decisions to make when deciding to sell your home.  You need to decide if you are going to use a real estate agent,  decide which agent to use, when to put the house on the market, what price to ask for the house.  It can be overwhelming and exhausting.  Once all those decisions have been made, it is then time for photos of the house to be taken for the listing, not to mention getting the house ready for showings and open houses.

A step in the home selling process that might either be overlooked or undervalued is the process of “staging” your home.  In an article written by Devon Thorsby, published in U.S. News and World Report, Thorsby states, “Home staging is the act of cleaning, rearranging and remodeling parts of a property to make it more appealing to potential homebuyers. Professional home stagers are often brought in by real estate agents – or the agents practice a bit of staging themselves – to help homeowners make a house ready to show to potential homebuyers.”

The spectrum of staging services is vast and the prices vary depending on how involved the project is.  Some stagers may go as far as recommending some personal items be put in a storage unit and staging furniture brought in.  It may not include every room in the house, but certainly some of the rooms that are most critiqued by buyers such as the kitchen, living room and master bedroom.

In the end, the purpose of staging is to help sell your home as quickly as possible for as close to asking price as possible.  Personal style choices, décor and clutter may make your house feel like a home, but it needs to appeal to the general buyer so it may not have a place in the house during the process.

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Finding the Best Real Estate Agent: Tips and Considerations

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Buying and selling  a home might be one or the biggest personal financial transactions of your life.  It can be emotional, confusing and time consuming.  Many home owners and those looking to purchase a home will eventually look to a real estate professional to guide them through the process.

In an article published by US News and World Report, the author, Devon Thorsby, provides some helpful tips and suggestions for finding a real estate agent for your next real estate transaction.  Thorsby begins by suggesting that potential home buyers or those considering listing their home begin the process of searching or a real estate agent earlier rather than later.  A real estate agent can help make important decisions and suggestions early on that may help the process go more smoothly.

Its important, of course, to find the right agent.  Narrowing down what kind go real estate professional you need is important:  an agent, Realtor or broker; each provides a different level of service and expertise.  Having a prepared list of questions for a potential agent can help ensure that there aren’t any surprises or concerns late in the process.  You  want to be sure you feel comfortable with the type and level service the agent will provide and what the ultimate price of using the agent will be.

Read the entire article for more specific information and details about tools to use when selecting a real estate professional.

 

 

Photo Credit:  Scott Maxwell

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Disappointing News for Many Chicago Homeowners

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Many American home owners have been relieved to see the real estate market, and their home value, rebound from the real estate collapse which began more than ten years ago.  At the height of the real estate market crash, many homeowners found that their homes were worth less than they owed on the home.  In a recent report from Zillow, the percentage of homeowners “underwater” on their mortgage has finally fallen below ten percent, the first time the number has been this low since the collapse.

However, according to an article published in the Chicago Tribune, by Darcel Rockett, Chicago homeowners may not be feeling the same market rebound.  In fact,  Rockett states, “According to Zillow’s 2017 Q4 Negative Equity report, the city has the most homes with negative equity of all the metro areas in the country.”   A little over 15% of Chicago metro homeowners are underwater on their mortgage.  More alarming, about 20% of these homeowners with negative equity owe two times as much as their home value.

Homeowners are faced with limited options when they owe more than their house is worth.  They can wait out the market until their home value returns to a value that matches what they owe.  However, some homeowners may choose to cut their losses and sell their homes at the current value.  Fournier Law Firm can assist homeowners with the process of a short sale.  Contact us at 630-792-1000 or info@fournierlawfirmltd.com

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Photo Credit: ANNA SZLACHTA

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Before Listing Your Home: Real Estate Myths Debunked

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Low housing inventory coupled with low interest rates has helped encourage home owners to finally consider putting their home on the market.  There are many considerations to take into account before listing a home.  Being able to determine what home selling advice is based on fact versus myth is vital for a successful and profitable transaction.  An article published in U.S. News and World Report, written by Teresa Mears, helps homeowners navigate the process by debunking some of the rumors and myths.

One home selling myth is that home owners should list the home at a price above what they actually expect to get for the home.  According to Mears, “That’s because shoppers and their real estate agents often don’t even look at homes that are priced above market value.”  Even if a homeowner lowers the price after a few weeks, the fact that it sat on the market for 3 weeks or more makes prospective buyers suspicious about issues with the home.

Sellers might often be tempted to sell a house on their own, without the use of a real estate professional, in order to save money.  The value real estate professionals add to the process comes in the form of marketing to buyers and their agents, negotiating the sales price and sales contract and helping navigate any issues that come up after the inspection.  When you hire and pay a real estate professional, you are able to take advantage of their experience and expertise from previous sales transactions.

Additional myths touched on include which home renovations home owners can expect to see a return on investment, and which renovations should not be done just to sell a home, whether open houses benefit the home owner and what your expectation for future market prices should be.  Read the entire article.

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Myth Busters: The Truths of Pricing and Selling Your Home

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One of the most important decisions a home owner who has decided to sell their home can make is what the list price of the home should be.  Emotions, financial strains, and decisions based on inaccurate or misunderstood information can lead to a disappointing and frustrating sales process.

In an article published by Realtor.com, Cathie Ericson helps debunk home pricing myths that might have home sellers hung up on their list price.   Reviewing these myths and understanding the truth about the pricing, listing and hopefully selling a home will help sellers start out on the right foot.

One myth sellers may believe that if a home is overpriced, it can just be lowered later without any negative effects.  As Ericson points out, lowering a price is not a quick and easy fix.  Many house hunters notice when a home has been on the market for a while and know when there have been numerous price reductions.   As she states,  “… buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.”

When deciding on a listing price, sellers may be turned off by the idea of pricing their home too low, assuming they will not make as much money in the sale.  However, low priced homes might just attract more buyers and the increased interest in the home might result in a bidding war.

The article details the truth behind other myths such as recouping 100% of the cost of home renovations, the real estate agent’s stake in the pricing strategy and the whether all home owners make money on the sale of their home.  Read the entire article.

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