The low inventory of homes for sale is causing some real estate companies to panic a bit. The number of homes for sale March 2017 compared to March 2016 fell seven percent according to the National Association of Realtors. In an article published by CNBC by Dian Olick, she quotes Glenn Kelman, CEO of Seattle-based Redfin, a real estate firm, “”The inventory is reaching historic lows. It’s never declined faster than it did last month. It’s freaking us out — it’s affecting our business; it’s limiting our sales.”
The cause of this low inventory issue can be attributed to a few factors. To begin, many homeowners are deciding to become landlords. Instead of selling a home when moving on, homeowners are holding on to their home and renting it out. Another reason is new home construction is declining. On average, home builders are building about 18 percent fewer homes than the historic average.
The good news for home owners looking to sell, homes are selling quickly and some are even selling above list price. Homes in April 2016 went under contract in 50 days, as of April 2017, that number decreased to 40 days.
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Earlier this year, a Chicago-land home owner and real estate attorney filed a law suit against the website Zillow. She felt the home estimate quoted on the popular real estate website was significantly lower her home’s actual value. Further, she argued, it was deterring buyers and irresponsible of the website to publish unreliable information. “If it’s not reliable, you shouldn’t put it out there,” she stated in references to the website “Zestimates”.
Zillow emerged on the web about eleven years ago and has about 171 million virtual visitors a month, according to an article published in the New York Times, written by Nick Wingfield. The market values quoted on the site are calculated using algorithms that factor in common appraisal data such as the home’s square footage, location, recent home sales and tax assessments. According to the New York Times article, the site has an error rate of about five percent. Although down from the earlier error rate of 14 percent in Zillow’s earlier years, the error rate is still not satisfactory for many home homeowners who feel it is affecting their ability to sell their home at its true value.
Zillow believes there is room for improvement as well. Last week they announced that they are not only open to suggestions but willing to pay for the best idea. The “Zillow Prize” is $1 million dollars and will be awarded to the party able to present Zillow with the most improved algorithm.
To read the entire article and get more info on how to get in on the competition for the million dollar Zillow Prize, click here.
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As the season of spring begins to bloom all around us, so it goes for the spring real estate market. Many homeowners see spring as the perfect time to put their homes up for sale. As prospective home buyers begin their search for their first or next home, they may find that homes aren’t sitting on the market nearly as long as they have been in the past several months.
A recent report provided by a national real estate firm, Redfin, indicates that despite the fact the number of homes for sale has dipped 13 percent from last year at this time, actual home sales has surged 9 percent. Additionally, the number of days until the average home goes under contract has decreased by 11 days since last March, dropping to just 49 days. Lower inventory and fast paced home sales has also driven up the prices of home an average of 7.5 percent.
A CNBC article written by Diana Olick, goes on to detail that not only homeowners are benefiting from a spring jump start. Builders are also tracking a home sales increase of 6.7 percent from last year. However, new home prices have remained virtually unchanged. Olick suggests, this “…may indicate builders are trying to keep prices down in order to get more buyers in the door.”
Home buyers are looking to take advantage of the low mortgage rates and their desire to close the deal has resulted in some very favorable news for those looking to sell their homes.
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The home improvement shows make it look so easy. It appears that as long as you can find an old, run-down house, you can spend a few weeks renovating it and list it for a profit. Many people realize, however, it is usually not that easy. Nevertheless, there is a market for flipping renovated homes and flipping these home can be profitable.
It is important, though, to understand the ins and outs of purchasing an old, dilapidated home and attempting to fix it up for resale. In an article published by Realtor.com, writer Lisa Gordon lists many of common mistakes made by first time home flippers.
For example, it might be tempting to purchase a home “as is” without getting a home inspection since the plan is to fix it up anyway. However, the home inspection will not only help identify major issues that could turn your flip into a money pit; it might also provide some bargaining power on the purchase price.
Gordon goes on to list additional mistakes such as “Overestimating your renovation skills” and “Underestimating total costs”. You may feel it will be easy enough to do all of the work on your own, in order to save money; yet, the article warns, it might be well worth the extra cost to hire professionals for some of the plumbing or carpentry projects.
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A recent ruling by the California Supreme Court might affect some real estate agents and their customers. Specifically addressed in this court case are “dual agents” and the agent’s responsibility to serve the seller as well as the home buyer equally and ethically.
In the case brought to the courts, a home buyer in California purchased a home in 2007. The buyer’s real estate agent worked for the same real estate firm as the seller’s agent. Therefore, the real estate broker was, in fact, a dual agent in the real estate transaction. It later came to light that the home’s square footage was actually significantly less than what was quoted on the flyer provided by the seller’s agent. Based on evidence presented, the justices determined that the buyer’s agent “…breached his fiduciary duty by failing to communicate all of the material information he knew about the square footage.”
In an article published in OCRegister.com, the journalist, Marilyn Kalfus, describes how this ruling could affect both agents and consumers. Specifically, some view this ruling a win for home buyers. In essence, it will ensure home owners are provided thorough and detailed information about the home they plan on purchasing. It doesn’t seem as though the ruling will end dual agent transactions, but it will require brokers to balance the communication they are providing to home buyers while protecting private information that may have been provided by the seller.
Read the entire article.
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Summer has come to an end, but it certainly doesn’t signify the end of home buying opportunities for the year. In fact, fall is a season that brings many positive home buying possibilities and benefits. In an article published by Realtor.com, Margaret Heidenry lists several reasons why this time of the year might be the perfect time for buyers to make their move on purchasing a home.
One significant reason to buy a home in autumn: home prices are lower. According to RealtyTrac’s analysis of home sales over the past 15 years, buyers in October have paid an average of 2.6 below market value. This compares to buyers making a purchase in April, who will pay an average of 1.2 percent above market value.
The article goes on to list other important advantages of shopping for a home this time of the year. For example, buyers will not be in competition with as many other home buyers as they would be during peak buying seasons. Additionally, those homes that are on the market in the fall are generally listed by sellers who are in a situation where they need to sell their home. This allows the buyer to leverage their buying power and allows for more significant negotiations. Among some of the other reasons listed in the article, buying in the fall also means less competition for your realtor’s attention and time, the same goes for mortgage brokers and real estate attorneys. As the article states, “You can take your time to ask all those questions you have about earnest money, due diligence, title transfers, and more without feeling like you’re horning in their busiest season to turn a buck.”
Read the article for additional information about the benefits of purchasing your home after the peak season.
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If you have decided to sell your home, it may be tempting to make your listing appealing to potential buyers by leaving off some of your home’s “issues”. Perhaps they are issues you have learned to live with or do not feel are worthy of disclosure. In some cases, it might be a big enough issue that you feel it will scare buyers off. As tempting as it might be to not disclose a known issue, failure to do so could expose you to trouble down the road.
An article written by Warren Christopher Freiberg and published by Realtor.com provides some helpful tips regarding seller disclosures:
- If you are unsure whether or not to disclose an issue with your home, its best to error on the side of safety and disclose it.
- Even when its not required, it is a good idea to disclose previous inspection reports, no matter how old they are. It protects the seller from having the home purchaser claim they weren’t informed of a problem.
- If you truly were not aware of an issue with the home and it was not uncovered during the home inspection, you cannot be held responsible. As the article states, “You can’t be held responsible for not disclosing a defect if it’s discovered by the buyer a few months after closing. In fact, at a certain point the burden falls on buyers to do their due diligence to uncover any problems.”
- Do not provide information to the buyer if you are not sure of the answer. For example the exact square footage of the home. Inform the buyer that you are unaware of the answer and put the responsibility on the buyer to find the answer.
“It is much better to lose a buyer by clearly disclosing all known issues than it is to spend two years and tens of thousands of dollars in litigation,” is the advice certified real estate specialist, Adam Buck, provides.
Read the entire article.
The Chicago-land real estate market has made a notable recovery since the housing crash in 2007. However, a closer look at the types and price point of homes that are in demand among home buyers reveals that smaller, lower priced homes have made the most significant turnaround.
On the other hand, the large homes that popped up at an explosive rate in the early 2000s, which came to be known as “McMansions”, have not recovered at nearly the same rate. In fact, many of the home owners looking to sell their homes, once valued at $2.5 million, are preparing to take a $600,000 loss on their investment. Further, these homes are on the market an average of 155 days before receiving an offer.
According to an article published by the Chicago Tribune by Gail MarksJarvis, the allure of these homes has faded. Many Generation X home owners lost money on the homes they purchased before the housing market crashed and are not financially able to purchase homes in the luxury price range, or are hesitant to make such a large investment in real estate. These large suburban, family-oriented homes do not appeal to a significant portion of millennials or baby boomer home buyers either. To add, home buyers who are in the market for luxury properties prefer to purchase new homes with the most up-to-date decor and amenities.
To read more about the luxury home market in Chicago-land, read the entire article.
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Foreclosures on homes in many U.S. cities lead to investors purchasing these “distressed” homes at deeply discounted prices. Consequently, the value of the other homes in these cities declined as well.
However, some good news has been released about this sector of the real estate market. According to an article published in DSNews.com by Brian Honea, there has recently been a decline in the number of distressed homes for sale. More specifically, as of May 2016, the number of distressed homes for sale decreased by 4 percent over the year. The lower inventory of foreclosed, REO and short sale homes has helped increase the demand for homes and, subsequently, increased the home values in those areas.
Honea quotes CoreLogic Chief Economist Frank Nothaft, “Overall, the homes-for-sale inventory remains relatively lean, while demand to buy homes has increased because of an improving labor market, more optimistic levels of consumer confidence, and continuing low mortgage rates.”
To learn more, read the entire article.
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It had been predicted that the Millennial Generation (18-34 year olds), would be key to a healthy rebound in the real estate market. However, based on new survey data released by Redfin, they might actually be responsible for the low inventory of homes for sale.
Millennials are, for the most part, more optimistic about the housing market. They have not seen home mortgage rates over 5 percent and have been able to build more equity than home owners of older generations. Additionally, they are confident they will see an increase in home values over the next year.
Therefore, according to the survey, millennials are more apt to rent out their home instead of selling their starter home. As a result, the supply of homes for sale will continue to remain low. A recent article on DSNews.com by Brian Honea indicates “…28 percent of millennials plan to rent out their house instead of selling it, compared to only 4 percent of homeowners ages 55 and older.”
For more information, read the entire article.