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BUSINESS AND FINANCE DEON ’ S DO ’ S AND DON ’ TS
Dave Ramsey
Real estate season is here , and experts are predicting the hot market conditions will continue throughout the summer in many states . Thinking of buying or selling ? Here are the 2018 real estate trends you need to know , and what the hot market means for your house .
Real Estate Trend # 1 : Homes Are Selling Faster Than Last Year In February 2018 , Realtor . com data showed that properties were selling 8 % quicker than the same time last year — staying on the market for a median of only 83 days !( 1 ) In March 2018 , the data found that homes sold ( at least !) a whole week faster than last year in 36 % of the largest housing markets in the country — averaging 63 days on the market .( 2 )
What Faster Sales Mean for Sellers Clearly this is great news for home sellers ! Not only does it mean your home could sell at a higher price ( more on that later ), but it also removes a lot of pressure you might be under to sell your home quickly . With plenty of buyers to choose from , you have a lot of negotiating power to sell on a timeline that works best for you . Woohoo !
What Faster Sales Mean for Buyers This news isn ’ t as great for buyers . Your biggest challenge will be competition for homes . In their latest report on the 2018 market , Realtor . com said we ’ ve never experienced a market where so many buyers have to choose from so few houses .( 3 ) To beat the competition and snatch a home this year , you may have
to reprioritize what you want in a dream home . So strap in , buckle down , and follow these tips :
• Prepare finances . If you haven ’ t saved 100 % in cash for the home you want , at least get preapproved for a 15-year fixed-rate mortgage and save up a 10 to 20 % down payment . ( A 20 % down payment is better — you ’ ll avoid having to pay private mortgage insurance .) This will show sellers that you ’ re a serious buyer because you ’ ve already started the mortgage process — which isn ’ t common among all buyers placing offers .
• Know what you want . You ’ ll be able to beat competitors to the punch and make an offer faster if you already know exactly what you want in a home . If you ’ re married and house hunting , you and your spouse need to agree on musthaves ! So first create separate lists of what you want most . Then compare and combine those lists for your real estate agent to use as the foundation of your home search .
• Write a letter . Sending a personal story to your seller might be just the thing that makes you stand out over similar offers . Nashville couple Abby and John B . included a personal letter when they made an offer on their home . They believe it ’ s the reason their offer beat the heavy competition . “ We sent the sellers a personal letter with our offer ,” Abby said . “ The best thing you can do is to include in the letter things you love about their house . If they have a deck or screened-in porch , tell them how you envision using the space . We did that , and the sellers accepted our offer — out of multiple offers — within 24 hours .”
• Hire an experienced pro . If you don ’ t operate in the real estate business every day , working through the complex details that go into a home purchase in a hot market could cause costly delays . In such a competitive market , why shouldn ’ t a seller choose to work with a buyer who ’ s more prepared ? That ’ s why you want to partner with a seasoned real estate agent who has a great reputation in the community . A good agent is an expert at negotiations and can manage detailed paperwork and closing so you don ’ t miss your chance on a great home .
Real Estate Trend # 2 : Home Prices Are Higher Than Last Year Over the past 30 years , home prices have continued to rise at an average rate of 3 – 4 % per year . But the increase in listing prices from February 2017 to 2018 is a startling 10 % jump !
What does this look like in dollars ? As of March 2018 , the median list price hit $ 280,000 . Most new listings tend to be over $ 350,000 , while the rest remain between $ 200,000 – 350 , 000 . Only 1 in 3 homes on the market are priced below $ 200,000 , and half of all buyers are competing
for homes in that price range !( 6 )
What Higher Prices Mean for Sellers You ’ ll likely make a nice profit as a seller ! Will you use the profits to purchase your next home ?
Maybe you ’ re downsizing and using the money to beef up your retirement . Whatever you do , lay out your plan before you sell so your profit doesn ’ t go to waste .
What Higher Prices Mean for Buyers If you ’ re going to buy a home in this expensive market , you absolutely must find out how much house you can really afford . Crunch the numbers yourself with our free mortgage calculator and figure out how much of a monthly payment your budget can handle .
Commit to staying within that budget amount . Don ’ t rush into a home purchase that doesn ’ t make financial sense for you — no matter how much pressure you feel watching competitors pluck good homes off the market . If you get impatient , you ’ ll screw up your finances !
If you can ’ t put at least 10 % down on a 15-year fixed-rate conventional loan , then you probably can ’ t afford a house in this market . A down payment that ’ s less than 10 % will strangle your budget with massive monthly mortgage payments . But if you ’ re determined to buy and you ’ re committed to your budget , here are some options to consider :
• Keep saving . If you don ’ t have the money right now , all you can do is save . If you stay patient and motivated , you can save for a 5-figure down payment by this time next year .
• Sacrifice some wants . If you can ’ t afford to buy the house you want , be willing to sacrifice some wouldlike-to-haves for the must-have . This doesn ’ t mean you have to kiss your dream home goodbye forever . If you find the least expensive home in the best neighborhood you can afford , you can upgrade over the years as your income and savings increase .
• Expand your search . What if the location you ’ re planning to buy in is what ’ s really busting your budget ? Get connected with a real estate agent to learn more about home prices in your area that will fit your budget and lifestyle .
AUGUST 2018
Real Estate Trend # 3 : CA Holds the Hottest Market While the hot market is likely to affect the sale or purchase of your home no matter where you live in the country , you can expect the above trends to be at their peak on the West Coast . As of February 2018 , California accounted for 13 of the top 20 locations where homes were receiving the most listing views and staying on the market for the shortest amount of days . For a glance at what some of those Californian areas are , below is a list of the top 10 hottest markets :
1 . San Francisco , CA 2 . Midland , TX 3 . Vallejo , CA 4 . San Jose , CA 5 . Sacramento , CA 6 . Denver , CO 7 . Santa Rosa , CA 8 . Colorado Springs , CO 9 . San Diego , CA 10 . Stockton , CA ( 7 )
What If I ’ m Not Buying or Selling a Home This Year ? Now you know the challenges and benefits of buying or selling a home this year . But what if you decide to hold off and wait longer to buy or sell ? Could your home continue to rise in value — and sell for even more ? Will the hot market cool down for better buying conditions ? Or are we in another housing bubble that ’ s about to burst ?
1 . Equity Will Likely Keep Increasing by 2 – 6 % ( Until 2020 ) With most housing markets at a low risk for a downturn , the 2018 edition of The Housing and Mortgage Market Review estimates that home prices will continue to rise for the next couple of years , with annual increases of 2 – 6 %.( 8 ) So if you sell your house before 2020 , you ’ ll likely still make a great profit . But don ’ t rely solely on market trends . Continue to monitor how much your home is worth to make sure your equity ( how much your home is worth minus how much you owe on it ) is going up .
2 . Is the Real Estate Market Going to Crash Again ? With such rapid upward trends , some are wondering if the housing market could collapse again . While it ’ s impossible to know for sure , most experts expect the rising prices to settle down over the next 24 months . For most cities , risk of a crash in the market is low .
3 . Despite Your Neighborhood , Buyers Are Interested Because of the hot market and low inventory , buyers may be willing to consider neighborhoods that don ’ t have easy-access to highways or close proximity to the city . In other words , if your neighborhood hasn ’ t been swarmed by home shoppers in a while , this market will likely make it more attractive . Determined buyers are willing to compromise for an unconventional area if it means they can snatch a house . So , even if you think you live in an unpopular neighborhood or that your home isn ’ t what buyers are looking for , think again . Maybe now is your perfect time to sell .
Take Control of the Trends With a Real Estate Agent
Whether you ’ re itching to enjoy the benefits of the hot market by selling your home or feeling the challenges of a buyer , you can take advantage of current real estate trends by partnering with an agent . Through our Endorsed Local Provider ( ELP ) program , our team will match you with the top real estate agents we recommend in your area . Our real estate ELPs are professionals who ’ ve earned Dave ’ s seal of trust for practicing what we teach , giving excellent advice , and providing outstanding customer service . Find your real estate agent today !
This article was provided by Deon Cannon Realty from Dave Ramsey ’ s website , www . daveramsey . com / blog .