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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.