How Pricing Your Home Right Makes a Big Difference
Even though there’s a big buyer demand for homes in today’s low inventory market, it doesn’t mean you should price your home as high as the sky when you’re ready to sell. Here’s why making sure you price it right is key to driving the best price for the sale.
If you’ve ever watched the show “The Price Is Right,” you know the only way to win the game is to be the one to correctly guess the price of the item up for bid without going over. That means your guess must be just slightly under the retail price.
When it comes to pricing your home, setting it at or slightly below market value will increase the visibility of your listing and drive more buyers your way. This strategy actually increases the number of buyers who will see your home in their search process. Why? When potential buyers look at your listing and see a great price for a fantastic home, they’re probably going to want to take a closer look. This means more buyers are going to be excited about your house and more apt to make an offer.
When this happens, you’re more likely to set up a scenario with multiple offers, potential bidding wars, and the ability to drive a higher final sale price. At the end of the day, even when inventory is tight, pricing it right – or pricing it to sell immediately – makes a big difference.
Here’s the other thing: homeowners who make the mistake of overpricing their homes will eventually have to lower the prices anyway after they sit on the market for an extended period of time. This leaves buyers wondering if the price drops were caused by something wrong with these homes when in reality, nothing was wrong, the initial prices were just too high.
Bottom Line
If you’re thinking about selling your home this year, let’s get together so you have a professional on your side to help you properly price your home and maximize demand from the start.
Rents in the United States have been skyrocketing since 2012. This has caused many renters to face a tremendous burden when juggling their housing expenses and the desire to save for a down payment at the same time. The recent stabilization of rental prices provides a great opportunity for renters to save more of their current income to put toward the purchase of a home.
Just last week the Joint Center of Housing Studies of Harvard University released the America's Rental Housing 2020 Report. The results explain the financial challenges renters are experiencing today,
“Despite slowing demand and the continued strength of new construction, rental markets in the U.S. remain extremely tight. Vacancy rates are at decades-long lows, pushing up rents far faster than incomes. Both the number and share of cost-burdened renters are again on the rise, especially among middle-income households.”
According to the most recent Zillow Rent Index, which measures the estimated market-rate rent for all homes and apartments, the typical U.S. rent now stands at $1,600 per month. Here is a graph of how the index’s median rent values have climbed over the last eight years:
Is Good News Coming?
There seems, however, to be some good news on the horizon. Four of the major rent indices are all reporting that rents are finally beginning to stabilize in all rental categories:
1. The Zillow Rent Index, linked above, only rose 2.6% over the last year.
2. RENTCafé’s research team also analyzes rent data across the 260 largest cities in the United States. The data on average rents comes directly from competitively rented, large-scale, multi-family properties (50+ units in size). Their 2019 Year-End Rent Report shows only a 3% increase in rents from last year, the slowest annual rise over the past 17 months.
3. The CoreLogicSingle Family Rent Index reports on single-family only rental listing data in the Multiple Listing Service. Their latest index shows how overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%. They have stabilized around 3% since early 2019.
4. The Apartment List National Rent Report uses median rent statistics for recent movers taken from the Census Bureau American Community Survey. The 2020 report reveals that the year-over-year growth rate of 1.6% matches the rate at this time last year; it is just ahead of the 1.5% rate from January 2016. They also explain how “the past five years also saw stretches of notably faster rent growth. Year-over-year rent growth stood at 2.6% in January 2018, and in January 2016 it was 3.3%, more than double the current rate.”
It seems tenants are getting a breather from the rapid rent increases that have plagued them for almost a decade.
Bottom Line
Rental expenses are beginning to moderate, and at the same time, average wages are increasing. That power combination may allow renters who dream of buying a home of their own an opportunity to save more money to put toward a down payment. That’s sensational news!
If one of the questions you’re asking yourself today is, “Should I sell my house this year?” the current Housing Opportunities and Market Experience (HOME) Survey from the National Association of Realtors® (NAR) should boost your confidence as it relates to the current selling sentiment in the housing market. Even with all the information overload in the media circling around talk of a possible recession, the upcoming 2020 election, and more, Americans feel good about selling a house now. That’s some news to get excited about!
As the graph below shows, as of Q4 2019, 75% of people surveyed indicate they believe now is a good time to sell a home:In the case of those with a yearly salary of $100,000 or more, the results jumped even higher, coming in at an 82% positive sentiment.
When the study divided the outcomes by region, the results still consistently showed Americans feeling good about selling:
Northeast: 71% positive
Midwest: 76% positive
South: 72% positive
West: 81% positive
In addition to looking at income and region, the report also divided the results by generation, as shown in the graph below:As you can see, many believe that, despite everything going on in the world, it is still a good time to sell a home.
According to NAR, the unsold inventory available today “sits at a 3.0-month supply at the current sales pace,” which is down from a 3.7-month supply in November. The current inventory is half of what we need for a normal or neutral housing market, which should have a 6.0-month supply of unsold inventory. This is good news for sellers, as Lawrence Yun, Chief Economist at NAR, says:
“Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”
Bottom Line
If you’re ready to list your home, you can feel good about the current sentiment in the market. Let’s get together today to determine the best next step when it comes to selling your house this year.
In 1963, Martin Luther King, Jr. led and inspired a powerful movement with his famous “I Have a Dream” speech. Through his passion and determination, he sparked interest, ambition, and courage in his audience. Today, reflecting on his message encourages many of us to think about our own dreams, goals, beliefs, and aspirations. For many Americans, one of those common goals is owning a home: a piece of land, a roof over our heads, and a place where our families can grow and flourish.
If you’re dreaming of buying a home this year, the best way to start the process is to connect with a Real Estate professional to understand what goes into buying a home. Once you have that covered, then you can answer the questions below to make the best decision for you and your family.
1. How Can I Better Understand the Process, and How Much Can I Afford?
The process of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, school districts you prefer, what kind of commute works for you, and how much you can afford to spend.
Keep in mind, before you start the process to purchase a home, you’ll also need to apply for a mortgage. Lenders will evaluate several factors connected to your financial track record, one of which is your credit history. They’ll want to see how well you’ve been able to minimize past debts, so make sure you’ve been paying your student loans, credit cards, and car loans on time. Most agents have loan officers they trust that they can refer you to.
“Financial planners recommend limiting the amount you spend on housing to 25 percent of your monthly budget.”
2. How Much Do I Need for a Down Payment?
In addition to knowing how much you can afford on a monthly mortgage payment, understanding how much you’ll need for a down payment is another critical step. Thankfully, there are many different options and resources in the market to potentially reduce the amount you may think you need to put down up front.
If you’re concerned about saving for a down payment, start small and be consistent. A little bit each month goes a long way. Jumpstart your savings by automatically adding a portion of your monthly paycheck into a separate savings account or house fund. AmericaSaves.orgsays,
“Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded.”
Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process.
3. Saving Takes Time: Practice Living on a Budget
As tempting as it is to settle in each morning with a fancy cup of coffee from your favorite local shop, putting that daily spend toward your down payment will help accelerate your path to homeownership. It’s the little things that count, so start trying to live on a slightly tighter budget if you aren’t doing so already. A budget will allow you to save more for your down payment and help you pay down other debts to improve your credit score. A survey of Millennial spending shows,
“70 percent of would-be first-time homebuyers will cut spending on spa days, shopping and going to the movies in exchange for purchasing a home within the next year.”
While you don’t need to cut all of the fun out of your current lifestyle, making smarter choices and limiting your spending in areas where you can slim down will make a big difference.
Bottom Line
If homeownership is on your dream list this year, take a good look at what you can prioritize to help you get there. Let’s get together today to discuss the best steps you can take to start the process.
Homes Are More Affordable Today, Not Less Affordable
There’s a current narrative that owning a home today is less affordable than it has been in the past. The reason some are making this claim is because house prices have substantially increased over the last several years.
It’s not, however, just the price of a home that matters.
Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by approximately 3% over the last year.
The National Association of Realtors (NAR) releases a monthly Housing Affordability Index. The latest index shows that home affordability is better today than at almost any point over the last 30 years. The index determines how affordable homes are based on the following:
“A Home Affordability Index value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).”
The higher the index, therefore, the more affordable homes are. Here is a graph showing the index since 1990:Obviously, affordability was better during the housing crash when distressed properties – foreclosures and short sales – sold at major discounts (2009-2015). Outside of that period, however, homes are more affordable today than any other year since 1990, except for 2016.
The report on the index also includes a section that calculates the mortgage payment on a median priced home as a percentage of the median national income. Historically, that percentage is just above 21%. Here are the percentages since June of 2018:Again, we can see that affordability is much better today than the historical average and has been getting better over the last year and a half.
Bottom Line
Whether you’re thinking about buying your first home or moving up to the home of your dreams, don’t let the false narrative about affordability prevent you from moving forward. From an affordability standpoint, this is one of the best times to buy in the last 30 years.
Construction continues for a fountain courtyard that will feature a light show with surround sound at the Grandscape in The Colony.(Vernon Bryant / Staff Photographer)
That’s what Jeff Lind, president of Grandscape, a $1.5 billion development along State Highway 121 in The Colony, is hoping.
Other multibillion-dollar developments — one after another, shiny and bright from Legacy West in Plano to The Star in Frisco — entice residents to come out and meet friends and family in new entertainment and shopping environments.
At the same time, the malls in the neighborhood — Stonebriar Centre in Frisco and the Shops at Willow Bend in Plano — have spent hundreds of millions of dollars to add a wing of restaurants, multiple kid venues, a luxury gym and a high-rise hotel.
Now there’s one more new destination for eating, drinking, playing and shopping coming to the growing neighborhoods fanning east and west of the Dallas North Tollway.
“We’re trying to be very different," said Lind, who is leading Grandscape, a project next to Nebraska Furniture Mart that’s part of Warren Buffett’s expansive Berkshire Hathaway. "We wanted to create a space that’s different from other lifestyle centers in the area and to give people reasons to keep coming back.”
Grandscape, which will start to open in March and April, is not like any development in the Dallas area. Almost all the restaurants and stores, big and small, are new to the market.
“I really think this is going to be the first destination up north that will get people from down in Dallas to visit,” said Dan Bradley, who owns T-shirt and gift shop Bullzerk. He’s an exception at Grandscape as a familiar retailer, with six stores in Dallas-Fort Worth.
The D-FW retail real estate market is still considered overbuilt, but there’s been less new construction in recent years, and occupancy rates have been rising.
Grandscape is being built for “future growth in the region,” Lind said.
Instead of turning leasing over to another company, Lind and marketing director Katie Wedekind, both Nebraska Furniture Mart veterans, became the leasing agents. Lind alone clocked 288,000 air miles last year traveling the world to discover new tenants and ways to make Grandscape unique.
Here’s what they came up with.
Multiple levels, 433 acres
Grandscape, which has been in the works since Nebraska Furniture Mart opened in 2015, will operate on multiple levels with lush landscaping, water venues, digital features and lots of places to sit in a pedestrian-friendly layout.
Scheels is a sporting goods and entertainment venue at Grandscape.(Vernon Bryant / Staff Photographer)
The Grandscape shopping center, just east of NFM, is on 125 more acres, including a 7-acre man-made lake with restaurants bordering it.
It’s anchored by three additional big-box tenants that are not as big as NFM but almost:
Andretti’s Indoor Karting & Games is 110,300 square feet and has three indoor tracks, bowling lanes, an arcade, restaurants and bars on two levels.
Scheels, at 331,000 square feet, is a supersized sporting goods store with a 65-foot Ferris wheel inside with 16 cars on it.
The 85,000-square-foot Galaxy Theatres 15-screen venue that will open this spring is like only one other that Sony has built, in Las Vegas.
While the giant NFM furniture store, at 560,000 square feet, is hard to miss, Grandscape has been designed to disguise its big boxes and “foster more interesting walks across the shopping center,” Lind said.
To prevent boring long stretches across the front of Andretti’s, Scheels and the Galaxy theater, smaller spaces were built on either side of their entrances for shops and restaurants.
“No one wants to walk across the front of a 300-foot building,” Lind said.
The Homestead area of Grandscape features small buildings with local tenants. (Vernon Bryant / Staff Photographer)
‘Something for everybody’
The development has six courtyards.
One of them, the Homestead, is a new idea for shopping centers. It’s a rustic collection of small buildings nestled, not lined up, next to an outdoor wine bar with a large fireplace. The dozen businesses occupy spaces as small as 250 square feet.
On paper, the development “looks kind of crazy,” Bullzerk’s Bradley said, “but when you see it, you understand that people can come and really be here all day."
“There’s something for everybody, and it’s not luxury,” which he said Dallas has plenty of. His Bullzerk store will have a $250,000 bus inside that customers can climb into for social media shots and videos.
Construction continues at Grandscape in The Colony. Nebraska Furniture Mart can be seen in the distance. (Vernon Bryant / Staff Photographer)
Other small-business Homestead tenants include Odin Leather Goods, Tyler Kingston Mercantile, Julie’s Sweets and Gnome Cones.
The Lawn section also will be finished this spring. It’s in front of a $4.5 million, 55-foot stage with dressing rooms and three LED digital boards that can be part of an audio/digital experience.
Some parts of the project will still be under construction when it begins to open.
The Grotto will have a courtyard, restaurants and entertainment venues, a water feature and a living wall. (Vernon Bryant / Staff Photographer)
The Grotto section, Lind said, will open later this year. It’s inspired by Covent Garden in London and has a tunnel that leads to a lake with restaurants.
When it’s finished, Grandscape will have a couple of dozen restaurants, including Windmills, a restaurant from India with a library-inspired interior design, and Davio’s Northern Italian Steakhouse.
Jeff Lind of Grandscape in The Colony on Wednesday, January 8, 2020. (Vernon Bryant/The Dallas Morning News)(Vernon Bryant / Staff Photographer)
Katie Wedekind of Grandscape in The Colony on Wednesday, January 8, 2020. (Vernon Bryant/The Dallas Morning News)(Vernon Bryant / Staff Photographer)
A 12-story apartment building is under construction and will open next year with 345 luxury units with lots of amenities, including dog parks and meeting rooms.
What Lind calls a fashion section is coming later, with retail shops that will connect NFM with Grandscape.
When it’s finished, the walk from NFM to sporting goods superstore Scheels will be almost the length of six football fields, and the space is designed for stops along the way.
Lind and Wedekind said they kept three ideas always in focus: the environment, technology and a nontraditional merchandise mix.
“We’re not developers," Lind said. “We’re retailers."
Here are the firms that are working on the Grandscape project:
Master plan and design architect: Mark Tweed, HTH Architects (Los Angeles)
Architect of Record: Merriman Anderson Architects (Dallas)
Civil Engineer: Olsson Associates
Construction: VCC, which has moved its Dallas office to Grandscape
Landscape Design: Ochsner Hare & Hare, The Olsson Studio
Technology features designed and built by The Barnycz Group of Baltimore
“The dream of homeownership is alive and well within “Generation Z,” the demographic cohort following Millennials.
Our survey…finds that Gen Z views homeownership as an important goal. They estimate that they will attain this goal by the time they turn 30 years old, three years younger than the current median homebuying age (33).”
If these aspiring homeowners purchase at an early age, the Urban Institute study shows the impact it can have.
Based on this data, those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-20s and early-30s had close to $50,000 left, but traditionally purchased more expensive homes.Although the vast majority of Gen Zers want to own a home and are somewhat confident in their future, “In terms of financial awareness, 65% of Gen Z respondents report that they are not confident in their knowledge of the mortgage process.”
Bottom Line
As the numbers show, you’re not alone. If you want to buy this year but you’re not sure where to start the process, let’s get together to help you understand the best steps to take from here.
There’s a Long Line of Buyers Waiting for Your House
If you’re following what’s happening in the housing market right now, you know that many people believe the winter months aren’t a good time to sell a home. As realtor.comSenior Economist George Ratiu recently noted,
“Sellers tend to be more reluctant to list during the colder time of year when the market typically makes a seasonal slowdown.”
However, a recent report by ShowingTime reveals how this year is different. Buyer activity is way up compared to the same time last year. The report explains,
“The nation’s 12.6% growth in home showings compared to 2018 was the most significant jump in buyer traffic during the current four-month streak of year-over-year increases. The West Region saw the greatest growth in activity, with a 23.1% jump – the region’s greatest in the history of the Showing Index.”
The increase has spread across all four regions of the country, as the graph below shows:
Bottom Line
Waiting for the “spring buyers’ market” may be a mistake this year. It seems the purchasers are already out and looking to buy.
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