Why So Many Americans Are Either Upsizing or Downsizing

Posted in Buying, Selling, and Living by Shelley Rossi

According to two recent surveys that took industry watchers by surprise, many family homeowners are putting frugality aside and upsizing to new houses that average as large as 2,480 square feet (an increase of as much as 13 percent from the year before), and sometimes exceed 3,500 square feet in size.

Meanwhile, millions of baby boomer homeowners are rushing to downsize—with some 40 percent of Americans between the ages of 50 and 64 saying they’re planning to make a move within the next five years.

It’s a tale of two very different segments of the population making dramatic shifts in their living accommodations to find the housing solutions that best suit their needs: one upsizing while the other downsizes.

With so many baby boomers now nearing retirement age (8,000 Americans turn 65 every day), it should come as no surprise that the number of prospective “downsizers” exceed the number of “upsizers” by three to one. With their children gone, these aging homeowners are interested in reducing the amount of house they need to care for, and are eager to bulk up their retirement savings with any home-sale profits.

As for why many families are choosing to upsize so substantially after years of downsizing or staying put, experts point to the extremely low interest rates and discounted home prices available today, and theorize that many families now feel confident enough about the economy to move out of homes they outgrew years ago.

If you’re considering upsizing or downsizing, here are some facts to consider:

How such a move can impact your life

The most common benefits of downsizing:

  • Lower mortgage payments
  • Lower tax bills
  • Lower utility bills
  • Less maintenance (and lower maintenance expenses)
  • More time/money for travel, hobbies, etc.
  • More money to put toward retirement, debts, etc. (the profits from selling your current home)

The most common benefits of upsizing

  • More living space
  • More storage space
  • More yard/garden space
  • More room for entertaining/hosting friends and family

Negative impacts:

  • Upsizing will likely increase your living expenses, so it’s important to factor into any financial forecasts
  • Downsizing will require that you make some hard choices about what belongings will need to be stored or sold

Other impacts to consider:

  • The loss of good neighbors
  • Lifestyle changes (walking, neighborhood shopping, etc.)
  • The effect on your work commute
  • Public transit options

Buy first, or sell first?

Homeowners considering this transition almost always have the same initial question: “Should I buy the new home now, or wait and sell my current place first?” The answer is dependent on your personal circumstances. However, experts generally recommend selling first.

Selling your current home before buying a new one could mean you have to move to temporary quarters for some period of time—or rush to buy a new home. That could prove stressful and upsetting. However, if you instead buy first, you could be stuck with two mortgages, plus double property tax and insurance payments, which could quickly add up to lasting financial troubles.

If you need to sell in order to qualify for a loan, there’s no choice: You’ll have to sell first.

Another option:

You could make the purchase of the new house contingent on selling your current home. However, this approach can put you in a weak bargaining position with the seller (if you can even find a seller willing to seriously consider a contingency offer). Plus, you may be forced to accept a low-ball offer for your current house in order to sell it in time to meet the contingency agreement timing.

The truth is, most home sales tend to take longer than the owners imagine, so it’s almost always best to finalize the sale, and do whatever is necessary to reap the biggest profit, before embarking on the purchase of your new home.

When to make the transition

Ideally, when you’re selling your home, you want to wait until the demand from potential buyers is high (to maximize your selling price). But in this case, because you’re also buying, you’ll also want to take advantage of any discounted interest rates and reduced home prices (both of which will fade away as the demand for homes grows).

How will you know when the timing is right to both sell and buy? Ask an industry expert: your real estate agent. As someone who has their finger on the pulse of the housing market every day, they can help you evaluate the current market and try to predict what changes could be coming in the near future.

Even if you’ve been through it before, the act of upsizing or downsizing can be complex. For tips, as well as answers to any questions, contact a Windermere agent any time.

Posted on November 16, 2018 at 7:46 pm
Windermere Evergreen | Category: Buying & Selling, Colorado Real Estate, Conifer Real Estate, Evergreen Real Estate, Housing Trends, Kittredge Real Estate, Lakewood Real Estate, Living, Morrison Real Estate, Mountain Living, Pine Real Estate | Tagged , , , , , , , , ,

Six Key Factors That Affect the Sales Price of Your Home

Posted in Selling by Tara Sharp

Pricing a home for sale is not nearly as simple as most people think. You can’t base the price on what the house down the street sold for. You can’t depend on tax assessments. Even automatic valuation methods (AVMs), while useful for a rough estimate of value, are unreliable for purposes of pricing a home for sale.

AVMs, like those used by Zillow and Eppraisal, have been used for many years by banks for appraisal purposes. They are derived from algorithms based on past sales. But producers of AVMs agree that they are not accurate indicators of home value. For example, Zillow.com states, “Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for. It is not an appraisal.”

So what does Zillow recommend sellers do instead? The same thing the real estate industry has been advising for decades: Ask a real estate agent who knows your neighborhood to provide you with a comparative market analysis. To accomplish that, I typically consider the following factors—plus others, depending on the house:

Location

The location of your home will have the biggest impact on how much it can sell for. Identical homes located just blocks apart can fetch significantly different prices based on location-specific conditions unique to each, including: traffic, freeway-access, noise, crime, sun exposure, views, parking, neighboring homes, vacant lots, foreclosures, the number of surrounding rentals, access to quality schools, parks, shops, restaurants and more.

Recommendation: Be willing to price your house for less if it’s located in a less desirable area or near a neighborhood nuisance.

Market

Another major factor that also can’t be controlled is your local housing market (which could be quite different from the national, state or city housing markets). If there are few other homes on the market in your local area (a situation known as a “sellers market”), you may be able to set a higher price. However, if there’s a surplus of homes like yours for sale (a “buyer’s market”), your pricing will also reflect that.

Recommendation: If it’s a buyer’s market and you can delay selling your home until things change, you should consider doing so. If you can’t wait, be willing to price your home extremely competitively, especially if you are in a hurry to sell.

Condition

The majority of buyers are not looking to purchase fixer-uppers, which is why any deferred maintenance and repair issues can also significantly impact the selling price of your home. When your home’s condition is different than the average condition of homes in your location, AVMs tend to produce the widest range of error.

Recommendation:  Hire a professional home inspector to provide you with a full, written report of everything that needs upgrading, maintenance or repair, then work with your real estate agent to prioritize the list and decide what items are worth completing before the property is listed for sale, and what should be addressed through a lower list price. Also, some defects are best addressed during negotiations with buyers.

Widespread appeal

If you want to sell your home quickly and for the most money, you have to make it as appealing as possible to the largest pool of prospective buyers. The more universally attractive it is, the greater the interest and the faster competing offers will come.

Recommendation:

Hire a professional home stager (not a decorator) to temporarily stage the interior of your home. Also spend time making the exterior look its best: address any peeling paint, make sure the front door/ door hardware is attractive, prune bushes and trees, remove old play equipment and outdoor structures, etc.

Compare homes

The only neighboring homes that should be used to estimate the value of your home are those that have been carefully selected by a real estate professional with special training, access to all sales records, and in-depth knowledge of the neighborhood.

Recommendation: If you’re considering selling your home, ask your real estate agent to recommend a professional appraiser.

Searchability

When working with a prospective buyer, most real estate agents will search the available inventory only for the homes priced at (or less than) their client’s maximum, which is typically a round number. If you home is priced slightly above or below that amount (e.g., $510,000 or $495,000), it will appear in fewer buyer searches.

Recommendation: Be willing to adjust your selling price to maximize visibility.

Periodic price adjustments

Pricing a home isn’t a set-it-and-forget-it proposal. As with any strategy, you need to be prepared to adapt to fast-changing market conditions, new competition, a lack of offers and other outside factors.

Recommendation: After listing your house, be ready to adjust your asking price, if necessary.

Posted on November 7, 2018 at 7:26 pm
Windermere Evergreen | Category: Buying & Selling, Colorado Real Estate, Conifer Real Estate, Evergreen Real Estate, Housing Trends, Kittredge Real Estate, Lakewood Real Estate, Morrison Real Estate, Pine Real Estate | Tagged , , , ,

How Restrictive Growth Policies Affect Housing Affordability In Many Cities

How Restrictive Growth Policies Affect Housing Affordability In Many Cities

Posted in Economics 101 Videos by Matthew Gardner, Chief Economist, Windermere Real Estate

Windermere Real Estate Chief Economist Matthew Gardner explains how restrictive growth policies are affecting housing affordability in many cities.​

 

 

 

Posted on October 21, 2018 at 12:35 pm
Windermere Evergreen | Category: Buying & Selling, Colorado Real Estate, Conifer Real Estate, Evergreen Real Estate, Housing Trends, Kittredge Real Estate, Lakewood Real Estate, Morrison Real Estate, Pine Real Estate | Tagged , , ,

How Staging Your Home Well Impacts Its Value

Posted by John Trupin

For more than 20 years, the benefits of staging a home have been well documented. Numerous studies show that staging helps sell a home faster and for a higher price. According to the National Association of REALTORS®, 88 percent of homebuyers start their search online, forming impressions within three seconds of viewing a listing. When a home is well staged, it photographs well and makes the kind of first impression that encourages buyers to take the next step.

Studies also indicate that buyers decide if they’re interested within the first 30 seconds of entering a home. Not only does home staging help to remove potential red flags that can turn buyers off, it helps them begin to imagine living there. Homes that are professionally staged look more “move-in ready” and that makes them far more appealing to potential buyers.

According to the Village Voice, staged homes sell in one-third less time than non-staged homes. Staged homes can also command higher prices than non-staged homes. Data compiled by the U.S. Department of Housing and Urban Development indicate that staged homes sell for approximately 17 percent more than non-staged homes.

A measurable difference in time and money

In a study conducted by the Real Estate Staging Association in 2007, a group of vacant homes that had remained unsold for an average of 131 days were taken off the market, staged, and relisted. The newly staged properties sold, on average, in just 42 days, – which is approximately 68 percent less time on the market.

The study was repeated in 2011, in a more challenging market, and the numbers were even more dramatic. Vacant homes that were previously on the market for an average of 156 days as unstaged properties, when listed again as staged properties, sold after an average of 42 days—an average of 73 percent less time on the market.

Small investments, big potential returns

Staging is a powerful advantage when selling your home, but that’s not the only reason to do it. Staging uncovers problems that need to be addressed, repairs that need to be made, and upgrades that should be undertaken. For a relatively small investment of time and money, you can reap big returns. Staged properties are more inviting, and that inspires the kind of peace-of-mind that gets buyers to sign on the dotted line. In the age of social media, a well-staged home is a home that stands out, gets shared, and sticks in people’s minds.

What’s more, the investment in staging can bring a higher price. According to the National Association of REALTORS, the average staging investment is between one percent and three percent of the home’s asking price, and typically generates a return of eight to ten percent.

In short, less time on the market and higher selling prices make the small cost of staging your home a wise investment.

Interested in learning more? Contact your real estate agent for information about the value of staging and referrals for professional home stagers.

Posted on July 11, 2018 at 7:00 pm
Windermere Evergreen | Category: Buying & Selling, Colorado Real Estate, Evergreen Real Estate, Housing Trends, Lakewood Real Estate, Living, Market News, Morrison Real Estate, Mountain Living, Pine Real Estate | Tagged , , , , , , , , ,

New Year’s Tips for Buying and Selling

Now that the end of the year is upon us, it’s time to start thinking about some New Year resolutions. If your 2018 resolution is to buy or sell a home, here are some suggestions to help you along the way. For everyone else, we’ve added some tips about building equity and investing in updates to your home.

Buying:

If you’re in the market to buy your first home or if you’re upsizing/downsizing, here are some ideas that can help you make this dream a reality:

  • Create a buying timeline and work towards your goal
  • Check your credit scores and work to improve your rating
  • Start or increase your savings for a down payment
  • Start the loan pre-approval process
  • Meet with your real estate agent
  • Start looking for homes

Selling:

If you are planning to put your home on the market in 2018, here are some good places to start:

  • Create a selling timeline to work towards having your home ready for market
  • Make a list of home improvements and a plan on how to manage them
  • Get rid of the clutter
  • Contact a real estate agent (If you don’t have an agent, click here to be introduced to a Windermere Real Estate agent.)

Building Equity:

You may not be moving this year, but you can create a plan to increase your equity in the home you have now.  Here are some tips:

  • Take advantage of low interest rates by refinancing to a lower rate
  • Consider refinancing to a shorter term loan
  • Make extra lump-sum payments. Consider using your tax refund, cash gifts, work bonuses, garage sale money, or any other unexpected income toward paying down your principal.
  • Pay every two weeks instead of once a month. A biweekly payment plan can substantially reduce the amount of interest you pay because you are breaking the interest accrual down from 30 days to every 15.
  • Pay a little extra each month. Even if you’re only rounding up to the next $100 increment, putting a little extra money towards your principal every month can add up.

Investing In Your Home

You can add a lot of value and additional enjoyment to your home by investing in improvements and upgrades.

  • Choose a home improvement project that will yield a good return on investment when you do choose to sell
  • Create a home checklist to track maintenance projects over the year
  • Make eco-improvements to increase your home’s sustainability and reduce your utility payments over the long-term. These improvements are generally a good return on your investment when reselling.
    • Upgrade furnace to an efficient model
    • Upgrade windows for better insulation
    • Add alternative energy resources, such as solar power
    • Update toilets and showers to low-flow
    • Install a programmable thermostat
    • Update to energy-efficient appliances

For more information on Windermere Evergreen please contact us here.

Posted on January 1, 2018 at 5:58 pm
Windermere Evergreen | Category: Buying & Selling | Tagged , , , , , , , ,

What Can We Expect From The 2018 Housing Market?

It’s the time of the year when I look deep into my crystal ball to see what’s on the horizon for the upcoming year. As we are all aware, 2017 has been a stellar year for housing across the country, but can we expect that to continue in 2018?

Here are my thoughts:

Millennial Home Buyers

Last year, I predicted that the big story for 2017 would be millennial home buyers and it appears I was a little too bullish. To date, first-time buyers have made up 34% of all home purchases this year – still below the 40% that is expected in a normalized market.  Although they are buying, it is not across all regions of the country, but rather in less expensive markets such as North Dakota, Ohio, and Maryland.

For the coming year, I believe the number of millennial buyers will expand further and be one of the biggest influencers in the U.S. housing market. I also believe that they will begin buying in more expensive markets. That’s because millennials are getting older and further into their careers, enabling them to save more money and raise their credit profiles.

Existing Home Sales

As far as existing home sales are concerned, in 2018 we should expect a reasonable increase of 3.7% – or 5.62 million housing units. In many areas, demand will continue to exceed supply, but a slight increase in inventory will help take some heat off the market. Because of this, home prices are likely to rise but by a more modest 4.4%.

New Home Sales

New home sales in 2018 should rise by around 8% to 655,000 units, with prices increasing by 4.1%. While housing starts – and therefore sales – will rise next year, they will still remain well below the long-term average due to escalating land, labor, materials, and regulatory costs. I do hold out hope that home builders will be able to help meet the high demand we’re expecting from first-time buyers, but in many markets it’s very difficult for them to do so due to rising construction costs.

Interest Rates

Interest rates continue to baffle forecasters. The anticipated rise that many of us have been predicting for several years has yet to materialize. As it stands right now, my forecast for 2018 is for interest rates to rise modestly to an average of 4.4% for a conventional 30-year fixed-rate mortgage – still remarkably low when compared to historic averages.

Tax Reform

Something that has the potential to have a major impact on housing are the current proposals relative to tax reform. As I write this, we know that both the House and Senate propose doubling the standard deduction, and the House plans to lower the mortgage interest deduction from $1,000,000 to $500,000. If passed, the mortgage deduction would no longer have value for home owners who would likely opt to take the standard deduction.

If either of the current proposals is adopted into law, the potential reduction in mortgage-related tax savings means the after-tax cost of home ownership will increase for most home owners. Additionally, both the House and Senate bills also end tax benefits for interest on second homes, and this could have a devastating effect in areas with higher concentrations of second homes.

The capping of the deduction for state and local property taxes (SALT) at $10,000 will also negatively impact states with high property taxes, such as California, Connecticut, and New York. Furthermore, proposed changes to the capital gains exemption on profits from the sale of a home (requiring five years of continuous residence as compared to the current two) could impact approximately 750,000 home sellers a year and slow the growth of home ownership.

Something else to consider is that all of the aforementioned changes will only affect new home purchases, which I fear might become a deterrent for current home owners to sell. Given the severe shortage of homes for sale in a number of markets across the country, this could serve to exacerbate an already-persistent problem.

Housing Bubble

I continue to be concerned about housing affordability. Home prices have been rising across much of the country at unsustainable rates, and although I still contend that we are not in “bubble” territory, it does represent a substantial impediment to the long-term health of the housing market. But if home price growth begins to taper, as I predict it will in 2018, that should provide some relief in many markets where there are concerns about a housing bubble.

In summary, along with slowing home price growth, there should be a modest improvement in the number of homes for sale in 2018, and the total home sales will be higher than 2017. First-time buyers will continue to play a substantial role in the nation’s housing market, but their influence may be limited depending on where the government lands on tax reform.

by Matthew Gardner, Chief Economist, Windermere Real Estate

For more information on Windermere Evergreen please contact us here.

Posted on December 24, 2017 at 11:30 am
Windermere Evergreen | Category: Evergreen Real Estate | Tagged , , , , , , ,

Cultural Trends: How driving trends are impacting the housing market

As we have mentioned in previous blog posts, home buyers continue to consider their daily commute when making home purchase decisions. Some Americans are limiting their driving or forgoing cars all together. In recent years, the driving trends of Millennial and Boomer generations have decreased steadily. More Americans in general are embracing alternatives to driving like mass transit, walking, bicycling, car sharing, and working from home.

Recent studies and articles in publications like the Washington Post and the New York Times document declining automobile use. Driving measured by consumption of auto fuel tells the same story. Whether you are a home buyer, seller, or owner, these trends may impact your decisions in new and surprising ways, with the value of your home being shaped, at least in part, by this trend.

If you are in the market for a home, considering your commute, walk-score, and transportation options could be an important part of determining if a particular neighborhood is right for you. It might also be helpful to seek out the assistance of a real estate agent familiar with such issues.

Real estate companies have started adding search features to their websites to assist buyers with evaluating commuting information. For example, Windermere recently added INRIX DriveTime™ to its website which allows home buyers to search for homes based on commute times. Walkscore.com and Transitscore.com provide home buyers with a quick and easy way to assess the quality of a community based on walkability and access to mass transit. These online tools highlight those homes with shorter drive times and higher walkability, factors which could end up impacting the value of certain homes as some buyers “vote with their feet,” rather than with their car.

Real estate developers are embracing this trend too by building in locations that reduce car use; this is why you may notice an increase in new housing as you travel from suburban neighborhoods into cities like San Francisco, Portland, San Diego, or Seattle. In some of these cities, it is increasingly common to see townhomes built in more walkable neighborhoods, many without dedicated, private garages.

City planners are encouraging such construction by changing zoning laws to foster “Transit Oriented Development,” (TOD). TOD changes zoning to incentivize developers to create new housing construction close to light rail stations, with progressively lower housing density to about 1/2 mile from their stops. This solves what city planners have come to call the “last mile problem,” (getting more commuters home from a transit hub). Cities with TOD initiatives include Seattle, the San Francisco Bay Area, the Salt Lake City Metro Area, and the Portland Metro area.

With experts saying that consumers are trending towards less driving, home buyers may wish to evaluate the location of their purchase by asking themselves the following questions:

  • Does this neighborhood lower the cost of living, while increasing the quantity and quality of free time, by increasing my independence from cars?
  • What is the travel time between the places those in my household frequent most, such as home, work, schools, and recreational amenities?

If you are selling your home, consider highlighting its location as one that might improve the quality of life for the next residents by showcasing drive time, walkability, and proximity to transit—to the extent that such benefits exist.

Studies continue to show that the amount of time a person spends commuting every day is a major factor when buying a home. In recent years, there has also been a significant trend towards mass transit and reducing one’s “carbon footprint” by driving less. This is important for both buyers and sellers to keep in mind, as these factors can have a significant impact on the long-term value of a home – and on the quality of life for you and those in your community.

For more information on Windermere Evergreen please contact us here.

Posted on December 16, 2017 at 8:24 am
Windermere Evergreen | Category: Buying & Selling | Tagged , , , , ,