While home prices for starter to mid-range homes are pushing upward toward pre-recession peaks, especially in secondary markets, they’re stabilizing in higher-priced areas. Here, Bankrate offers some tips for adapting to the latest market conditions.
- First-time homebuyers: Get that starter home now
More than half of the home sales (52 percent) in 2017 are expected to be to first-time buyers, and mostly to millennials ages 19-34 years old, many moving from urban rentals, research by the National Association of Realtors shows. That means competition—and bidding wars—could become fierce through the rest of the year for such “starters” in desirable areas. Although there will be less inventory this winter, there also will be less competition per unit and a higher percent of motivated sellers.
- Buyers: There’s more loan money out there
Those who couldn’t get mortgages during the downturn because they didn’t have 20 percent to put down can find affordable financing now. Borrowers with FICO scores as low as 690 are getting conforming mortgage loans (those under $417,000). One telling sign: About two-third of mortgage refinancers were getting approved in the fourth quarter of 2016 compared with just one-half of those at the end of 2014. However, borrowers without a 20 percent down payment still will pay private mortgage insurance until they hit the 20 percent to 25 percent equity mark. The best rates go to those with 800-plus credit scores, although 750-plussers are getting virtually the same terms.
- Sellers: It may be a seller’s market, but …
Home sellers can do several simple things to enhance appearance, increase buyer interest and boost their home’s profile. Among them: light makeovers, with an eye on the kitchen and bathrooms; scrubbing floors, baths, kitchens, windows and walls, and being sure to clean, vacuum and deodorize rugs; decluttering by storing family photos, kids’ school papers and excess art, and storing bulky and worn furniture, as well as organizing closets to make them look half empty; opening drapes and adding brighter light bulbs in dark areas; and repainting with neutral colors where needed.
- Renters: It might be time to buy
In many cases, rents are rising faster than home values, yet mortgage rates remain low. That, and the fact that renters now account for 37 percent of households (the highest level in 50 years), seem to indicate an imminent coming-out party for renters-turned-buyers, especially if they plan to stay put for five to 10 years after buying.
- Sellers: The grass is always greener …in yards with a “sold” sign
Major presale upgrades typically aren’t needed, but a little greening outdoors is a must. Surveys show that strong curb appeal can increase prices by 10 percent or more. Greener grass, whether derived from new sod or fertilizer and water, is a must. New shrubs, plantings and flowers also project a welcoming feel. Sellers typically enjoy a 100 percent return on the money they put into curb appeal. Another form of green, sustainable landscaping has become a value-add for buyers. Native plants, native grasses and perennials that require less water and attention fill that bill. Do some local research or ask your local home-and-garden pro for simple “greening” tips.
- Sellers and buyers: Know the state of your market
A balanced housing market is defined as one with an average inventory of six-and-a-half months, according to Texas A&M University Real Estate Center research. When inventory remains below equilibrium, sellers enjoy more control over prices and terms, and the area becomes a seller’s market. When inventory lingers well above stasis, you have a buyer’s market where sellers must get more serious about price reductions, credits and throw-ins. Of course, these averages don’t necessarily reflect demand in certain desirable and undesirable submarkets.
- Sellers: House going on sale in the spring?
Do some prep work First, grab your camera or smartphone and do an exterior autumn photo shoot, with the leaves changing colors. This is a much better way to showcase your home than to wait until late winter when everything is dead and brown. Take a preliminary inventory, too. Look through your attic, closets, basement and garage to see what stored items you’ll want to keep, give away or sell in the spring. This will help you determine whether you’ll need a storage unit when your home is on the market and if there are any problem areas that need repairs or attention. It’s also a good time to start discussing financing options with a local lender and to interview prospective listing agents who also might provide additional preparation tips.