First-Time Buyers Aren’t Afraid of Renovation

First-Time Buyers Aren’t Afraid of Renovation

First-time home buyers are showing a strong desire for taking on remodeling projects. First-time buyer renovators in 2016 spent $33,800, on average, on their projects. That marks a 22 percent increase over 2015, according to the sixth annual Houzz & Home survey of more than 100,000 respondents in the U.S.

Average Investment in Living Spaces

Here is what remodelers spent in renovating their homes in 2016:

• Kitchens: $19,100
• Master bathrooms: $11,700
• Living/family rooms: $5,400
• Master bedroom: $3,400
• Laundry room: $2,800
• Dining rooms: $2,600
• Guest bedrooms: $1,900

Source: “Houzz & Home Survey,” Houzz (May 4, 2017)

“Younger and cash-constrained first-time buyers are responding to the low inventory of affordable homes by purchasing properties that require more than just cosmetic upgrades,” says Nino Sitchinava, Houzz principal economist. “Not surprisingly, we are seeing their spending on home renovations increasing significantly in 2016 and expect this trend to continue through 2017.”

Both first-time and repeat buyers are taking on larger scope projects, such as remodeling up to four rooms at the same time, the Houzz survey shows. Kitchen and bathrooms continue to be the most popular rooms in the house to renovate.

And while “recent home buyers drive a significant share of home renovations today, repeat buyers are investing twice as much in their home as first-time home buyers,” Sitchinava notes.

Baby boomers and earlier generations, who are age 55-plus, continue to spend three time more than millennial homeowners aged 25 to 34.

Overall, homeowners spent $60,400 in 2016 on home renovation projects, up from a $59,800 average in 2015.

Source: “Houzz & Home Survey,” Houzz (May 4, 2017)

An Uptick in Housing Starts Matters to Buyers

An Uptick in Housing Starts Matters to Buyers

Your home buyers may want to look more closely at the housing starts numbers, even if they don’t intend to buy new.

Housing starts, or the number of new homes that builders have begun construction on, tend to follow a seasonal pattern—increasing in the spring, peaking in the summer, receding in the fall, and dropping to their lowest levels in the winter.

An increase in housing starts should make for good news for home buyers.

“Housing starts, when they are completed, add supply [and in turn] reduce upward pressure on new-home prices and may even reduce them,” says Andres Carbacho-Burgos, a senior economist at Moody’s Analytics.

Therefore, even if buyers aren’t buying new, they can still benefit from a healthy level of housing starts, says Danielle Hale, managing director of housing research at the National Association of REALTORS®. A high number of homes, whether old or new, will decrease prices for all homes, she notes.

Housing starts have been in gradual recovery mode the last few years. In 2016, starts were at 1.23 million units.

“We’re relatively optimistic” for 2017, says Carbacho-Burgos. “By the end of 2017, we expect housing starts to be closer to 1.7 million,” a 10 percent increase from a year earlier.

Source: “What Are Housing Starts, and Why Should Home Buyers Care?” realtor.com® (May 1, 2017)

The Housing Market Is Outperforming

The Housing Market Is Outperforming

The housing market has been off to a roar this spring. In fact, the market is performing so strongly that the National Association of REALTORS® has upgraded its forecast for the year.

At the start of the year, home sales were expected to match last year’s pace due to higher mortgage rates and diminishing affordability. But the market is hardly slowing down, notes Lawrence Yun, NAR’s chief economist. He now predicts existing-home sales to rise by 3.5 percent, and home prices likely will increase 5 percent this year.

Home sales are strong: Real estate professionals report an increase in foot traffic at listings and mortgage applications to buy a home remain above year-ago levels. Also, signed contracts to purchase a home are essentially running at decade highs, Yun notes.

“Not only are the buyers out in the market, but they are committing quickly,” Yun notes in a recent column for The Hill. “The typical days on the market for a newly listed property is short at only a month. A month’s supply of inventory is less than four months, which is well below the six to seven months that is considered more balanced.”

Escalation clauses in contracts are reportedly growing. This is where a potential buyer bids on a home at one price but is willing to raise the bid if the seller receives any higher bid.

But the hot market shouldn’t offer up any fears of a housing bubble, Yun notes. Unlike years past, buyers are coming in with higher down payments and higher credit scores. Also, the lack of new-home construction is another reason not to fear a bubble, he says. Prices don’t drop when there are inadequate supplies, and homebuilding is basically at half the level it was in the mid 2000s.

The strengthening housing market is becoming one major contributor to economic growth too, Yun notes. Higher home prices and housing equity will help give a boost to consumer spending, he adds.

“With no imminent threat of a recession, the housing market’s strong first quarter sets the foundation for continued gains the rest of the year,” Yun writes.

Source: “First Quarter GDP May Be Cool, But Housing Market Downright Balmy,” The Hill (May 1, 2017)

Cities With the Most Cash Sales

Cities With the Most Cash Sales

Cash sales made up about 30 percent of all single-family and condo sales in the first quarter of this year, according to ATTOM Data Solutions’ First Quarter 2017 U.S. Home Sales Report. That is well below their peak of 44.7 percent in the first quarter of 2011 but higher than the prerecession average of 20.4 percent from 2000 to 2007.

“With a stronger market and overall sales increasing, we are seeing a decrease in foreclosure sales across the markets we serve, as well as a decrease in institutional investors purchasing homes,” says Matthew Watercutter, senior regional vice president and broker of record for HER, REALTORS®, in Dayton, Ohio. “With the stronger market and availability of money from institutional lenders such as mortgage companies and credit unions, we are seeing a decrease in cash purchases, as more properties are being sold to owner occupants and fewer to investors.”

Out of 150 metro areas with populations of at least 200,000, the highest share of cash sales were in these cities, according to ATTOM Data Solutions’ analysis:

• Salisbury, Md.: 61.2%
• Raleigh, N.C.: 60.6%
• Naples, Fla.: 56.6%
• Binghamton, N.Y.: 54.3%
• Spartanburg, S.C.: 53.3%

Fifty-one of the 150 metros analyzed posted a year-over-year increase in the share of all-cash sales. Some of the markets seeing the largest year-over-year increases were New York; San Francisco; Riverside-San Bernardino, Calif.; Seattle; and Minneapolis-St. Paul, Minn.

Source: RealtyTrac

How Trees Benefit Home Values

How Trees Benefit Home Values

Today is Arbor Day, the perfect time to send clients information on landscaping that can boost their home’s value and reduce energy bills.

The U.S. Forest Service Pacific Northwest Research Station says that planting a tree in front of a house increases the home’s sale price by an average of $7,130. So, in essence, money can grow on trees.

Planting a tree on the west side of a home can reduce a home’s energy bills 3 percent within five years and 12 percent within 15 years. Specifically, west-side trees can bring summertime electric bills down by an average of $25 a year and reduce air conditioning use by 30 percent, according to the Forest Service.

Trees and other landscaping can also lower the impact of damaging winds on a home, potentially reducing 35 mph winds to 10 mph, according to the Arbor Day Foundation. This also lessens the load on the furnace working to heat the home on those cold, windy days, which can bring energy bills down by 30 percent.

Additionally, a Clemson University study found that landscaping has the potential to increase the value of homes by about 6 percent. Some of the most desired landscape trends among consumers include: rainwater harvesting, native plants and drought-resistant plants, permeable paving, and fire pits, according to the 2016 Residential Landscape Architecture Trends Survey conducted by the American Society of Landscape Architects.

Source: The Davey Tree Expert Company

Checks to Protect a Home in the Spring

Checks to Protect a Home in the Spring

The spring season can bring about dangers to a home from strong wind gusts, rains, and fluctuating temperatures. Be sure to take steps to protect your home this season.

1. Check outside faucets and exteriors for flood risks.

Inspect your outside hose faucets for any damage from the winter. Hold your thumb over the opening. If the flow stops completely, the pipe indoors could possibly be damaged and may need to be replaced. Also, check the hose for dry rot and examine the foundation and exterior walls for any cracks or potential areas where water could enter.

2. Check the roof and gutters.

The roof may have been damaged by heavy storms or hail. Don’t assume that because there are no visible signs of damage, there isn’t some beneath the shingles. Have it inspected. Also, clean the gutters to avoid risks of pooling water and leaks.

3. Check the landscaping.

Beware of trees that are too close to the home. In a storm, these could pose a threat. Have any tall overhead branches trimmed if they could potentially fall and hit the roof or damage the home.

4. Check the foundation.

Examine the lawn and near the foundation for any low areas. Water will collect and pool in any low areas. This could then potentially seep through any cracks in the home’s foundation or create a breeding ground for insects. Fill any low areas with compact soil and repair cracks in the foundation.

Source: “How to Help Your Clients Keep Their Homes Safe From Spring Weather,” Remodeling (April 21, 2017)