Supply & Demand of Real Estate

Just in case you slept through Economics/Civics class in high school and/or college 🙋🏾‍♀️……

Ever wondered why the prices of homes keep increasing in DFW? Is it the new companies constantly moving here? The new Dallas transplants? Or simple supply and demand?

Here’s the DFW answer.

Why are home prices still rising? It is a simple answer. There are more purchasers in the market right now than there are available homes for them to buy. This is an example of the theory of “supply and demand” which is defined as:

“the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”

When demand exceeds supply, prices go up. This is currently happening in the residential real estate market.

Here are the numbers for supply and demand as compared to last year for the last three months (March numbers are not yet available):

House Prices: Simply a Matter of Supply & Demand | Keeping Current Matters

In each of the last three months, demand (buyer traffic) has increased as compared to last year while supply (number of available listings) has decreased. If this situation persists, home values will continue to increase.

Bottom Line

The reason home prices are still rising is because there are many purchasers looking to buy, but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick.

Let’s Talk About Affordability

 

Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

However, it is not just the price of a home that determines its affordability. The monthly cost of a home is determined by the price and the interest rate on the mortgage used to purchase it.

Today, mortgage interest rates stand at about 4.5%. The average annual mortgage interest rate from 1985 to 2000 was almost double that number, at 8.92%. When comparing affordability of homeownership over the decades, we must also realize that incomes have increased.

This is why most indexes use the percentage of median income required to make monthly mortgage payments on a typical home as the point of comparison.

Zillow recently released a report comparing home affordability over the decades using this formula. The report revealed that, though homes are less affordable this year than last year, they are more affordable today (17.1%) than they were between 1985-2000 (21%). Additionally, homes are more affordable now than at the peak of the housing bubble in 2006 (25.4%). Here is a chart of these findings:

Homes More Affordable Today than 1985-2000 | Keeping Current Matters

What will happen when mortgage interest rates rise?

Most experts think that the mortgage interest rate will increase to about 5% by year’s end. How will that impact affordability? Zillow also covered this in their report:

Homes More Affordable Today than 1985-2000 | Keeping Current Matters

Rates would need to approach 6% before homes became less affordable than they had been historically.

Bottom Line

Though homes are less affordable today than they were last year, they are still a great purchase while interest rates are below the 6% mark.

Download Your #NewAveRealty Game Plan

Is now the time to get #CROWNEDAHOMEOWNER? I’ve created a game plan to help buyers become the kings and queens of their castle and prepare themselves for the Dallas-Fort Worth real estate market. Now is the time to download your personal game plan to get you to results!

Click the link below to download the new game plan.

#NewAveRealty Game Plan

For a more detailed plan of the game plan that include credit resources, savings and spending plan, contact us at info@newavenuerealty.com.

 

Spring Into Action: Boost Your Curb Appeal

Spring is official here – which means planting and landscaping will be in full swing. These activities are not just wonderful hobbies enjoyed by millions, they are key to creating great curb appeal.

The importance of curb appeal

Curb appeal is the aesthetic charm of a property and its surroundings when viewed from the street. In real estate, first impressions make an important impact and curb appeal matters!

Most buyers form an opinion about a property before they step inside – this is valuable to remember whether your clients are buying or selling. A property with an exterior wow factor maximizes its value. At first blush, curb appeal presents itself by the condition of the lawn, trimmed trees and shrubs, planted or potted flowers, fresh mulch, and an inviting entryway.

If a buyer already feels like they are home before even stepping foot inside, sellers are ahead of the game.

Where should homeowners start when looking to boost their curb appeal?

A good overall power washing of the home, porch, garage and driveway will provide a clean slate to work from. It will also reveal whether or not a fresh coat of paint is necessary. If a home requires major repairs such a new roof, paint, driveway, siding or gutters, these are best taken care of before putting the home on the market. Most buyers don’t want to be out of pocket before they’ve even moved in. Smaller projects such as painting the trim or front door can freshen up a home as well as set the palette of your curb appeal projects. Working with the colors of a home and its natural landscape can tie in an overall impression.

What to plant?

When considering adding flower value to a property, it’s a good idea to know which flowers offer the most bang for your buck. Potted and planted annuals offer a quick and immediate fix to a home’s charm and appeal. Annuals are great for filling bare spots in garden beds, adding a pop of color to your front entry or hanging from a basket. Some annuals reseed and will pop up again the following year. Perennials are unfussy, long-lived plants which will bloom year after year. They like to be planted in spring or fall to get a healthy start.

Roses: Most traditional types of roses only have a blooming period of a few weeks. Instead of having a limited bloom time, consider Knock Out Roses. These hearty roses are low maintenance and bloom throughout spring, summer and fall.

Geraniums: These come in a wide array of colors which stay in all summer long. These colorful flowers also pack an extra bonus: their fragrant scent is natural mosquito repellant.

Petunias: Petunias look beautiful and classic in hanging baskets. They also come in a variety of colors to complement a home’s color palette.

Impatiens: These shade-tolerant plants work hard to beautify tree bases, borders and garden beds.

Marigolds: Just like their color implies, these blooms love full sun and are extremely hearty.

Violets: These perennials are purple and low growing, adding a beautiful edge to any border or bed.

Before you plant permanent landscaping plants and shrubs, head to The National Gardening Association website to see which survive best in their specific climate zone(s).

The overall physical condition of a house will be complemented by a great curb appeal. Remember, curb appeal doesn’t have to be elaborate. A freshly cut lawn, clean driveway, inviting entryway and weeded sidewalk present a home that is neat, taken care of, and respected.

Is Moving Up More Affordable in 2018?

If you are considering selling your current home, to either move up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed.

Last week, Trulia posted a blog, Not Your Father’s Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that:

“Nationally, homes are just about the most affordable they’ve been in the last 40 years… the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price.

Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years – from a high of over 16% in the 1980s to under 4% by 2016.

Of the nation’s 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame.”

Here is a graph showing the Affordability Index compared to the 40-year average:

Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years | Keeping Current Matters

 

The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade.
(Remember that during the crash you could purchase distressed properties – foreclosures and short sales – at 20-50% discounts.)

In DFW, the median sales price for February 2018 was $248,250 which is an increase of 5.6% of appreciation whereas normal appreciation rates are between 2-4% per year.

There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall. That is why if you are thinking of moving up, you probably shouldn’t wait.

Bottom Line
If you have held off on moving up to your family’s dream home because you were hoping to time the market, that time has come. Let New Avenue Realty at Keller Williams help you learn your options to your future. Contact us at 972-813-9788 or atfowler@NewAvenueRealty.com.

2 Ways to Get the Most from the Sale of Your Home

Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive the maximum value for your house?

Here are two keys to ensure that you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counterintuitive, but let’s look at this concept for a moment. Many homeowners think that pricing their homes a little OVER market value will leave them with room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

2 Ways to Get the Most Money from The Sale of Your Home | Keeping Current Matters

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price but will instead have multiple buyers fighting with each other over the house.

Realtor.com gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

A study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”

The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.

The Finale: I BOUGHT A HOUSE

It’s a few weeks before closing, I’ve worked out situations with my lender on what I need to do and find out NOT one but TWO of my deals are falling through. In real estate, every deal doesn’t go through. Those aren’t the things I share publicly because that isn’t sexy. How many Realtors out there are really talking about those things? One of the two was deal set to close FOUR days before my home. That WAS my downpayment. I couldn’t sleep at all after finding out. I really was about to watch something I dreamed of walk away so easily. However, when you really work your business, you are never without business. I had another deal come through and close a few weeks prior that secured the extra funds I needed to pay off my car. We even worked everything out to where I brought in $1300 at closing.

I swear every call I received from the lender, my heart would drop. I’m like I have no more money to give without completing falling out of my living comfort zone.

What I learned from the whole process is

1. Never depend on others to do what you REALLY want to do. I know deals may fall through however that one deal set me back because I was dependent on it for my home. Had I not had my house tied to it, I would have been okay.

2. Be resourceful. Just because you have one way or doing things doesn’t make it the only or best way. I was able to use a mortgage credit certificate (which helps me qualify for a tax credit for the life I own the home) to help offset my debt to income ratio. This helped me not really break the bank after paying the car off.

3. Always have MORE money. Down payment assistance route was never my option because I knew the cost of that would have me way out of my comfort zone. I settled for a slightly higher rate than I felt I should have gotten because of the money I wanted to bring to closing. I still feel like my rate should be lower and somewhere between now and April, I hope that can happen.

4. Don’t sweat the small stuff. I tossed and turned every night until I signed the papers. I never got to really enjoy my home when I moved in because I suddenly had to move as my lease ended the day after closing. In my mind, I had to grind for the first mortgage payment. It’s like bills are due and there is no time to slack off. This made me not really sit back and enjoy my hard work. I overworked myself for 2017 because I had grand goals. The first and most important one has been accomplished.

Let’s take a look at the process:

https://youtu.be/_StcYD9o-f0

From “I Do” to Sold

LRE Social Blog

Newlyweds are saying “I do” to each other, and equate to over half of first time home buyers that are also saying “I do” to their dream homes. It makes sense! When you put two hearts together, the time comes to find a home to nourish that love. A home that brings two of your places together, and makes it one. If you and your spouse are ready to fall in love with the perfect house together, here are five tips to make sure the process goes smoothly, and you come prepared.

1. YOUR WEDDING BUDGET: Your wedding is a one-time event that shouldn’t be less than what you’d imagine. It’s a beautiful time to put all of your dream pieces together. However, it’s best to sit down and find out ways you can shift the budget to help with your down payment for a home, if you plan to purchase. The average couple spends a little over $20,000 on their wedding. Even a savings of $5000 from your wedding budget can help with owning the perfect home. 

2. WEDDING GIFTS: Wedding bliss comes with wedding gifts. Let’s admit, one of our favorite times during the wedding season is all of the gifts that come pouring in! Have any friends or family pitching in cash? Save that to put towards your down payment. And depending on the generosity of your gifts, you can even open an account dedicated to your down payment, that friends and family can gift to. 

3. GET PRE-APPROVED: One of the least brought up conversations in relationships is the credit and financial history of your soon-to-be spouse. Get together with a lender to go over both of your histories to know what needs to be done to put you guys in a position to own together. In some cases, only one person can get approved, while the other can’t. If you want to put both of your incomes toward the cost of the house you want, talking to a lender early on can ensure you are prepared to make the right moves.

4. THE RIGHT AGENT: That’s where I come in! For starters, I can connect you with a lender to ensure you guys are being watched over from the best recommendations. And it’s an absolute joy to take the stress out of buying a home for my newly wed couples. We all know how stressful, although joyous, a wedding can be. To then jump into buying a house shortly after, well, it’s certainly a lot to get through. But I can guide you through all of the steps to make sure you end up with a house you love. Just think of me as a wedding planner, but for homes.

5. NOW THERE’S TWO: Although some spouses are a match made in heaven, loving and adoring the same exact things, often times that’s not the case with most couples. You still are your own persons, and have your own tastes. This is where the first step to comprise really begins. Spending a good bit of money on a place you both will love and call home. A happy marriage starts with a happy home, so be sure you both are considerate of each other’s wants and needs in style and location, so you both are happy with the home you end up getting. 

Let’s start the chat to happily ever after. Visit newavenuerealty.com to search for your future marital home.

I BOUGHT A HOUSE: Building the Dream (Part 3)

The ball is now rolling and it’s official, I’m buying a house. Although I was quite excited, deep down I felt like something was going to happen during this time. I kept wondering why the other lender kept saying I wouldn’t qualify but my new one was like Yes! Would I get so far in my process and it not come true? Honestly, it was these thoughts that stopped me from publicly discussing building a home.

So here we are. It’s May 2017 and I’m starting. It’s getting real. I’m nervous and excited at the same time.

After returning from my little sister’s baby shower in Atlanta.
Foam boards going in.
Roughing plumbing

Before foundation is poured.

I LIVED for this moment here. I literally cried at this very moment.
Foundation has been poured.

I went away for the Fourth of July weekend at Essence and came back to this.

It was at this moment who I was emotionally invested. I needed to do whatever it took to keep the no and nay says away. It’s July 2017 and my home is slated to be completed in 2 months. I started to pay off EVERYTHING. When I say EVERYTHING, I did everything. That tax bill that I should have paid off in 2016 was finally paid off. Those credit cards were finally paid off. I did whatever the lender saw fit. However, there was a hold up. The lender I was using had internal issues that affected me. I get a call from a random person saying he’s know my loan officer. I am NOT receptive to it. I’ve been working with this particular lender for the company and I like him. He had a Realtor Day at his lake house and I really enjoyed him. Your personal finance is heavily on display when buying a home so it is important to work with someone you can trust. I trusted this guy not the new guy calling. I let that be known and it was told to me that my regular guy would finish up my loan process. Well, two weeks later, they LOCKED him out of the file.

As a Realtor, I understood the internal issues but as the now consumer, I was hot. The communication now lagged because my second lender guy was ON IT. I had questions and he had answers. This mess from the inside meant a delay on getting an answer. I was in debate with should I pay my car off. Can I do this instead? Can we use this program to help offset my DTI (Debt to income ratio because that was really my main issue anyway. It wasn’t my debt more so the income I claimed. I wanted to pay lower taxes so the income that I actually made was lower)? I remember distinctly waiting a week and a half for my question to be answered when I responded 5 minutes later to an original email. It was at that moment that I said GOODBYE.

I didn’t want to be involved in the tussle anymore and communication is MAJOR for me. Buying a home or better yet financing a home is stressful enough. I didn’t need the extra stress. I went back to my sales rep and said okay, who is next on the list. I told her I’d try one of the preferred lenders again and if it didn’t work, I’d go with one of my own lenders and just pay $20K extra because I’d lose my incentives for working with an outside lender.

She recommends Mortgage Financial Services and Jim Ward. I thoroughly explained to Jim what was happening, what I needed, and to guarantee he could get me to the closing table. If he couldn’t do it, just let me know ahead of time. He mentioned he could but I would have to pay off my car. I was trying to avoid that. I was like Jim, “I don’t owe like $2000 on the car. I owe almost $8000 and now we are interfering with the money I have saved for my downpayment. After counting my resources, I knew I had a closing right before the scheduled date to close on my home. In some way, this could work out OR it could end really bad. Just my luck, it got bad before it got good.

Supposed to be a half wall instead it was a whole one. I paid an additional $100 for a half one.
Me to My Builder: Just as long as they remember. I’d hate for them to continue and have to come take it all off.

I’ve extended this to four parts. I couldn’t add so much for part 3. Thanks for reading and stay tune for the final part next week*

Why You Need An Agent for New Construction

Are you ready to buy a home and considering going in the route of new builds? It may seem like an easy enough process, where you get to call the shots of how you want your dream home to be, but there is a lot of risk when it comes to new construction if you are going in blindly. It’s unfortunately not as trouble free as we’d like to hope, if you don’t have the right representative by your side to help with the things that need to be looked out for from a professional’s eye. Below, we’ll dive into the many reasons you need a professional buyer’s agent representing you in the sale. They are, after all, on your side. And it’s their role to ensure you aren’t taken advantage of by the builders and their representatives in the transaction.
1. HIRING THE RIGHT BUILDER

The most important part of finding an agent is having a professional’s perspective to finding a builder with a great reputation. You get to benefit from your agent’s network of vendors, lenders, and home builders. They have the industry expertise to connect you with a builder that matches your needs, and more than likely, have already had experience with the builder with a past client. Or, if they haven’t worked with a builder you want to use directly, they can gather person-to-person recommendations from other agents to know the expected experience with said builder. They will help you find one, that not only delivers exactly what their clients want, but in a timely fashion.

2. THE RIGHT LOT IN THE RIGHT NEIGHBORHOOD

The lot you choose to go with in a new build can either be a positive to your new home, or detrimental. In the excitement of the process, we tend to overlook important features of a property. It’s important to have a professional to ensure you make a purchase that will best serve you. They’ll be able to find a neighborhood that best fits your lifestyle and a lot that has a location that works for you. Whether you’re single with pets, or a family with children, the lot location can really make a huge impact. Especially when it comes time to selling it in the future. These are important things your agent will be able to help walk you through, so your decisions work in your favor in the long term, as well as now.

3. UPGRADES AND PLAN MODIFICATIONS

Not only will your agent be able to ensure you get the upgrades and modifications that will best suit your lifestyle, but will also help you make decisions that will increase the value of your home in the long term. They are working for your best interest long term, and with an agent’s guidance, you can be sure to make changes that end up benefiting you.

4. HANDLING CONTRACTS AND PAPERWORK

Your agent will handle the contract and all of the paperwork, and they will be sure to review it to ensure that it is in your best interest. They will be able to help you break down the best loan types, purchasing processes, and steps to take that benefit YOU, not the builder. They are, after all, working for you. They’ll make sure there are no overlooked terms in a builder’s contract that could end up hurting you after you move in. Or even during the building process. You want to make sure you have a professional who is experienced with the paperwork and contracts and knows how to make revisions that work in a way that make you happy.

5. NEGOTIATIONS

It is imperative in the purchasing process to have an agent that is able to represent you and negotiate for you. The building process is so much more than having the builder put in your favorite counters and floors. They will be able to get you a price that actually benefits you – not the builder. They will be able to run a comparative market analysis to ensure you are paying a fair price for the property. You don’t want to end up overpaying for the home – it could put you in a tough spot when it comes time to sell. They’ll also be able to negotiate terms around building time frame, closings costs, and so many other aspects of a contract that you may otherwise overlook.

6. BUILDER’S AGENT REPRESENTS THEM, NOT YOU

It may seem easy just to pop into an office of a new build, or a builder’s office, and use the onsite agent. But keep in mind that this agent works FOR the builder, NOT for you. So they will be working to make sure the builder gets the best deal at the end of the day. By having a buyer’s agent of your own, you can ensure there is a professional on your side that can walk you through the process and avoid being taken advantage of during the transaction. They will also have a better handle on things when you hit bumps along the way. If you end up working with a builder who isn’t holding their end of the deal, they will have the power to make connections that ensure the builder holds their end of the contract terms.