real estate

Searching for a new home requires patience, hard work, and sometimes, a little luck.  When the economy is less than ideal, it forces people to make decisions that are not in their best interest.  The good news is: right now is the perfect time to buy a house. There are three huge advantages homebuyers must keep in mind before jumping into the market.  

The government is preparing for a housing boom.  Both Fannie Mae and Freddie Mac have set aside less money than usual to protect themselves in case of a housing market implosion.  This is a direct result of faith in the continuing upward trends that have been going on since the economic collapse. Here are the three main reasons why right now is the perfect time to buy a house.

Reason #1: Recovery of the Housing Market

The economy is improving rapidly.  According to the National Association of Home Builders, fifty-nine metropolitan areas have completely recovered from the market crash that sent home numbers plummeting.  “Our builder members tell us they are starting to see more optimism in the field. Mortgage rates are low, home prices are affordable and with the harsh winter behind us our latest surveys show builders are feeling more bullish about future sales,” said NAHB chairman Kevin Kelly.

Even with issues such as the ability to afford a home and low credit scores, there has been no better time for a potential homeowner to decide to get into the in-town Atlanta housing market.  

Reason #2: Buying Is Cheaper Than Renting

With the housing market in full recovery, home prices are rising.  Even with that statistic, Forbes released evidence that buying a home is much cheaper than renting.  As of right now, a 30-year fixed rate is 38% cheaper according to Trulia. But there’s more to the story.  Rising mortgage rates have been closing the gap over the past few years. Last year it was 44% cheaper to buy than to rent, which means the time is now to take advantage of the soft market.  

Reason #3: Low Mortgage Rates

In 2014, the mortgage rates were hovering around 4.29%.  As of this year, the rates have slowly declined and are now at 3.7% for a 30-year fixed rate.  Frank Nothaft, chief economist and vice president of Freddie Mac, commented on the fall: “Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter.”

If those weren’t enough reasons to entice a potential homeowner to get start his journey, here’s another: Fortune Magazine and Deutsche Bank released a study of “The Best Places in the U.S. to Buy a Home”, and Atlanta, Georgia took the top prize.  That’s due to the astronomical cost of renting, which is more than 50% higher than an after-tax mortgage payment.  

Atlanta also led the nation in the construction of new homes just before the major real estate crash.  This means the supply was high and demand was low, causing home prices to take a tumble. This is also happening all over the country. The great economy has people looking to buy homes and get away from renting. 

To keep up with demand, new houses are going up all over the place. Even in once-defunt rust belt cities, like Flint and Detroit. Old houses and blight are being knocked down to make room for new housing developments. 

We’re currently sitting in a market that should be inspiring a real estate frenzy. Consumer sentiment about buying a home is higher than it’s been in five years. Home price appreciation is slowing down. Mortgage rates are slipping to a rate of 3.82%, a two-year low. While these are great numbers, it’s not leading to the kind of excitement it should be.

“We are in an extremely interest-rate-sensitive housing market,” said Daren Blomquist, vice president of market economics at Auction.com. “There’s a lot of hopefulness that cycle will repeat in 2019.” But, it’s just not happening. People aren’t buying home like they would in the past. Mortgage applications have dipped by 2% according to the Mortgage Bankers Association.

A lot of it is gun-shyness from the economy that is still recovering from the last recession. Buying a home is a riskier investment now. Due to rising mortgage rates last year, many Americans decided to get into a ‘rate-lock’ mortgage, so they already have low-interest mortgages and have no need to change it, which would be risky.

“Rates are clearly not the only factor people consider,” said Danielle Hale, chief economist at Realtor.com. While rates have gone down, homeowners are facing prices that continue to be expensive. They’re not seeing the motivation they need to decide to move up and purchase larger pieces of property.

Tax Fallout Hurting Home Buying

Another major issue keeping homebuyers from taking the leap is Trump’s changes to the tax code. The deduction for state and local taxes has been capped, preventing new buyers from getting a lower rate of property taxes. Now that those are moving upward, it’s preventing new buyers from jumping in.

“You’re facing a triple-whammy right now,” said Rick Sharga, a mortgage industry veteran and CEO of CJ Patrick Company, a real estate and financial services consulting firm. “A lot of the financial incentives that a move-up buyer would have had a couple years ago no longer exist.”

In the past year, the median U.S. home listing price jumped from $297,200 last year to $315,000 in 2019. “It’s really difficult to forecast where rates are going to go right now because there’s so much uncertainty,” Hale said. “Anytime there’s a lot of uncertainty that just sets the market up for disappointment.”

Despite the positive indicators, people are scared away from buying a new home. There’s nothing out there right now to push them into that decision. In fact, it hurts them in several ways. Hopefully this will change soon and the market will go back to being a buying frenzy.

You’re excited.  You’re at the closing table and have your fingers on the buy or sale, but something happens out of the blue.  Suddenly, what was a problem-free situation went sour and you’re left trying to put together the pieces. Real estate is an evolving beast and can often pose new challenges each day, no matter how secure things seem at the time.

Here is a list of a few issues you can run into during your real estate experience:

1) Seller changes their mind

It’s more common that buyers change their mind, but sellers can get cold as well.  Buyers can go through the entire process of inspections, appraisal, and on its way to closing only to suddenly get the call the day before that the seller is no longer interested in selling.  

This can bring in numerous potential challenges for the seller, as a good real estate agent would then tell them the legal action they could be facing if the buyer wants the house bad enough.  That’s why it’s important to have pro/con list when working out whether or not to sell. Agents should know how to tell if a seller is motivated or not and can help connect buyers with the right sellers to prevent this from happening.

2) Buyer remorse

In real estate, bidding wars can happen.  It’s only human nature to want to win the war, but realize a few days later that they bid significantly higher than the listing price, and even their budget!  This can lead to buyer remorse and a terminated contract.

This is true for first-time owners as well, who often find themselves swallowed up by new and enormous responsibilities.  Buyers have a million questions and concerns running through their mind, so it’s important to put together a list of needs and wants to review so the buyer can get their mind back on track.   

3) Unknown Structure Issues

Buyers can often be scared of unknown problems with the house.  The best way to avoid any issues cropping up is to have a pre-inspection before listing your home, giving you a chance to fix those concerns ahead of time.  

Cara Ameer, broker associate and Realtor at Coldwell Banker Vanguard Realty based in Ponte Vedra Beach, Florida, had this to say: “If you’re starting to get into something where it’s more than 2% to 3% of the purchase price, you should think about it.  If you’re dealing with structural things, consider how much you want to do.” Anything that’s not fixed can affect your resale value.

4) Sellers Take Permanent Fixtures

A lot of times, sellers will take with them a permanent part of the home, like a refrigerator, chandelier, or other fixture.  This often leaves the buyer frustrated as they expected such features to be included, as they were listed. It’s best to double-check which items are personal property and which are part of the home.   

5) Choosing a Bad Lender

Not all lenders are created the same.  Some are on the ball and make sure all the paperwork is in order and ensuring no problems with the loan.  Other lenders aren’t so organized. In one example, a lender dropped the ball by putting a buyer’s file on a back burner, but actually ended up forgetting about it completely!  Realtor’s will often have a list of lenders they recommend, so consider those first.

6) Buyer Has No Credit

Yes, lenders can pre-approve loans based on income alone, but what happens later when they come to find they have no credit?  It will often be rejected. In most cases, to own a home, some kind of credit on file is needed. If someone doesn’t have a car loan, student loans, etc, then getting a home loan probably won’t happen.   

Buying or selling a home can be a quick and easy process, but often times, something comes up.  Don’t let these issues happen to you. Plan out all contingencies. Get inspections well before putting anything on the market.  If you’re as prepared as possible, the process should go smoothly.

Having an attorney who knows the real estate laws and regulations will only help you in the long run regardless of any issues that might pop up.  It can prevent you from being scammed and can take part in ensuring the entire process is safe and legal.