One of the toughest things for us to combat over the past few years has been the sense that buyers have had, that they can take all the time they want to, while making decisions. It seemed to many that, not only would the same property be available, but that others that might be as good or better would come along all the time. That made it difficult to put transactions together.
Now we seem to be joining the rest of the country in having low inventory. In many price ranges, there simply isn't enough available to satisfy the demand. This is particularly true at the first-time homebuyer price points. In some places around the country, time on the market is measured in hours, or perhaps in days. We're not used to that here, to say the least.
Buyers need to get ready to make decisions on homes that they see, before others make offers, or at the same time. It helps to have a list of things that must be true about a new home you would buy, in order of how important each item is. It's also really useful to rank each home as you see it, and, while remembering that nothing is perfect, to eliminate any that do not bump off any of your current top three choices.
Sometimes, it can be crucial to have someone on hand to evaluate changes or additions that you would require, and get a price right away. Arranging inspections quickly can also give you an advantage, as well of course as a prequalification. The most important factor, however, is your own willingness to pull the trigger. More people regret not making an offer in time, than they do those that they make.
This is the point at which I come back to one of my favorite pieces of advice: Bid the amount that you would be unhappy to hear that it sold for, to someone else. That's your true estimate of the property's value to you. And be prepared to come to that number in relatively short order. That's becoming more important every day in our current market.
Showing posts with label first-time home buyers. Show all posts
Showing posts with label first-time home buyers. Show all posts
Monday, March 5, 2018
Monday, July 24, 2017
What Makes a Neighborhood?
We recently talked at a meeting about trends in neighborhood preferences among buyers. The average first-time homebuyer is a millennial, and the average buyer is a Gen Xer. For a long time, people thought that those groups would only live in cities, and only commute on foot, by bike, or by public transportation. It seems now that that's not entirely true, but there are some real differences that our agents are seeing in Greater New Haven.
Once younger buyers have children, they care a great deal, as did their parents and grandparents, about school quality. They also tend to prefer more space, both inside and out. Unlike their parents, however, they want to spend less time commuting, maintain less in the way of house and grounds, and live in a setting with shops, restaurants, and parks. That's what is meant by the new "walkability" scores that show up on real estate websites. People want to be able to get milk, see a neighbor, or arrange a play date without getting into a car.
We are seeing this show up in New Haven, for instance, where East Rock now seems almost suburban to buyers, but has sidewalks and foot traffic everywhere, with coffee shops and other neighborhood attractions and institutions. Most people drive many places, but want the freedom to walk children to school, or sit on a front porch and converse with passersby. It's a feeling of safety in numbers, but also of community. Bigger homes on bigger lots that are farther apart appeal to a different group, smaller in number, that want to entertain, love the spacious feeling of older homes built in a bygone era of grandeur, and want backyards and big gardens. They also like walking places, but crave more privacy.
In the suburbs, we see the same trends playing out. Spring Glen, with its high walkability score, is selling quickly. On the Shoreline, houses and condos near the Guilford Green are at an all-time premium. There is a second reason for this, which is that older buyers also care about walkability and convenience, and they also want less space and smaller lots to maintain. The two groups compete for the closer-in properties along the Shoreline, although the smaller homes in East Rock are still large, and attract mostly growing families.
This means that there is a large supply, almost everywhere, of the biggest homes in a town. Some of that relates to taxes, but just as much to lifestyle. Whether busy with young children, or free to travel more, buyers are choosing smaller, sometimes cheaper, and always as walkable as possible. So, if that's the type of home you own, think about now as a good time to sell!
Once younger buyers have children, they care a great deal, as did their parents and grandparents, about school quality. They also tend to prefer more space, both inside and out. Unlike their parents, however, they want to spend less time commuting, maintain less in the way of house and grounds, and live in a setting with shops, restaurants, and parks. That's what is meant by the new "walkability" scores that show up on real estate websites. People want to be able to get milk, see a neighbor, or arrange a play date without getting into a car.
We are seeing this show up in New Haven, for instance, where East Rock now seems almost suburban to buyers, but has sidewalks and foot traffic everywhere, with coffee shops and other neighborhood attractions and institutions. Most people drive many places, but want the freedom to walk children to school, or sit on a front porch and converse with passersby. It's a feeling of safety in numbers, but also of community. Bigger homes on bigger lots that are farther apart appeal to a different group, smaller in number, that want to entertain, love the spacious feeling of older homes built in a bygone era of grandeur, and want backyards and big gardens. They also like walking places, but crave more privacy.
In the suburbs, we see the same trends playing out. Spring Glen, with its high walkability score, is selling quickly. On the Shoreline, houses and condos near the Guilford Green are at an all-time premium. There is a second reason for this, which is that older buyers also care about walkability and convenience, and they also want less space and smaller lots to maintain. The two groups compete for the closer-in properties along the Shoreline, although the smaller homes in East Rock are still large, and attract mostly growing families.
This means that there is a large supply, almost everywhere, of the biggest homes in a town. Some of that relates to taxes, but just as much to lifestyle. Whether busy with young children, or free to travel more, buyers are choosing smaller, sometimes cheaper, and always as walkable as possible. So, if that's the type of home you own, think about now as a good time to sell!
Monday, February 27, 2017
Millennials Catch Up
We've all been reading for the past few years about how millennials are slow to leave home, slow to find a career, slow to get married, and slow to buy houses. In addition, there has been a lot of speculation that they would never embrace some of those things the way that their parents and grandparents did. Even if they wanted to buy homes, the story went, they have too much student debt to do so, and a generational disinclination to suburbs and investment in real estate in general.
Lately, it seems as though the pundits spoke too soon. Now the theory is that, while the average 30-year-old has had eight jobs, and while millennials have reason to distrust corporate America, given what happened to many of their parents in the most recent downturn and the one before that one, he or she is not so different from earlier 30-year-olds, or at least from those having children. They seem to want to buy homes, and even homes in the suburbs, once they start having kids. While walkability is desirable for them, and puts places with amenities within walking distance at a premium, they own cars, and want to own houses also.
When the Gen Xers and Yers reached this point, they were not interested in homes that needed updating or redecorating. They wanted everything to be perfect. The millennial generation, which grew up on HGTV, is much more likely to undertake those types of projects. In fact, their interest in having balanced lives and healthy lifestyles will make it easier for them to spend the time at home that DIY undertakings require; even professional help means that you need to take the time to hire and manage it, and this generation is willing to do that.
All of this is good news for sellers, who have struggled with the dilemma of whether or not to fix up homes before selling them, knowing that they could guess wrongly about the taste or budget of a buyer. Now it seems possible to show potential, and leave the rest up to the buyers. Reports from recent weekends have indicated that there are lines out the door at open houses in some parts of our region, made up both of first-time homebuyers and downsizing boomers. Maybe both of those groups will finally rejuvenate the stock of homes being vacated by seniors. They might have to, if demand goes up enough, and if they end up competing against each other for the listings that are out there. Now that would be a welcome problem for Realtors in Connecticut!
Lately, it seems as though the pundits spoke too soon. Now the theory is that, while the average 30-year-old has had eight jobs, and while millennials have reason to distrust corporate America, given what happened to many of their parents in the most recent downturn and the one before that one, he or she is not so different from earlier 30-year-olds, or at least from those having children. They seem to want to buy homes, and even homes in the suburbs, once they start having kids. While walkability is desirable for them, and puts places with amenities within walking distance at a premium, they own cars, and want to own houses also.
When the Gen Xers and Yers reached this point, they were not interested in homes that needed updating or redecorating. They wanted everything to be perfect. The millennial generation, which grew up on HGTV, is much more likely to undertake those types of projects. In fact, their interest in having balanced lives and healthy lifestyles will make it easier for them to spend the time at home that DIY undertakings require; even professional help means that you need to take the time to hire and manage it, and this generation is willing to do that.
All of this is good news for sellers, who have struggled with the dilemma of whether or not to fix up homes before selling them, knowing that they could guess wrongly about the taste or budget of a buyer. Now it seems possible to show potential, and leave the rest up to the buyers. Reports from recent weekends have indicated that there are lines out the door at open houses in some parts of our region, made up both of first-time homebuyers and downsizing boomers. Maybe both of those groups will finally rejuvenate the stock of homes being vacated by seniors. They might have to, if demand goes up enough, and if they end up competing against each other for the listings that are out there. Now that would be a welcome problem for Realtors in Connecticut!
Monday, July 11, 2016
What Millennials Want
Since the average age of first-time homebuyers is now around 32, we are dealing with millennials now. The average age of a seller is 57, and the average age of a real estate agent is about the same. That means that both sellers and agents have to educate themselves about what's changed in buyer preferences. I had friends who were the above age, with an agent of the same "vintage", and she told them that their home was perfect. Although it was highly desirable, and in a great location, selling quickly, millennial buyers most decidedly had opinions on the décor and finishings.
Millennials want, above all, convenient, walkable locations, and homes that need no work at all. It would be hard to say which of those things would come first, and they are very different--one you can fix, and one you cannot. Flippers and investors take note, because you can definitely make money on properties that just need some updating and are in desirable places.
What do they want to see inside a home? An open floor plan. Soapstone counters. Gray walls. Big, luxurious bathrooms. Fancy appliances and fixtures. The list could go on, but you get the idea. DIY is OUT.
Where do they want to live? In cities, near cities, and near town centers. How much of the purchase do they want to finance? All of it, or as much as is possible. At current rates, almost anyone would make that choice. Who else is involved in the decisions? Their parents. I've dealt with more parents in the past few years than in my entire career. The helicopter parent has landed!
We certainly sell homes to non-millennials, and we certainly sell homes that don't match the above descriptions. However, it's always worth knowing what the trends are. But don't wait too long to act, if that's your intent, because tastes will change again; that's the one constant in real estate.
Millennials want, above all, convenient, walkable locations, and homes that need no work at all. It would be hard to say which of those things would come first, and they are very different--one you can fix, and one you cannot. Flippers and investors take note, because you can definitely make money on properties that just need some updating and are in desirable places.
What do they want to see inside a home? An open floor plan. Soapstone counters. Gray walls. Big, luxurious bathrooms. Fancy appliances and fixtures. The list could go on, but you get the idea. DIY is OUT.
Where do they want to live? In cities, near cities, and near town centers. How much of the purchase do they want to finance? All of it, or as much as is possible. At current rates, almost anyone would make that choice. Who else is involved in the decisions? Their parents. I've dealt with more parents in the past few years than in my entire career. The helicopter parent has landed!
We certainly sell homes to non-millennials, and we certainly sell homes that don't match the above descriptions. However, it's always worth knowing what the trends are. But don't wait too long to act, if that's your intent, because tastes will change again; that's the one constant in real estate.
Thursday, June 16, 2016
How Do We Give Pricing Advice Today?
In my last blog post, I wrote about how Connecticut's real estate market has diverged from the rest of the country's situation. There are many reasons for that, and they've been well documented. That begs the question, though, of what the real problems in the real estate arena are for professionals now. We are having trouble getting buyers and sellers on the same page.
There is definitely a market for well-priced homes, especially those that are within reach of first-time homebuyers. Although the strength of the recovery varies from town to town, and even from submarket to submarket, a compelling price will often result in multiple bids. This often confuses buyers, who have been led to believe that they are in a buyer's market, and can offer well below the asking price. They are happy to believe this, even though it is clear that most of the country is in a seller's market, due primarily to a lack of inventory.
Here, in many places, we have lots of inventory. However, it's not always in the same price categories or locations that buyers want first. And, sorry to say, much of what's been around a long time is overpriced. Sellers don't accept that in many cases, though, because they often paid more for the home that it is currently worth, and sometimes have also done work. They can also point to homes that sold for more, even if those properties may not be in the same condition as their own home. (A note here: Buyers today want perfection. They do not want to do any work to a home. What you may overlook as the current occupants, they will deduct from the value.)
What should sellers do? Listen carefully to what you are being told about value. Write it down, so you don't forget it. Don't ask "What shall I put my house on the market for?", but rather "At what price will my home sell within thirty days?". Don't assume that you need to leave room for negotiation. That's one tactic, but, in my opinion, a compelling price (at or slightly below the expected sales price within 30 days) will have the greatest likelihood of drawing multiple offers, which is your best chance of getting a higher price. Bidding wars work. They excite people, and increase a buyer's estimation of a home's value. Pay attention to early signs. If your home has been shown ten times, and you don't have an offer, it's the price. Period. If you don't sell your home in the first month (or even in the first two weeks), your chances of selling relatively quickly go way down. Period. This isn't rocket science. So why is it so hard for people to follow these rules?
One clear example, as we know from Freakonomics, is to look at what real estate agents do with their own properties. I heard yesterday that one shoreline agent just sold her own home for $200,000 less than she paid for it. That should ring a big bell for sellers there.
And for buyers? The market now is hyperlocal. You may find much more competition in some places than in others. If you love the home, bid what you would regret to hear that someone else paid for it. If it goes for more than you could afford, or if you didn't like it that much, you won't have regrets. Otherwise, don't play games. Understand that there are often back-up offers, and don't go crazy with the inspection requests, or consider them a second round of price negotiations on the property. Behave fairly. Tell the truth. Again, these rules are simple. And they yield big dividends.
Are we ever wrong? Of course we are. But not as often as you would think, since we see so much inventory, and have such a good pulse on market conditions. Please listen to us. It will be worth your while.
There is definitely a market for well-priced homes, especially those that are within reach of first-time homebuyers. Although the strength of the recovery varies from town to town, and even from submarket to submarket, a compelling price will often result in multiple bids. This often confuses buyers, who have been led to believe that they are in a buyer's market, and can offer well below the asking price. They are happy to believe this, even though it is clear that most of the country is in a seller's market, due primarily to a lack of inventory.
Here, in many places, we have lots of inventory. However, it's not always in the same price categories or locations that buyers want first. And, sorry to say, much of what's been around a long time is overpriced. Sellers don't accept that in many cases, though, because they often paid more for the home that it is currently worth, and sometimes have also done work. They can also point to homes that sold for more, even if those properties may not be in the same condition as their own home. (A note here: Buyers today want perfection. They do not want to do any work to a home. What you may overlook as the current occupants, they will deduct from the value.)
What should sellers do? Listen carefully to what you are being told about value. Write it down, so you don't forget it. Don't ask "What shall I put my house on the market for?", but rather "At what price will my home sell within thirty days?". Don't assume that you need to leave room for negotiation. That's one tactic, but, in my opinion, a compelling price (at or slightly below the expected sales price within 30 days) will have the greatest likelihood of drawing multiple offers, which is your best chance of getting a higher price. Bidding wars work. They excite people, and increase a buyer's estimation of a home's value. Pay attention to early signs. If your home has been shown ten times, and you don't have an offer, it's the price. Period. If you don't sell your home in the first month (or even in the first two weeks), your chances of selling relatively quickly go way down. Period. This isn't rocket science. So why is it so hard for people to follow these rules?
One clear example, as we know from Freakonomics, is to look at what real estate agents do with their own properties. I heard yesterday that one shoreline agent just sold her own home for $200,000 less than she paid for it. That should ring a big bell for sellers there.
And for buyers? The market now is hyperlocal. You may find much more competition in some places than in others. If you love the home, bid what you would regret to hear that someone else paid for it. If it goes for more than you could afford, or if you didn't like it that much, you won't have regrets. Otherwise, don't play games. Understand that there are often back-up offers, and don't go crazy with the inspection requests, or consider them a second round of price negotiations on the property. Behave fairly. Tell the truth. Again, these rules are simple. And they yield big dividends.
Are we ever wrong? Of course we are. But not as often as you would think, since we see so much inventory, and have such a good pulse on market conditions. Please listen to us. It will be worth your while.
Tuesday, December 29, 2015
Happy New Year!
We in real estate are looking forward to a very happy 2016, for several reasons. First of all, it may sound counterintuitive, but having the Fed raise rates slightly is almost always good for business. People just don't seem to take the threat of higher mortgage rates seriously, until they actually begin to go up. That tends to make buyers much more motivated to buy in the short run, as opposed to what they have been doing, which is a lot of looking, waiting, and looking some more.
Another sign of hope is the lack of inventory in some price ranges, and the number of first-time homebuyers out there. As millennials marry and have children, they (often with the help of their parents) will buy homes. Up until now, they've been happy renters. In our area, the math clearly suggests that buying is better. Soon, a new generation will agree.
Locally, we can probably thank GE, but the Governor has definitely gotten the message that residents have choices about where to live, and they have been voting with their feet. The attention on our loss of population, jobs, and allure is getting our state to the point where it feels it needs to respond. And, if it does, more renters who own property elsewhere may buy here, also or instead.
All of these factors make me optimistic for 2016, but, in order for me to be correct, many of you have to agree. Here's hoping that you do!
Another sign of hope is the lack of inventory in some price ranges, and the number of first-time homebuyers out there. As millennials marry and have children, they (often with the help of their parents) will buy homes. Up until now, they've been happy renters. In our area, the math clearly suggests that buying is better. Soon, a new generation will agree.
Locally, we can probably thank GE, but the Governor has definitely gotten the message that residents have choices about where to live, and they have been voting with their feet. The attention on our loss of population, jobs, and allure is getting our state to the point where it feels it needs to respond. And, if it does, more renters who own property elsewhere may buy here, also or instead.
All of these factors make me optimistic for 2016, but, in order for me to be correct, many of you have to agree. Here's hoping that you do!
Tuesday, February 21, 2012
Open Houses Rule
This weekend, despite being at one end or the other of just about every school system's vacation week, was a big one for open houses. Some had as many as 25 people at them. The market seems driven by first-time home buyers (proving that they are the one group that probably doesn't need an incentive to want to buy), who want to take advantage of low rates and low prices. Of course, it is usually their parents who have to let them know how low rates are, since anyone under 35 wouldn't remember high ones. (Conversely, my husband and I bought our first home in 1982 with an 18.75 % special low rate, that seemed OK to us, given that other mortgages were at 21%---it's all relative!).
Houses are starting to come onto the market at springtime pace, and buyers are out there to take advantage of the rates, the choices, and the weather. Let's hope it keeps up at this rate!
Houses are starting to come onto the market at springtime pace, and buyers are out there to take advantage of the rates, the choices, and the weather. Let's hope it keeps up at this rate!
Friday, April 2, 2010
Stimulus Needs Stimulating
Last year, when the first-time homebuyers incentive plan was introduced by the Federal government, there was a clear uptick in the number of buyers in the market. This year, the plan was reintroduced, along with a second incentive for existing homebuyers. It was obviously another, supposedly stronger, attempt to increase home sales.
Well, this time it doesn't seem to be working. Most brokers, including the one I spoke to this week in Phoenix, don't see the results. There could be more than one reason for this. First of all, most things like this--including big sales at stores--work better when people think that they are limited in time. If they think that deals will be offered again or extended, they are not as likely to move quickly. Secondly, it keeps getting harder for new buyers to get mortgages. This means that there may be buyers out there who want to buy, but who cannot qualify with the higher FICO scores now required. That last point is not necessarily a bad thing. If we can just stop and remember how we got into this mess, we will want banks to think twice before loaning to those who may not be able to repay.
I believe that there is also a fundamental flaw in the stimulus package, however. The government is trying to push demand from first-time buyers, who comprise the one group who will buy in almost any situation where they can. After all, they haven't bought homes at lower prices or with lower mortgage rates. They are generally buying because of changing life circumstances, and graduations, marriages, and babies happen regardless of the economy. Also, there are, in the end, only so many new households being formed. It might have made more sense to give the incentive to folks who didn't have the same motivation to move. After all, isn't it a little like giving a car price break only to teens?
Well, this time it doesn't seem to be working. Most brokers, including the one I spoke to this week in Phoenix, don't see the results. There could be more than one reason for this. First of all, most things like this--including big sales at stores--work better when people think that they are limited in time. If they think that deals will be offered again or extended, they are not as likely to move quickly. Secondly, it keeps getting harder for new buyers to get mortgages. This means that there may be buyers out there who want to buy, but who cannot qualify with the higher FICO scores now required. That last point is not necessarily a bad thing. If we can just stop and remember how we got into this mess, we will want banks to think twice before loaning to those who may not be able to repay.
I believe that there is also a fundamental flaw in the stimulus package, however. The government is trying to push demand from first-time buyers, who comprise the one group who will buy in almost any situation where they can. After all, they haven't bought homes at lower prices or with lower mortgage rates. They are generally buying because of changing life circumstances, and graduations, marriages, and babies happen regardless of the economy. Also, there are, in the end, only so many new households being formed. It might have made more sense to give the incentive to folks who didn't have the same motivation to move. After all, isn't it a little like giving a car price break only to teens?
Wednesday, July 22, 2009
Market Spike?
We're experiencing a late, late spring market surge, even though it's July. Our New Haven office has posted record sales for the past six weeks, and all offices seem flat out, despite the signs that summer has finally come. The New Haven numbers are still largely driven by Yale, and we hope that continues. All offices say that the strongest activity is in the FHA mortgage range (under $387,500 for a mortgage), and in first-time homebuyers. Lower price ranges, except again near Yale, move much faster.
Our hope for first-time buyer interest is that the national unemployment rate starts to go down. As the parent of twenty-somethings, I hear many stories of lost jobs, postponed starts, and pay cuts. While it may be slightly older people who go into the real estate market, the "last in, first out" theory of human resource layoffs has many newer workers nervous. When they, and their parents, start feeling more secure about their future job prospects, more of them will jump in at these low interest rates.
If we're brave enough to wish for anything else, we're keeping our fingers crossed that sellers understand the fragility of the current market, and respond reasonably and positively to negotiations and problems that occur along the way to the closing. It may be the general national stress level, but I hear a lot of stories about sellers who just won't compromise, even when it's in their interest to do so. Good thing our agents are so talented!
Our hope for first-time buyer interest is that the national unemployment rate starts to go down. As the parent of twenty-somethings, I hear many stories of lost jobs, postponed starts, and pay cuts. While it may be slightly older people who go into the real estate market, the "last in, first out" theory of human resource layoffs has many newer workers nervous. When they, and their parents, start feeling more secure about their future job prospects, more of them will jump in at these low interest rates.
If we're brave enough to wish for anything else, we're keeping our fingers crossed that sellers understand the fragility of the current market, and respond reasonably and positively to negotiations and problems that occur along the way to the closing. It may be the general national stress level, but I hear a lot of stories about sellers who just won't compromise, even when it's in their interest to do so. Good thing our agents are so talented!
Wednesday, February 18, 2009
What's Selling?
Although it may sound as though nothing is selling in the current real estate market, there are some pockets of strong activity. The market is almost bifurcated, with most homes sitting and a few receiving multiple offers. I checked with two of our offices, our New Haven office and our Wallingford Regional office, to see what common threads exist with the quick sales we've had. There are three factors: price; condition; and location. Price means two things--the price must be considered a good value, and lower prices are more likely to attract first-time home buyers (the most active segment of the market now). Condition usually means that the property should be clean, freshly painted, and clutter-free. Location is the normal location, location, location. The worse the market, the closer you can get to the ideal location, and status does matter.
Having said all that, we are seeing strong interest particularly in East Rock, where demand outstrips supply now. Stefanie Rank has a listing on Livingston Street that has been shown over 50 times since the end of last week, and multiple offers. Fran DeToro sold a Whitney Avenue condo in less than a week. Mary Jane Burt has sold two high-end condos recently.
Hamden is also seeing demand. Eileen Smith has three times cleaned out a house top to bottom, shown it from Thursday to Sunday, and sold it on Monday. She has researched current prices in Spring Glen, and they have decreased by only 1%. The Edgehill team just sold a Hamden house in two days.
Remember that the tax credit can be used for one's 2008 taxes, so time is of the essence. So, if you're thinking of selling in any of these neighborhoods, please consider doing it now!
Having said all that, we are seeing strong interest particularly in East Rock, where demand outstrips supply now. Stefanie Rank has a listing on Livingston Street that has been shown over 50 times since the end of last week, and multiple offers. Fran DeToro sold a Whitney Avenue condo in less than a week. Mary Jane Burt has sold two high-end condos recently.
Hamden is also seeing demand. Eileen Smith has three times cleaned out a house top to bottom, shown it from Thursday to Sunday, and sold it on Monday. She has researched current prices in Spring Glen, and they have decreased by only 1%. The Edgehill team just sold a Hamden house in two days.
Remember that the tax credit can be used for one's 2008 taxes, so time is of the essence. So, if you're thinking of selling in any of these neighborhoods, please consider doing it now!
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