How Has The Housing Market Responded to Past Crises?

Housing Market Responses to Epidemics

The word “unprecedented” is frequently used to describe COVID-19 and its effects on society. As true as that may be, we can look to past events for clues on what will come next — specifically for the economy and the housing market.

Through a deep dive into past research, Zillow experts were able to ascertain some patterns that are especially helpful to anyone who is considering buying or selling a property in the near future. Among the key findings…

  • Economic activity declined sharply during past epidemics, but rebounded much more quickly than during standard recessions.
  • Although transaction volume decreased during recent epidemics, property prices remained relatively stable.
  • Epidemics may or may not coincide with the occurrence of a standard recession.

As The New York Times notes, some buyers recognize there are certain advantages to buying at this time — such as less competition and low rates. In areas such as ours where sellers have held the advantage for a while, this may signal a temporary turn toward a buyers’ market.

In contrast to renting, owning a home may also look especially attractive to buyers right now who are eager to have fixed expenses and the emotional benefit of having a place they can call their own.

For homeowners who had plans to sell, the trends from past recessions may not be as grim as it could first appear. As Zillow shares from data analysis, the collapse of home values during the Great Recession between 2007 and 2009 is actually an “outlier” as “annual home value growth remained positive” through other recessions, such as the 2001 dot-com crash.

Even in the best of times, buyers and sellers often express wanting to wait for the “right time” to make a move. But, as this collective experience is now proving, it is also important to factor what feels right. If that points to still making a move, you should feel optimistic that even though these are “unprecedented” times, we can confidently predict houses will still sell.

Uncover These Common Hidden Costs Before Buying a Home

Uncover Hidden Costs Before Buying

Although the down payment may be the biggest expense when buying a home, it certainly isn’t the only one. This is a case where ignorance isn’t bliss, at least as far as your wallet will be concerned — which is why it’s invaluable to work with a qualified realtor who can help open your eyes to costs during the home buying process and beyond.

“You try to give them as much information as you can,” says Woods Bros. Realtor Mark Tvrdy, explaining years of experience has helped him become aware of potentially pricey hazards specific to different homes.

Before getting in over your head as fees arise during the home buying process and after closing, here are a few things you can be on the look-out for with your realtor’s help…

Are you in a floodplain?

As we’ve recently seen, Nebraska is not immune to flood risks. In fact, floods are the most expensive natural disasters for homeowners in the United States — and insurance companies are well-aware of this, too. As a result, if the house you are considering is in a floodplain, expect to pay more in insurance coverage.

“It can come to be a great cost,” says Tvrdy. “Even if it’s in a 500-year flood plain, you can have this extra costs on top of it. It’s a bigger issue in Nebraska right now than people realize.”

Will you need radon mitigation?

There will likely be — and should be — a radon test completed during the process of inspecting a house when it is under contract. Although it’s hard to guess the results of this in advance unless there is already a radon mitigation system in place, older homes are especially susceptible to radon, which the EPA estimates causes thousands of cancer deaths annually.

In other words, radon is not something to mess with. If the home you are under contract for has a radon level of 4 picocuries per liter (pCi/L) or higher, you will either need to ask the seller to install a mitigation system or carry the cost yourself. Depending on the size and construction of the house, this costs approximately $1,000.

Is it a 3-tab roof?

As Tvrdy explains, many insurance companies are no longer covering 3-tab roofs because the thinner shingles offer limited protection. So although 3-tab roofs cost less to install, you may soon find yourself in need of a replacement. If you discover the home has a 3-tab roof before the sale, you may have some leeway with getting the seller to contribute money for a new roof. Otherwise, this might be an expense that will come out of your own pocket.

Is there knob and tube wiring?

Another red flag is extensive knob and tube wiring throughout the house, says Tvrdy. Commonly installed in homes during the first half of the 20th century, insurance companies now consider this system hazardous.

“You’re going to pay a greater cost if you have knob and tube wiring,” he says. “Underwriters are going to start looking at this and there are only going to be a handful of companies that take these.”

The expense to upgrade a knob and tube system is $8,000 on the low-end and can cost upwards of $20,000.

Will water flow toward the house?

Another issue Tvrdy says he helps home buyers consider is the landscaping grading — and specifically whether there are areas where water will likely flow toward the house and pool. Depending on the severity of the grating, this can be an issue for the foundation and flooding.

Some cases are relatively easy fixes, but others can put you at risk for major expenses in the years to come.

Best Practices For When You Are Simultaneously Buying And Selling

Buy + Sell Same Time Tactics

Buying a house can be stressful. Selling a house can be stressful. Trying to do both simultaneously? It can feel like asking the stars to align — especially in a fast-moving market where you have to balance snatching up a good home with not wanting to be out of your current residence too quickly.

The dream scenario for most concurrent buyers and sellers is a “door to door” transition, which means closing on both houses at the same time so there isn’t a layover during the move. There generally is a bit of luck involved, but you can turn the odds in your favor by approaching the process strategically.

START BY PUTTING YOUR CURRENT HOME ON THE MARKET

Although every transaction is different, Woods Bros Realty REALTOR Kent Obrist suggests getting the ball rolling with your home sale even if you haven’t zeroed in on your next home quite yet.

“Oftentimes buyers are a bit reluctant to do this because it’s an uncomfortable feeling to think that you could end up homeless,” Obrist says. “But the control is totally in the client’s hands as far as whether they feel comfortable accepting an offer prior to finding a home to move into.”

LOOK INTO BRIDGE FINANCING

Although door to door sales are the ideal situations, Obrist wants clients to be prepared for a gap between the purchase and sale. The best way to go about this is to lock down a bridge loan, which allows you to temporarily overlap ownership of two properties. Bridge loans, however, do come with a few caveats — such as you need 20% equity in your current home. Check with a lender to see if you qualify.

GET PRE-APPROVED FOR YOUR NEW HOME, TOO

While you’re already talking with a lender, it’s a good time to get a mortgage pre-qualification letter, especially if the house you are looking to get into is more expensive than your current place. To do this, you will want to compile relevant financial and personal information to ensure the lender has everything they need.

CONTROL THE FACTORS YOU CAN — LIKE YOUR CURRENT HOUSE

Whenever you are selling a home, the goal is to get the biggest return on your investment. However, Obrist warns against overpricing your home — which is sage advice for any seller, but particularly for those who are also trying to buy. He explains, “This will certainly lengthen your marketing time and may be detrimental to a favorable timing of the simultaneous selling and buying.”

Also keep in mind best practices for staging the home and, if possible, attempt to make the transition at a time of year when there will be fellow buyers and sellers making moves. With these steps and, yes, a little luck, you will be in your new home before long.

Mistakes Wintertime Home Sellers Should Avoid

Avoid Wintertime Selling Mistakes

This time of year, it would be easy to assume people are more concerned with finding the perfect gift than finding the perfect home. But, while winter time may be the “off season” for home sales, it doesn’t mean you need to freeze your listing until the temperatures rise again.

“Yes, there are fewer people looking to buy. But those buyers are often more serious that the casual person out looking at homes on a nice spring or summer weekend,” says Woods Bros REALTOR® Joanne McCoy. “Those serious buyers will need to find something, and if your home is one of only a few for them to consider then it can perhaps result in a better negotiation for you.”

If you’re looking to make a move this winter, here are a few mistakes to avoid…

 

Don’t go overboard with holiday spirit

If you are looking to sell you home between November and December, you may want to keep the bulk of your usual holiday decorations in storage this year. Not only can these add clutter to the home that isn’t conducive to staging, but prospective home buyers also like to envision themselves in the space and the extra decor can be overkill.

Don’t get lazy with your walkways

Woods Bros REALTOR® Bruce Hahn says the biggest winter-time mistake he sees home sellers make is failing to keep their driveways, sidewalks and porches clear of snow and ice. Although this maintenance may be a big undertaking here in Nebraska, it’s worth it if you hope to move before everything thaws.

“If a potential buyer is going to make an effort to view a home in the winter, they shouldn’t have to try and navigate a snowy and slippery drive and sidewalk in order to reach your home safely,” Hahn says.

Don’t price your home too high

With fewer buyers in the market, it’s especially imperative to price your home right from the get-go. According to a 2018 report from Trulia, nearly 1-in-5 houses for sale nationally underwent one price cut—which can be a foreboding sign for some buyers as they immediately suspect something is “wrong” with the home.

Don’t make it seem any darker and colder than necessary

Good homes offer the promise of warmth and comfort in the wintertime—so now isn’t the time to save on utility costs by keeping the thermostat down and lights off. Says Hahn, “Make sure window coverings are open, all the lights are on to create a warm and inviting atmosphere to a potential home buyer.”

Ultimate Home Inspection Checklist for Homebuyers

Content Provided by American Home Shield

The Ultimate Home Inspection Checklist for Homebuyers

American Home Shield Home Inspection GuideBuying a home can be overwhelming, but a home inspection checklist can help you keep track. From costs to what’s covered, we walk you through a home inspection.

There are a lot of moving parts in the homebuying process, including pre-approvals, loan applications, information gathering, fact checking and doc signing. And that’s before you even make an offer. Luckily, there are valuable tools, like a home inspection checklist, to help keep you on track.

Once the seller accepts your offer, the property officially goes into escrow and the window for a home inspection opens. But what is a home inspection exactly? It’s a professional evaluation of the property you intend to purchase that is completed by a third party. Assessing the home from a structural and safety standpoint, an inspector helps ensure the house is free of hazards, up to code and a wise investment. But what do home inspectors look for? What happens if problems are identified? Who pays for a home inspection, or repairs for that matter? To point you in the right direction and eliminate uncertainty, let’s take a closer look at what you need to know now and what to do next.

What is a Home Inspection and Why is it Important?

An inspection offers detailed insight into a home’s current condition. Sometimes it proves a property is in great shape. Other times, a report spotlights issues the seller didn’t even realize existed. From repairs that need to be addressed immediately to maintenance that may be required down the road, identifying problems at this point in the process can be eye-opening for all parties. Home inspections give sellers the chance to fix any issues up front and affords buyers the opportunity to ask for credits and repairs. Ready to take the next step? Follow this home inspection checklist:

Find an Inspector

Your realtor will likely offer a list of professionals he or she trusts and has used in the past, but you are free to choose your own. Remember, licensing is different in every state, so take that into consideration when looking for recommendations.

Hire an Inspector

It’s important to reach out and schedule your home inspection as quickly as possible. The more valued the inspector, the more quickly their calendar fills up.

Prepare for the Inspection

Home inspection costs average between $350 and $600 depending on your state. Money should also be budgeted to cover additional assessments should the need arise.

Wondering who pays for a home inspection? Traditionally buyers are responsible, though sellers may choose to conduct independent evaluations that they will pay for.

What Home Inspectors Look For?

Both homebuyers and sellers can be present for the inspection. The process usually takes a few hours and is an ideal time to ask questions, bring up concerns and take your own photos and notes. Make a detailed list of components and areas to be evaluated, including:

  • Appliances
  • Attic
  • Basement
  • Doors and windows
  • Electrical panel, power outlets and light switches
  • Exterior paint, siding or stucco
  • Foundation
  • Garage
  • Plumbing faucets, fixtures and water heater
  • Porches and balconies
  • Rain gutters and downspouts
  • Roof
  • Stairs, steps and railings
  • Thermostats and heating, cooling and ventilation (HVAC) system
  • Walkways and driveways
  • Walls, ceilings and floors

It’s important to note that inspectors can only report on physical components they can see. This means they may not catch issues hidden behind walls or beneath the ground, such as in the sewer line, sprinklers and fireplace. For more insight into the purchase process beyond a home inspection checklist, check out our tips for first-time homebuyers.

The Added Benefit of a Home Warranty

Some sellers instruct their real estate agent to order a home warranty while their property is on the market. This helps mitigate unexpected issues that may arise from the inspection and increases value for the buyer. While an inspection offers assurance that you’re making a wise investment, an American Home Shield® Home Warranty can extend that confidence by helping to protect major components of your home’s systems and appliances. If you don’t already have a home warranty you can get a free quote and find out how we can help protect your investment.

What To Consider When Buying Your Starter Home

Starter Home Search TIpsIt may not have all of the glamour. It may not be perfectly updated. And it may not be in the dream location. But a starter home is, well, a great place for many home buyers to start. By making the move into ownership from a rental, there is a lot to consider—from market availability and appreciation trends to what color you can paint the walls without a landlord’s prior approval.

What is realistic for the market?

According to a 2019 report from Realtor.com, 45% of mortgages assumed this year will be by Millennials. With younger buyers on the hunt for their first home, they will also have younger savings portfolios—and likely eager to keep the budget down. However, here in Nebraska and around the country, low prices tend to represent high competition from other would-be residents, people looking to flip houses and property management companies.

What compromises are you willing to make?

When creating a wish-list for a starter home, divide the items into “must-haves” and “could-haves.” By its very definition, you will likely move on from your starter home—so prepare to be fine if it doesn’t check all of the items on your list for a dream home. The purpose here is to also get serious about what you are unwilling to compromise, such as your top budget, the location or number of bedrooms.

Do you want move-in ready?

Although starter homes are often good chances to put your own touch (and experience the appreciation benefits) of renovations, there are some great renovated or completely new options that fit many buyers’ budgets for their starter home—especially if you are willing to look on the farther edges of town.

How long do you plan to stay?

In order to recoup the investment in the face of other expenses (such as closing costs and needed home maintenance), the general rule of thumb is that you should stay at one address for at least five years. Of course, it could be much shorter or longer than that depending on how quickly houses in the region continue to appreciate—but if you anticipate you will outgrow a 2-bedroom, 1-bath home by 2021, you may want to consider looking larger now.

Mistakes To Avoid While Selling Your Home

Chances are would-be buyers see your home first the first time when they scroll through pictures online, not when they pull up to the curb. Ensure that your images are not only professional and crisp, but also portray your home at its best—meaning deep-cleaned and decluttered.

Pricing Too High

Of course you don’t want to leave money on the table when selling your home, but you may also be setting yourself up for a prolonged, less lucrative sale by leading with an unrealistic price. Here’s why: As your days on the market (DOM) tick upward, interest will decrease as buyers assume something may be wrong with the property.

Working With the Wrong Agent

Yes, there are plenty of numbers to consider when hiring an agent—but your decision shouldn’t be based on that alone. By working with a real estate professional, you are really working with an advocate for your interests, a marketer for your home and a concierge for your moving-related questions.

Ignoring Dust and Clutter

You may be used to overlooking the messes—big or little—in your home. You live there, after all. However, a potential buyer will likely not be so forgiving. Before your first showing, take the time to do a deep-cleaning and ruthless decluttering of your home. Then set a schedule to keep up with the cleanings until your home sells so you don’t have to turn down showings because the bathroom is dirty.

Getting Surprised by Inspections

If everything has been going smoothly and you have a deal in sight, the last thing you want is to get blindsided by a major repair revealed by a professional inspector. You can avoid this by either doing your own informed inspection before selling your home or make it even more likely you won’t be surprised by doing a pre-inspection with a professional. That way, you will have time to decide what you are prepared to fix—or can even get ahead of it by doing the repairs before listing.

Looking back on 2015 housing market, forecasting 2016

As we begin 2016 and reflect on the last 12 months, we would ultimately characterize 2015 as having been a very solid year for housing.  Early year-end numbers indicate that year-over-year sales nationally are up by about 10%, equating to roughly 5.3 to 5.4 million units of inventory (and compared to about 4.9 million in 2014).  The strong spring selling season in 2015 was indicative of the market’s overall strength, even while luxury sales activity appeared to have slowed slightly over the course of the last four months. Furthermore, as has been evident in the wake of the Fed’s December announcement, the long-anticipated interest rate increase is not predicted to have a large impact on home-buying activity in the year to come.

Locally in our Nebraska market areas, we saw a nearly flat year. Woods Bros Realty closed 3,157 total units, compared with 3,200 in 2014. However, the company’s closed volume is up 5 percent year over year. The luxury market, defined as homes $400,000 and up in the Lincoln market, was down in 2015 overall. Lincoln, Seward/York, Grand Island and Beatrice are all still experiencing a sellers’ market with fewer than six months of inventory available for sale.

residential market review 2015Looking ahead, here are some of the trends we’ll be watching:

  • 2016 will be a continuation of the housing market’s recovery: This will not be a “boom” or a “bust” year, but a “normal” one with reasonable expectations.
  • Millennials forming new households: This key segment of the consumer population has largely delayed purchasing homes; however, we are starting to see a shift from rentals to ownership among the demographic … and we expect 2016 to be a “break-out year” for these buyers.
  • Washington recognizes the need for affordability: We are seeing a move toward more normalized credit standards versus more risk-averse standards, essentially giving more qualified buyers the opportunity to own a home.  The banks, Fannie Mae and Freddie Mac have furthermore seen fewer foreclosures in the recent year, and we expect that trend to continue in 2016.
  • Boomerang buyers bounce back: Homeownership continues to be a very important dream among American consumers. While a number of people weathered the hardships of short-sales or foreclosures in the downturn, over the last five years, we have seen a gradual return of these buyers to the marketplace – another indication that the market has been successfully working through prior challenges.  People who may have been forced into rentals are now re-entering the market with home purchases.
  • By that same token, even with the dollar strengthening against other global economies, the American housing market will maintain its standing as a very safe place to park assets.

All that said, as the recovery continues and the strength of the industry grows, 2016 will be another important year for housing and its steady move toward normalcy.

Don’t be afraid to list your home in the winter

CB031153One question I am asked all the time from homeowners who are considering putting their house on the market is: When is the best time to list? Many people feel they should wait until the Spring when the grass is green, the flowers are blooming and more people are out looking. I question, are those people out looking because the grass is green and the flowers are blooming and they just enjoy looking? In other words, are they serious buyers or those infamous “Lookey-loos”?

My advice to someone considering selling is to, number one, list when you need to sell. But, number 2, don’t be afraid to list in the winter. In fact, listing in the winter might be to your advantage. If someone is needing to buy a home in the winter months, they will have to choose from what’s available. So if your neighbors all decide to wait until the snow and ice is gone and the temperatures are above freezing, then those buyers looking at that time will have to choose from the homes that are listed. If fewer homes are listed then it’s less competition for your home.

A quick look at the statistics from the Midlands Multiple Listing Service shows the most popular months for listing a home are typically April – July. For 2013, the last year with a full 12-months of numbers available, the busiest month for listing homes was July. During that month, there were 674 Single Family Residential Listings processed on the MLS. The slowest month that year was December, when only 314 listings were processed. As well, the MLS stats show the busiest months for homes sold in 2013 was July, with 489 single family homes sold. The slowest month was February with 208.

Yes, there may be more people looking in the warmer months and more people wanting to move at that time. However, if someone is out there looking at homes when the days are shorter and the temperatures are colder, you can imagine they are pretty serious about wanting to find a new home.

So my advice is keep the snow shovel handy, keep the firewood stocked, put out the welcome mat and beat the competition to the buyers.

In other news, a review of stats from the Midlands MLS from recent years reveals two very interesting developments. The number of homes available for sale on the MLS has steadily dropped since the high in 2008. At any point in time during 2008, there was an average of 2,319 of homes listed for sale on the MLS. Compare that to 2013, when the average number of homes listed for sale was 1,342. It’s not totally clear why there has been such a decline in the number of homes listed for sale. But clearly this has created good news for home sellers and a challenge for home buyers. People looking to buy a home have much fewer options on the MLS than they had just a few years ago. This has often resulted in homes selling faster and for higher prices. That’s the second development. The average sales price of a single family home according to the MLS has steadily increased in recent years. For the year 2008, the average single family home sold for $154,221. In 2013, that number had improved to $163,731.

Can’t find that perfect home? Build your own!

Today’s low inventory of existing homes for sale is a challenge for home buyers. Building a new home can be a good solution for a home that meets your needs.

Low Existing Home Inventory

Buyers shopping for a home today are finding selection limited due to an extremely low inventory of homes for sale. Plus, homes in good condition are selling quickly, which can be frustrating for a buyer.

This makes it an even better time for home buyers to buy a new home or build a custom a home to meet their lifestyle and needs.

Low Interest Rates

Today’s interest rates are still low, hovering between four and five percent. Low rates mean a home buyer can afford more home than they could a few years ago. A reputable mortgage company can offer a wide range of financing programs to make it even easier to get into the home of your dreams.

Choose Your Neighborhood

There are a variety of areas in and around Lincoln with available lots for sale. A real estate agent specializing in new construction can help buyers find a lot in the location that fits their needs. Interested buyers can drive through some of the new neighborhoods to see which areas of growth appeal to them most.

Energy Efficiency

Today’s new homes save home buyers money on heating and cooling costs, as the efficiency standards have increased over time.

Some builders go above and beyond when considering energy efficiency. Compared with standard homes, Energy Starc homes meet strict energy efficiency guidelines, delivering hundreds of dollars in annual savings on heating, cooling and water bills. These guidelines also help protect the environment, creating less air pollution, and the Energy Star rating is becoming an important quality when considering resale value.

Spring Jubilee & Parade of Homes

With the Woods Bros Realty Spring Jubilee of Homes (April 27 and May 4), and the Home Builders Association of Lincoln’s Parade of Homes (May 11-18), the new construction season is getting under way.

Home buyers can tour brand-new homes throughout the area in all different styles and price ranges. They can then select from finished model homes and move right in or select a lot and floor plan and build a new home from the ground up.

Preview the Spring Jubilee of Homes here:

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