Bellingham Real Estate Broker | Kristal Grimstead

Buying, Selling & Investing Bellingham Real Estate

Kristal Grimstead

Finding a New Home for Your Next Stage In Life

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Imagine the first place you lived as a young adult. Now imagine trying to fit your life today into that space. Not pretty, right? 

For most of us, our housing needs are cyclical.1 A newly independent adult can find freedom and flexibility in even a tiny apartment. That same space, to a growing family, would feel stifling. For empty nesters, a large home with several unused bedrooms can become impractical to heat and clean. It’s no surprise that life transitions often trigger a home purchase. 

While your home-buying journey may not look like your neighbor’s or friend’s, broad trends can help you understand what to keep in mind as you house hunt. No one wants to regret their home purchase, and taking the time now to think about exactly what you need can save a lot of heartache later.

The Newly Married or Partnered Couple

The financial and legal commitment of marriage has provided a springboard to homeownership for centuries, though these days more couples are buying homes without exchanging rings. In the last few decades, changing demographics have shifted the median age of first marriage and buying a first home into the late 20s and early 30s, planting most newly married or partnered buyers firmly in the millennial generation.2,3 But no matter your age, there are some key factors that you should consider as you enter into your first home purchase together.

Affordability is Key

There’s no doubt about it—with high student loan debt and two recessions in the rearview mirror, many millennials feel that the deck is stacked against them when it comes to homeownership. And it’s not just millennials—Americans of all ages are facing both financial challenges and a tough housing market. But stepping onto the property ladder can be more doable than many realize, especially in today’s low mortgage rate environment. 

While many buyers are holding out for their dream home, embracing the concept of a starter home can open a lot of doors.4 In fact, that’s the route that most first-time homebuyers take—the average home purchase for a 20-something is about 1,600 square feet. While the average size increases to around 1,900 square feet for buyers in their 30s, it’s not until buyers reach their 40s that the average size passes 2,000 square feet.5

Chosen carefully, a starter home can be a great investment as well as a launchpad for your life together. If you focus on buying a home you can afford now with strong potential for appreciation, you can build equity alongside your savings, positioning you to trade up to a larger home in the future if your needs change.6

Taking Advantage of Low Mortgage Rates

Mortgage rates are historically low, making now the perfect time to purchase your first home together. A lower interest rate can save you tens of thousands of dollars over the life of your loan, which can significantly increase the quality of home you can get for your money. 

But what if both halves of a couple don’t have good credit? You may still have options. First, boosting a credit score can be easier than you think—simply paying your credit cards down below 30% of your limit can go a long way. But if that’s not enough to boost your score, you might consider taking out the mortgage in only the better-scoring partner’s name. The downside is that applying for a mortgage with only one income will reduce your qualification amount. And if you take that route, make sure you understand the legal and financial implications for both parties should the relationship end.

Commute and Lifestyle Considerations

Whether you’ve lived in a rental together for years or are sharing a home for the first time, you know that living together involves some compromises. But there are certain home features that can make life easier in the future if you identify them now. The number of bathrooms, availability of closet space, and even things like kitchen layout can make a big difference in your day-to-day life and relationship. 

Your home’s location will also have a significant impact on your quality of life, so consider it carefully. What will commuting look like for each of you? And if you have different interests or hobbies—say, museums vs. hiking—you’ll need to find a community that meets both your needs. Need some help identifying the ideal location that fits within your budget? We can match you with some great neighborhoods that offer the perfect mix of amenities and affordability.

The Growing Family

Having kids changes things—fast. With a couple of rowdy preteens and maybe some pets in the mix, that 1,600 square foot home that felt palatial to two adults suddenly becomes a lot more cramped. Whether you’ve just had your first child or are getting to the point where your kids can’t comfortably share a bedroom any longer, there’s plenty to consider when you’re ready to size up to a home that will fit your growing family. 

The Importance of School Districts

For many parents, the desire to give their kids the best education—especially once they are in middle and high school— surpasses even their desire for more breathing room. In fact, 53% of buyers with children under 18 say that school districts are a major factor in their home buying decisions.7 Of course, better funded (and often higher ranking) schools correspond to higher home prices. However, when push comes to shove, many buyers with kids prefer to sacrifice a bit of space to find a home in their desired location.

But when you’re moving to a new community, it can be tough to figure out what the local schools are actually like—and online ratings leave a lot to be desired. That’s why talking to a local real estate agent can be a gamechanger. We don’t just work in this community; we know it inside and out. We’ll be happy to share our first-hand knowledge of the local schools and which neighborhoods are most welcoming to families.

Lifestyle Considerations

For many families, living space is a key priority. Once you have teenagers who want space to hang out with their friends, a finished basement or a rec room can be a huge bonus (and can help you protect some quieter living space for yourself). 

A good layout can also make family life a lot easier. For example, an open plan is invaluable if you want to cook dinner while keeping an eye on your young kids playing in the living room. And if you think that you might expand your family further in the future, be sure that the home you purchase has enough bedrooms and bathrooms to accommodate that comfortably. 

Functionality

Try to think about how each room will fit into your day-to-day. Are you anticipating keeping the house stocked to feed hungry teenagers? A pantry might rise to the top of the list. Dreading the loads of laundry that come with both infants and older kids (especially if they play sports)? The task can be much more bearable in a well-designed laundry room. Imagine a typical day or week of chores in the house to identify which features will have the biggest impact.

Chances are, you won’t find every nice-to-have in one home, which is why identifying the must-haves can be such a boon to the decision-making process. We can help you assess your options and give you a sense of what is realistic within your budget.

The Empty Nesters 

When we talk about empty nesters, we usually think about downsizing. With kids out of the house, extra bedrooms and living space can quickly become more trouble than they’re worth. While the average buyer under 55 trades up to a larger home, buyers over 55 are more likely to purchase a smaller or similarly sized but less expensive home. Even in the highest age groups, the majority of home purchases fall in the single-family category. According to research by the National Association of Realtors, by the time buyers reach their 70s, the median home size drops to 1,750 square feet.5 But there’s plenty for empty nesters to think about besides square footage.

Maintenance and Livability

What factors are driving your decision to move? Identifying those early in the process can help you narrow down your search. For example, do you want to have space for a garden, or would you prefer to avoid dealing with lawn care altogether? What about home maintenance? In many cases, a newer home will require less maintenance than an older one and a smaller one will take less time to clean. You may also want to consider townhomes, condos, or other living situations that don’t require quite as much upkeep. 

Lifestyle Considerations

Many empty nesters have retired or are nearing retirement age. This could be your chance to finally pursue hobbies and passions that were just too hard to squeeze into a 9-5. If you’re ready to move, consider how you’d like to spend your days and seek out a home that will help make that dream a reality. For some, that might mean living near a golf course or a beach. For others, being able to walk downtown for a nice dinner out is the priority. And with more time to spend as you wish, proximity to a supportive community of friends and family is priceless. 

Ability to Age in Place

Let’s face it—we can’t escape aging. If you’re looking for a home to retire in, accessibility should be front-of-mind.8This may mean a single-story home or simply having adequate spaces on the first floor to rearrange as needed. While buying a home that you plan to renovate from the start is a viable option, being forced into renovations (because of the realities of aging) a few years down the road could seriously dig into your nest egg. Location matters, too—if your family will be providing support, are they close by? Can you easily reach necessities like grocery stores and healthcare? While it’s tempting to put it out of our minds, a few careful considerations now can make staying in your home long-term much more feasible.

Finding the Right Home for Right Now

One thing is for sure—life never stands still. And your housing needs won’t, either. In the United States, the median duration of homeownership hovers around 13 years.9 That means many of us will cycle through a few very different homes as we move through different life stages. At each milestone, a careful assessment of your housing options will ensure that you are well-positioned to embrace all the changes to come.

Whatever stage you’re embarking on next, we’re here to help. Our insight into local neighborhoods, prices, and housing stock will help you hone in on exactly where you want to live and what kind of home is right for you. We’ve worked with home buyers in every stage of life, so we know exactly what questions you need to ask. Buying a home—whether it’s your first or your fifth—is a big decision, but we’re here to support you every step of the way.

Sources:

  1. Freddie Mac –
    http://www.freddiemac.com/blog/homeownership/20190104_homebuying_lifecycle.page
  2. PRB –
    https://www.prb.org/usdata/indicator/marriage-age-women/snapshot/
  3. Experian –
    https://www.experian.com/blogs/ask-experian/research/average-age-to-buy-a-house/#:~:text=Buying%20a%20first%20home%20will,by%20real%20estate%20marketplace%20Zillow
  4. Nerdwallet –
    https://www.nerdwallet.com/article/mortgages/starter-home-forever-home
  5. NAR 2020 Home Buyers and Sellers Generational Trends Report –
    https://cdn.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf
  6. Investopedia –
    https://www.investopedia.com/personal-finance/what-look-starter-home/
  7. NAR 2019 Moving With Kids
    https://www.nar.realtor/research-and-statistics/research-reports/moving-with-kids
  8. Kaiser Health News –
    https://khn.org/news/baby-boomers-aging-aging-in-place-retrofit-homes/
  9. National Association of Realtors –
    https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes#:~:text=As%20of%202018%2C%20the%20median,varies%20from%20area%20to%20area

Can I Buy or Sell a Home Without a Real Estate Agent?

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Today’s real estate market is one of the fastest-moving in recent memory. With record-low inventory in many market segments, we’re seeing multiple offers—and sometimes even bidding wars—for homes in the most sought-after neighborhoods. This has led some sellers to question the need for an agent. After all, why spend money on a listing agent when it seems that you can stick a For Sale sign in the yard then watch a line form around the block?

Some buyers may also believe they’d be better off purchasing a property without an agent. For those seeking a competitive edge, proceeding without a buyer’s agent may seem like a good way to stand out from the competition—and maybe even score a discount. Since the seller pays the buyer agent’s commission, wouldn’t a do-it-yourself purchase sweeten the offer?

We all like to save money. However, when it comes to your largest financial asset, forgoing professional representation may not always be in your best interest. Find out whether the benefits outweigh the risks (and considerable time and effort) of selling or buying a home on your own—so you can head to the closing table with confidence.

SELLING YOUR HOME WITHOUT AN AGENT 

Most homeowners who choose to sell their home without any professional assistance opt for a traditional “For Sale By Owner” or a direct sale to an investor, such as an iBuyer. Here’s what you can expect from either of these options.

For Sale By Owner (FSBO)

For sale by owner or FSBO (pronounced fizz-bo) offers sellers the opportunity to price their own home and handle their own transaction, showing the home and negotiating directly with the buyer or his or her real estate agent. According to data compiled by the National Association of Realtors, approximately 8% of homes are sold by their owner.1

In an active, low inventory real estate market, it may seem like a no-brainer to sell your home yourself. After all, there are plenty of buyers out there and one of them is bound to be interested in your home. In addition, you’ll save money on the listing agent’s commission and have more control over the way the home is priced and marketed.

One of the biggest problems FSBOs run into, however, is pricing the home appropriately. Without access to information about the comparable properties in your area, you could end up overpricing your home (causing it to languish on the market) or underpricing your home (leaving thousands of dollars on the table).2

Even during last year’s strong seller’s market, the median sales price for FSBOs was 10% less than the median price of homes sold with the help of a real estate agent.1 And during a more balanced market, like the one we experienced in 2018, FSBO homes sold for 24% (or $60,000) less than agent-represented properties.3 This suggests that, while you may think that you’ll price and market your home more effectively yourself, in fact you may end up losing far more than the amount you would pay for an agent’s assistance.

Without the services of a real estate professional, it will be up to you to get people in the door. You’ll need to gather information for the online listing and put together the kind of marketing that today’s buyers expect to see. This includes bringing in a professional photographer, writing the listing description, and designing marketing collateral like flyers and mailers—or hiring a writer and graphic designer to do so.

Once someone is interested, you’ll need to offer virtual showings and develop a COVID safety protocol. You’ll then need to schedule an in-person showing (or in some cases, two or three) for each potential buyer. In addition, you’ll be on your own when evaluating offers and determining their financial viability. You’ll need to thoroughly understand all legal contracts and contingencies and discuss terms, including those regarding the home inspection and closing process. 

While you’re doing all of this work, it’s likely that you’ll still need to pay the buyer agent’s commission. So be sure to weigh your potential savings against the significant risk and effort involved. 

If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission.

iBuyer

iBuyers have been on the scene since around 2015, providing sellers the option of a direct purchase from a real estate investment company rather than a traditional direct-to-consumer sales process.4 iBuyer companies tout their convenience and speed, with a reliable, streamlined process that may be attractive to some sellers.

The idea is that instead of listing the home on the open market, the homeowner completes an online form with information about the property’s location and features, then waits for an offer from the company. The iBuyer is looking for a home in good condition that’s located in a good neighborhood—one that’s easy to flip and falls within the company’s algorithm.

For sellers who are more focused on speed and convenience, an iBuyer may offer an attractive alternative to a traditional real estate sale. That’s because iBuyers evaluate a property quickly and make an upfront offer without requesting repairs or other accommodations. 

However, sellers will pay for that convenience with, generally, a far lower sale price than the market will provide as well as fees that can add up to as much or more than a traditional real estate agent’s commission. According to a study conducted by MarketWatch, iBuyers netted, on average, 11% less than a traditional sale when both the lower price and fees are considered.5 Other studies found some iBuyers charging as much as 15% in fees and associated costs, far more than you’ll pay for a real estate agent’s commission.6

In a hot market, this can mean leaving tens of thousands of dollars on the table since you won’t be able to negotiate and you’ll lose out on rising home prices caused by low inventory and increased demand. In addition, iBuyers are demonstrably less reliable during times of economic uncertainty, as evidenced by the halt of operations for most iBuyer platforms in early 2020.6 As a seller, the last thing you want is to start down the road of iBuying only to find out that a corporate mandate is stopping your transaction in its tracks.

If you choose to work with a real estate agent, you can still explore iBuyers as an option. That way you can take advantage of the added convenience of a fast sale while still enjoying the protection and security of having a professional negotiating on your behalf.

BUYING YOUR HOME WITHOUT AN AGENT

According to the most recent statistics, 88% of home buyers use a real estate agent when conducting their home search.1 A buyer’s agent is with you every step of the way through the home buying process. From finding the perfect home to submitting a winning offer to navigating the inspection and closing processes, most homebuyers find their expertise and guidance invaluable. And the best part is that, because they are compensated through a commission paid by the homeowner at closing, most agents provide these services at no cost to you!

Still, you may be considering negotiating your home purchase directly with the seller or listing agent, especially if you are accustomed to deal-making as part of your job. And if you are familiar with the neighborhood where you are searching, you may feel that there is no reason to get a buyer’s agent involved.

However, putting together a winning offer package can be challenging. This is especially true in a multiple-offer situation where you’ll be competing against buyers whose offers are carefully crafted to maximize their appeal. And the homebuying process can get emotional. A trusted agent can help you avoid overpaying for a property or glossing over “red flags” in your inspection. In addition, buyer agents offer a streamlined, professional process that listing agents may be more likely to recommend to their clients.

If you decide to forego an agent, you’ll have to write, submit, and negotiate a competitive offer all on your own. You’ll also need to schedule an inspection and negotiate repairs. You’ll be responsible for reviewing and preparing all necessary documents, and you will need to be in constant communication with the seller’s agent and your lender, inspector, appraiser, title company, and other related parties along the way.

Or, you could choose to work with a buyer’s agent whose commission is paid by the seller and costs you nothing out of pocket. In exchange, you’ll obtain fiduciary-level guidance on one of the most important financial transactions of your life. If you decide to go it alone, you’ll be playing fast and loose with what is, for most people, their most important and consequential financial decision.

SO, IS A REAL ESTATE AGENT RIGHT FOR YOU?

It is important for you to understand your options and think through your preferences when considering whether or not to work with a real estate professional. If you are experienced in real estate transactions and legal contracts, comfortable negotiating under high-stakes circumstances, and have plenty of extra time on your hands, you may find that an iBuyer or FSBO sale works for you. 

However, if, like most people, you value expert guidance and would like an experienced professional to manage the process, you will probably experience far more peace of mind and security in working with a real estate agent or broker. 

A real estate agent’s comprehensive suite of services and expert negotiation skills can benefit buyers and sellers financially, as well. On average, sellers who utilize an agent walk away with more money than those who choose the FSBO or iBuyer route.3,5 And buyers pay nothing out of pocket for expert representation that can help them avoid expensive mistakes all along the way from contract to closing.

According to NAR’s profile, the vast majority of buyers (91%) and sellers (89%) are thrilled with their real estate professional’s representation and would recommend them to others.1 That’s why, in terms of time, money, and expertise, most buyers and sellers find the assistance of a real estate agent essential and invaluable.

QUESTIONS ABOUT BUYING OR SELLING? WE HAVE ANSWERS

The best way to find out whether you need a real estate agent or broker is to speak with one. We’re here to help and to offer the insights you need to make better-informed decisions. Let’s talk about the value-added services we provide when we help you buy or sell in today’s competitive real estate landscape.

Sources:

  1. National Association of REALTORS –
    https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
  2. Washington Post –
    https://www.washingtonpost.com/business/2020/12/09/factors-consider-when-determining-whether-use-an-agent-buy-or-sell-home/
  3. National Association of REALTORS –
    https://www.nar.realtor/blogs/economists-outlook/selling-your-home-solo-to-save-money-you-ll-actually-make-less-than-you-think
  4. Seattle Times –
    https://www.seattletimes.com/business/real-estate/redfin-is-first-major-ibuyer-to-sell-in-seattle
  5. MarketWatch –
    https://www.marketwatch.com/story/selling-your-home-to-an-ibuyer-could-cost-you-thousands-heres-why-2019-06-11
  6. Forbes –
    https://www.forbes.com/sites/nataliakarayaneva/2020/03/19/billion-dollar-real-estate-businesses-ibuyer-suspended/?sh=c7f59f921747

5 Inspiring Home Design and Remodeling Trends for 2021

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We’ve all spent a lot more time at home over the past year. And for many of us, our homes have become our office, our classroom, our gym—and most importantly, our safe haven during times of uncertainty. So it’s no surprise to see that design trends for 2021 revolve around soothing color palettes, cozy character, and quiet retreats.

Even if you don’t have immediate plans to buy or sell your home, we advise our clients to be mindful of modern design preferences when planning a remodel or even redecorating. Over-personalized or unpopular renovations could lower your property’s value. And selecting out-of-style fixtures and finishes could cause your home to feel dated quickly.

To help inspire your design projects this year, we’ve rounded up five of the hottest trends.  Keep in mind, not all of these will work well in every house. If you plan to buy, list, or renovate your property, give us a call. We can help you realize your vision and maximize the impact of your investment.

1. Uplifting Colors

Colors are gravitating toward warm and happy shades that convey a sense of coziness, comfort, and wellbeing. This year’s palettes draw from earthy hues, warm neutrals, and soothing blues and greens.1

While white and gray are still safe options, expect to see alternative neutrals become increasingly popular choices for walls, cabinets, and furnishings in 2021. For a fresh and sophisticated look, try one of these 2021 paint colors of the year: 

  • Aegean Teal (coastal blue) by Benjamin Moore
  • Urbane Bronze (brownish-gray) by Sherwin-Williams 
  • Soft Candlelight (muted yellow) by Valspar 

On the opposite end of the spectrum, indigo, ruby, sapphire and plum are showing up on everything from fireplace mantels and floating shelves to fabrics and home accessories. These classic, rich hues can help bring warmth, depth, and a touch of luxury to your living space.

To incorporate these colors, designers recommend using the “60-30-10 Rule.” Basically, choose a dominant color to cover 60% of your room. For example, your walls, rugs, and sofa might all be varying shades of beige or gray. Then layer in a secondary color for 30% of the room. This might include draperies and accent furniture. Finally, select an accent color for 10% of your room, which can be showcased through artwork and accessories.2

2. Curated Collections

After a decade of minimalism, there’s been a shift towards highly-decorative and personalized interiors that incorporate more color, texture, and character. Clearly-defined styles (e.g., mid-century modern, industrial, modern farmhouse) are being replaced by a curated look, with furnishings, fixtures, and accessories that appear to have been collected over time.3

This trend has extended to the kitchen, where atmosphere has become as important as functionality. The ubiquitous all-white kitchen is fading in popularity as homeowners opt for unique touches that help individualize their space. If you’re planning a kitchen remodel, consider mixing in other neutrals—like gray, black, and light wood—for a more custom, pieced-together look. And instead of a subway tile backsplash, check out zellige tile (i.e., handmade, square Moroccan tiles) for a modern alternative with old-world flair.4

3. Reimagined Living Spaces

The pandemic forced many of us to rethink our home design. From multipurpose rooms to converted closets to backyard cottages, we’ve had to find creative ways to manage virtual meetings and school. And designers expect these changes to impact the way we live and work for years to come.

For example, some home builders are predicting the end of open-concept floor plans as we know them.5 Instead, buyers are searching for cozier spaces with more separation and privacy. Cue the addition of alcoves, pocket doors, and sliding partitions that enable homeowners to section off rooms as needed.4

The necessity of a home office space is also here to stay. But what if you don’t have a dedicated room? Alternative workspaces have become increasingly popular. In fact, one of the biggest trends on Pinterest this year is the “cloffice”—essentially a spare closet turned home office. Searches for “home library design” and “bookshelf room divider” are on the rise, as well.6

4. Staycation-Worthy Retreats 

With travel options limited right now, more homeowners are turning their vacation budgets into staycation budgets. Essentially, recreate the resort experience at home—and enjoy it 365 days a year!

Bedrooms should provide a soothing sanctuary for rest and relaxation. But this year, minimalist decor and muted colors are giving way to bolder statement pieces. To create a “boutique hotel” look in your own bedroom, start with a large, upholstered headboard in a rich color or pattern. Layer on organic linen bedding and a chunky wool throw, then complete the look with a pair of matching bedside wall lights.7 

Carry those vacation-vibes into your bathroom with some of the top luxury upgrades for 2021. Curbless showers and freestanding tubs continue to be popular choices that offer a modern and spacious feel, and large-format shower tiles with minimal grout lines make clean up a breeze. Add a floating vanity and aromatherapy shower head for the ultimate spa-like experience.4

5. Outdoor Upgrades

From exercise to gardening to safer options for entertaining, the pandemic has led homeowners to utilize their outdoor spaces more than ever. In fact, backyard swimming pool sales skyrocketed in 2020, with many installers reporting unprecedented demand.8 But a new pool isn’t the only way homeowners can elevate their outdoor areas this year.

The home design website Houzz recently named 2021 “the year of the pergola.” They’re a relatively quick and affordable option to add shade and ambiance to your backyard.4 Another hot trend? Decked-out, custom playgrounds for exercising (and occupying) the youngest family members who may be missing out on school and extracurricular activities.9 

But don’t limit your budget to the backyard. Landscapers are reporting an increase in front yard enhancements, including porch additions and expanded seating options. These “social front yards” enable neighbors to stay connected while observing social-distancing guidelines.10

DESIGNED TO SELL

Are you contemplating a remodel? Want to find out how upgrades could impact the value of your home? Buyer preferences vary greatly by neighborhood and price range. We can share our insights and offer tips on how to maximize the return on your investment. And if you’re in the market to sell, we can run a Comparative Market Analysis on your home to find out how it compares to others in the area. Contact us to schedule a free consultation!

Sources:

  1. Good Housekeeping  –
    https://www.goodhousekeeping.com/home/decorating-ideas/g34762178/home-decor-trends-2021/
  2. The Spruce – 

https://www.thespruce.com/timeless-color-rule-797859

  • Homes & Gardens – 

https://www.homesandgardens.com/news/interior-design-trends-2021

  • Houzz – 

https://www.houzz.com/magazine/36-home-design-trends-ready-for-takeoff-in-2021-stsetivw-vs~142229851

The New Normal: A Strong Housing Market Expected to Continue into 2021

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“2020 will be known for a lot of things, and a record-breaking year for real estate will certainly be one of its more unexpected legacies,” prominent economist Daryl Fairweather said.1 And he’s right: most of us would have expected the housing market to suffer from circumstances like a once-in-a-hundred-years pandemic and historic inventory shortages. 

But, rather than a slowdown, we are continuing to experience a surprisingly robust real estate market across the country. And experts estimate that these conditions are likely to last well into the new year. Fannie Mae Senior VP and Chief Economist Doug Duncan predicts that existing home sales will ultimately “be up a percent or more in 2021.” He believes home prices will continue to rise due to limited inventory, but he is confident the Federal Reserve will keep interest rates low into the future, which will be “very good for households.”2

Market conditions like fewer available listings, changing criteria for desired homes, and record-low mortgage rates are changing the way people buy and sell homes, most likely in a lasting way. But this sustained activity, even in the uncertainty that is 2020, proves that our country still views real estate as a sound investment. The only question now is how you can take advantage of the housing market’s “new normal.” 

FEWER LISTINGS EQUALS A SELLER’S MARKET

Inventory, meaning the number of homes for sale, is at a record low across the country. The National Association of Realtors (NAR) reports there are fewer homes on the market today than the association has seen in data going all the way back to 1982.3 Currently, the total housing inventory is about 1.47 million units, which is a decline of 19.2% from one year ago.4

Experts do predict some relief on the horizon. MarketWatch had previously anticipated housing starts would occur at a pace of 1.45 million and building permits would come in at a pace of 1.52 million.5 But it turns out that the market exceeded expectations: compared with last year, housing starts are up 11% and permitting for new homes occurred at a seasonally-adjusted annual rate of 1.55 million. That represents a 5% increase from August and an 8% increase from a year ago.

For now, the fact that there are fewer listings creates an advantageous housing market for sellers. There are several reasons why. 

For one, buyers have to act fast to snap up available homes. As a result, most properties that come on the market stay for an average of just 21 days before they are sold.6 “That is the fastest ever recorded in our monthly series,” says NAR Chief Economist Lawrence Yun.

Another benefit is that sellers are enjoying higher net returns on their listings. This is thanks to the tough competition for homes, which often results in bidding wars between buyers. Nationwide, the median home price in September rose to $311,800. That translates to about $40,000 (15%) more than just a year ago.7

This seller’s market is not simply a product of the pandemic. In fact, in the country’s top 100 metro markets, inventory has been dwindling since the first quarter of 2020.8 This means that even with increased construction, buyers can’t simply wait for things to go back to normal before reentering the market. Rather, all signs indicate that this is the new normal.

What It Means for Homeowners: 

These higher home prices show that buyers are willing to spend more on a home right now than they did last year. So, if there ever were a time to list for top dollar—and expect to receive asking price quickly—that time is now. Ask us for a free consultation of your home’s value today.

What It Means for Homebuyers:

Due to low inventory, buyers could easily find themselves in a bidding war. Time is of the essence in a seller’s market, so you’ll need to get your financing in order and be preapproved for a loan before you begin your home search. We can connect you with a trusted mortgage professional to get you started.

BUYERS BENEFIT FROM LOW MORTGAGE RATES AND A BIGGER PLAYING FIELD

Don’t worry, homebuyers. This “new normal” of real estate has benefits for you too. 

For example, people used to base their next home purchase on how far the commute was to work or in which public school district it was. But now, thanks to the pandemic shifting the locus of jobs and work, they are free to consider what they need from a home to make it a place they truly want to be in as they work, teach, exercise, cook, and live.

Often, this equates to needing more space in different types of areas. Realtor.com consumer surveys show that people are desiring quieter neighborhoods, home offices, updated kitchens, and access to the great outdoors.9 The search for these criteria is driving residents out of densely populated metropolitan areas and into the suburbs.10 And this exodus from cities is good news for buyers: it opens up more possibilities for inventory that they could not have considered pre-pandemic. 

Another advantage for buyers is the record-low mortgage rates. The average rate for a 30-year fixed-rate mortgage hit a record low in mid-October when rates fell to 2.81%. That’s the lowest since Freddie Mac began conducting the survey in 1971, and well below last year’s 3.69%.11 Similarly, a 15-year fixed-rate mortgage can be had for as low as 2.35% compared to 3.15% a year ago.

Thanks to these rates, buyers are afforded the opportunity to buy nearly $32,000 more home than they could one year ago, while keeping their monthly payment the same.12 So even though home prices are high now, it is currently more affordable to buy a home now than it was last year.

If you want to take advantage of these rock-bottom mortgage rates, you need to act fast. Though rates are projected to stay low, housing economists predict that the window of opportunity to get the best rate could be closing in the coming months. Mike Fratantoni, chief economist at the Mortgage Bankers Association, said he expects the average rate on a 30-year mortgage to rise to 3.5% by the end of 2021.13

What It Means for Homeowners:

Record-low mortgage rates offer you the opportunity to lower your monthly payment—or even take out some equity—with a refinance. With those additional funds, you could even choose to invest in a second home in a new desirable location. Reach out to us for a referral to a trusted mortgage professional or an agent in those markets. 

What It Means for Homebuyers:

The time is now to determine how much home you can comfortably afford and make a plan to find it. We can set up a search for you to find homes that best meet your new needs, even if they’re in neighborhoods you wouldn’t have considered before.

A RECORD-SETTING YEAR FOR HOME SALES IS JUST THE BEGINNING

Despite the seemingly adverse buyer conditions, 2020 experienced a 14-year high number of home sales, NAR reports. Existing-home sales, which include single-family homes, townhomes, condominiums and co-ops, rose 9.4% in September to a seasonally adjusted annual rate of 6.54 million.14 That’s a 21% increase from a year ago! 

Every region of the country has seen a surge in sales activity. According to George Ratiu, senior economist for Realtor.com, part of the reason for these continued sales is that the pandemic has created a paradigm shift in the patterns of real estate.15 For example, housing needs are typically resolved by late summer and early fall to coincide with the commencement of the new school year. With homeschooling and remote work, however, buyers have been freed to continue their home search into the traditionally slow winter months.

Another reason for the robust market is that Millennials are finally putting their money into homeownership. According to the U.S. Census Bureau, the homeownership rate for 25-to-34-year-olds rose to 40.7% by the end of last year.16 This is significant because Millennials, the generation of people in their mid-20s to late-30s, currently surpasses Baby Boomers as the nation’s largest living adult generation. As the remaining percentage of this group starts investing in homes in the near future, demand will persist.

All of these factors indicate that the housing market is poised to remain strong as we head into the new year. And as Jonathan Woloshin, head of U.S. real estate at UBS Global Wealth Management, believes, they could “buoy the housing market for years to come.”17 

What It Means for Homeowners:

It’s tempting to believe that homes will basically sell themselves in a market like this. But we’re still seeing properties that are overpriced and under-marketed sit unsold. We can help you optimize the process of selling your home so you can get the best possible offer.

What It Means for Homebuyers:

Preparation is key to success in a seller’s market like this, but don’t let yourself become paralyzed. We are here to answer your questions and offer sound advice to guide you through all the options that are available to you.

REAL ESTATE IS A SAFE BET

Your other investments might have been on roller coasters this year, but the real estate market has been steady, competitive, and strong throughout. That makes it a good choice for your financial future.

National real estate numbers can give us a pulse on the market, but real estate happens in our own backyard. As your local market experts, we can help you understand the finer points of the market that impact sales and home values in your own neighborhood. 

If you’re considering buying or selling a home before the new year or in early 2021, contact us now to schedule a free consultation. We’ll work with you to develop an actionable plan to meet your goals.

Sources:

  1. Redfin –
    https://www.redfin.com/news/housing-market-news-september-2020/
  2. Housing Wire – 
Fannie Mae’s Duncan offers 2021 housing market forecast
  1. CNBC – 
https://www.cnbc.com/2020/10/22/september-existing-home-sales-jump-9point5percent.html
  1. NAHB – 
Existing Home Sales Surge Despite Record-Low Supply
  1. MarketWatch – 
https://www.marketwatch.com/story/new-home-construction-slows-slightly-in-august-driven-by-pullback-in-multifamily-starts-2020-09-17
  1. National Association of Realtors – 
https://www.nar.realtor/newsroom/existing-home-sales-soar-9-4-to-6-5-million-in-september
  1. Business Insider – https://www.businessinsider.com/how-2020-broke-the-housing-market-inventory-could-run-out-2020-9
  2. Forbes –
https://www.forbes.com/sites/petertaylor/2020/10/11/covid-19-has-changed-the-housing-market-forever-heres-where-americans-are-moving-and-why/#74e7355761fe
  1. Realtor.com – 
    https://www.realtor.com/research/top-consumer-home-features-coronavirus/
  2. Wealth Advisor – https://www.thewealthadvisor.com/article/covid-19-has-changed-housing-market-forever-heres-where-americans-are-moving-and-why
  3. Washington Post –
https://www.washingtonpost.com/business/2020/10/15/30-year-mortgage-rate-drops-record-low/
  1. Forbes – 
https://www.forbes.com/advisor/mortgages/buying-a-home-low-mortgage-rates/
  1. BankRate – 
https://www.bankrate.com/mortgages/refinance-window-could-close-soon/
  1. National Association of Realtors – 
https://www.nar.realtor/newsroom/existing-home-sales-soar-9-4-to-6-5-million-in-september
  1. Forbes –
https://www.forbes.com/sites/petertaylor/2020/10/11/covid-19-has-changed-the-housing-market-forever-heres-where-americans-are-moving-and-why/#74e7355761fe
  1. TD Economics – 
https://economics.td.com/us-falling-mortgage#:~:text=The%20homeownership%20rate%20among%20millennials,47.7%25%20at%20a%20comparable%20age.&text=This%20means%20that%201.4%20million,that%20of%20the%20older%20generation
  1. Axios Media –
https://www.axios.com/real-estate-market-819e3c85-3765-4014-91c0-b545be6d5935.html

5 Secrets Buyers & Sellers Must Know About Virtual Home Tours

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For years now, virtual home tours have helped real estate buyers far and wide find the perfect home. From long-distance military personnel being relocated, to investors expanding their portfolio, to homeowners looking for a vacation getaway, this technology makes finding a house that’s a bit out of driving distance much easier. And for real estate agents, virtual tours have been a useful way to help buyers with their home search and to assist sellers in creatively marketing their listings.

Because of the pandemic, virtual home showing options recently experienced a huge spike in popularity. One survey found that nearly 33% of recent home tour requests were for virtual tours, as compared to just 2% pre-pandemic.1And it’s easy to see why.

Buyers want to quickly find their next safe haven, one that may need to serve as their office, gym, and even classroom for months to come. And sellers want to limit the number of strangers in their home, yet still have the ability to reach enough potential buyers to get the best offer on their property.

Virtual home tours are the popular thing right now, but that doesn’t automatically mean they’re the only option for your homebuying or selling experience. In this post, we’ll reveal five important secrets behind the virtual real estate scene. Read on to learn how they impact today’s home buyers and sellers.

SECRET #1: Virtual Tours Have Evolved

Lots of real estate professionals who had never used virtual tours before were forced to quickly adapt when the pandemic struck. Because of restrictions on time and resources, not everyone is able to create what would have been deemed a “virtual tour” last year. So instead, we’ve expanded the definition of the phrase by creating innovative new ways to show homes while keeping our clients safe and socially-distanced. Here are some terms you might come across as you explore homes with virtual tours.

Traditional virtual tours use 360° Photos, which are images that allow you to see all angles of a space. These are what allow virtual tour viewers to look up, down, and all around the interior and exterior shots of a home. Using a software program, 360° photos can be stitched together to create a digital model that looks like a dollhouse. This is called a 3D Tour. Sometimes agents will also add Virtual Staging, which decorates rooms with digital furniture and accents like wallpaper or paint.

Traditional virtual tours allow you to click to move from room to room in the home, but Online Walkthroughs feature the actual action of walking around. Either the seller or the agent (depending on factors such as time and safety requirements) will create a video by holding their camera or smartphone and simply moving through the home. 

Online Walkthroughs can be filmed in advance or happen live. If they are live, they can also be referred to as Virtual Showings or Online Open Houses. A Virtual Showing is often a scheduled, one-on-one event that mimics an in-person tour of the home, in which the agent and viewer start at the exterior and move their way through the property. If your agent offers to FaceTime or Skype you from a home you’re interested in, for example, that would be a type of Virtual Showing. In contrast, an Online Open House is more freeform, allowing more viewers to pop in and out of a group video call on apps such as Facebook or Zoom. 

SECRET #2: Virtual Doesn’t Mean Impersonal

All these styles of virtual tours showcase the property’s details better than static photos ever could. But for a purchase as intimate as your next home, details like a new refrigerator or the size of the master closet aren’t the only deciding factors. Luckily, virtual tours are exceptional tools for personal connection.

As a prospective buyer, virtual tours give you a feel for the property, inside and out, so you can easily picture yourself in the space and decide if the home’s flow and features work for your lifestyle. Live video walkthroughs with the real estate agent will give you insights on those crucial non-visual aspects, like creaky floors, super-fast internet speed, and neighborhood dynamics. Plus, you’ll be able to ask questions and get an insider’s perspective on what’s so great about the home.

For sellers, if your agent recommends using a virtual tour to market your home, you could attract more buyers.2 And you can be sure that those interested buyers are still getting the up-close and personal look inside your home that will inspire their strongest offers.

SECRET #3: Virtual Is Just The First Step To Safe Home Sales

Even as government restrictions begin to ease in some areas, virtual tours are still recommended as a safer way to buy and sell real estate.3 Buyers don’t have to worry about exposure to anyone who previously visited the property, and sellers cut down on the foot traffic in their home. Some data even suggest that virtual tours keep agents safer as well, since they’re hosting fewer in-person showings and open houses.4

But despite the variety of virtual tours available, some buyers will still need to visit a home themselves in order to feel confident enough to submit an offer. In this situation, listing agents and sellers will work together to come up with a procedure that ensures everyone feels safe and comfortable. Some recommendations include requiring interested buyers to present a pre-qualification letter, conducting tours only by appointment and with essential parties, and asking buyers to self-disclose whether they have COVID-19 or exhibit any symptoms.3

The day of the in-person tour, agents might ask buyers to remain in their vehicle until they arrive at the property, and to wear protective gear such as face coverings and gloves. Many will provide hand sanitizer and will ask buyers to refrain from touching any surfaces in the home. Instead, the agent (or seller, prior to the buyers’ arrival) will turn on lights, open doors, and pull back curtains. Then, after everyone has left, the agent will return the home to its original state and disinfect it as needed.3

SECRET #4: The Speed of Closing Depends on Your Goals

Though maybe not literally, virtual tours are opening doors for both buyers and sellers in terms of options available to them. In 2019, buyers viewed an average of 10 homes over a period of 10 weeks before submitting an offer.5 But thanks to an increased prevalence of virtual tours saving them driving time, they’re able to peek inside that number of homes in a much shorter period to make their final choice. 

With all this viewing activity, it makes sense that sellers whose listings feature virtual tours are receiving more offers on their properties. According to one study, virtual tours can add between two and three percent to the sales price of a home, in part because increased buyer interest has made sellers feel confident waiting for the exact right offer.2

So if you’re a buyer luxuriating in viewing homes from your couch, just remember that you’re not alone in your search. Your competition is virtually viewing the same properties you are, so it’s still important to work with your real estate agent to quickly submit a strong offer when you find the home of your dreams. And for sellers, if a speedy sale is important to you, carefully weigh that against the temptation to entertain more and more offers, which can keep your home on the market up to six percent longer.2 Your agent can help you decide the right strategy for your priorities.

SECRET #5: Virtual May Not Always Be the Right Choice

Creating, editing, uploading, and marketing virtual tours for a listing can be pricey. Packages through popular 3D imaging platforms like Matterport and Immoviewers can cost hundreds of dollars on their own.6 Virtual staging will further bloat a listing’s marketing budget, and then there’s the advertising dollars needed. Even seemingly inexpensive options like video call walkthroughs still require time and energy on behalf of both the seller and agent. 

These costs mean that a full virtual tour package might not always be the right choice for sellers. When you talk to your agent about marketing your home, it may be that an elaborate virtual tour, showing, and open house just don’t make sense. It could be that your potential buyers may not resonate with that type of marketing, that the investment-to-return ratio isn’t in your favor, or that there are more effective ways to get your listing seen by qualified buyers.

Buyers, you may notice that some listings within your search parameters don’t offer virtual tours. That’s because those for-sale homes might not have needed a full virtual marketing package to entice buyers to submit offers, or those homes are better marketed through more traditional tactics. Don’t close the door on your dream home because it doesn’t have virtual events and features. Stay open-minded so you can consider the wealth of home options that fit your lifestyle, needs, and budget.

ARE VIRTUAL HOME TOURS IN YOUR FUTURE? As technology develops, it will become easier and cheaper to create virtual tours. Coupled with the high demand for them, this means that virtual tour options are likely not only here to stay, but will continue to grow into a common addition to listings. If buying or selling a home is on your mind, we’d be happy to discuss how virtual tours can play a part in your real estate experience. Reach out to us today for help finding local homes for sale that have virtual tours, or to chat about if adding a virtual tour to your upcoming listing is the right fit.

Sources:

  1. Rocket Mortgage – https://www.rocketmortgage.com/learn/evolution-of-home-showings-during-covid-19
  2. Radio Iowa – https://www.radioiowa.com/2020/07/28/trying-to-sell-a-house-ui-study-finds-virtual-tours-will-bring-more/
  3. NAR Showing Guidance During Reopening – https://cdn.nar.realtor/sites/default/files/documents/Showing-Guidance-During-COVID-05-14-2020.pdf
  4. NAR 2020 Member Safety Report – https://cdn.nar.realtor/sites/default/files/documents/2020-member-safety-report-08-31-2020.pdf
  5. NAR 2019 Profile of Home Buyers and Sellers – https://cdn.nar.realtor/sites/default/files/documents/2019-profile-of-home-buyers-and-sellers-highlights-11-21-2019.pdf
  6. Realtor.com – https://www.realtor.com/advice/sell/how-to-host-virtual-home-tours-almost-as-good-as-the-real-thing/