What Home Improvement Stores Are Telling Us About The Housing Market

A recent Bloomberg Business article reports that both Lowe’s & Home Depot experienced fourth quarter profits that beat revenue projections by the most in six quarters. So what does that mean to the housing market?

Consumer Confidence

Lowe’s Chief Executive Officer Robert Niblock sounded off about this,

“Consumers are feeling better about their jobs, their wages and certainly feeling better about the value of their home, they are re-engaging in projects that they have put off.”

Sales to professional contractors have increased significantly as well, and were a driving factor in the quarter. Home Depot’s Chief Financial Officer Carol Tome calls this a “sign of health. If they are putting more items in their basket, it means they have work coming at them.”

Home Values Rising

In a quarterly consumer survey conducted by Lowe’s since 2007, the percentage of respondents who said that the value of their home is rising increased to its highest value ever, at 50%.

Whether Americans are finally adding that man-cave they’ve always wanted, or renovating a master suite, an increased confidence in the value of one’s home often sparks homeowners to invest in big-ticket projects.

The National Association of Realtors (NAR) reports that the median price of an existing home (for all housing types) rose year-over-year for the 35^th consecutive month.

Not all who are renovating are planning on staying in their home. The Demand Institute reports that “nearly half of American households plan to move at some point in the future.”

For those who are planning on listing their home this spring, spending the time and money needed to update that 1950’s bathroom or kitchen can fetch higher prices in today’s market.

Bottom Line

Meeting with a local real estate professional can give you insight into the small (or big) improvements your home could use to draw the highest price and return on investment this spring.

To get a FREE home evaluation, log-in to: http://www.MyNorthTexasHomeValue.info

Contact the Trump Realty Team for professional real estate service, (214) 609-7123 or jtrump@kw.com

 

6 Quick, Easy Steps That Help Get Your House Ready To Sell!

Add These To-Dos to Your Presale Checklist

Before booking your market evaluation appointment to discuss listing strategy, here are a few things you can do to prepare for a speedy sale.

Handle Repairs – Take care of easily fixed repairs that may be potential red flags for buyers. Common quick fixes include repairing drywall, repainting walls and oiling hinges.

Declutter – Take this opportunity to get rid of those seldom used items that are cluttering up your home. Remember, it costs to move them, so now is the time to let them go!

Start Packing – Store seasonal clothing, sports gear and small appliances you know you won’t need before the move. Too much stuff crammed into cupboards and closets will make your home seem small.

Downsize Furniture – Consider removing extra or large pieces of furniture that make your home look smaller. You may want to stage specific rooms to highlight potential uses for the space.

Depersonalize – Tuck away family photos, collectibles and any other personal items. It’s important to make your home a “blank canvas” for potential buyers to imagine themselves in.

Check Curb Appeal – Plant colorful annuals along sidewalks and in containers, and remove any debris or clutter from around your home. Many buyers will preview a home from the outside before deciding whether or not to schedule a showing.

For professional real estate services, contact Jim Trump & Associates, (214) 609-7123 or jtrump@kw.com. “In Trump We Trust!”

Is Buying A Home A Good Investment?

A house is, with 100-percent certainty, an investment.

An investment is the outlay of money (i.e., a home down payment), usually for income or profit. Buying a home allows you to save on the monthly cash outflow you’d spend renting a comparable property. Instead, you’ll have a somewhat fixed, long-term housing cost thanks to your fixed mortgage payment until you pay it off, and then you’ll have no mortgage payment at all. You’ll also benefit through appreciation in your home’s value, possible tax advantages, mortgage amortization on the loan and not being burdened with housing costs in retirement.

Of course, while buying a home is an investment, that doesn’t necessarily mean it is a good investment. Avoid short-term real estate ownership, fixer-uppers, properties that are much more expensive to own than a comparable property would be to rent, and properties in poorly run homeowners associations.

The most important consideration when buying a home is your ownership time frame. Basically, the longer you own it, the better an investment it will be for you. The optimal holding period for most real estate purchases, whether it’s your personal home or a rental property, is your entire life.

Many homes do not have the best investment rates of return, and some, like fancy prize properties, should generally be avoided. However, two important aspects of investing in a personal residence do add value to your wealth picture (although, unfortunately, that value cannot be calculated):

1. A monthly mortgage payment requires you to do something most Americans find challenging: Saving the money they earn.
2. Individuals who retire with a paid-off home (or rental properties) are more likely to live a comfortable retirement than people who must pay rent or a big mortgage payment each month after they retire.

For those two reasons alone, most personal residences are a good investment, provided you hold them long-term. However, you must be sure to buy a home with a mortgage you can comfortably afford on your income, or that you can rent out later in life to a tenant who can pay the mortgage for you.

If you stick to those guidelines, you’re likely to reap the rewards of your real estate ownership.

Predictions For The Housing Market in 2015

Experts polled by Fortune expect home prices and mortgage rates to rise slowly next year.

At a recent panel discussion on the 2015 real estate market, the chairman of Standard and Poor’s Index Committee, David Blitzer, was asked to describe what the market will look like in one word. His answer?

“Mysterious.”

His response tells us that, for one, the real estate market can confound even the experts. But, more importantly, it suggests that housing has reached an inflection point. With home prices in many markets at or above pre-bubble levels, we can no longer expect the “rebound effect” to power home values higher each month. Fundamentals, like population and wage growth, as well as the tastes of a new generation of home buyers, will dictate the trajectory of home prices in the New Year. Here are four trends to watch for in the housing market next year:

1. The demographic wave of Millennials will help boost prices: The U.S. has been stuck in a demographic rut, which has dragged down the demand for homes. For the past decade, the largest portion of the American population was made up of Baby Boomers, folks who long ago settled down and started families. But late last year, the Census Bureau announced that the cohort of now 23 year old Americans is largest in the country, followed by 24 and 22 year olds, respectively. As this ascendant generation ages another year, more of them will start families and look to buy homes of their own. Jonathan Smoke, chief economist at realtor.com, argues that this generation will “drive two-thirds of household formations over the next five years.” Smoke thinks 2015 will mark the first year in which the Millennial generation’s presence in the housing market will be truly felt, especially in more affordable regions like the Midwest and the South.
2. Young people will continue to demand housing where it’s tough to build: At the S&P Panel, Nobel Prize-winning economist Robert Shiller pointed out that since the housing crisis, the total value of owner-occupied housing has remained flat. This is because builders have not been constructing many single-family homes at all, a situation that the U.S. economy hasn’t faced since the Great Depression.

Single-family home construction has been so subdued in part because the Millennial generation as a whole prefers to live where housing is expensive and where building is difficult. Jed Kolko, chief economist at Trulia, calls it the “Millennial mismatch” in a new report out Tuesday, where he shows that Millennials tend to live in markets like New York, Honolulu, and Austin, where homes are least affordable.

3. Mortgage rates will rise: While many analysts were convinced that mortgage rates would rise this year on the back of an improving economy and the winding down of the Fed’s bond-buying stimulus program, the market did not comply. The year started out with news that the U.S. economy shrank in the first quarter, which put the market on edge. Next came news of unrest in Ukraine and slow growth in Japan and Europe, putting more downward pressure on interest and mortgage rates. Now, a 30-year mortgage is actually cheaper on average than it was at this time last year.

But economists are still betting that 2015 will be the year rates rise in earnest, citing, again, an improving domestic economy and a lack of stimulus from the Federal Reserve. Smoke, for instance, sees the 30-year rate ending at 5% by the end of next year, a more than 100-basis point increase from today.

4. Home price increases will decelerate, but affordability will decline:The housing recovery slowed markedly in 2014. Home prices in October 2014 were up by 6.4% year-over-year, after climbing 10.6% in 2013. Economists polled by Fortune were nearly unanimous in predicting that home values would continue to rise, but even slower than they did this year. That’s because the rebound from the bursting of the housing bubble has just about run out of steam, with Trulia’s Kolko estimating that homes are only 3% undervalued relative to fundamentals nationally. Surveys of homeowner sentiment suggest that more of them will look to sell their homes next year, putting more downward pressure on prices. But factors like the “Millennial mismatch” and rising mortgage rates will conspire to make the most popular markets unaffordable for the middle class.

For professional real estate services, contact me at (214) 609-7123 or jtrump@kw.com

  

You Cannot Please All Of The People All Of The Time

You simply cannot please all of the people all of the time.

This adage is particularly true with real estate and putting your house on the market- because homes, locations, and such are so much a matter of personal preference, some people will find something to criticize about even the most perfectly staged, perfectly priced property on the market.

As a listing agent, my job is not to try to make your listing be all things to all people- but you do want it to appeal to enough buyers that you get one great offer (and multiple offers never hurt anybody, either!). That said, you don’t want your listing to be the house that nearly every buyer and agent sees, rolls their eyes at and utters the same few, predictable, deal-killing criticisms.

Fortunately, what is predictable is avoidable. Unfortunately, many of the things that make a listing susceptible to critics are issues on the seller’s side of the preparation for getting it ready to sell. Let’s explore the most common things buyers hate about listings they see.

House Critic Complaint No. 1: Odors

You might think I’m beating a dead horse or even preaching to the choir. But as long as house hunters keep asking me why, in the name of all that is Real Estate related, they keep viewing homes that smell like all sorts of mishmash, I’m going to keep repeating this!

Viewing a home sounds like it’s all about the visual, and mind you, visuals are critical- your listing should be at its Sunday best when it’s being shown, in terms of being spruced, staged and clutter-free. But when a buyer comes to see your listing, they don’t turn off the rest of their senses. There is nothing that can turn a buyer off from a home they’d otherwise like more quickly than a powerfully bad odor, in particular, cigarette, pet odors, and food smells in a house that seems to have been well-cleaned create the concern that those smells might be permanent and that the buyer might not be able to get rid of them without dropping some serious cash on cleaning or even removing wall, window and flooring.

If I am listing a home and you know that someone has been habitually smoking in it or that the seller has had a “challenge,” let’s say, with pet accidents, I cannot ignore the problem. Do not think that because you had the carpet shampooed or the drapes cleaned, or because YOU can’t smell anything, that the problem is gone. The human sense of smell very quickly gets used to smells that it lives with or is surrounded with on a regular basis.

It’s one of my toughest jobs as an agent to point out bad smells and odors, no matter how painful the conversation, and to make sure they are eliminated by any means necessary before you place your house on the market.

Critic Complaint No. 2: Overpricing 

There’s the one kind of overpricing that makes a buyer say, “Hmmm, seems a bit high, but let’s go see it anyway.” The other kind of overpricing is one that makes the buyer say, “I’ll wait until a price reduction,” or worse, hold their sides because they are laughing too hard!

It is common in our market for agents and sellers alike to say, “Let’s see if we can get it!”, and price a home a little above market value. However, when overpricing is glaring, many buyers and buyers’ agents are less likely to actually come out and see the place, especially if they weed it out online after comparing it’s pricing to all the other homes in the area. Often, homes this severely overpriced simply don’t sell, or at least not until after they have had some serious price cuts or have been on the market so long buyers begin to feel confident about making lowball offers.

The goal is the opposite- you want your listing to stand out as a property that is not priced so low as to throw up red flags but does present a good value for the money- that’s what motivates buyers to get out of their chairs and into the property for a viewing, and hopefully gets you, the seller, into a multiple offer situation!

I don’t set the price of my listings, I can only suggest. It’s obvious that the agent-seller conflict about overpricing is one of those battles that have been fought since Moby Dick was a minnow!

Here’s how to Critic Proof your home’s listing against this issue: Fixate on the comparables. Smart sellers deactivate their emotional attachment and the very human tendency to overvalue their precious homes by poring over the sales prices (not list prices) of similar, nearby homes that have recently sold. The buyer that wants to purchase your home doesn’t see the value in the fact that Jr. took his first steps in the Great Room, and won’t want to pay for it! Walk through this data — don’t forget to note the overpriced listings that are lagging on the market, and also any value-priced listings that have sold for way more than asking.

When I get a seller that simply won’t budge off a dramatically high list price, I have to consider whether this listing makes sense to take in the first place, or I will also use my wonderful office and the combined experience of the agents in my market center in a listing tour. If the agents overwhelmingly comment that they think the home is significantly overpriced, it is my duty to communicate this feedback to the seller. It doesn’t do either party any good to have a listing that is just sitting out there, not selling.

Critic Complaint No. 3: Dirt and/or Messes

Possibly the single largest source of Critic Complaints I’ve ever heard are the dirt, messes, and personal belongings that buyers find so distracting when they walk into a home for a viewing. Obviously, homes that are filthy from floor to ceiling are ripe for the picking for critics. What is underestimated is how often even savvy homebuyers are distracted (and disgusted) by relatively clean homes that just have a few outstanding messes, like piles of dirty dishes in the sink, piles of dog poo in the yard, or even piles of papers, mail, books or clothes lying out in plain view.

Will one or two such items ruin the sale of your home? It’s doubtful, however, a few of them (or more) can certainly distract a buyer enough that they fixate on the home’s messes and, in the process, fail to see what is so great about your property. As I see it, cleaning up faithfully before leaving for work every day and before every showing free-so it makes no sense to even run the risk of turning off a prospective buyer by letting messes get in the way of their ability to visualize themselves and their families flourishing in your home.

Make sure you brief the sellers in detail on what buyers expect, in the way of cleanliness. Also, set up a plan for giving them enough notice of showing appointments that they can do a quick, but thorough, house cleaning pass-through before every single viewing.

Critic Complaint No. 4: lots of little malfunctions

All of us tend to think our homes are in fantastic condition. After all, your sellers have had the furnace maintained regularly, they’ve installed granite and dual-paned windows, and maybe they even took your advice to have the floors refinished or the walls painted in preparation for putting the place on the market.

That’s all fantastic — all the noncosmetic work that’s been done to maintain and improve your listing should be trumpeted in your marketing materials, and the cosmetic items will (or should) speak for themselves. But here’s the thing: House hunters won’t be running the dishwasher or testing the furnace (at least not until inspections).

What they will do — almost unconsciously — is:

Flick light and fan switches.

Open or close window coverings, closet, room and entry doors.

Open and close drawers, cupboards, gates and fences.

Hold the handrails as they walk up and down the stairs.

They will hear leaky faucets and point out water spots from long-ago-repaired leaks, and they will notice (or potentially trip on) uneven exterior tiles, paths and walkways. And even though these items might be vastly less expensive to fix than the roof or sewer line you had replaced, they are much more visible and noticeable to a buyer. In fact, buyers don’t always even know that the little malfunctions and repairs that need doing are little or inexpensive. And when they notice a bunch of these sorts of things in a single property, they can jump to the conclusion that the whole place is rickety.

Since these little fixes are inexpensive to make, have them completed before you list, if at all possible. You might even ask your seller to walk through the property with you, pinpoint all the necessary little fixes and offer the a handyperson reference for someone you know works efficiently.

For professional real estate services, call me: (214) 609-7123 or jtrump@kw.com

Rent Increases Expected To Climb Through 2015

NBC’s Diana Olick recently reported that rents in the residential housing sector continued to rise in 2014. She interviewed Jed Kolko, Chief Economist at Trulia, who revealed:

“Rents are rising because of strong demand that supply hasn’t kept up with. Nearly all the new households are renters, and young people moving out of their parents’ homes will keep fueling rental demand.”

Where are rents headed in 2015?

The question now is where rents will be heading over the next twelve months. In a press release last week, Zillow chief economist Dr. Stan Humphries predicted residential rental prices will continue to climb in 2015:

“Home value appreciation will continue to cool down, from roughly 6 percent now to around 2.5 percent by the end of 2015. But rents will see no such slowdown, and will continue to grow around 3.5 percent annually throughout 2015. As renters’ costs keep going up, I expect the allure of fixed mortgage payments and a more stable housing market will entice many more otherwise content renters into the housing market.”

However, those potential buyers must make a decision quickly because, as Kolko explains:

“Paying more on rent makes it harder for would-be homebuyers to save for a down payment.”

Bottom Line

Ryan Severino, a senior economist at Reis, in Olick’s article stated the obvious:

“Landlords should still be able to push asking rent increases on to their tenants.”

If you are thinking about buying a home in 2015 instead of continuing to rent, it probably makes sense.

I have a network of trusted professionals that I partner with, and all have one goal in mind: To make the selling and buying experience the best possible experience that it can be! Contact me at (214) 609-7123 or jtrump@kw.com

5 MIstakes That Could DECREASE The Value Of Your Home

Renovating or improving something too much sounds like an oxymoron, however when it comes to attracting a buyer and generating a return on investment, it is possible. The decisions you make may be best for you and your family, but it is crucial to consider the mindset of potential buyers.

Here are five common renovation mistakes that may decrease your home value:

1. Over improvement: Your home should be similar to other homes in the neighborhood. If your home costs much more than other homes in the neighborhood, potential buyers may choose that the updates you made do not outweigh the increased cost.
2. Over personalization:You may love bright paint, built-ins, and elaborate tiles but the potential buyer may see changing it as too much of a hassle. You want buyers to be able to picture themselves living in the home so it is helpful to have a neutral design aesthetic when you show your home.
3. Inconsistency: It is better to spend smaller amounts on many projects than spend a large amount of money on one project while neglecting other parts of the home. Instead of spending upwards of $30,000 installing a pool while keeping old and outdated appliances, it is a wiser decision to update the appliances.
4. Removing a wall: It may seem as though knocking down a wall between two small rooms to make one larger room is a no brainer but having more rooms is almost always better when it comes to increasing the value of your home. Your family may be smaller than the potential buyers and, for them, it may be better to have more rooms regardless of their size. Removing bedrooms can also decrease the value of your home. Turn an extra bedroom into an office or gym while you are living there, but switch it back to a bedroom when you are getting ready to sell.
5. Functional Obsolescence: Make sure that your renovations make sense. For example, potential buyers will probably not want to have the only way to enter one bedroom be to go through another bedroom. Another example would be turning a garage into a guest house. Although having a guest house might be better for your family, many families would prioritize having a garage.

Remember these mistakes when you are choosing renovation projects around your home. What seems like a good idea might not actually lead to a return on investment or, worse, may detract someone from buying your home.

Contact me for professional real estate services at (214) 609-7123 or jtrump@kw.com

Home Prices Continue To Rise

“Broad-based Slowdown for Home Prices”

That is a headline you might have seen over the past weekend. And though it is true, we must understand the story behind the headline. Case Shiller reports on the year-over-year difference in home values. Their latest report revealed that the rate of appreciation has slowed – not that prices are falling!! Here is exactly what they said:

“The 20-City Composite gained 4.9% year-over-year, compared to 5.6% in August.”

Prices are still up this month over last year’s values (4.9%) just not as much as they were last month (5.6%).

Home Prices are NOT Falling.

As a matter of fact, the latest Home Price Expectation Survey by Pulsenomics (a survey of a nationwide panel of over one hundred economists, real estate experts and investment & market strategists) showed that home prices will continue to appreciate for the next several years.

Bottom Line

Both first time buyers and families thinking of moving-up to their dream home can be assured that their investment in their new home makes sense.

For professional real estate services, call Jim Trump @ (214) 609-7123 or jtrump@kw.com

The Top 5 Benefits Of Using A Professional To Buy A Home

Every year the National Association of REALTORS releases their Profile of Home Buyers & Sellers, in which they reveal the results of a yearlong survey of buyers and sellers. The latest profile revealed what actual buyers saw as the benefits of using an agent during the home buying process.

Here are the Top 5:

#1: Helped the Buyer Understand the Process

Whether it is your first time purchasing a home, or you’re an experienced buyer, there are over 230 possible actions that need to happen during every successful real estate transaction. Having someone to guide you through the process who can simply explain what is going on at every step of the way was sited as the top benefit by 63% of all buyers (that number jumped to 83% with first time buyers).

#2: Pointed Out Unnoticed Features/Faults with the Property

When you start the process of buying a home, you may be too excited to see each potential home for what it is, good and bad. An experienced professional can help you realize the potential hidden gems or risks before you make an offer.  Nearly 60% of all buyers listed this as a major benefit of hiring a professional.

#3: Improved the Buyer’s Knowledge of Search Areas

Whether you are looking to relocate to a new state, or just across town, having someone who knows the neighborhoods in which you are looking can be an invaluable asset.

#4: Negotiated Better Sales Contract Terms/Better Price

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

#5: Provided a better list of service providers

A great agent has relationships with mortgage professionals, home inspectors, appraisers and other experts that you will need in securing your dream home.

Bottom Line

If you are considering purchasing a home, whether as a first-time or move up buyer, sit down with a local experienced real estate professional in your area and see what they have to offer. Contact me for professional real estate services at (214) 609-7123 or jtrump@kw.com

Will New Construction In My Neighborhood Alter My Homes’ Value?

The terms “seller’s market” and “buyer’s market” describe the party most likely to benefit from a real estate transaction in certain conditions; deriving from the basic economic principle of supply and demand. Put simply, when more houses are listed for sale than there are buyers willing to buy those houses, prices will go down. The opposite is also true. Here’s why.  

Where There’s Choice, There’s a Price Drop

When the Apple Macintosh computer, the world’s first affordable computer, was released in 1984, it cost $2,495. In today’s money, that equates to almost $5,500! How many people today would pay over $5,000 for a computer? Walk into a tech store and you can pick any number of models for a fraction of that cost.

The thing that has changed, of course, is competition. Basic economic theory suggests that if you have a large supply of a something, its value will go down. When there are more products for sale than buyers willing to purchase those products, suppliers must drop the price to attract the buyer and encourage a sale. In the real estate market, a large supply happens when there are more houses listed for sale than buyers willing to buy those houses. Buyers with multiple real estate options can bid down prices. More often than not a seller will accept a low ball offer because it is the only offer he will receive.

House values are determined by reference to the sale prices of comparable properties in the neighborhood. Over time, an oversupply will cause values to drop across the board.

New Construction Increases Housing Supply 

Housing inventory is in a constant state of flux, new construction; conversion and renovation add to the housing stock, which happens at local, regional or national level. For example, housing may be in short supply across the state but a popular city within that state might experience an oversupply of new development. All things being equal, a glut of new construction property in your neighborhood will increase supply and depress property prices. But supply is only one side of the equation. The concept is meaningless unless you also consider buyer demand.

Factors that Affect Housing Demand   

Multiple factors affect demand for housing, the primary factor being population. If a neighborhood experiences a population boom, demand for housing will increase. This frequently happens when a new employer moves to an area or a school district boasts outstanding results. In this scenario, new construction is needed to meet demand for housing. As long as demand keeps pace with supply, the value of local properties will not fall. In fact they will probably rise, particularly if the new development boosts the desirability of the area or signals that the neighborhood is on the up.

Another factor that affects housing demand is the buyer’s purchasing power. In a growing economy, workers typically experience greater job stability and rising wages. Homebuyers are more likely to qualify for mortgage financing, especially if interest rates are low. Existing homeowners find themselves with the cash to trade up, and people who previously rented can finally place their feet on the property ladder.

The opposite is also true. In a falling economy, wages stagnate. If inflation is high, true wages fall. Home seekers may struggle to get mortgage finance and demand for housing is typically weak. Listed properties may linger on the market without a sale. Over time, reduced demand will cause prices to fall.

The Verdict? 

New construction in a neighborhood may raise prices, reduce prices or have no effect at all. The outcome depends on the number of buyers and homes in the market, the quality of the subject property and external factors such as interest rates and attitudes to lending. The only way to figure out the true value of your property is through a comparative market analysis, which takes account of supply and demand factors in your local market. I would be happy to prepare this for you with no obligation.

For professional real estate services, contact The North Texas Home Hunter @ (214) 609-7123 or jtrump@kw.com