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Recent Real Estate Market Report

by Tom Stachler,ABR,CDPE - Group One Realty Team

April sales took a nice jump, gaining back some of the delayed sales from January through March. Although spring sales are moving up, the combination of fewer homes to purchase and reduced Buying power will keep sales from making up all of the decline we saw in the first quarter (compared to last year). We still see 2014 as a strong real estate year across all markets and price ranges, however about 5-7% down from last year in terms of total homes sold.

One of the biggest logs in the dam holding back a flood of new listings is the seller’s “Move Up Spiral.” With many homes selling quickly, sellers are afraid to put their Home on the market until they find a home to buy to avoid an intermediate move. Imagine if all sellers held back for that reason, there would be very few, if any, homes to purchase. On the other hand, if all of those sellers let us know of their intent to sell (even if they did not specifically put their home on the market), our matchmaking skills would take over, creating additional sales and breaking up the log jam. We do see this now, with about 10% or more of our sales “creative,” meaning transactions where the properties were not specifically on the market.

We have successfully used sales contracts with extended closing and occupancy dates to give sellers more time to look for a home and many sellers are arranging for an interim move. Although not convenient, it does give sellers certainty. Our most successful strategy has been simply reaching out to homeowners in targeted areas via mail, social media or even door to door with messages about the new home needs of our sellers (aka hesitant buyers) to find that other reluctant seller whose home fits our clients’ needs. 

One area to watch is some creeping overconfidence on the part of some sellers as a result of media and our own discussion of double-digit appreciation and bidding over asking price. Values are rising quickly and 68% of all home listings are selling in 90 days or less. However, homes are still selling on average at 96% of list price, so buyers are aggressive, but within a relatively narrow value range. Buyer activity is always the best gauge of whether a home is at the right price point. Under the current market conditions if the property is priced correctly, showing activity should be immediate and there should be at least one offer in the first 30 days (markets over $500,000 will have a slower activity pace).

Our monthly charts break down the markets by under and over $100,000 segments. If we move upstream a bit in price the differences in markets become even stronger. Here is a snapshot of the market change from April of 2013 using a $200,000 price point. Both are moving in the same general direction but at different paces: the inventory levels under $200,000 show dramatic declines, while the over $200,000 is more modest. A buyer looking in either segment will experience some inventory frustration.

I am happy to announce that my brokerage ranked #8 in the nation in number of transactions for 2013 as well as #1 in Michigan. 

Thank you very much for your business and support!

 

The Biggest Turnoffs for Homebuyers

by Tom Stachler,ABR,CDPE - Group One Realty Team

When you have your Home on the market and you're looking for a buyer, every little detail counts. You need to be aware of the biggest turn-offs for homebuyers so that you don't have to worry that a small detail you've overlooked is scaring off buyers who might otherwise be ready to make a decent offer on your property. A few simple touchups on your home will make a big difference if you've unknowingly left one of the following turn-offs visible to those who come to view your home.

  • Outdated décor features– When was the last time you put some thought into the interior décor of your rooms? Potentials buyers might be making note of the dated look of your home. Even subconsciously, buyers might be put off from making an offer on your home because you need to have your appliances, furniture, or décor modernized.
  • Cluttered interiors– If you've always preferred a comfortable sloppiness in your home, you might want to reconsider while your home is on the market. A cluttered interior can detract from the appeal of your home in a variety of ways. It could make your home look less spacious and less clean. Take a look around. If you can't see a lot of open floor or table space, you might want to put some thought into clearing away the clutter and letting your beautiful property shine through.
  • An unrealistic asking price– Of course, everyone who is trying to sell a home wants to get a good offer that will make their original home purchase a good investment. However, it's important to realize that you might come across as overly demanding if your asking price is something that no one is possibly going to be willing to offer you on your property. If your home has been on the market a while without any offers, try lowering your asking price and see what happens.
  • Overdue maintenance– When you're showing your home, you might assume that simply explaining that a bit of imminent maintenance is needed will be considered an inconsequential detail by would-be buyers. However, they might actually read a lot into the fact that you've been putting off maintenance and become suspicious that the property has not been well maintained throughout your residency.

Once you've remedied the biggest turn-offs for homebuyers mentioned above, you might be presently surprised to receive a long-awaited offer.

National Existing Homes Sales the Strongest in 7 Years

by Tom Stachler,ABR,CDPE - Group One Realty Team

There is some good news for individuals who are currently trying to sell their Home. According to recent statistics, home sales are now the strongest they've been in the last seven years. While the national real estate market has clearly gone through some tough times since the 2008 recession began, there is some pent-up demand for home sales that is fueling a slow but steady recovery. Record low interest rates and a slight rise in resales this past December show that those who are currently trying to sell a property have a considerable chance at finding a buyer in the coming months. 

Home sales in 2013 show that home sales of existing homes have been the strongest in 7 years, which is bringing some optimism to the real estate industry as a sign that the market is gaining health. Home resales rose through December, as was expected according to a poll of economists given by Reuters earlier in 2013. Although resales had gone down due to increases in the interest rates of mortgages, there has been some new development activity among builders that shows that the demand for properties is out there despite multi-decade lows in household formation.

The obstacles that the housing market still faces include rising prices in combination with the fact that incomes do not seem to be growing proportionally across the country. Despite the fact that home sales were the strongest in 2013 that they have been in seven years, the median price for an existing home has risen alarming– by almost 10 percent– between December of 2012 and December of 2013. 

The rise in home prices can be attributed to the fact that there is a shortage of available homes on the market. Due to market uncertainty, many homeowners who would otherwise put their homes up for sale are reluctant to attempt to find a buyer. The number of unsold properties on the market has fallen significantly over the last few months, and scarcity in available prices is contributing to rises in home values.

However, the pick-up in the market that was shown in 2013 will hopefully continue and encourage would-be sellers to put their homes up for sale. Ideally, this will lead to a stabilization of home prices across the country. 

Energy-Efficient Mortgages

by Tom Stachler,ABR,CDPE - Group One Realty Team

Homeowners who are interested in improving the efficiency of their homes can consider taking out an energy-efficient mortgages. Energy-efficient mortgages are loans that can be taken out to finance upgrades on a Home that will benefit both the homeowner and the community by working to reduce the carbon footprint of the property. Typically, expenses involved with making the upgrades are added to the overall mortgage loan so that additional loans do not need to be taken out by the homeowner to make the upgrades.

An important aspect of an energy-efficient mortgage (or an EEM) is that they can feature exceptions to debt-to-income rules that restrict homeowners from taking out additional financing. Therefore, a homeowner who takes at an EEM can borrow more money to put toward his or her home than would be possible through a traditional mortgage. These exceptions are justified due to the fact that- despite the fact that initial expenses will be higher- the EEM should reduce the cost of living in the home and maintaining the home over time. However, taking out an EEM requires an energy audit carried out by a recognized expert to prove the benefits of the proposed energy-efficient upgrades.

There are three types of EEMs: the conventional EEM, the Federal Housing Administration (FHA) EEM, and the Veterans Administration (VA) EEMs. Below is an explanation of each type.

  • Conventional EEMs- This is the most common of all of the different EEMs. When a lender is determining whether or not a given energy-efficiency update can be financed, that lender can factor the future energy savings that will be brought about by the update into the borrower's income when determining the borrower's debt-to-income ratio. In this way, the homeowner can borrow more money and still be within applicable debt-to-income rules.
  • FHA EEMs- There are a variety of different underwriting conditions that need to be met for a homeowner to take out a FHA EEM. Through this type of EEM, the homeowner can borrow whichever amount is less: the overall expenses involved with the improvements/inspections, or the lesser amount of either 5 percent of the property's value, 115 percent of the median price on a single family home in the area, or 150 percent of the loan limit specified by Freddie Mac.
  • VA EEMs- This type of EEM is available to qualifying veterans, and it can consist of a loan of anywhere between $3,000 and $6,000.

Four Spring Projects to Boost Your Home's Curb Appeal

by Tom Stachler,ABR,CDPE - Group One Realty Team

Spring is a great time to get to work on the following four spring projects to boost your Home's curb appeal that can help improve the exterior appearance of your home. The warm weather means that more people will be out and about in your neighborhood, and you might want to put some effort into making your home look presentable from the road- especially if it's currently on the market and you're looking for a buyer.

Consider the following four maintenance projects if you're keen on making your home look great this spring:

  • Implement a landscape design- Unfortunately, many homeowners engage in landscaping efforts as something of an afterthought. Yet if you get started in the spring, you can revolutionize your home's landscaping and make it so that you're home's surroundings grab the attentions of passersby.
  • Make some touch-ups- As time goes on, the paint job on your home will begin to look aged. A great way to drastically change the appearance of your home through one simple home improvement job is to repaint or touch up the paint job on the exterior of your home. You should also consider pressure washing the surface of your home's exterior to prevent infestations of mildew or mold.
  • Fix up your roof- Any flaws on the roof of your home are very noticeable to those viewing the exterior of your home from a distance. Not only do saggy gutters and missing or damaged shingles look bad, but they can also make your home susceptible to the elements. Protect your home from leaks and other water damage caused by an aging roof by fixing up your roof and gutters this spring.
  • Fence off your yard- If there is a fence that marks your yard's boundaries, you should pay attention to how it's looking. A fence that looks old and damaged can give a home a rundown look. A simple paint job or a pressure washing can work wonders in improving the appearance of your fence. Best of all, this job doesn't typically take up much time. Fixing up your fence should be doable in a weekend, but it makes a big difference in the appearance of the exterior of your home.

You're got plenty of time to engage in one or all of these four spring projects to boost your home's curb appeal to make your home look great this summer!

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Tom Stachler
Real Estate One, Group One Realty Team
555 Briarwood Circle
Ann Arbor MI 48108
Direct: (734) 996-0000
Fax: (734) 661-0102