First Time Homebuyers

Oct. 2015 Housing in Greater Louisville

The Greater Louisville Association of Realtors® (GLAR) reported year-to-date sales up 12.2% with 13,896 homes and condos sold versus 12,383 at the same time last year. Sales were up 5.1% in October 2015 (1,416 units) compared to October 2014 (1,347 units). The median price for all areas in October 2015 was up 6.3% compared to October 2014, and the year-to-date statistics continue to show a 5.8% increase in values. In Jefferson County, the average price was $189,428 and the median was $155,000. For all MLS areas, the inventory of available properties was 17.3% lower than at the same time last year.

GLAR President Greg Taylor commented that, “Continued low inventory in Louisville means that accurately priced, move-in ready homes are selling quickly.” At the national level, Lawrence Yun, Chief Economist for the National Association of Realtors® commented that despite persistently low mortgage rates and a healthier job market, the first-time homebuyer rate remains suppressed. In the recent survey of Home Buyers & Sellers, debt was cited as the primary reason for the delay in home ownership. However, 64% of first time buyers said their primary reason to purchase a home was a “desire to own,” compared to a figure of 53% last year, which could be a positive indicator heading into 2016.

Click here for October 2015 Stats

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Young Buyers Prefer Walkable Communities, Says REALTOR Survey

Most potential homebuyers are not only looking for the perfect home, they are also looking for the perfect neighborhood. According to the National Association of Realtors® 2015 National Community and Transportation Preference Survey, when Americans think of their dream neighborhood they often think of a mixed-used, walkable community.

Realtors® are community builders and understand the complexities that go into creating a strong and successful community. “While there is no such thing as a one-size-fits-all neighborhood, more and more Americans, especially younger ones, are being drawn to mixed-use communities with a combination of homes and business and walkable areas.

Walkability is defined as a measure of how friendly an area is to walking. Can someone go grocery shopping on foot? Are there shops and restaurants within walking distance? Are there plenty of sidewalks, and are they well maintained? These are all factors taken into account when determining an area’s walkability.

According to the survey, millennials, those aged 18 to 34, prefer walking as a method of transportation by 12 percentage points over driving. Millennials are also the generation most likely to make sacrifices to purchase a home in these types of communities, such as buying a smaller home or buying a house without a backyard.

Younger buyers are looking for communities where they can walk to a restaurant and don’t have to drive to pick up their weekly groceries. However, it is not only millennials who are hoping to move into walkable neighborhoods; these preferences are seen across generations.

Based on the survey, women of all generations are more likely than men to show a preference for walkability, with 61 percent saying that the availability of sidewalks in a community with stores and restaurants to walk to is very important to them. And 48 percent of all respondents answered that they would prefer to live in communities containing houses with small yards but within easy walking distance of the community’s amenities rather than living in communities with houses that have large yards but are driving distance to all amenities.

As their preferences shift from the suburbs to urban centers, homebuyers continue to rely on Realtors® to help them find their dream homes and neighborhoods. Realtors® are the most trusted resource for real estate information and have unparalleled knowledge of local markets and conditions, helping their clients to fulfill their real estate goals.

Tips for Buying a Home with Friends

With housing inventory low and prices going up, some people are making the decision to partner with friends and buy a home together. This scenario allows people who otherwise would not be able to afford a house to share expenses and achieve the dream of becoming homeowners. But how do you know if buying property jointly is the right move for you?

It is important to remember that this is a business transaction, so you and your friends will have to approach it as such. You are going to have to have a very open, very frank conversation with your friends about their finances, their plans for the future, what to do if someone wants to sell, etc.If these are conversations you are uncomfortable having or you are worried about the effect they might have on your friendship, then buying a home with friends is probably not the right choice for you.

However, if you and your friends can come to terms, owning a home while sharing the burden of all the costs can help you build your savings while gaining equity in a home.

Here are some tips on purchasing a home with friends:

Review your friends’ finances. This is most likely the largest financial decision of your life, so now is not the time to hem and haw on questions of finance. You will need to be aware of everyone’s credit scores, income, savings and any other relevant assets. It is important to make sure that you and your friends are financially prepared to become homeowners.

Decide how payments and costs will be split. Questions to consider are how much each person will contribute to the downpayment and if that will affect how you and your friends divide the mortgage payments? Will the utilities be split evenly every month or will you alternate who pays? It is important that these details be worked out and understood by everyone involved before the home is purchased.

Decide on the type of house. Are you planning on buying a single-family home or a multi-family home? Do you see yourself sharing a kitchen and bathroom, or are you looking to buy a place where you will each have your own private residence? You should also decide ahead of time on everyone’s must-haves for the home. Knowing that your friend will only buy a house with a big backyard or that they will not buy a house on a corner lot can save you a lot of time house hunting.

Get everything in writing. It is important that all of the co-purchasers keep written documentation of all of your agreements regarding financial and other responsibilities. So many people think that because they are dealing with friends that there is no need to write up a contract, but it can help you to avoid conflicts and surprises down the road.

Work with a Realtor®. Buying a home is an important decision, and whether you are doing it on your own or with a friend, using a Realtor® is a smart move. A Realtor®, a member of the National Association of Realtors®, can provide counsel, discuss listings, show you homes in person, negotiate on your behalf and help you stay focused on the issues that are most important.

If you enter the arrangement educated and prepared, co-purchasing a home can be a great way to get your foot on the first step of the homeownership ladder.

Louisville 2014 Home Prices up 2.7% with Slightly Fewer Homes Sold

With sales up 4.8% in December 2014 compared to December 2013, members of the Greater Louisville Association of Realtors® (“GLAR”) finished the year selling 14,486 homes compared to 14,775 in 2013 (down 2.0%). The year-to-date average and median prices were $180,200 (up 2.7%) and $147,000 (up 2.8%) respectively. The inventory of homes available for sale remained tight with approximately 11% fewer for sale than December 2013.

GLAR President Paula Colvin commented that, “members were actively helping homebuyers take advantage of low interest rates, which showed in the 25% increase in the number of contract signings in December 2014 versus the same month last year. Early data in January shows a positive trend continuing into the new year.”

At the national level, Lawrence Yun, Chief Economist for the National Association of Realtors®, recently remarked that even in the face of tight underwriting standards, today’s low interest rates have contributed to an increase in the share of first-time homebuyers to 31% (up from 28% in 2013). Recently reduced FHA mortgage insurance premiums and a 3% down conventional loan program should facilitate continued first-time buyer activity in 2015. Realtor.com recently spotlighted the return to normal price appreciation and the decline of distressed sales as positive trends in 2014. The same report also highlighted the ongoing challenges of limited inventory and the modest recovery in homebuilding, with new home sales comprising 9% of the national market compared to the longer term trend of a 16% share.

December-2014-Release

Realtors’® Market Predictions for 2015

As we welcome in the New Year, we also welcome more positive predictions for the housing market. After years of slow and steady recovery, in 2014 the U.S economy saw its best year since the 2008 recession. With the economy continuing to show improvement and income levels seeing growth, housing experts and economists have high hopes for 2015. After seeing so much improvement in 2014, the housing market seems poised for a real comeback in 2015. Prospects are looking bright for homeowners and prospective home buyers.

Here are a few trends and predictions the Greater Louisville Association of REALTORS expects to see play out in the coming year.

Lending standards will be loosened. In December 2014, Fannie Mae and Freddie Mac announced they will be offering 3 percent down payment mortgages, rather than 5 percent. Many potential buyers simply do not have the resources to save for a substantial down payment. This new program will allow first-time, creditworthy buyers, who would otherwise be kept out of the market, to purchase a home.

Mortgage rates will go up. With the economy improving, the Federal Reserve has indicated that they will be increasing the federal funds rate in 2015. This rate has a substantial impact on mortgage rates, which have been at historic lows for the past few years. This means that if you are considering buying a home or refinancing your mortgage, now is the time. The rates will likely increase as the year progresses.

Millennials will enter the market. As the economy continues to make gains and the job market improves, millennials (ages 25-34) will start forming households and entering the housing market. Millennials began to enter the market in 2014, but as the job market continues to improve and rent prices continue to rise millennial’s involvement in the housing market will likely increase. Combining that with opportunities for lower down payments, it’s a prime time for young people to enter the market.

Housing inventory will increase. Builders will begin to ramp up production in 2015. This increase in inventory should help improve choices for consumers, another potential draw for first-time buyers.

For more information about the 2015 housing market contact a Realtor®, whose expertise and local market insights can help make your home or investment dreams happen in the year ahead.

How to make the best purchase offer in a seller’s market

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You’ve worked with a Realtor® to scour the listings, toured what feels like a million houses and finally found it: the house you want to call home. The next step is to make your purchase offer, and if you are like most people, the prospect can be quite intimidating. In a seller’s market, there can be even more pressure on the buyer to submit an impressive bid. So how can you make sure that the offer you submit is the one that is accepted?

In a seller’s market, home prices are a bit higher and inventory is lower. This means you are more likely competing with multiple bidders. In a competitive market like this, sellers need every advantage they can get, and working with a Realtor® to make the best purchase offer is a smart move. And, believe it or not, the bid with the highest price is not always the one that wins.

Of course sellers want to get the best price for their home, but that isn’t always the deciding factor. Eliminating or reducing the number of contingencies with your bid, through things like pre-offer inspections, can also help make your offer stronger. The bid that causes the least amount of hassle for the seller is the one that will probably win.

That doesn’t mean, however, that you should just submit a below market offer with no contingencies. This is not the time to make a lowball offer. When you are going up against more than one potential buyer, it’s the time to put your best foot forward. This might be your one chance to convince the owner to sell their home to you, so it’s all the more important to submit your best possible purchase offer.

If you can pay cash for your home, chances are your bid will be accepted. Sellers’ appreciate all-cash offers as they usually mean a quick, streamlined purchase. Financing issues, such as delays in mortgage approval or getting funds moved from the buyer’s bank account, are the primary causes of delays in the closing process. If a seller can avoid a lengthy or complicated process by choosing an all-cash buyer they likely will.

For most people, however, a cash offer isn’t a possibility, and you’ll need to qualify for some variety of mortgage financing. If this is your situation, get preapproved for a mortgage before you begin the search process. With loan preapproval, you’ll be able to make a solid commitment to buy, and your offer will be more appealing to the seller.

And of course, the most important thing that you can do to give yourself an advantage is to hire a Realtor®. Realtors® have real insights and unparalleled knowledge of your local market and can help you navigate the complicated home buying process.   Click here for more.

What do Millennials Want From A Realtor?

The numbers are in and Millennials take the top spot as the largest group of recent home buyers in the U.S. According to the 2014 National Association of Realtors® Home Buyer and Seller Generational Trends study, which evaluates the generational differences of recent home buyers and sellers, Millennials (those age 33 and younger) comprised 31 percent of recent home purchases.

“Millennials are the largest generation in history after the baby boomers, and since many still aspire to one day invest in their future through homeownership, they will drive future housing demand,” said NAR chief economist Lawrence Yun.

Despite having a reputation of not wanting to put down roots, this generation still very much sees homeownership as part of the American Dream. What exactly is this age group – most of whom are likely to start their home buying search online – hoping to gain from working with a Realtor®?

Getting information from the Internet is a lot like trying to take a drink from a fire hydrant. Young buyers are looking to Realtors® to help them understand and interpret all this information, given them insights into everything that goes into the home buying decision, and guide them through the process. This is the largest financial transaction of their lives, so they are looking for someone they believe is honest and trustworthy.

This means that they are most likely to hire their agent based on a reference from a friend or relative. As this is probably their first venture into the real estate market, a recommendation from mom or dad, or perhaps a good friend who just went through the process is going to carry more weight than any online reviews. While Millennials want to enter the market, this generation does face some challenges on their path to homeownership. Twenty percent of Millennials polled said that they would have a hard time saving for down payment, citing student loan debt as their main financial hurdle. That, along with the challenges of tight credit, limited inventory, and the possibility of rising interest rates, can limit the options and ability for young people to own.

However, these issues aren’t changing young buyers’ attitudes about buying a home. This generation truly appreciates the long-term benefits and economic security of homeownership; 87 percent polled say they consider their home purchase a good financial investment. They also understand the issues currently affecting the market, and that they may have to be flexible to make owning their own home a reality.

Realtors® know that younger people often need to make compromises to get into their new home and can help guide buyers to achieving their goal of owning their own property. Desired size and location are usually negotiable when buying a home and most buyers are willing to make financial sacrifices if it means they can make this important investment in their future.