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How to Pick a Friendly Neighborhood

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | July 1st, 2020

Two years ago, Skylar Olsen and her young family moved from a townhouse in a hip Seattle neighborhood to Bainbridge Island, a bucolic part of western Washington state. There they selected a much more spacious, 3,000-square-foot house on a cul-de-sac in a freshly constructed subdivision.

Until recently, Olsen and her husband were doing the arduous daily commute by ferry to their offices in Seattle. But fast-forward to the COVID-19 era, and the couple, now working solely from home, are thrilled to be living in a friendly, family-oriented area where they’ve established many fulfilling relationships with other residents.

“It turned out to be a blessing we chose to live on the periphery in such a welcoming neighborhood,” says Olsen.

Olsen, an expert on housing trends, says the sort of lifestyle her family selected is what an increasing number of current buyers have come to favor during the new work-from-home era, when close-knit communities are highly prized.

“Social support from neighbors is so much more important now that most of us aren’t going to an office, a gym or any other places where we could get our social needs met,” says Olsen, the senior principal economist for Zillow, which tracks real estate markets throughout the country.

Despite the recession, housing experts say home sales have been unexpectedly strong this summer, powered in large measure by millennials motivated to move to a larger space in a congenial community setting.

“Through June, the housing recovery has been just frankly remarkable,” says Ivy Zelman, who tracks homebuilder stocks for Zelman & Associates, the New York-based research firm she heads (zelmanassociates.com).

As Zelman notes, near-record-low mortgage rates are a major driver keeping home sales strong. Although furloughed employees typically can’t qualify for a home loan, many who are lucky enough to retain well-paying jobs suited to remote work are now on the prowl for a different property more suited to their evolving lifestyles.

Here are a few pointers for buyers:

-- Investigate the “social culture” of any neighborhood you’re considering.

Mark Nash, a longtime real estate broker and analyst, says buyers who want a friendly, interactive community are well advised to spend some time there looking for less-than-obvious clues about how people relate.

“Even the most prestigious neighborhoods can have real issues,” says Nash, noting that just a few problematic residents can create problems for an entire community.

“It only takes a couple of curmudgeons to make everyone a little sour. A couple of intense ‘partyaholic’ guys could also spoil a neighborhood,” he says.

To learn more about the underlying social dynamics of a community, don’t hesitate to go door-to-door and strike up conversations with residents, or talk to local shopkeepers. Ask them about the pros and cons of living in the area.

-- Visit the neighborhood on multiple occasions.

Nash, the author of “1001 Tips for Buying and Selling a Home,” suggests that those with a strong interest in a community visit the area at varied hours to look for patterns of human behavior. Also consider visiting on a weekday as well as the weekend.

“Walk or drive through the neighborhood four times in a day -- during the morning, at mid-afternoon, at dinnertime and at 11 p.m. Notice whether people are relating to each other or staying holed up in their homes nearly all of the time,” he says.

In some neighborhoods, residents are superficially friendly yet don’t build in-depth relationships.

“Perhaps you’ll see people out walking their dogs who smile and wave to each other. But they seem too busy to stop and communicate,” Nash says.

-- Consider a brand-new development where friendships are still forming.

Are you interested in moving to a subdivision that’s still under development, but fear it could be an unfriendly place to raise your family? If so, Nash suggests you learn more about the community before rejecting it based on what could be an unfounded belief.

Granted, brand-new communities are often populated by two-income families with parents in their 20s to 40s who have demanding daily schedules. Still, many who move to these new areas are highly motivated to build lasting friendships with neighbors.

“Another positive is that in a brand-new neighborhood, everyone comes in from the same starting point. There’s no established social hierarchy for a newcomer to break into,” Nash says.

-- Realize that friendship is inevitably a reciprocal activity.

Those with a support structure within the immediate radius of their home have many advantages. Not only can they borrow the cup of sugar they need to finish that batch of cookies they’re baking, they can also find neighbors to help ensure the security of their home when they’re away on vacation, for example. Most important, they can count on help in an emergency situation.

But as Nash says, moving to a friendly neighborhood won’t guarantee you develop a strong support structure unless you invest time and energy in creating positive relationships that are genuinely give-and-take. You need to socialize during times of celebration as well as times of need.

“All good relationships are inevitably reciprocal. So, unless you’re interacting with your neighbors continuously, it’s unreasonable to expect they’ll be much help when you’re in a bind and need them terribly,” he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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Buying Tips in a Weird Market

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | June 24th, 2020

All this spring, a couple in their mid-30s struggled to buy their first home. They were exasperated with their landlord and eager to move to a handpicked neighborhood where their boys, 10 and 11, could attend top-ranked schools. Yet due to COVID-19, the spring market proved a bust for this young family.

“In five multiple bidding situations, they lost out to other buyers. They were extremely disillusioned,” recalls Neil Corkery, the buyer’s agent who assisted the couple.

As it worked out, this true tale had a happy ending. Through quick action a few days ago, these buyers were finally able to secure a property. They did that with a full-price offer on a diminutive gray rancher with three bedrooms and an attached one-car garage.

This is an acutely frustrating time for many buyers. It’s also a puzzling period for first-timers who wonder why, in the midst of a recession, the housing market remains highly competitive in many areas.

“The problem is, lots of buyers are now rushing forward because they believe mortgage rates are the lowest they’ll see in their lifetimes. The other issue is there’s a serious shortage of available houses, because many potential sellers don’t want buyers trooping through their property until COVID is over,” Corkery says.

In reality, of course, some would-be buyers are also waiting on the sidelines until there’s greater certainty about the direction of the overall real estate market. And economists say this position also has validity.

For example, at Moody’s Analytics, the financial services firm, chief economist Mark Zandi is forecasting a “cooling off” of home price appreciation later this year due to macroeconomic pressures.

Here are a few pointers for buyers:

-- Keep your emotions under control when shaping a bid.

Joan McLellan Tayler, who owned a realty firm for 15 years, says would-be buyers who in the past have lost houses to other bidders are sometimes prone to rush into a deal they might later regret.

“Without quick action, they fear they’ll be shut out of the market altogether,” says Tayler, the author of several real estate books.

Granted, buying a home is currently a competitive activity in many neighborhoods. But, she says, every property should be evaluated on its merits, not on the number of people vying to own it.

Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies,” suggests buyers set a ceiling on how much they’re willing to pay for a property before making an opening bid. This is especially important if one partner in a couple is likely to get carried away with a “must have” house.

-- Research neighborhoods through local residents.

Your agent should be helpful in sorting through property listings, making sure you identify the most promising homes available.

But once you have your eye on a particular place, it could be the time to talk to those who know the community best: residents.

“Believe me, most neighbors will bend your ear about their neighborhood. For example, they’ll tell you if they like or hate the local schools and the ages of kids who live in nearby homes,” Tyson says.

-- Educate yourself on local property values.

If you’re uneasy about the price tag attached to a property you like, have your real estate agent show you several comparable homes that are also on the market, including those “under contract,” Tyson says.

Resourceful buyers might even go a step further by asking people who’ve recently bought into the neighborhood whether they would mind giving them a peek inside.

“Drop a little note in their mailbox telling them you’re interested in the neighborhood, and leave your names and phone number in case they’ll let you come by,” Tyson says.

What’s the advantage of evaluating the price and quality of freshly sold homes? In areas where home prices are rising, the latest sales are the most telling, more so than transactions that occurred months ago, he says.

-- Visit enough properties to make an informed comparison.

Even if the first place you see looks perfect, you’ll want to ponder alternatives to make sure you have a basis of comparison, says Tyson, who recommends that home shoppers look at a minimum of six properties before they buy.

Due to COVID-19, many more sellers are now offering virtual tours, or you can go inside properties with the proper protective gear, including masks and gloves.

“Buyer’s remorse is much less likely if you’ve examined several options, even if you must do so in a single day,” Tyson says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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How to Minimize Risk When Buying a Home

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | June 17th, 2020

The economy is officially in recession, 30 million Americans are collecting unemployment benefits, and COVID-19 deaths continue to rise. Meanwhile, the number of young adults applying for mortgages to buy a home is skyrocketing. Economists who track real estate are amazed.

“The housing market has displayed incredible resilience,” says Danielle Hale, chief economist at Realtor.com, the national real estate listings website.

Hale is one of a number of housing economists expressing surprise at the strong rebound in buyer demand. At the Mortgage Bankers Association (mba.org), forecasting specialist Joel Kan notes that in recent days home loan applications have risen to the highest level in more than 11 years.

Kan says the current homebuying surge is largely attributable to demographics and the fact that many in the millennial generation -- a cohort already entering their late 30s -- still have yet to buy a first home.

“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” Kan says.

But the reality is that many millennials have suffered financial setbacks due to the pandemic, making it tougher for them to fulfill their housing aspirations. To make up for lost income, Hale says numerous young adults have had to dip into accounts earmarked for a down payment.

Take the true story of a couple in their 30s -- a landscape designer married to a medical assistant. The medical assistant was furloughed by her hospital in March, and it took her weeks to obtain unemployment compensation. During that difficult period, the couple had to rely in part on savings to meet regular expenses. That postponed their dream of acquiring an exurban cottage surrounded by enough land to plant a huge flower and vegetable garden.

Yet, despite the delay, the couple is as driven as ever to fulfill their housing desires. And they have reason for optimism, because the medical assistant’s hospital expects to soon recall her to work. Meanwhile, the pair have resumed house-hunting and are back in contact with their mortgage lender.

Not all young would-be homeowners are as sanguine about their prospects. And others are weighing the pros and cons of moving forward with a purchase in the near future, given lingering uncertainties about the economy.

“Some young buyers are gung-ho and can’t wait to get the keys to their new house. Because we’re short on available homes in hot neighborhoods, we’re witnessing multiple bids for entry-level property. But some qualified buyers are still waiting in the wings,” says Michael Crowley, an independent real estate broker who works exclusively with buyers and takes no listings.

Crowley, a past president of the National Association of Exclusive Buyer Agents (naeba.org), counsels wannabe buyers who are solidly employed to persevere with their plans while at the same time making sure they don’t overpay for a property or get themselves into too much mortgage debt.

Here are a couple of other pointers for novice buyers:

-- Review your personal economy before deciding what to buy.

Would buying a well-priced home in a strong neighborhood be a good financial bet for your household if your monthly mortgage payments are a major stretch for you to afford? Probably not, says Eric Tyson, a personal finance expert and author of “Let’s Get Real About Money.”

Despite stringent credit standards, Tyson says it’s still possible for many buyers to qualify for a larger mortgage than their situation warrants, thereby placing them at risk of a future default. That’s because the lender knows less about their financial obligations and spending habits than they do.

Before committing to any purchase, it’s always wise to first take an in-depth look at your budget and assess your level of job security. Is your current position at risk? Do you have easily marketable skills that would allow you to quickly get another job if you had to?

-- Consider neighborhood property values before you bid.

Researching local property values before you bid on a home is critically important these days.

To reduce your odds of overpaying for a particular place, Crowley recommends you ask your agent to provide you with information about similar homes that have sold recently -- ideally within the last six months or still more recently.

But data on comparable sales won’t give you the whole story. These days, you also need numbers to track the direction of the market. Ask your agent to give you data on the median price of a home sold this past month versus the month prior. Also ask for median-price comparisons on an annual and yearly basis. These statistics should give you a good feel for the trend.

Use these data when crafting a bid for a property you like. If selling prices have been rising in the neighborhood where you’re searching and inventory is scarce there, you could lose out to rival bidders if your offer comes in lower than market level.

“Lately, many sellers have been holding out for the stronger market they anticipate in 2021. Because many owners are in this wait-and-see mode, there are fewer listings on the market than at many other times. Strange as it seems, we’re in something of a seller’s market despite the recession,” Crowley says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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