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Making the Right Home Purchase in Changing Times

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | August 12th, 2020

Due in large measure to the pandemic, Americans’ preferences on where and how to live are clearly evolving, according to real estate specialists.

“We are at the dawn of a great reshuffling,” says Rich Barton, CEO of Zillow, which tracks housing markets throughout the country.

The living patterns that have taken hold as a result of COVID-19 are persuading millions of people -- those who can afford to buy in an uncertain economy -- to consider moves to larger and less urban spaces. With so much time now spent at home, many have recast their priorities.

“Home offices are in high demand. Backyards are more desirable than parks and gyms. Work-from-home policies are eliminating the commute for many. There’s an endless list of considerations,” Barton says.

Take the case of an engaged couple in their early 30s who work for New York-based finance firms. Last year, they intended to make their first purchase a city condo. But after discovering the delights of working remotely in an exurban location, they now expect their initial property to be a spacious suburban house with two home offices and property sizable enough for an in-ground pool.

Tom Early, a veteran real estate broker, doesn’t know the engaged couple in this true story. But he says they’re typical of many wannabe homeowners, whose priorities are now in flux after months working from home.

“A lot of these folks are even surprising themselves about their changes of heart. Last year they wanted city, city, city. But many months working remotely have altered their thinking on the best way to live,” says Early, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

Besides their enthusiasm for the freedom that comes with working remotely, many buyers are also excited by the chance to get a more spacious house for their money, due to near-record-low mortgage rates.

“People who didn’t imagine ever affording (a) 4,000-square-foot house with a gigantic kitchen can now picture that -- assuming they grab a low-cost mortgage and head miles outside the city,” Early says.

Stacy Berman, a longtime agent affiliated with the Residential Real Estate Council (crs.com), understands the zeal of young adults with solid jobs who are now considering a move to a less-populated town or outlying area. Like the engaged couple, many believe they’ll be allowed to continue working from home indefinitely.

But Berman urges such would-be buyers to project how their lives -- and priorities -- could well change after the pandemic and whether they will indeed always work from home full-time.

“If you’re thinking of moving amidst all the current upheaval, this shouldn’t be a one-year plan. You want to stay in the new house for a minimum of five years,” says Berman, noting that an outlying community that might seem appealing during the pandemic could have less allure once the lockdown era is over.

“People planning to move need to avoid making a rash decision about their future lifestyle. After COVID-19, ask yourself if you’d rather live where you can walk to a Starbucks or where everything is car-dependent and there’s no public transit,” she says.

Making a careless home-buying choice could also carry financial risks, particularly if you decide to move again in just a few years. Home prices are still ascending in many areas, but there are no guarantees on appreciation, says Robert Shiller, a Yale University economist and Nobel laureate well known for his housing valuation forecasts.

Shiller isn’t advising against a home purchase in the current market. Yet he cautions buyers against the assumption that “the boom times for housing will go on forever.”

Here are a couple of pointers for buyers:

-- Check out the economic trends for areas you’re considering.

National economic predictions are of less value to buyers than local information. To determine which areas have the best prospects for appreciation, start with a regional map. On this, pinpoint major employers, such as corporate headquarters and military bases, where jobs are expanding. Also locate communities with well-ranked public schools and popular public transit lines, including light rail systems.

“Meaningful local information, which you can find on the internet, helps you spot places where prices should rise in the years ahead,” says Eric Tyson, a personal finance expert and author of “Let’s Get Real About Money!”

-- Analyze neighborhood property values before you bid.

Researching relative property values before you put in an offer is always critically important.

“You and your agent should attempt to find nearby homes that have sold recently, ideally within the last six months,” Early says.

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 -- whether prices are heading up, down or sideways.

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.

“Taking advantage of wonderfully low mortgage rates is smart. But acting without a lot of forethought is not,” Early says.

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

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New Home Buyers: Taking Advantage of Your Buying Power

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | August 5th, 2020

The extra buying power that comes with surprisingly low mortgage rates has increased the lifestyle choices open to many first-time home purchasers. This is an especially promising yet nerve-racking period for those who’ve long hankered to own a brand-new home.

“Buyers are very excited, but somewhat anxious because new home market inventory is tight now,” says Sheryl Palmer, the CEO of Taylor Morrison (taylormorrison.com), a nationwide home-building firm based in Arizona.

Of course, given the high rate of joblessness across America, many whose finances have been hurt by COVID-19 can’t possibly consider a home purchase at this point in time. But others with secure jobs, sufficient savings and sound credit can finally fulfill their home-buying aspirations. In one of the bright spots in the current recessionary economy, sales of newly built homes this June increased to their highest level since 2008.

“Along with rising builder sentiment, we are seeing increasing consumer demand in the suburbs, exurbs and rural areas,” says Robert Dietz, chief economist for the National Association of Home Builders (nahb.org).

Given that many young adults are now allowed to work remotely due to the pandemic, Palmer says an increasing number of buyers anticipate that in the future, even after the outbreak is over, they’ll spend more working hours at home. This makes them somewhat less concerned about the commuting time between their residence and their workplace. For that reason, many are more willing to consider a house in an outlying suburb, where they can get more space for the money than they could close to a city center.

Among the major draws for suburban buyers are access to public parks and outdoor exercise areas, including hiker-biker trails.

“Buyers want big lots and open space so their kids can be healthier outside,” Palmer says.

Those who’ve been living through the pandemic in space-constrained apartments are particularly motivated to live in large homes surrounded by greenery. Due to low mortgage rates, Palmer says some renters planning a first purchase can now qualify for the equivalent of a trade-up property.

Taylor Morrison does extensive research on buyer preferences, and recent surveys show pandemic-era purchasers are very interested in what the company calls “healthy house living.”

“Consumers are consciously aware of the health benefits and perceived risks in virtually every environment they’re entering today -- stores, schools, planes -- so naturally they’re just as tuned in to the health benefits of their homes,” according to Palmer.

To address these concerns, some homebuilders, among them Taylor Morrison, are embedding wellness features into all their new construction at no extra cost to buyers. These include whole-house filtration systems, high-tech thermostats and antibacterial bathroom fans.

But beyond such automatic built-ins, income-constrained young adults planning a new home purchase typically confront multiple trade-offs. For example, they might need to decide if they’d rather spend their extra dollars on glitzy kitchen features or on more square footage.

Though every such decision is ultimately personal, Palmer reminds buyers that it’s less costly to add square footage when a home is first constructed than to build it on later.

“You can always go in and replace your kitchen countertops or appliances in the future. But improvements to the structure will be more expensive later,” she says.

Here are a few other pointers for new home buyers:

-- Try to capture your ideal lifestyle in words.

Where and how you choose to live has countless implications, says Doro Kiley, a certified life coach who’s helped many clients navigate real estate transitions. She urges clients to make a home choice within the context of their overall life plans.

“Always begin by thinking about the end product -- what you’d really like as opposed to what you would settle for,” Kiley says.

She recommends that couples planning a home purchase first write down their respective visions of a dream house, including both location and home features. They should then share their visions, combining the key elements of both into a single statement.

Written statements help people clarify their thinking and refine the details of their plans, as they move through successive drafts. They’re also a way to help reconcile differing views.

-- Don’t hurry the selection of a property.

Merrill Ottwein, a longtime real estate broker and past president of the National Association of Exclusive Buyer Agents (naeba.org), says these days competition among those aspiring to buy a brand-new home in popular neighborhoods is often fierce. That’s why some buyers feel pressure to act too quickly, lest they lose out to a rival.

“With so much at stake, it’s a horrible idea to buy any house before you’re really ready. Don’t let your competitive instincts trick you into the wrong choice,” Ottwein says.

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

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Prepping Your Place for Pandemic-Era Buyers

Smart Moves by by Ellen James Martin
by Ellen James Martin
Smart Moves | July 29th, 2020

For millennials living through the pandemic, it’s a tale of two economies.

One cohort, including those with jobs tied to tourism -- hospitality, retail and restaurants -- are struggling professionally. Yet others with stable careers adaptable to remote work are enjoying excellent financial prospects. It’s this latter group that’s hankering to buy their first home and finance it at record-low mortgage rates. And their choices have increased dramatically with the growing acceptance of working from home.

Mark Nash, a real estate analyst and author of “1001 Tips for Buying & Selling a Home,” says, “The crisis has at least opened up the opportunity for so many young professionals to pick their favorite town without having to give up their jobs,” says Nash, a longtime real estate broker.

In coveted communities, affordable properties are in acutely short supply and demand is high, particularly from millennial-age purchasers still seeking to step onto the first rung of the homeownership ladder. But Nash cautions sellers against overconfidence.

“Remember that a multitude of young buyers are now exploring a wider array of housing possibilities. So, as sellers, it’s essential you’re mindful of their preferences when presenting your place for sale,” he says.

At the Pulte Group, a national home-construction company, staff researchers recently surveyed millennial-age buyers on their “must-haves” in a new home.

The Pulte survey concludes that “across all features, yard size, garage storage, floor plans and kitchen design are universally most important.” What’s more, it says an open floor plan is a key requirement for 46% of those in this age group, born between 1981 and 1996.

Rich Carlson, who heads Carlson Communications (carlcomm.com), a marketing firm that advises homebuilders, says that when faced with a crisis, buyers want properties with a roomier feel.

“The world may be a frightening place, but at home people want plenty of space to be gregarious with friends and family,” Carlson says.

All who put their homes on the market should strive to make them appear as spacious as possible, says Dorcas Helfant, the co-owner of several Coldwell Banker real estate offices.

“The fact is that most purchasers want as much light, space and storage as they can get,” says Helfant, a past president of the National Association of Realtors (realtor.org).

Here are a few pointers for sellers:

-- Highlight the features that present-day buyers appreciate.

Carlson says several features that provide a feeling of openness and space resonate especially well with current buyers.

Among the strongest draws: oversized “great rooms” that link to kitchens and provide ample space for casual entertaining, soaring atriums and walk-in closets.

“If you have any of these features, you should highlight them in your advertising and promotional materials,” Carlson says.

-- Remove extra possessions to make your place look larger.

Helfant, who’s been involved in a number of international real estate transactions, says Americans typically own far more clothes than do Europeans.

“Most people have four to five times as many clothes as they actually wear,” she says.

She says it’s tough to convince sellers to dispense with more than a few clothes. But at the minimum, she urges sellers to place all their out-of-season clothes in storage until their property is sold.

“It’s crucial that your closets be thinned out and orderly. Prospective buyers should be able to see clearly to the back wall of all your closets and kitchen cabinets,” she says.

Helfant also encourages sellers to pay special attention to the clutter that can build up in a bedroom that’s been adapted to home office use.

“Buyers don’t want to see all your stacks of paper and messy office supplies strewn about,” she says.

-- Improve the illumination of your home.

“Light is the No. 1 draw for people,” according to Helfant, who says most home sellers can benefit from upgrading key light fixtures, including those at their property’s entrance and in heavily used rooms, such as the kitchen and bathrooms.

Where lighting is plentiful, living space seems larger, and attractive lighting also elevates the mood of a room.

-- Focus special attention on your windows.

In past decades, many buyers liked the look of formal draperies, particularly in dining and living rooms. But nowadays most would-be purchasers prefer their windows “au naturel,” or nearly so.

As Helfant notes, windows with minimal coverings usually seem more appealing to visitors because they allow more light to penetrate a room. In fact, she says it’s now perfectly acceptable to market a home with no window coverings at all, except in bathrooms and bedrooms where privacy is an issue.

Windows that are barely covered and kept sparkling clean do more than make for bright rooms. They allow visitors a more expansive view of a home’s surroundings.

“Especially now during the pandemic, people think of their home as their kingdom. They don’t want to feel confined. They want an exquisitely clear view through their windows,” Helfant says.

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

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