Announcements of a housing recovery have become a wrongheaded rite of summer, but after several years of false hopes, evidence is accumulating that the optimists may finally be right. The housing market is starting to recover. Prices are rising. Sales are increasing. Home builders are clearing lots and raising frames. Joe Niece, a real estate agent in the Minneapolis suburb of Eden Prairie, said he recently concluded a streak of 13 consecutive bidding wars over homes that his clients wanted to buy. Each sold above the asking price. “I just had a home that wasn’t supposed to go on the market for two weeks sold before it even went on the market,” Mr. Niece said. “It’s definitely a lot different than what we saw” during the last few summers. The trend is clear in the data. The widely respected S.&P./Case-Shiller index reported recently that sales prices for existing homes rose in April for the first time this year. Several other measures, including a seasonally adjusted version of the index, show that price increases began in February. The pace of housing construction has increased. And the National Association of Realtors reported that pending home sales climbed to the highest level since the end of a federal tax credit for first-time buyers in September 2010. “All bets are off if anything happens to the economy, but apart from that, I think the fundamentals look better than they’ve looked in 17 or 18 years,” said Richard K. Green, a professor of real estate at the University of Southern California. Professor Green cited the combination of rising rents and low rates on home loans as a powerful inducement to potential buyers, both renters who would prefer to own and investors who want to become landlords. “Compared to a lot of other investments right now this looks pretty good,” he said. Source: The New York Times
Due to low prices and the relative weakness of the dollar, international buyers continue to identify the U.S. as a desirable place to own property and make a profitable investment. According to the National Association of Realtors’ 2012 Profile of International Home Buying Activity, total residential international sales in the U.S. for the past year ending March 2012 equaled $82.4 billion, up from $66.4 billion in 2011. Total international sales were evenly split between non-resident foreigners and recent immigrants. “Today’s advantageous market conditions have drawn more and more foreign buyers to the U.S. in recent years, signaling how desirable and profitable owning property in this country can be,” said NAR President Moe Veissi, broker-owner of Veissi & Associates, Inc. in Miami, Fla. “Low housing prices, a good inventory condition and increased buying power with today’s exchange rates help attract international clients. International buyers bought homes throughout the country, but four states accounted for 51 percent of the purchases – Florida, California, Texas and Arizona. “Foreign buyers recognize that owning a home in the U.S. has many benefits, both financial and social,” said Veissi. “Many purchase property as an investment, vacation home, or to diversify their portfolio. In addition, many recent immigrants view homeownership as an important accomplishment. They believe that being a homeowner is one of many ways they become established in the U.S. and attain stability, security, and a sense of community.” More than half – 66 percent – of survey respondents reported international buyers purchased detached single-family homes. Sixty-two percent of international purchases were all cash, which has increased since 2007. Source: NAR
For buyers who want new construction, be sure to educate them about some differences in buying “old” versus “new.” Bankrate.com offers some of the following tips for smart strategies when buying new construction:
- Choose to escrow if not all changes are completed by closing. If the builder isn’t going to be done with all of the changes by the time of closing, “it’s probably a really good idea to escrow some money,” Ron Phipps, immediate past president of the National Association of REALTORS®, told Bankrate.com. Then builders will have more incentive to complete the work.
- Try to get custom features added. The builder may be willing to swap out a few things before you move in, says Stephen Melman, director of economic services for the National Association of Home Builders. This is easier to do in a new home because the building materials are already on site, unlike in a previously owned home where you have to negotiate any alterations with the seller.
- Research additional financing options. Buyers of new homes may have financing options available since many builders usually work with a bank, however buyers aren’t required to go with the builder’s lender. Use the builder’s lender as a point of comparison to what other lenders are offering in shopping around.
You can still negotiate. While previously owned homes offer plenty of deals nowadays and most likely more square footage for less money, builders are also more willing to negotiate with buyers on new homes. “There is such price pressure on the builder,” Melman says. “Prices haven’t been this low in years on new construction.” And even though you may be able to get a better deal on a previously owned home, Phipps says some buyers still may be drawn to new construction, despite the higher price tag: “You’re starting fresh, its economic life is longer, you get to personalize it, and you don’t have to undo what that other person thought was important.”
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to buy and not a bad time to sell”