Tag Archives: housing

A Peek Behind the Real Estate Market

If you can believe Discover the Nation, rental markets in metropolitan areas are falling, as much as 12% in some areas. Grand incentives are being offered: rent credits, large gift cards, months of free rent to sign on, and still a lot of empty units sit empty, the windows staring out at what still looks like a bustling economy. It’s a matter of time before the truth breaks forth.

Air BNB homes are either empty or being switched to properties for sale. International investors are standing by, based on new laws, high prices and astronomical special assessments in some areas. For the first time in decades, “renters are back in control”. But are they really? Costs are rising faster than wages, free months worth of incentive notwithstanding, and people are giving up on ‘traditional’ housing like renting or buying. Well what else is there?

This is being called a ‘cultural shift’. More and more people are embracing ‘off grid’ types of lifestyle. More and more people are finding out that a life in under 400 square feet is pretty good when you’re not stressing about how to make a 5 figure house payment. According to Discover the Nation, “Housing markets don’t defy gravity forever.” Some of us watched a big correction in 2008: proof. We didn’t learn a thing, except that greed lives on, no matter what. I feel the effects of that greed looming.

On a side note and keeping the cultural shift in mind, remember that people in their 30’s are focused on setting roots…buying a home, starting a family. This market makes that impossible, and could be one reason young people are so angry these days. Their expected trajectory has been destroyed.

The ones who would be rushing to the market to experience the ‘American Dream’ cannot afford to buy a home now. Jobs are not as available and student loan debt still cripples young people. Those who can afford to buy are eyeing high interest rates and just refusing to accept both high home prices and ridiculous monthly payments. Some are moving back in with parents. House prices have been ridiculously high for a long time now, too long, so one important part of society is now pushed out of home ownership or even renting. Entire groups of people are being offered ‘free housing’, which kills the market in those areas while builders keep flooding the market with product that won’t sell or rent. If I didn’t know better, I’d call that insanity.

The rental market is struggling, clearly. But it’s not just rental high rises and it’s not just luxury accommodations nobody can afford instead of sensible, affordable housing. It’s also production builders. They have finally gotten a strangle hold on resale sellers, because only the wealthy builders can offer the tens of thousands of incentive dollars they offer to potential buyers. One builder is offering up to FIFTY THOUSAND dollars to fill their inventory with bodies, while they still build, by the way, and that’s with a total of 500 to 1500 dollars out of pocket to the buyer. That surely feels like a dream to those brave enough to test that water.

One builder is using their own in-house lenders to ‘qualify’ a buyer with a credit score under 500 in order to sell them a home. Oh, and how about a 3.99% interest rate offered by builders too. Often these come with adjustable rate products which ensure that the 490 credit score buyer will lose that home to foreclosure within years. I’ve seen this before too. By the way, that house that was such a dream come true? It’s still vastly overpriced and possibly cheaply built.

But the builders and lenders have made their money. Builders have ridiculously overpriced badly built product. Loans are sold to investors who will cash in on mortgage interest over the life of the loan…until they default. Am I writing history? Does this sound familiar to you at all? Do you remember the last housing crash?? It’s starting again. When I heard the ‘under 500 credit score’ advertisement, I knew. Here we go again. The only good thing is that buyers who have had to give up hope, will get it back. In the aftermath of a crash, or even during it, buyers have all of the power, and their demands are brutal. Sellers take a beating. Personally? I’m tired of this ridiculous greed-fueled, roller coaster market. And it makes me very sad to see young people blocked out…BLOCKED OUT…of the housing market. So while I see them take revenge after a crash, I understand.

If we think the crash of 2008 was horrible…which it was… we ‘ain’t seen nothing yet’ as they say. This time, the pain will be greater and spread thicker across America. And the recovery will take longer and will look awful if it happens.

Not painting a lovely picture, am I? Well maybe I’m wrong.

I’m Brenda Briggs with Premier Advantage Realty. Reach out and let’s talk.

Understanding Local Real Estate Markets: A Key to Home Buying

Real estate is local. I’ve said that many times here. But what does that mean?

It means that within your state, numbers might show a median home price of $300,000. But that’s statewide. Within your metropolis, the median might be $550,000. And then within your LOCAL market, even within your subdivision, or the one you want to move to, the median might be $355,000. Okay, so what?

Well, if you look at the statewide median price, you might lock that price in your brain and not be able to afford anything at all in the area you want to move to. Why? Because that price is not your LOCAL price. You see $300,000 when YOUR median price is really 50K higher. Get it? Gotta go local.

Now let’s talk about median. Median is not the MEAN, or average. Median means line up every house in a line and put a price above it, then find the middle of that line. There it is. That’s the median. Median is not average.

How do they come up with the numbers? Just like that: make a list, find the middle. No attention to amenities in the community, no attention to the age of the house, what kind of condition is it in, ‘popularity’ of the area…none of that. And I’m just going to say it: Popularity includes low crime rate. There it is. If you buy in a high crime area, you probably got a lower home price, but you’re going to feel it when you try to sell.

Okay, let’s look at the notorious ‘price per square foot’ check box. If a home has a higher one, it might have a TON of upgrades that you will never be able to afford, or won’t be able to wedge in, later. So that PPSF might be worth it! Note that the reasons for this higher factor is not called out for you; it’s just entered in the data. Lock in on the ‘median’ and you’re gonna miss that special three-seasons room you always dreamed of having. Take a few minutes to find out how much that extra 5 bucks per square foot actually effects your payment (or ask AI) and you might get a pleasant surprise. Don’t miss out on that dream home over 5 bucks a month. Remember, you want to be happy with your home. There’s not much better than that.

There’s so much information out there that it’s overwhelming. We feel like we’re in a sea of it. The important thing is to connect these data points in the way that makes your perfect home stand out for you. That’s why it’s important to have a realtor who knows the market, and who knows how to look for hidden issues while you imagine placing your furniture. Real estate agents do that.

We are in the age of information, but you know…you know…that a lot of it is bogus. Check and recheck. And there’s still nothing like driving by the home to get a feel for the community. How much shade is there for summer heat, how is the topography? Are you in the bottom of the bowl where all of the runoff will end up in a storm? Is construction uniform? That matters! It goes straight to your bottom line, and remember when you buy, you will also need to sell one day.

Do you hate being hand-shake distance from your neighbor? Well don’t look in the middle of the metropolis! Gotta go out into the ‘banished from the kingdom’ areas (my favorite). And even those are becoming impossible to find. Do you want an acre of land in the country? Well you’re going to have a septic tank and well, for you guys who hate them.

Food for thought. If you want to chat (chatting is free), contact me. I’m Brenda with Premier Advantage Realty. 919-210-6113. And I actually like talking. I know, who DOES that?