It’s Not Just About the Price of the Home

 

Many buyers as they begin the start of their home search, jump to price, and usually point out to me that “that seller only paid ‘xxx’ amount of dollars for the home. My response is, “how wonderful that the sellers have made money on their home and I hope you do as well.”

Forbes:

“Homeowners are the clear winners. Low mortgage rates mean the cost of owning is at historically low levels and who gains all the benefits of strong house price appreciation? Homeowners.”

There are so many things that could impact your purchase, not just price. Take into account what the seller has spent on maintenance. For example, over the last few years, I have replaced my HVAC system, roof, a few appliances and the water heater. I also replaced the countertops and sink in my kitchen, that was 7 thousand dollars (its a beautiful white quartz). Did you just do the math of what I just put down here? Those items can be expensive, and remember, owning a home means paying taxes, home insurance (you have rental insurance already) HOA fees(possibly) and yearly maintenance. As a buyer, don’t jump on how much money the Seller has made over the years, look deeper at what they have invested as well and remember you are buying a home not only because you OWN it and can basically do what you want, within reason, but you are looking for your money to appreciate in that investment as well. Its ‘forced’ savings. I have a friend who over the past three years has spent over 40,000 dollars in rent..and he has nothing to show for it except a one bedroom apartment. He has the downpayment for a home…..personally I think its not a smart economic move. Interest rates are so low right now.

Ok getting back to what I was saying, when I do a price suggestion for a seller’s home, I incorporate a percentage of costs, for the updates and upgrades, the sellers have done into that suggested price.                                                          To sellers, if you are going to do cosmetic updates, do them early so you have time to enjoy them- call me, before you do spend those funds. I am happy to make suggestions as to what will or won’t work.

Buyers- you are so lucky today with interest rates as low as they are, you are really buying more home for the money. If you can swing it, consider purchasing now.

These low interest rates are affecting housing affordability though, as home prices are continuing to rise…..please, this is a ‘blanket statement’, not every home in every town, city etc is rising like a rocket ship. There are homes that are sitting on the market, not selling, because they are overpriced or not in a desirable location/town/area. Every market is different, which is why you should hire an experienced Realtor

This graph, courtesy of our National Association of Realtors (NAR), shows that the higher the bars, the more affordable the homes are. Orange bars show when homes were most affordable, AND reflective of when the housing bubble burst. When that happened, nationally the market was dominated  with distressed properties like foreclosures and short sales, Our current market is enjoying an uptick in pricing because sellers are concerned about showings due to the pandemic so not listing, which means we have a shortage of homes for sale, creating a demand……..

Getting back to the graph, the green bar represents today’s market. Can you see how currently (as of Sept 16 2020) homes , because of interest rates, are more affordable. Remember these statements are a general overview, each market is different. 

Lawrence Yun, Chief Economist, NAR:

“Although housing prices have consistently moved higher, when the favorable mortgage rates are factored in, an overall home purchase was more affordable in 2020’s second quarter compared to one year ago.”
 
Mortgage News Daily:

“Those shopping for a home can afford 10 percent more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power.”

 
Bottom Line

When buying a home, remember there is a list of factors that affect that purchase, not just what the seller paid of it. Lets talk about your real estate needs.

Contact Sharon and Let’s Get You Moving!

~Sharon