Scot Ulmer Real Estate

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Homebuyer Education: Clarity is Key

Scot Ulmer

Educating your clients, regardless of what field of work you’re in, is vital for the success of any business. If clients do not understand the logistics and reasoning behind why certain things are done or prioritized, they will be confused by the goals of the company. With real estate, and homebuying, in particular, working with your clients face-to-face is inevitable, and you will have opportunities to teach them about the buying process, which you should do without hesitation.

The reason why homebuyer education is so important is that it strengthens the willingness of a homebuyer to be a permanent resident of the neighborhood their potential home is in, which thereby stabilizes neighborhoods as a whole. According to an article published by HomePath Agent Matters, “Those who get pre-purchase counseling and education are significantly less likely than other borrowers to become delinquent,” (Homebuyer Education – An Agent’s Best Friend). This will further help the entire homebuying process run more smoothly and effectively.

One vital aspect of educating homebuyers is that it eliminates client confusion. When buyers know what they can afford, and they understand the entire process of buying a house (which can be quite lengthy), their confidence levels boost, and it will be easier for both loan officers and agents to work alongside. Education in real estate helps clients get a sense of what buying a house entails, and all the finite details that go along with it. If you have a client who doesn’t fully understand the home buying process, the chances are that they will be surprised more than once throughout their experience – and surprise is not always a good thing.

In conclusion, clarity is vital when it comes to homebuyer education and the entire process of buying a home. But remember, not all agencies are educated in the same ways – so be sure that everyone involved in your home buying experience is well trained and are “HUD-approved,” which means they pass the HUD’s Office of Housing Counseling requirements.

Seven Real Estate Predictions for the New Year

Every time a new year rolls around, people love to predict what the future will hold. For some, this means setting resolutions that they will (most likely) give up on by the end of the year. Oftentimes, it can be difficult to predict what the future will hold, on both personal and global levels. This year, we have a new president whose choices could have profound impacts on the economy and the real estate market as a result. The economy is volatile and subject to change… wars could break out, an asteroid could strike the earth, the apocalypse could come. Not saying those last few things are likely, but my point is that anything could happen. 

As a real estate professional with over 20 years of experience, I’ve been in the field long enough to know that real estate is one sector of the world that can be reasonably easy to predict based on past trends and behaviors. Not only that, but it is essential for both real estate agents and buyers/sellers to stay up-to-date on real estate trends so that they can make informed decisions based on the current market. 

If you’re looking to buy and/or sell a home this year or you’re a real estate agent wanting to achieve the best outcomes for your clients, then it pays to do your research. Luckily, I’ve already done some of it for you. Here are some of the top trends to look out for this year, according to industry experts.

1. Housing boom in suburbs and mid-sized cities

The years following the housing crisis saw a rise in the number of people moving to large cities like New York, Los Angeles, and San Francisco because real estate was more affordable. Now, however, as the market is in a gradual state of recovery, home prices are on the rise, and buyers are flocking to the suburbs for more affordable housing. While the major cities will always be a hub for jobs, especially for younger people, the suburbs and mid-sized cities are typically the more affordable option. According to Svenja Gudell, Chief Economist for Zillow, “Now we see people like to live close to the city center where they’re close to amenities and in walkable neighborhoods, but for the first time they’re not able to find enough inventory that’s affordable for them to buy.” Additionally, many young adults looking to buy their first homes are attracted to mid-sized cities (Raleigh, North Carolina, for example) for the cheaper rents and lower housing prices that they offer. 

2. Millennials and baby boomers will take up a large share of the market

As the millennial generation comes of age, more and more will be looking to start families and buy their first homes in 2017. The younger end of this generation may be more attracted to rental properties early in their careers. Still, the older end (those in their early to mid-thirties) will start to mortgage homes due to a variety of factors, including more jobs targeted at workers between the ages of 25 and 34, and increased wages. On the other end of the spectrum, many baby boomers are reaching retirement age and will be purchasing retirement homes. According to Jonathan Smoke, chief economist of Realtor.com, some retirees will want to downsize to cut back on expenses, but a large proportion (now that their buying power has improved after the housing crisis) are purchasing large homes to accommodate children and grandchildren.

3. Home values will increase, but at a slower rate than last year

Home values will continue to increase at a rate of about 3.6. This would be a slight decrease from last year when national home values rose 4.8 percent. As the market recovers from the housing crisis, the increase in home values will start to level off. This slowdown in appreciation rates is an inevitable effect of the housing market normalizing after the crisis, according to Gudell and Smoke.

4. Rent affordability will improve

Good news for twenty-somethings struggling to pay rent each month on their entry-level salaries! Real estate experts predict that rent prices will become more affordable across the nation as the rate of income growth is outpacing rental rates.

5. Mortgage rates will increase

While there are some, who are fearful that the Trump presidency will lead us back into recession due to his plans to cut government spending, real estate professionals are optimistic. Rick Sharga, executive vice president of real-estate auction site Tex-X, believes Trump’s presidency will positively affect the housing and mortgage markets in the long term, and home buying will stay steady throughout 2017. Home prices and mortgage rates are expected to continue to rise after the housing market crash of 2012. From a buyer’s and seller’s perspective, it makes sense to act sooner rather than later if you’re planning on buying/selling a home.

6. More new construction

As home values, in general, continue to increase, so too will the price of new construction, exacerbated by a shortage of labor in the construction industry, forcing contractors to offer higher wages to compete for workers. Prices will increase for buyers to offset these costs. Yet, despite increases in the costs of new construction, the rate of new construction will increase as well based on the trends of the last few years, and the fact that higher wages and more flexible credit are giving home buyers more spending power.

7. Rise of the drones

Advancements in technology are expected to play a part in real estate trends this year as well, in the form of drones. Some real estate agents have already been using drones to capture flyover images of properties, and now (thanks to new regulations from the Federal Aviation Administration) homeowners can use them to take their own images of their homes, even using them as a way to bypass the home inspection.

 

Thicker Than Water: Why More Young Adults Are Living With Parents

A few decades ago, returning home to live with Mom and Dad for an extended period of time after college was not without a certain stigma attached. Young adults were expected to be independent and self-sufficient in older generations. While that is still mostly the case, more and more young Americans are choosing to live with their parents to save money until they have the financial means to provide for themselves.

According to the Washington Post based on data from real estate tracker Trulia,  the percentage of American young adults living with their parents is at a 75-year high, with nearly 40% of the millennial generation (young adults between the ages of 18 and 34) living with their parents or other family members in 2015. This is the most significant percentage since 1940.

Even with recent job growth since the economic recession, this trend has been on the rise since 2005, when the number of young adults living with relatives was only one in three. In previous periods of recession, the number of young people living with their parents dropped off as economic conditions improved, but that is not the case anymore, as this all-time-high rate demonstrates. As a result of more millennials returning to live at home than ever before, millennials are occupying a much smaller share of the housing market than would be expected for the largest generation in U.S. history. According to research from the Harvard Joint Center for Housing Studies, the number of adults under the age of 30 has increased by 5 million over the last decade. Still, the number of households for that group did not rise in proportion, growing by just 200,000 over the same period. This could be due, in part, to the fact that the barriers to owning a home are much steeper than they used to be.

Even with the job market gradually improving, housing prices are not. Rent prices are on the rise in many cities, and mortgage-lending standards are stricter than they used to be. Additionally, millennials as a whole are getting married and starting families later in life than previous generations. Without a combined income to work with, homeownership is out of reach for many millennials. The Harvard Joint Center found that of those aged 25 to 34, only 40% of those earning less than $25,000 headed their household. The rate is at 50% for those making between $25,000 and $50,000 and 58% for those earning more than $50,000 in annual income. These statistics go to show how inextricably linked income and homeownership are. Even as the millennial generation is expected to double its number of households by 2025, it still begs the question of what the long-term consequences of delayed homeownership will be.