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Is The All-Cash Offer Trend Going To Last In The Real Estate Market? 

The Covid-19 rocked the housing market in a multitude of ways. Real estate agencies saw an uptick in individuals moving out of cities and investing in homes in more rural/suburban areas. 

In 2022, nearly one third of all US homes were purchased using all-cash offers, according to the National Association of Realtors. However, experts are wondering if this trend of all-cash purchases is going to continue, or decline as time goes on. 

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Lawrence Yun is the chief economist at the National Association of Realtors, and recently spoke with the Wall Street Journal regarding this trend and new data in housing trends as reported by Redfin

“Only the wealthy are essentially buying homes. If this trend was to continue, that means something fundamentally is wrong with society.”

The Wall Street Journal also reported that the trend of all-cash purchases isn’t equal across the entire nation. For example, nearly one fifth of all homes purchased in Washington D.C. and its surrounding cities were made in cash. 

On Long Island, almost half of the home purchases between 2020 and now were made using all-cash offers across both Nassau and Suffolk county. 

“What we found was those who already were more well-off were able to take advantage of the strong housing market and add to their wealth, while those trying to better their situation were often pushed to the side,” Ali Wolf, chief economist at Zonda, a housing data and consulting firm, said to the Journal.

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Wolf explained that the main population of buyers making all cash offers are retired, international, investors, and wealthy individuals in general. 

The current rate of all-cash home purchases hasn’t been this high since 2014, when the housing market saw its biggest rebound after the Great Recession. 

“FHA loans, which typically allow for lower down payments, have ticked up in popularity in response to the slowdown in housing-market competition,” Redfin noted, detailing government-backed mortgages insured by the Federal Housing Administration.

“FHA loans, which typically allow for lower down payments, have ticked up in popularity in response to the slowdown in housing-market competition,” Redfin noted, detailing government-backed mortgages insured by the Federal Housing Administration.

“Americans who sell a home in a pricey place like San Francisco may use equity to pay cash in a more affordable area like Las Vegas,” Redfin concluded.

appraisel

Black Couple Sues Real Estate Appraiser After Home Valuation Increases By $300,000 When Shown By White Colleague

A Maryland couple is suing a local real estate appraiser and an online mortgage provider after alleging that the housing appraisal they received was unfairly low due to their race, violating the Fair Housing Act.

Mortgage

Biden Administration Looking To Reverse Trump-Era Mortgage Policy

The Trump-era policy removed a lot of protections for those who were dependent on loans for their payments, as well as created the space for riskier loans to be dealt out.

Selling Home and keys

Supply of Homes for Sale Slumps in December

The final month of 2019 saw a greater slump in real estate sales than previously anticipated by the market. With the holiday season in tow, December is never a popular time to list a home for sale – however this past month’s supply of homes for sale was 12% lower when compared with the same month in 2018, according to realtor.com. This was also a much steeper decline than the 9.5% drop witnessed in November.

As expected, the shortage of homes for sale has taken the biggest hit at the low end of the market, but the drain in supply is actually accelerating across all markets, including the most expensive properties. The end of the year saw the supply of entry-level home priced at less than $200,000 drop more than 18% annually, compared to the 16.6% drop witnessed in November. Midrange houses priced between $200,000 and $750,000 dropped 10.2% annually, compared with November’s decline of 7.4%, while the top end houses priced over $1 million reported a drop of 4.4% annually compared with November’s 2% slump. The median listing price on a U.S. home is currently just under $300,000.

While low-cost homebuilders are continuing to tap into a market of millennials – around 4.8 million of whom will be turning 30-years old in 2020 and looking to buy for the first time – the supply of houses being built and listed simply isn’t able to meet the sizable demand.

The drop noted in December suggests continuing unevenness in the housing market, with many predictions expecting historically low levels of houses for sale to come. December’s slump represents a loss of approximately 155,000 listings, compared to the same period in the previous year, and the amount of new listings is decreasing as well.

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So what is causing this difficult time for the housing market? Higher prices are discouraging many potential movers from listing their homes; increasing numbers of older homeowners are choosing to stay where they are rather than selling their property; and a large number of investors have spent the past decade transforming previously sellable homes into rental properties, which has removed them from the market for prospective buyers.

Real estate is a local business however, meaning not all markets are encountering the same effects. While areas such as California, Seattle, San Francisco and San Jose all encountered a 30% drop in inventory in December, the major markets of San Antonio, Las Vegas and Minneapolis-St. Paul saw their supply of for-sale homes increase. This may appear to suggest that the struggling locations have simply faced an unfortunate year, but the problem is far more widespread than just a few bad districts.

Demand for houses will inevitably increase into the year. With mortgage rates still low potential buyers have greater purchasing power available, but this short supply is likely to push prices up across the board, and currently the majority of new homes in the U.S. are already on the mid to high end of the scale. While many builders are beginning to develop lower-cost properties, as well as ramping up production in general, it will likely be some time before their efforts begin to make a real impact across the market.

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So what next for the housing market? If you believe the gloomiest predictions, the U.S. could be due for another market crash. Just like in 2008, slow wage growth has made it difficult for potential buyers to keep up with the rising house prices. Property sales are currently expected to drop by 1.8% this year, and it’s likely that potential buyers pull out as they struggle to afford the few properties on sale. Combined with a greater uptake of low mortgage rates, this does not paint a pretty picture for real estate. As sales decline, prices may follow – this could leave buyers struggling to make payments on houses that were too expensive for them in the first place.

This is a worst-case scenario prediction however. New homes are being built across the country and the rate is increasing – construction began on 1.37 million new homes in November 2019, a 3.2% increase on October’s numbers and a 13.6% increase on the same month a year prior. If these numbers are accurate and production is successfully ramped up, the construction industry may be able to alleviate the strain that the housing market is currently facing.

Right now, the best advice may be for prospective buyers to hold on to their cash. Low mortgage rates may seem tempting, but the lack of houses available will mean paying out an unjustifiable fee overall. The situation may improve further into the year as more and more properties are built, but if possible it’s worth waiting to see if the market steadies out over the coming years before making such a sizable investment.

Real Estate Meeting

How To Make The Best Out Of Your Online Real Estate Presence

The real estate industry is always changing with the times. One of the biggest adjustments the industry has had to accommodate to is the implementation of technology and social media into marketing plans. With millennials now being at the age where buying a home is their next step, having an online presence is crucial for the success of any real estate firm. 

If a real estate firm is greatly established within a community, then their success seems inevitable. However, with a whole new generation of buyers now sweeping in and buying property, there needs to be a way that they feel like they can trust the firm they’re working with. 

It should go without saying that your real estate business should have an online presence. No matter how large or small your firm is, everyone goes online when it comes to finding the right business for them to work with, so make your presence stand out. Don’t just post listings online as a means to an end. The effort that you put into these digital listings could make or break how much buyer interest you curate. You want to show off the property to the best of your ability. Say your new client is from out of town and can’t coordinate a time to come see the property. If your online listing is detailed, thorough, and full of flattering photos of the property, they’re more likely to stay interested and make the time. 

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One of the most unflattering things that can turn a potential buyer off of a property is a Craigslist-looking listing that simply has a few pictures of the front of the property and bullet points with how many rooms the house has. Effort pays off, so look at the home from their perspective and provide the details that you find so attractive about the listing. For example, say the home is in walking distance to an amazing bakery with the best coffee for the morning; buyers want to know that! Those quaint little details in a listing can surprisingly strike a lot more interest as opposed to a listing that simply states “two bedroom apartment with one and a half bath.”

In addition to detailed and thorough online postings, avoid excessive real estate industry lingo that the average person may not know. Many buyers, including first time millennial buyers, aren’t aware of the full scope that is investing into a property. When it comes to your online presence, don’t fill the spaces with complicated words and phrasing that aren’t common in everyday conversation. Instead, fill it with all the positives about the property. 

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When it comes time to discuss all of the important terms and conditions regarding the property, do it in person and explain in depth what everything means. Having those conversations face-to-face makes the concepts so much easier to grasp as opposed to trying to figure it out on your own from a computer. In addition, a potential buyer is more likely to click off of your page if they can’t even understand it. 

In the same regard, discussing mortgages and real estate as an industry in general should be kept at a minimum. Obviously, you are selling a piece of property at the end of the day, so things like mortgage, monthly payments, utilities, etc. are an important and necessary conversation to have with your clients. However, there’s no need to have those conversations until you know how deeply invested a buyer is in a property.

Finally, a major trend in online real estate is video advertisements for your firm. These videos act as commercials for your place of business, so if you’re going to make one, make it short, simple, and casual. Tell your audience of potential clients why working with you is personal and comfortable. You can make a script, but don’t make it seem like you’re reading off of a teleprompter the whole time. That will make viewers think you’re just another real estate cog in the machine. You want to stand out beyond all of those other agencies who don’t put in the effort with how they represent themselves online. 

Your online presence gives your buyers a real insight into where your values are as a real estate agent. The more genuine you are, the more people will gravitate towards your business, and tell their friends about it too. Just be honest, and tell them why you love working in your industry so much, when people see passion, they want to feel like that too.

Millennials Buying Home

Why Millennials Are Buying Fewer Homes

Millennials are currently the largest group of consumers in the US, and as such have a significant impact on businesses and the economy, an impact which is sure to grow stronger with time. As such, millennials are the frequent subject of speculation about their lifestyles and spending habits, and much has been made online of their supposed “killing” of various industries. Various stereotypes of millennials abound; they are thought of as having short attention spans and problems committing to jobs, but are also recognized for their desire to feel a sense of purpose and community in their professional lives. Whether or not millennials differ fundamentally from other generations when they were the same age remains an open question, but as the spending habits of young people influence various industries, businesses will have to adapt in order to meet the demands of their newest generation of customers.

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One such industry is real estate. For various reasons, millennials seem less likely than their parents’ generation to want to invest in purchasing a home—according to a ValueInsured Modern Homebuyer Survey, only 48% of millennials think that buying a home is a good investment. This is a sharp decline from two years prior, when 77% of the same generation believed in the value of purchasing a home. Many explanations have been proposed for the downward trend in millennials’ view of the value of real estate, but one popular theory is that millennials are a generation that values experiences over products, preferring to spend money on ephemeral things rather than physical objects. This theory has gained significant traction among people who seek to understand changes in young people’s spending habits, particularly when it comes to their reluctance to make expensive, permanent purchases like real estate.

When millennials are asked about their views on homeownership, however, the answers they give tend to refute this belief.

However, other theories have been proposed that have less to do with the unique characteristics of the millennial generation and more to do with external pressures. The previously mentioned survey offers different explanations for millennials’ reluctance to invest in homeownership. For instance, 49% of first-time homebuyers are concerned that rising mortgage rates could cause homes that are affordable now to become unaffordable in the future. Other economic anxieties factor into this reluctance to buy houses; 67% of first-time buyers worry that they will be unable to save enough money to buy a house they actually want to live in, and 52% believe that a home they buy now is likely to drop in value within a year. Additionally, 68% worry about the threat of another housing crisis, and 64% worry that they’ll suffer from buyer’s remorse after purchasing a home.

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Despite the reality of these widespread economic anxieties, however, many believe that millennials simply choose not to buy houses because they prioritize investing in experiences. When millennials are asked about their views on homeownership, however, the answers they give tend to refute this belief. One of the factors that delays homeownership for the millennial generation is the burden of financial obligations like student debt, which has exploded in recent years, and the slow rate of wage growth over the past several years. However, research has shown that when these financial burdens are lifted, such as when a person finishes paying off their student loans or gets a higher-paying job, rates of homeownership among millennials increase dramatically. That being said, even when the financial burdens faced by millennials are taken out of the equation, many millennials still can’t afford to buy a house. This is because the price of housing has also increased. And while a handful of millennials have taken to a “digital nomad” lifestyle, living in a mobile home and working remotely, this trend appeals to only a small number of people, as such a lifestyle can become immensely difficult both for social and practical reasons. In fact, this trend is likely driven not by millennials’ unique interest in experiences over things, but rather by financial difficulties, as the lifestyle of a “digital nomad” is one of the more affordable ways to live. Nevertheless, the myth that millennials’ spending habits are driven by preferences for experiences rather than financial difficulties persists, and continues to serve as a justification for blaming this generation for killing any number of industries.