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To Buy Before or After Selling Your Home?

by Hart Real Estate Solutions

One of the biggest frustrations in the real estate market is timing. Having another property lined-up after selling a home is not always easy. The ideal scenario for sellers is to close on their current home just as they purchase a new one, allowing a seamless move.

Unfortunately, as in most markets, it’s difficult to accurately predict timing between sale and purchase, causing frustrating conflicts in the transition process. The time-frame for getting a home under contract can range anywhere from days (not uncommon in here in Bozeman, Montana) to months or even years (typically for higher priced homes). This is why hiring a Realtor® is worth the investment to gain market insights about local inventory, months of supply, and other market conditions not entirely available to the public.        

In short, there’s no concrete answer about whether it’s better to buy before or after selling your current home. There are pros and cons to either decision (or outcome).

To Buy First?

Pros

If you have the financing available, buying a new home first may be a viable option. Having a home lined-up in advance has the obvious benefit of relieving pressure on your home search. This is typically the biggest advantage of buying first, because buying a home is no small deal, so you really shouldn’t rush and buy under pressure.

Buying first also allows you to move all your stuff and get your home just right before you move in, and again, without having to rush.

Another benefit of buying first is that, although you may end up having an extra mortgage payment, you won’t have to find a place to rent while searching for a new home. And because most renting agreements require a year lease, renting may not be the best option for you.

Cons

However, there exists the risk of not being able to sell your current home, or at least at the price or time-frame you were hoping for, adding the cost of a second mortgage.

Another major disappointment that you may face when buying first is losing out on your dream home. If you don’t have the funding to purchase a new home outright (as most people don’t), your offer will have to be contingent upon sale and transfer of title of your current home. Depending on how your contract is negotiated, a non-contingent offer may force your hand to remove a contingency in typically a 48 to 72-hour period, or terminate

To Sell First?

Pros

The main advantage of selling first is the strong position it puts you in as a buyer to negotiate, without being tied down by sale contingency terms. Offers tied to contingent-upon-sale contracts can significantly lower your negotiating power, and in a seller’s market, are often rejected.

Another great benefit of selling first is that it will give you the cash you may need for your new home.

Cons

On the other hand, selling your home before securing a new one will obviously entail the risk of not having anywhere to live in the meantime. When selling first, you may have to rent, stay at a friend’s house and pay for storage, or do whatever means necessary to find shelter in your transition between homes.

One way to avoid this, however, is to negotiate “rent-back” terms with the buyer of your current home, allowing some additional time for your home search.    

Why Hire a Real Estate Agent?

As discussed already, Realtors® have (or should have) a firm grip on local market conditions. Having experience and exclusive access to local market statistics, a Realtor® can provide a closer estimate of how long it should take for a home to sell in your neighborhood, and negotiate terms and conditions in your best interest. It’s the job of a real estate agent to be your trusted guide and ensure that the whole process, from marketing to writing a contract, flows smoothly.

With that, I have one last important tip: make sure to properly interview prospective real estate agents before entering a contract. Not all Realtors® have the same experience and wisdom in guiding you through the transaction process. Find an agent that truly cares about their clients and will go above and beyond expectations to serve you. Make sure to read through reviews, ask your friends and neighbors, and do some digging to find the right agent for you.

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Survey Finds Seceding Buyer Confidence in the Real Estate Market

by Hart Real Estate Solutions

The National Association of REALTORS® (NAR) forecasts a negligible increase in existing home sales going into 2017. According to survey findings from a total of 2,776 household respondents from the fourth quarter of 2016, consumers are losing confidence that now is a good time to buy a home.

Much of the skepticism in the market is held by renters. According to the survey, 11 percent of renters lost confidence in buying a home last year. Last quarter, 57 percent of renters believed it was a good time to buy a home, down from 68 percent in 2015.

Homeowners, on the other hand, seem to be more optimistic, with 78 percent of homeowners believing that now is a good time to buy a home. At the same time, the majority of homeowners (62 percent) believe that it is also a good time to sell.

The Contributing Factors

There are several factors that are likely contributing to the seceding buyer confidence—rising mortgage rates, steady price growth, and limited inventory, countered by an optimistic economic outlook.  

Rising Mortgage Rates—With the considerable increase in mortgage rates after the election, buyers may be reluctant to lock themselves in on a higher interest rate than they could have had. However, with expectations of a continued climb in mortgage rates through 2017 and 2018, it might be a better decision to buy now rather than later.

Steady Price Growth—There has been a steady price growth since the housing crisis, with national averages finally back to pre-recession levels. Lawrence Yun, the chief economist of the National Association of REALTORS®, says there is declining affordability in many areas of the country. With rents and home prices rising faster than income levels, more buyers are falling out of reach of their dream home.

Limited Inventory—A declining supply of inventory is another major issue, one that largely contributes to price increases. The rate of new construction is falling short of demand, by what Yun estimates to be about 3 million homes. How the construction industry accommodates for the rising demand as millennials reach their prime home buying years will shape the market in the years to come.

A Brighter Economic Outlook—The economy seems to be holding things together in the real estate market. Yun says that 2017 is expected to bring about 2 million new jobs. Unemployment levels have fallen to 4.7 percent last year, and is expected to be 4.5 percent through 2017 and 2018. According to a recent forecast from The Federal Open Market Committee projects that the U.S. GDP will rise to 2.1 percent this year.

With more jobs, and more millennials coming to market, Yun is hopeful that buyer demand will remain steady through the affordability tensions brought by rising mortgage rates and prices outpacing income growth.

With so many different factors affecting local markets, it would be wise to get in touch with a real estate agent for the best, and most informed decision about buying or selling. As NAR President William E. Brown says, “A Realtor® will have their pulse on current market conditions and can ensure a buyer is only searching for and making offers on a home that fits within the budget."

 


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4G LTE Reaching Montana's Countryside

by Hart Real Estate Solutions

It looks like Montana is becoming more connected to the modern world. Governor Steve Bullock just announced on Oct. 6 that T-Mobile is paving the way for spreading its high-speed wireless broadband reach across Montana. This will bring 4G LTE to a wider range of rural areas, reaching out to about 1.1 million people of both Montana and Wyoming.

Governor Steve Bullock has shown his enthusiasm for this development, stating in his recent letter to the Federal Communications Commission (FCC), “Increased access to high-speed internet and enhanced mobile coverage will further strengthen our state’s business climate and enable Montana businesses to thrive in a global economy and create more job opportunities for hard-working Montana families.

T-Mobile has demonstrated its commitment to this plan with the purchase of three licenses from Charter Communications to allow them to build on this broadband connection in nearly the entire area of Montana east of I-15, as well as four northwestern counties of Wyoming.

This may be groundbreaking news for those who question living out of town for the sake of losing their beloved cell-phone and Internet connection. It looks like the joys of living in a quiet country-side home will be getting even better without having to sacrifice your high-speed reception.

Buying Continues to Trump Renting

by Tim Hart

Yeah yeah, we have all heard the pros of buying a home versus renting, but when it comes down to it; do consumers act upon all that advice? Yes.

A new study has shown that in more than 75% of metro areas in the US, home owners would start saving money after only three years of home ownership as compared to renting. This figure includes down payments, closing costs, mortgage payments, property taxes, utilities, and even maintenance costs. Three years is just the average. In Miami, the turn-over to benefit only takes 1.6 years where as in California the same figure is 8.3!

"Historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5 percent over the past year," says Stan Humphries, Zillow’s chief economist.

Source: “Buying Beats Renting in Most Cities,” CNNMoney (Aug. 2, 2012)

Read More

The Buy vs. Rent Debate: Why Buying Wins
Rents Keep Rising as Demand Soars

 

 

More Reasons to Buy v. Rent

by Tim Hart

“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is more compelling house choice.” 

Are you part of the 73% increase of people who think that now is a good time? With home prices and rental prices estimated to rise in the months to come, any hesitation may detriment a buyer-to-be’s chances as securing the deal they want.

 

Source: “Americans’ Expectations Align to Encourage Home Buying,” RISMedia (May 6, 2012)

Read More

Buying is Cheaper Than Renting in Nearly All Major Cities

 

Spring Housing Trends

by Tim Hart

High Competition

Housing affordability is at its highest in years (highly impacted by falling home values and low mortgage rates). Now, inventory is dropping while the demand stays high. The result is fierce competition. Investors are pouncing on the good prices with the upper hand of doing cash only deals while traditional home-buyers can only watch or get ready for a head-to-head battle.

Renter-to-Owner Shift

"Rents are going up, and as long as there are properties at the level where investors can get the positive cash flow, they will continue to invest," says Jed Smith, managing director of quantitative research for the National Association of REALTORS.

Homes are becoming more affordable than monthly rent. Only 59.5% of tenants intend to renew their lease for the year to come.

Raising Mortgages

Fannie Mae, Freddie Mac, and the FHA have raised their loan fees which results in pricier mortgage rates. "Those who don't have credit scores in the high 600s to low 700s may be forced to go the FHA route," says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. "And they will be stuck with the higher fees."

Read about more trends expected for the spring selling-season. 

Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)

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Rental Program Urged By The Fed

by Tim Hart

The Federal Reserve has called on lawmakers to help with the ailing housing market. The Fed gave lawmakers the task of instilling more aggressive actions to prevent home values from plummeting further. Suggestions within this new surge include an idea that a government program may start renting out single-family homes in foreclosure. An REO rental program by the government-sponsored enterprises may cost mortgage servicers and bond investors; the it is the benefits in the long run that need to be weighed.  

"Some actions that cause greater losses to be sustained by the GSE in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery."

Furthermore, renting out some of Fannie Mae’s REO inventory could end in a better loss recovery than selling the property. Purhaps this is the way to create a more stable housing market bubble. 

Renting a Home Vs Owning a Home

by Tim Hart

Renting a Home Vs Owning a Home

Rising rental costs are pressing renters to match and even outspend owners in housing costs! Since 2005, owner’s housing expenses have increased from 31.9% to 33.2% of their household budget. To compare, in that same time span, renter’s housing expenses have gone from 35.6% to 38.4%. (CoreLogic US Housing and Mortgage Trends).

Looking further back, over the last 26 years home owners have increased the amount spent on household expenses by 12% and renters by 22%. Still, home ownership rates continue to drop in most parts of the country. CoreLogic found homeownership in 25-to-34 year olds has dropped the most from 51.6% to 42%. In the 35-to-44 age group, homeownership declined from 71.2% to 62.3%.

These trends are startling considering Capital Economics found that for the first time in 30 years, the median monthly mortgage is equivalent or less than the median rental payment! Please, look into the options for buying a home and when you reach the point you are ready to take a step forward, visit me!

 

Non-Traditional Living: Adults Moving in With Relatives

by Tim Hart

New studies are suggesting that 30% of adults are living with their relatives. “Doubling Up,” this trend of co-habilitation, is at levels that have not been seen since the Great Depression. The recent US Census data shows the greatest rise is found in young adults who are moving back in with parents. About 5.9 million Americans 25-34 live with their parents, a 25% increase compared to the years prior. Men are twice as likely as women to make this untraditional move in life.

In conjunction with this new data, renters and home owners are also delaying new home purchases due to tougher mortgage qualifying standards and concerns regarding the economy and job security. Still, the majority feel home ownership is an important keystone in life and they feel more and more comfortable with the direction the housing market is moving.

 

http://realtormag.realtor.org/daily-news/2011/10/13/more-adults-move-in-relatives 

Tim Hart

Cheaper to Buy Than Rent? In Most Cities, 'Yes'

by Trulia.com

Cheaper to Buy Than Rent? In Most Cities, 'Yes'

Americans in 39 of the country’s 50 largest cities are finding it’s cheaper to buy a home than rent one, according to Trulia’s second quarter Rent vs. Buy index. In its index, Trulia compared the cost of buying and renting a two-bedroom apartment, condo, or town home in the 50 largest cities in the country.

When compared to the previous quarter, buying a home has become even more affordable than renting. Trulia found last quarter that in 72 percent of the cities it was better to buy than rent, but this quarter the number has grown to 78 percent of the cities studied.

Rising rents, falling home prices, and low mortgage rates have made home ownership make more financial sense in most areas of the country, according to Trulia.

"With home prices nearing a double dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying," said Ken Shuman, Trulia's spokesperson, in a statement.

The cities where renting was a less costly option than home ownership were in New York, Fort Worth, Texas, and Kansas City, Mo.

Where It’s Cheapest to Buy vs. Rent

The following is a list of the top 12 cities where it’s cheapest to buy a home than rent.

1. Las Vegas
2. Phoenix
3. Arlington, Texas
4. Fresno, Calif.
5. Miami
6. Mesa, Ariz.
7. Jacksonville, Fla.
8. Sacramento, Calif.
9. Detroit
10. Omaha, Neb.
11. San Antonio
12. El Paso, Texas

Source: “Trulia Reveals Trend Towards Homeownership Where Affordability to Buy Versus Rent Extends to Almost Four in Five Major U.S. Cities,” Trulia.com (April 28, 2011)
 

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