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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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Red Flags in the Real Estate Market

by Hart Real Estate Solutions

The real estate market is similar to the stock market—it’s a roller coaster. Prices fluctuate, demand is seasonal, and a lot of money can be made by those who know how to play the game.

Tracking the trends and market conditions of your local area is key to anticipating opportunities and threats in the real estate market. Here are some of the biggest factors to look for to help you make smart, informed decisions, whether buying or selling a home.

Months of Supply, or Days on Market (DOM), determines whether the market favors buyers or sellers. As the phrase implies, months of supply indicates the average number of months it takes for a house to sell. Greater than 6 months of supply is considered a buyer’s market, less than 4 months is considered a seller’s market, and anywhere between the two is considered a balanced market.

Number of Closed Sales is a great way to get a feel of how “hot” the market is. Following the trend for closed sales is helpful for understanding the seasonality of your local market. Summer months are typically much busier than winter months.

Mortgage Rates is a major factor in determining buyer demand. The rule of thumb is that as rates go up, buyer demand goes down. In particular, if mortgage rates and housing prices outpace income levels (which is a national trend today), buyer demand will likely decline as home affordability becomes an issue. The Fed funds rate is also an indicator for which direction mortgage rates will go, and the Federal Reserve normally announces what the Fed funds rate will be in the coming years.  

New Construction is a big player (especially today) in determining price levels and available inventory. Currently, much of the nation (including here in Bozeman, Montana) is experiencing a housing shortage, causing prices to rise and intense competition among homebuyers. The construction industry is still recovering from the housing crisis, and is struggling to keep up with demand as millennials enter their prime home buying years.

Local Development is vital to uncover opportunity. Much like a business, real estate investment is all about location, location, location. Development such as new roads, schools, and shopping centers are all signs that property values may increase. A growing community (like Bozeman, Montana) can be very profitable you invest early.

Housing Affordability in city limits is an indicator for future development in outlying areas. Much like what we’re experiencing here in Bozeman, as properties in town become limited and overpriced, you can expect the outer fringes to soon be in high demand.    

Staying informed with these trends will help equip you with the best decisions going into the real estate market. Anticipating which direction the market will turn will not only uncover investment opportunity, but also help insulate you from any threats (like the recent housing crisis).

For exclusive information and statistics in your local market, you can contact a Realtor® for the most recent market conditions. Subscribe to our newsletter, and once a month, we’ll send you local market reports and news updates for the Bozeman, Montana area. 


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Mortgage Rates Hit Lowest for 2014

by Tim Hart

After mortgage rates dropped in the U.S. for the second week in a row, borrowing costs hit their lowest rate yet for 2014. This week, the average rate shifted from 4.12% to 4.1% for a 30 year fixed mortgage. Although the percentage shift may be small, when added up over 30 years, even the smallest changes can greatly impact the cost of home ownership. A 30 year rate has not been this low since the end of October last year. 15 year mortgages also saw price reductions, slipping from 3.24% to 3.23% this month. The 30 year rate has been consistently declining since it had hit a two year high of 4.58% last August. Experts foresee the lower rates supporting and fostering home demand. July trends support these expert’s claims, as previously owned homes sold at an annualized rate of 5.15 million this July, up 2.4% from June. The longer the rates stay low, the more activity can be expected in the future of the US housing market.

Source: http://realestate.msn.com/blogs/post--mortgage-rates-hit-new-2014-low

Off-Leash Dog Park Coming to Bozeman

by Tim Hart

A new dog park will be coming to Bozeman. The park will provide off-leash options, which is even better news for dog owners. The new park will be located at Rocky Creek Farm off of Frontage Road. Starting today, owners will be able to visit the fully fenced 2-acre park. The 2-acre park will allow for dogs off leash and is only the first phase in an effort to create a much larger dog park with both off leash and on-leash options. Soon, new trails will be created that will provide dog owners with on-leash hiking options as well. The park is now accessible thanks to West Paw Design, who finished installing a new bridge, opening up access to the park. West Paw Design also chipped in $6,000 worth of fencing and other small projects to get the dog park starting strong. Dog owners can now look forward to another beautiful park to take their dogs. Having a park with off-leash access will also provide the dogs with a fun, friendly environment to meet other dogs and not be constantly on-leash in public. Having a dog in the home has become even more worry free in Bozeman with this additional dog park, providing a place for home owners to get their dogs out of the house and burning some of that seemingly never ending dog energy.

Want to be Happier & Healthier—Buy a Home

by Tim Hart

Canada Mortgage and Housing Corp. has done a recent study on Habitat for Humanity families evaluating the amount a family’s life changes when they move into a home. The results ultimately found that families who own a home are healthier, happier and more financially secure.

  • 89% said their lives improved since they moved into their homes.
  • 86% said they’re happier since owning a home.
  • Children’s school performance improved, they saw signs of increased confidence, improved behavior and enjoyment for studying and social activities.
  • 75% said their health had improved since becoming home owners.

"There is evidence from numerous studies that attest to the benefits [of home ownership] accruing to many segments of society,” according to Canadian researchers. “Home ownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates and lessens welfare dependency."

http://www.realtor.org/sites/default/files/social-benefits-of-stable-housing-2012-04.pdf

http://realtormag.realtor.org/news-and-commentary/feature/article/2013/03/remaking-dream

http://realtormag.realtor.org/daily-news/2013/05/15/realtors-right-path-ready-for-action

 

Real Estate Recovery: Good and Misunderstood

by Tim Hart

Misunderstood News:

April saw a sharp fall in housing starts primarily due to apartment and condominium declines. The Census Bureau reported a 17% reduction for the month with a 38% drop in multi-family units. This emphasizes the volatility of the market since each livable unit with such buildings counts as an individual statistic. New building starts boasted gains of 14%--much coming from the building of large apartment buildings.

 

Straight–Forward Good News:

The two more stable measurements, single-family home starts, fell only 2% allowing the overall stat to remain 21% above last year’s levels. In addition, near-record low mortgage rates in combination with the drop in foreclosures and by extension a constricting of the new home supplies available for sale have all been positive strengthening influences on the housing market and national economic growth.

Take the good news with the bad but don’t get too carried away by either side!

http://money.cnn.com/2013/04/30/real_estate/home-lotteries/index.html?iid=EL

http://money.cnn.com/2013/05/16/news/economy/home-building/index.html

 

BUY A HOME NOW: 4 Undeniable Reasons

by Tim Hart
  • PRICE IS RIGHT- Single-family home prices are at a decade low with their median reaching $154,600 in January! During the house market’s peak, this same figure was $230,900.
  • BUYING V. RENTING BALANCE– As many of my blogs have been emphasizing, the balance that is ever shifting between home-ownership and renting is firmly on the side of home-ownership. Rents are on a sharp rise and home affordability is as well. Two trends that make a big statement.
Read more about this issue:
  • INVENTORIES– Inventories are shrinking. “When excess supply dries up, people start building more new houses, which has the virtuous effect of reducing the unemployment rate and increasing the economy generally,” according to a USA Today article.
  • MORTGAGE RATES– The average 30-year fixed rate mortgage (most popular choice for hoem buyers) is 3.59% just above the all time record setting rate of 3.49% that was recorded in July.
“It’s hard to argue against buying a house now, assuming you can get a loan,” writes John Waggoner, a columnist with USA Today. Sure, Waggoner says that getting a credit check for approval of a mortgage can be a “only slightly less intrusive than a CIA background check,” but for those who are able to qualify, a lot of analysts say that now can be a good time to purchase a home.
Source: “If You Can Pull it Off, a House is a Smart Investment,” USA Today (Aug. 9, 2012) 

Market on the Mend

by Tim Hart

Overall, recent housing reports have shown that the housing market is picking up across the country.

"Excluding distressed sales, home prices in March and April are improving at a rate not seen since late 2006 and appreciating at a faster rate than during the tax-credit boomlet in 2010," says Mark Fleming, chief economist for CoreLogic. "Nationally, the supply of homes in current inventory is down to 6.5 months, a level not seen in more than five years, in part driven by the ‘locked in’ position of so many home owners in negative equity."

Source: “CoreLogic: Phoenix Leads the Nation in Home Value Gains,” Phoenix Business Journal Online (June 5, 2012)’

 

 

Market Stabilizing? Home Inventories Fall by Nearly 20%

by Tim Hart

Home inventories of for-sale listings continue to fall, which may help raise overall housing prices as demand picks up.

Inventory of for-sale single-family homes, condos, townhouses, and co-ops dropped by 18.85 percent in April compared to a year ago, according to housing data of 146 metro markets tracked by REALTOR.com

“These key indicators continue to suggest the housing market may be at a turning point and headed towards a broad-based recovery,” REALTOR.com notes in a release on its April housing data. “Lower inventories, combined with faster moving markets and relatively stable median listing prices are indicative of the kind of balanced housing market that has not been seen in many years.”

On a national basis, the median age of inventory dropped nearly 12 percent year-over-year. 

 

NOW: Time to Take Action If You Are Looking to Buy

by Tim Hart

“Buying a home cannot get any cheaper than it is right now.” Headlines like this will not be as frequent in the year to come according to predictions made by housing experts. Housing prices are down 34% nationally since 2006. Chief economist for PNC Financial Services expects these historical rates to flatten by the third quarter of this year.

REASONS:

  • Decline in Foreclosures: The process is being streamlined and buyers are getting less trigger shy with snagging foreclosures up. 
  • Job Growth: Rising unemployment rates increase the confidence in the economic market as well as the housing market. This translated as more aggressive and determined buyers are looking to buy.
  • Better Access to Mortgages: Costco is even into the mortgage game!
  • Basic Supply/Demand: Buying is cheaper than renting. Listings are not staying on the market. Demand is spiking and the supply is dwindling. 

 

Displaying blog entries 1-10 of 18

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