217,726 Reasons to Buy a Home Now!

The inaugural Opportunity Cost Report was released recently by realtor.com. The report explained that “with interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today's market have become very steep”.

The report estimates that, based on today's dollars, the average purchaser would accumulate $217,726 in increased wealth over a 30-year period.

(You can get the projected wealth increase for almost 100 metros here.)

What could this mean to someone sitting on the fence waiting to buy?

Experts believe that both home prices and mortgage interest rates will increase over the next twelve months. Obviously, if this does happen, the monthly cost of a home a year from now will be dramatically higher than it is today. The Opportunity Cost Reportbreaks down exactly how much a purchaser could lose over increments of one year and three years. Here are the results based on an average purchaser in the U.S. delaying their purchase:

Bottom Line

If you are ready, willing and able to buy a home, waiting doesn't make sense.

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Would You Ask Your House Guests to Sign A Lease Agreement?

According to a June 11, 2015 article in the Sun Sentinel, by Gary M. Singer, a Florida attorney who is an expert in Real Estate law, owners cannot remove a squatter from their property without a court order, even if that person moves into your property without your knowledge or permission. You are not allowed to remove the person/s or their belongings and you are not allowed to change the locks or turn off utilities. Interestingly enough this also applies to your guests in your own home!

In order to remove the squatter you will need to file an “unlawful detainer” or “ejection” lawsuit depending on the situation to get the police to help. Mr. Singer recommends you sign a written lease agreement with anyone who is staying with you for more than a few days. 

As those of us who live in Florida know all too well, we are usually the hotel of choice for family and friends visiting from the north during those cold winter months. Can you just imagine the look on your guest’s faces the next time they come to stay and you whip out a written lease agreement for them to sign? In my opinion I'd rather be safe than sorry!

Link to article at Florida Association of Realtors

5 Reasons You Shouldn’t For Sale By Owner

In today's market, with homes selling quickly and prices rising some homeowners might consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons this might not be a good idea for the vast majority of sellers.

Here are five reasons:

1. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies which work for the buyer and will almost always find some problems with the house.
• The appraiser if there is a question of value

2. Exposure to Prospective Purchasers

Recent studies have shown that 88% of buyers search online for a home. That is in comparison to only 21% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

3. Results Come from the Internet

Where do buyers find the home they actually purchased?

• 43% on the internet
• 9% from a yard sign
• 1% from newspaper

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

4. FSBOing has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 9% over the last 20+ years.

5. You Net More Money when Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $208,000 while the typical house sold by an agent sells for $235,000. This doesn’t mean that an agent can get $27,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

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Guess Where Rents Are Heading?

Each month, many people are faced with the decision of renewing their rental lease for another year or purchasing their first home. One of the questions that must be answered before they make a decision is – “Where are rents headed?”

The Wall Street Journal recently wrote an article on this issue. Their conclusion:

“Apartment rental increases slowed in the first quarter from a year earlier, but the move is more likely a temporary blip than the beginning of a long-term respite for renters.”

The article goes on to quote Ryan Severino, a senior economist at Reis:

“I wish I had a better story to tell renters these days, but I think they’re in for some rent increases for the foreseeable future.”

Probably the most interesting part of the article came in the Comment Section where a proud landlord proclaimed:

“As a landlord I can tell you I don't pay property tax. I don't pay for repairs. The tenant pays. I get my money off the top.”

Here is a chart showing rent increases over the last 25+ years:

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The #1 Reason to Buy Right Now – THE MONEY!!

People often ask whether they should buy a home now or wait. Recently released data suggests that waiting may not make sense as prices seem to again be on the rise. Let’s take a look at some of the data and commentary on the subject:

Ed Stansfield, chief property economist at Capital Economics:

“The current tightness of supply conditions would normally be consistent with much faster price growth. The continued steady growth in home sales that we expect this year will only add to this upward pressure on prices.”

Case Shiller Home Price Index

“The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 4.1% annual gain in March 2015 … with a 0.8% increase for the month.”

Anand Nallathambi, CEO of CoreLogic

“All signs are pointing toward continued price appreciation throughout 2015… Tight inventories, job growth and the impact of demographics and household formation are pushing price levels in many states toward record levels.”

Danielle Hale, Director of Housing Statistics at NAR

“Even without further acceleration, the pace of price growth remains too high. Strong buyer demand and low inventories coupled with relatively low new construction are helping to push prices up, keeping the housing market tipped in favor of sellers.”

FHFA Principal Economist Andrew Leventis

"The first quarter saw strong and widespread home price growth throughout most of the country. Home prices are now, on average, roughly 20 percent above where they were three years ago. This run-up has been historically exceptional and is particularly notable in light of the limited household income growth and modest rate of overall inflation observed during that same time period."

Bottom Line

If you are planning on buying a home in the near future, waiting probably doesn’t make sense from a purely pricing standpoint.

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