Realtor Magazine | Daily Real Estate News | Wednesday, June 24, 2015
New-home sales surged to the highest rate since February 2008, as the new-construction market continues to gain ground this year. Sales of newly built single-family homes increased 2.2 percent, reaching a seasonally adjusted annual rate of 546,000 units in May, according to a report from the Commerce Department.
“Our builders are seeing motivated buyers and the release of pent-up housing demand,” says Tom Woods, chairman of the National Association of Home Builders. “However, builders are facing supply-chain challenges, which is affecting the inventory of new homes.”
Sales are nearly 20 percent higher than the pace in May 2014. New-home inventories remain tight at 206,000, a 4.5-month supply at the current sales pace. That’s pushed the average sales price of a new home sold in May to $337,000.
“This month’s new-home sales report is consistent with other government data and rising builder confidence that indicate a continual recovery of the housing market,” says David Crowe, NAHB’s chief economist.
Regionally, new-home sales were mixed in May. They rose 87.5 percent month-over-month in the Northeast and had a 13.1 percent boost in the West. However, new-home sales dropped 5.7 percent in the Midwest and 4.3 percent in the South.
Let’s take a look at who has the wind at their back in this market.
Landlords/Investors After the recession homeowners who were forced to sell are still unable to get back into the housing market, either because of credit issues or because they are being priced out of the market by the competition. There is a shortage of inventory, and there are many cash buyers with deep pockets swooping in, especially in the single family housing market. Investors make up a large portion of these cash buyers, and they turning the homes into rental properties, taking advantage of the current shortage. Rental rates are rising and occupancy is high.
Sellers If ever there was a time to sell, this is it. With the shortage of inventory, if a home is well-priced, it is going to go into multiple offers and selling quickly, most probably over the asking price. However, the downside here is that if a seller is thinking of selling and buying another home in Los Angeles, then they will put themselves in the pool with all the other buyers competing for the same homes. A seller cannot make their offer contingent on the sale of their own property as it will not be accepted, so unless they don’t have to rely on the sale of their own property to buy then they should think carefully. However, don’t worry about buying at the top of market because you are also selling at the top of the market.
Buyers If you are sick of paying someone else’s mortgage and have decided that it makes more sense to buy than rent, just be strong and stick with the market. Keep making offers until yours is the successful one. Yes it could be near the top of the market right now, but real estate will always be a good investment, and whenever you buy you will look back and be glad you did. Your alternative is to remain in the ranks below.
Renters Sometimes it just does not make sense to buy. Your rent is so cheap. You love the area in which you live and would not be able to afford to buy there. You don’t have the down payment or your credit is not good. You are nervous about committing yourself to a mortgage. These are all valid reasons not to buy. But, the rental market is a fickle one. Right now rents are on the rise, vacancies are down , and competition is high, making buying a home look more and more attractive. Do the math and see what makes more sense long term.
You’re ready to make an offer on the home of your dreams. But before you do, make sure you’re really ready. Ask yourself and your household members if this is the home for the next five or so years. Make sure everyone is on board with commitments to make it work, from putting off the dream vacation to putting in the elbow grease to clean, paint and do the yard work.
You may know that any agent who is licensed in New Yorkcan legally help you purchase or sell a home anywhere in the state. But just because it’s legal doesn’t make it a good idea.
In large metropolitan areas, it isn’t even a good idea to use an agent from the North end if you’re contemplating a transaction in the South end. It’s true that he or she might have access to the listings via the MLS (Multiple Listing Service), but the printed information in the MLS is not everything your agent needs to know. Neither is the information that listing agents post on their own websites.
Much of the information and expertise that an agent offers you is located not on-line or in print, but in their own memory banks. It comes from focused study of the local market, combined with first-hand experience.
Only an agent who is familiar with the homes in your immediate area and who knows the difference between neighborhoods can give you an accurate estimate of a home’s value. Homes that are similar in size and condition, but are located a quarter-mile apart, can have vastly different values.
Only an agent who has been watching the trends can tell you if values are rising or declining.
Only an agent who has seen similar homes in similar neighborhoods can say if your home or the home you are considering is actually comparable to others that are on the market or already sold.
Only a local agent will have his or her finger on the pulse of local politics and events – and can tell you about outside influences that could affect the value of homes in a given neighborhood.
If you’re thinking of buying or selling a home here on Staten Island, call me. I do know the local market. And if you’re planning to sell here and move to another part of New York, or even New JerseyI’ll be happy to refer you to a trusted colleague who has the expertise to help you there.