Monthly Archives: February 2019

 

As a general rule, the strength of the United States economy significantly impacts the strength of the real estate economy. Whether assessing GDP, unemployment, or income growth, each variable has a unique impact on the real estate market, specifically how investors and homeowners can react. Most homeowners understand these aspects of the US economy; however, many are not avid followers of the stock market. Perhaps they are not personally investing, or maybe they have a managed fund – either way, understanding the connection is important for any individual associated to both markets

Understanding the Connection

There is an indirect correlation between the two markets related to the status of interest rates – specifically mortgage rates. In times of low volatility, lenders tend to offer lower interest rates, therefore increasing the opportunities for potential home buyers. In times of high volatility, the opposite occurs – mortgage rates are higher and few buyers are permitted the option to purchase, ultimately slowing down the housing market. Increased mortgage rates do not only impact home buyers, but also investors seeking investment properties. As this occurs homes become in less demand creating a decline in the housing market as well.

Volatility can also have an impact on the down payment required by the lender. Similar to the scenario above, a more volatile market can create higher demand for larger down-payments from potential home buyers. Ultimately, high volatility in the market can lessen the number of potential home buyers, therefore reducing the competition for any seller. The final result: a lower selling price for the home.

Additionally, there is a strong relation between the real estate market and the stocks of companies that supports the real estate market. For example, reviewing companies like Home Depot, D.R. Horton, and Lennar can provide homeowners an understanding of the anticipated future of their house’s values.

Lastly, reviewing the overview of the US economy as a whole, including the strength of the stock market, can give homeowners and potential home buyers a general idea of the status of the economic health of the country. If investors think the U.S. housing bubble will burst, they will start selling these stocks related to the real estate and housing market.

Today’s Market

• Interest rates are rising. Since this is one of the only connections between the two markets, the change in lending should not go unnoticed. Throughout 2018, the Federal Reserve raised the central bank’s benchmark interest rate four times, totaling to an increase of 1%. On March 21^st, the rate raised from 1.50% to 1.75%; on June 13^th the rate raised from 1.75% – 2.00%; on September 26^th, the rate raised from 2.00% – 2.25%; then, on December 19^th, the rate raised from 2.25% to 2.50%. There is expected to be two more hikes in 2019. This rapid influx in interest rates is anticipated to slow the housing market down, reducing the number of buyers in the market.

 

• Real estate related stocks have witnessed a decline in the last year. Home Depot (HD) has gone down 1.30% YTD; D.R. Horton (DHI) has gone down 15.42% YTD; and Lennar (LEN) has gone down 22.47% YTD. Additional homebuilding stocks to review include: LGI Homes (LGIH), which has declined 3.92% YTD and Eagle Materials (EXP), which has declined 29.73% YTD. The trend seen in these stocks over the last year are an indicator that the housing market may be following a similar pattern.

What Does This Mean For You, The Homeowner?

Selling your home may be more challenging now compared to a few months ago. Rising interest rates are causing a decline in the number of home buyers and an unsteady/declining stock market is signaling a weakening in the housing market as a whole. Nevertheless, you as a homeowner do not need to fall victim to this decline. Selling your home to an all cash home buyer can provide you the stability and certainty for your next move. We here at Gulf State Homebuyers do not depend on lending when purchasing your home, therefore, the changes in interest rates do not always impact out offers. We have the capital at hand to purchase your homes, therefore removing any finance contingency in the sale. Additionally, we are also buying. Yes, the stock market may be indicating a decline in the housing market, but the reality is: the housing market is still strong. And we can provide you a competitive offer than reflects how exactly the local market is doing.

To learn more, contact us today for your free consultation.

 

Whether you are a current or prospective homeowner, determining the type of house you want to purchase next is a critical decision in the home buying process. There are basically two types of homes you can choose from: an old one or a new one. In this article we will outline the differences between your options, hopefully providing you with the knowledge you need for your next investment.

Now, Let’s Compare!

Purchase Price and Negotiating Opportunities

As you may have assumed, buying a new home will be more expensive and the purchase price may have less room for negotiation. Developers are strategically building track homes in neighborhoods, creating an average on-market price and closing price for homes in specific communities.

However, if you buy an older home you will have a higher chance of finding a home at a lower selling point. In addition to the lower value, there also tends to be more room for negotiation in the sale. Homeowners know the value of their home and the challenges with competing with newer models; therefore, they usually have more leniency on the closing terms.

Maintenance

Newly constructed houses should require minimal maintenance, providing you with peace of mind on the cost of the home upfront. Older model homes however are often bought as an investment with multiple DIY (do it yourself) projects required in the future. Furthermore, as time goes on, it’s inevitable that the older home will have more issues than a newer one, requiring even more time and money.

Home Design: Character and Space

Older homes are smaller but are often described as having more character. With years of life happening in them, they have the personality that some homeowners are looking for. Newer homes however are generally designed with a more open-space concept and with white walls. This allows incoming residents to decide how they want to decorate the space, giving it their own unique touch.

Warranties

This one is simple. Older homes generally do not have warranties unless the current homeowner has recently installed appliances or upgraded the property and obtained a warranty – such as for the roof. Newer homes, especially those that are brand new, will provide homeowners with the comfort of knowing that any future issues within the warranty timeframe will be covered by the manufacturer or company responsible for the work

Energy Efficiency

This topic is prevalent for two types of home buyers. First off, if someone is looking for an eco-friendly home, older homes are not the avenue to choose. Newer homes generally include double plane windows, energy efficient HVAC systems, on-demand water heaters and heat pumps, and much more. Not only are these energy efficient homes environmentally friendly, but they also help homeowners save money. Upgrades and additions such as those listed reduce energy usage and therefore reduce monthly bills. If you purchase an older home however, transitioning it to an energy efficient home can be quite costly; consequently, both the upgrades and the long-term expensive bills are not typically a financially sound decision.

Security

We are not talking about your typical front door security system, but rather an improved architectural design that helps with the security of your home and your family. Newer homes often include features that help enhance these qualities, including strong construction materials, already installed alarms and sensors, and high-performance locks.

Assessing your options, along with reviewing what is available in the market, is the key to making a financially responsible decision for your future. It is imperative that if you do decide to purchase an older home, you are prepared to take on the DIY projects and unexpected maintenance issues that come along with the house.

What if you live in an old home, but want to move into a new home?

At the end of the day, moving can be expensive. But as you can see from the list above, the benefits of living in a newer home greatly outweigh the benefits of living in an older home. There is a simple solution for you if you are considering moving: sell to us. We are Gulf State Homebuyers, an all-cash home buying company located in Baytown, TX. We are dedicated to helping individuals in our community transition into the newer home of their dreams. The benefits of selling to us include: we cover all closing costs and we charge no agent fees, plus we help with moving costs! To learn more about how we can help you, contact us today!

 

Last week we posted Part 1 of “4 Questions To Ask Your Broker Before Listing and How Do Their Answers Compare to An All Cash Buyer?” We recognized however that this list was short, and there are probably a lot more questions going through your head about what to ask your real estate broker. Therefore, we have decided to continue with a Part 2 series, identifying the next four most important questions you can ask your broker; and again, outlining how our process differentiates from theirs.

In case you missed Part 1, here is what we covered: What are your fees? Can you explain the process of selling to me? What’s the best price you think my home can sell for? Can you guarantee that price? How long do you think it will take to close on my home? So, without further a dew let’s look at a four more questions to ask your broker.

1 – What is your average list-price-to-sales-price ratio?

For this question there is no single answer that is correct – the answer depends on the real estate agent you are interviewing. However, it is vital to recognize the importance of their response. To get started, you need to understand: What is a list-price-to-sales-price ratio? This is the correlation between the listing price the agent will take your home to market versus the price they will actually close on. An accurate assessment of your home’s value would bring this ratio close to one, or 100%. If there is a large discrepancy in this number, it should be a sign that the agent you are interviewing is not the right one for you.

At Gulf State Homebuyers, we match our offer. We have valued hundreds of homes and are constantly staying active and knowledgeable on current market trends. Therefore, the offer that we provide is the price that we close on.

2 – What marketing tools will you use to market my home?

An effective broker will have an array of marketing tools that they will use to effectively market your home. These tools can include: creating appealing brochures of your home and sending them to their list of active agents and investors, committing to open houses, and/or posting your home on various online platforms. You will want to be sure to fully understand the strategy they will be using. An agent who does not utilize every effective method may be leaving your money on the table.

We make this simple. We use no agents and we do not need marketing material. We have the capital to buy your home at the price we offer. This allows you to be stress-free about whether or not your home is being marketed competitively.  

3 – How will we be communicating and how often will you send me updates?

This may seem like a silly question. However, since all agents and brokers are different, it is key that you understand how and when you can expect your agent to communicate with you. Again, there is no exact approach to this – it all depends on your preference. Nevertheless, be sure that your agent understands your expectations before getting started with him or her.

First let’s recognize that selling to an all cash buyer reduces stress because the process is condensed to as few as five days. Our communication is simple and direct. To get started, we assess your home’s value and send you our offer. If you accept, we prepare the paperwork then contact you so that you can come sign and collect.

4 – What are the closing costs?

Closing costs on a home in Texas can range from 2% – 5% of the homes purchase price. Remember though, this is in addition to the agent fees you will be paying. Ensure that you fully understand what you as the seller are responsible for so that you can have an estimate of the profit you will actually make after selling your home via an agent.

Selling to us you are responsible for ZERO closing costs. We cover all fees associated with closing the home. As said multiple times, the offer we provide is the amount you get to take home in your pocket.

The most important recommendation we can make to anyone considering working with an agent is that they fully understand the process of selling their home, their responsibilities and their agents’ responsibilities, as well as the fees they will be paying. There are so many factors that can impact the sale of a home on the open market and the wrong decision can lose you, the home seller, money.

However, if you want to make the sale quick and simple, contact us today and we can help you get into your next home quickly!