Homebuyers are starting to get nervous, at least that’s what I’ve been hearing. Inventory’s down and rates are steadily increasing, no? Most probably won’t remember, last year there was an uncharacteristically large drop in February’s home sales, but we rebounded very nicely in March. Regardless, there have been other things preoccupying our time recently such as Stella, Russia, the World Baseball Classic, March Madness right down to the Sweet Sixteen and everything in between, and real estate has taken somewhat of a back-seat thus far in 2017. That will change.
Here are 4 reasons you should be talking about spring real estate this year:
Last Wednesday, we received the news that the Federal Reserve has raised its benchmark rate and this in turn, has sent some into a panic. If you’re looking to purchase a home in 2017, maybe even thinking 2018, don’t fret, a Fed rate hike doesn’t automatically correspond to mortgage rate increases. Yes, we could see mortgage rates climb to 4.5%-4.75% by year’s end, but those are “abyss-mal” from a historical perspective and believe it or not, below the rates a decade ago.
Let’s say you were planning on making a home purchase a year from now where rates would be hovering around 5%, and conceivably this would be a rate-increase you couldn’t afford for a particular home you desired (having certain specifications). We’ll apply this to our present day and look ahead to March 2018 as well:
|March 2017 Purchase||March 2018 Purchase Low||March 2018 Purchase Avg.||March 2018 Purchase High|
|Loan Terms||30-year fixed||30-year fixed||30-year fixed||30-year fixed|
|Monthly Payment (P&I)||$640||$698||$778||$918|
|Monthly 2017 Savings||—||$58||$65||$77|
|Yearly 2017 Savings||—||$696||$780||$924|
Keep in mind in our local market, the average purchase price is $130,239 (year-to-date 2017, through the Greater Scranton Board of REALTORS®). Note that the average sales price, each quarter since Q1 2014 until the present has fluctuated between $130,239 and $171,277. Also, note interest rates vary based upon your credit score and the type of loan program/lender one utilizes.
I think it’s important to acknowledge these range of values as well as the mean purchase price of $145,290 (average price of the last thirteen quarters – GSBR). If a homebuyer waits a full year to purchase a $171,000 home, they will lose approximately $900+ per year. I think homebuyers on the fence should strongly consider getting off: At the current average sales price, they will still save about $700/year, by purchasing now versus later.
We saw “all indicators point to [last] spring being the busiest since 2006” (in a statement released a year ago from Jonathan Smoke, Chief Economist at realtor.com). Freddie Mac, the public government-sponsored enterprise and mortgage loan company, also made a very similar claim at the time. Not only did this come to fruition, but it carried over into the summer selling season in such a fashion that July was a-typically hot.
So are some of these same factors present in 2017? Yes, historically low interest rates are still present. The job market is looking robust and more promising. Millennials will persist in dominating homebuyer market share and this segment will continue to produce more families. I’m no Mr. Smoke, but I would say many of these trends still exist.
Locally, our average and median sales prices continue to rise year-over-year:
|Average Sales Price||Median Sales Price|
I also believe there’s still repressed housing demand from local buyers. We’re seeing that despite lower than normal inventories (see below), buyers are still purchasing (pending home sales remain on par with last year through February, 338). These are great signs for this spring market!
Homes Show Their Best
During this time of the year (as Stella’s stain fades), we’ll begin to see tulips budding and many of the winter shades of gray turn into the greens of spring. With a quick trip to Lowes, some meaningful landscaping attention and perhaps a good old exterior power-wash, the curb appeal for prospective listings in Northeastern Pennsylvania can show their best.
Perception can be vital here. Many homebuyers will assume your house’s outward appearance mimics its inward appeal (even if there’s no correlation). Think about how buyers might experience it at first glance. Put yourself “in their eyes” – depersonalize and use this season to your advantage. If you’re looking to sell this year, spring is perhaps the optimal time to showcase your home.
Newer Marketing Channels Are Beginning To Emerge
There are various promotional channels which have existed for some time now, namely MLS, professional photography, detailed property description and open houses, among others. In addition to these, there are also those intangibles which can really differentiate your home from the rest of the competition such as working with a knowledgeable real estate professional who knows and understands your hyper-local market, establishing the finest first impression for your property online first, then in person, and hiring an agent that drives social media marketing (trust me, they will promote your investment to a much larger pool of buyers).
This brings me to a significant crossroads in real estate in 2017: Newer channels to market clients’ homes are emerging such a Snapchat, Facebook Stories, not to mention we’ve recently witnessed how Instagram and Pinterest can be game-changers for some in real estate. Video continues to reshape and evolve the landscape. Geo-fencing has become a wonderful real estate farming mechanism. These are some of the innovative tools available to today’s real estate professional, which absolutely should be used to sell homes.
As our economy arises from the Great Recession, we are experiencing signs of life. If inflation is controlled, sustained growth over the years can indeed be promising for many avenues, including real estate. Last spring was one to remember, but there’s no reason we won’t encounter a similar season in 2017. Consumers will be talking about real estate more in the weeks to come. And the above four reasons are why you should be talking about spring real estate too!