Tag Archive for: Homeownership

Homeownership isn’t for everyone! I know that can sound downright strange coming from a real estate firm. Yes, we are in the business of selling homes. We’re in the business of connecting buyers and sellers. We’re a company that’s predicated upon building and nurturing relationships with our clients, our agents, lenders, appraisers, inspectors and other professionals. Yet, while owning a home is typically seen as a sound investment, there are situations when it may not be financially advantageous to buy one.

For example, you might not want to own a home if there’s uncertainty about your future or your job security, as committing to a mortgage could prove burdensome, if income becomes unstable. Another factor to consider is if you’re carrying high levels of debt. If you’re in a financial deficit, it may be more feasible to rent and focus on paying off obligations before taking on the additional financial responsibility of a home. Paying down/off higher-interest debts can raise your credit score as well, which will help you achieve a better mortgage rate for your next home purchase. Additionally, if you plan to relocate frequently due to work or personal reasons, the costs associated with buying, selling and moving can make renting a more favorable option as well. Ultimately, the decision to buy a home should be carefully weighed against all personal satisfaction with your current residence, financial position and job situation.

On the other hand, if you are a property owner, welcome to the wonderful world of ownership (and maybe lower taxable income too). With that being said, did you know, there are ways that you can increase or likewise decrease the value of your home? And this can happen even over short timeframes.

Increase Your Home’s Value

Increasing the value of your home in less than one year can be achieved through different ways. One effective method is to focus on curb appeal by enhancing the aesthetics of the exterior. This can be done by maintaining a well-manicured lawn, planting flowers and shrubs, and adding a fresh coat of paint to the front door (choose that color wisely!). Upgrades to your home’s exterior can be relatively affordable. This is the one area where sellers can give themselves a boost when debuting their home for sale. Another approach is to update key areas in the house such as the kitchen or bathroom, as these rooms often have a significant impact on the overall value of the home. Maybe it’s time that your kitchen finally got a face-lift. The condition of the kitchen and the bathrooms are often the hinge on what buyers tend to gravitate towards or away from when engaged in their search. The kitchen, like the main living area, is a frequently visited room, and as such, potential buyers are looking for modern beauty and convenience here, when possible. Additionally, improving energy efficiency by installing energy-saving appliances/lighting, improving insulation and opting for eco-friendly materials can boost the value of your home too. Smart home technology has been one of the safest investments in recent years. The ability to adjust the temperature, security or lighting in your home from a distance is a real game-changer. There’s a certain peace-of-mind in this sector of home improvement and unfortunately for some sellers, this is a must-have for a handful of buyers.

If you have other questions about valuation or selling, in general, click here.

Negatively Impacting Your Home’s Value

On the flip side, there are several actions that can quickly diminish the value of your home. For one, neglecting maintenance and repairs is one of the easiest ways to decrease value. This includes ignoring necessary fixes like leaking roofs, faulty plumbing or electrical issues. If homeowners avoid addressing a major issue, it could balloon into something intolerable. Water is a good example of this. A water dilemma, left to its own devices, could become a big financial headache for owners of a property. Another pitfall you might want to evade is engaging in excessive customization that may not appeal to the general public, such as unconventional color choices or highly specific themed rooms. Lime green or Pepto-Bismol pink, anyone? Or think solarium or home theater. While you might love those colors or while these might be intriguing rooms, a real hub for excitement in a home, they’re not for everyone. In fact, there’s a segment of homebuyers who would never have a use for either color or room. Lastly, failing to maintain an overall clean and tidy household, including proper hygiene and cleanliness, can also reduce the overall value of your home or at least its perceived value. Many of the buyers we work with are thankful for their ability to rely on their five senses during their home search. Sight and smell are as important as any and they can single-handedly make buyers do an about-face upon entering a residence.

There are also some pretty strange elements which can impact your home’s worth. Some of them might catch you off guard.

 

As you examine your property, probing the aspects you can – remember, you’re probably not a licensed home inspector. Take note of what requires your attention and make a plan based upon that, calling upon professionals when needed. Pinpoint areas where updating will raise the value of your home. Maintenance, repairs and upgrades will positively affect the valuation of your property as well as your confidence as a homeowner.

The later part of this year might bring about some stabilization in the way of a more balanced market, but don’t expect one favoring buyers anytime soon. As inventory shortages continue, and they will, prospective homebuyers are attempting to determine if they should stay in the game. Others have doubts and aren’t sure if they should join the quest for homeownership either.

The anticipation of homeownership can be intoxicating for some. Recent months have been a prime example of this in our region of Northeastern Pennsylvania. With homes sold on par with the previous year (843 versus 853, respectively)*, and inventory struggling to see the light of day (1.29 month’s supply),* there’s an element of hysteria to real estate transactions these days. Certainly the pandemic was a catalyst for the surge in activity, but make no mistake about it, our housing supply had already been depleted prior to 2020.

Before we reveal why now is a good time to buy, there are a couple reasons we caution some to re-evaluate their situation before purchasing a home. These reasons include those facing upheaval in their lives, those who must remain nomadic for the sake of their job as well as anyone who struggles to cover their monthly expenses. If your life is a little frantic today and you’re going through transitions, purchasing a home might not be the best course of action. If you’ve undergone more change than you care to admit, renting may provide you more freedom and less stress. It’s also favorable for those who need to move promptly due to work. Homeownership can only create headaches for these successful itinerant types, who could potentially sit on the sidelines waiting longer than expected for their home to sell. Finally, owning a home comes with maintenance, presumably a mortgage, taxes, insurance and occasionally other fees/costs. If you presently grapple with covering your expenses and debt, purchasing a home isn’t a path you should pursue until your situation changes for the better.

Obviously, renting in particular situations just makes sense! Doesn’t a seller’s market, the likes of 2022, qualify as one of those instances? Not necessarily. In fact, since the “lockdown dam” ruptured in June of 2020, rents have been rising too.

Yes, glaring issues in our economy such as inflation, the increasing costs for food/gas, among others, create barriers to buying (we can’t minimize them), but opportunities exist for those looking to enter the market, especially for the first time. They remain even in the midst of a supply shortage.

Homebuyers, now is the perfect time to pursue homeownership, especially if you don’t need to sell and your rental rates are continuing to climb. Purchasing property is advantageous, and in the majority of cases, will be the smarter play over leasing. Here are the top three reasons why purchasing a home (or likewise, continuing to own one) now makes sense.

Stability

Because the landscape for buying and selling is more volatile recently, having a meticulous plan of approach is essential. Before you commit to taking on a mortgage, understand your finances and prepare them appropriately. The first step toward investing in your future in real estate is stability. If you’re grounded in your finances, with trace amounts of bad debt in your name, and you have the ability to afford a home at a particular price point in addition to the closing costs that are associated with it, you’re in a good position to invest. If you have a nest egg or emergency fund, you’re in a superb position. Of course, having excellent credit gives you a competitive advantage and firmer stability still.

You’ve Been Squandering Your Extra Money

If you’re looking for safer places to store your loot, you should strongly consider building equity by purchasing a home. Homeownership forces you to produce equity. On the other hand, renting makes it easier to spend your extra cash rather than invest it. The money you’re putting into a home will come back to you as your property appreciates over time. In 2021, we witnessed homes appreciate by roughly 19% and they should sustain 5-10% through year’s end. Housing appreciation in the Greater Scranton area registers 13.1%, year-over-year for the April.* According to the latest numbers from CoreLogic from March, homes have appreciated by 20.9%, year-over-year. It’s a great time to make an investment in a home!

Feel At Home

As a result of owning property, you can create something that’s truly yours. Would you like to renovate? You can. [Make sure to check with your local municipality/borough first.] Want a bigger say in lifestyle decisions? Make them for yourself and your family. Need increased privacy? You’re in the driver’s seat. You can make additions to your property to make it more secure. You can erect shrubs and fences. Alter the landscaping or design of your residence, because you can – you’re captain of this ship. Don’t worry about the logistics! Homeownership means less restrictions and limitations and more freedom.

Why not own a place you can call home, when it’s all said and done? As a prospective homebuyer, especially a first-time one, you have the ability to invest in your family and create a foundation to build on, for their stability too. What’s more, homeownership statistically creates a better environment for children. There are many intangibles produced when a child has a safe and affordable place to live. Furthermore, homeownership drives your local economy and has the potential to enhance your community. For every two home sales, one job is generated, increasing economic mobility

If you’re looking for housing, don’t give up hope. Our region might be slightly oversaturated with buyers, but that continues to improve. What we can expect six months from now is anyone’s guess, but we’re approaching a more balanced market in the months ahead. At the moment, it’s a great time to buy, and if you’re in the position to do so, will you take the steps necessary to join those who find homeownership very rewarding?

* statistics from the Greater Scranton Board of REALTORS®

Over a decade ago, the Great Recession was coming to an end. Mortgage lenders were beginning to tighten their requirements as they were sifting through the mess of an influx of foreclosures. Housing prices began to plummet. Millennials, anyone who was then ages 13 to 28, obviously didn’t have much of an impact on the housing market, many will still in school. Over the course of the past decade, home prices as well as the impact this generation has had on housing have steadily increased. The question remains though: What sort of effect have they had?

A recent article from Fortune written by Shawn Tully discusses the challenges millennials have encountered in recent years in a slightly volatile real estate market. Although housing experienced cheaper prices relative to the previous decade, millennials had little impact until two years ago. “[M]illennials had loads of college debt, and many had bad credit,” as the above mentioned cites. Until 2017, this generation became the “lost generation” when it came to home ownership. Last year, they made a big impression accounting for half of new homes sales. Now it appears with under-building in home construction, diminishing home affordability and rising rates on home loans, sales could be shifting back to more affluent buyers (Gen-Xers and baby boomers). We may once again witness a drop in homeownership rates for millennials.

This is concerning for the state of affairs in many markets throughout our nation: multiple locations such as California, Nevada, New York, Florida, just to name a few. The cost of housing has spiked so much in recent years that first-time homebuyers, many of which are millennials, don’t stand a chance. Yet, not all millennials are fighting this battle. In Northeastern Pennsylvania, the “lost generation” continues to be found in the first-time homebuyer market.

The Greater Scranton market presently carries with it an absorption rate of 6.34 year-to-date and 5.82 year-over-year (YOY) for December. Absorption rate is “the rate at which homes are selling in a specific area.” I bring this up, because this market is actually slipping into a seller’s market. Absorption rates between 6-9 (months of inventory) signal a balanced market, whereas rates between 3-6 indicate a normal seller’s market. Millennials are actually the catalyst. They’re buying up homes now.

Millennials, the largest generation in our country, lead the charge to homeownership and improved financial stability in Northeastern PA. As family formation increases in our area this year, we’ll see the effect this “lost generation” has on the growth of our local economy.