Real Estate Trends in 2016

2016

Now that we are firmly into the New Year, we can start to report and forecast some trends in real estate that will affect both buyers and sellers.

Home prices will continue to rise modestly. Economists and housing experts surveyed by Zillow expect home values to grow an average of 3.5 percent with most markets experiencing modest gains. That’s closer to historical averages and more sustainable than double-digit increases.

Rising interest rates. Rates on adjustable-rate mortgages are reacting to the Fed hike. The rate on the 30-year fixed mortgage will increase slower, because it follows the yield on the 10-year Treasury, rather than the fed rate.

Rates on a 30-year mortgage currently stand at about 4 percent, up from record lows but still favorable. The Mortgage Bankers Association expects rates to reach 4.5 percent in 2016.

Credit is getting a little looser. The average FICO score on all closed loans in the third quarter was 723, the lowest level in at least four years, according to Ellie Mae. Two years ago, the average score for denied applications was 729.

Banks may be more willing to work with homebuyers over the next year as the volume of refinances falls as interest rates rise. The competition for borrowers may result in more flexibility in credit standards and underwriting.

It will still be cheaper to buy than rent Rental rates have risen even faster than home prices in some markets. Buying a home is 36 percent cheaper than renting nationwide for Millennials and now is the best time to buy since 2012, according to Trulia. Buying is cheaper than renting in every one of the country’s 100 largest metro areas. This disparity will likely grow as rents are expected to increase by 8 percent next year.

The suburbs will make a comeback. As Millennials start families and Boomers seek quieter surroundings, suburbs are becoming a desirable destination for potential buyers. The most attractive qualities in a suburban area are walkable Main Streets, job opportunities, and public transportation.

Buyers will want green and smart homes. Affluent Baby Boomers and younger buyers are increasingly seeking homes that incorporate eco-friendly features. This includes energy efficiency, a healthier indoor environment, and longevity.

For sellers, things as small as smart thermostats and lights that can be controlled by smartphones are great ways to differentiate their properties from similar listings.

Videos will be the new photos. While high-quality, professional photographs are the norm for online listings, it isn’t enough to make your listing stand out from the competition. More sellers are working with their real estate agents to create virtual tours and videos to highlight their properties.

New homes will come back big time. New home construction was one of the hardest-hit industries after the housing bubble bust. At their lowest point in 2009, developers had scaled back production by nearly 79 percent. Construction is ramping up again. New home sales grew 15 percent last year and are forecast to rise to 26 percent in 2016, according to the National Association of Home Builders.

Thinking of selling a home this spring?

Tune in next week for must-do fixes to prepare your home.

The Millennial Market

Mill

According to a recent Pew Research Center survey, more adults between the ages of 18 and 34 are living at home than ever before.

Despite the fact that rents are predicted to increase up to 8% and that nearly 95% of renters 34 years old or younger want to own a home, Millennials who do leave home are increasingly renting while U.S. home ownership rates hit a 48-year low in 2015.

The good news for current homeowners is that home values have increased at more than twice the rate of inflation at 4-5%. For Millennials facing record levels of student debt and increasing mortgage rates, the rise in home values makes it even more difficult to secure the standard 20% down payment.

The good news for Millennials is that job prospects are improving and wages are showing signs of increasing which could create a more favorable opportunity to buy. Nearly all young renters want to own a home, even if many are also pessimistic that economic conditions will allow them to, finds a new survey by the National Association of Realtors (NAR).

This all means that there is a large demand, but limited supply, for first time owner properties. A variety of economic and personal reasons impacting potential owners have created this largely untapped demand.

Last year the percentage of first-time buyers fell to its lowest level in almost three decades. First-time buyers fell to 32% of all purchasers in 2015 from 33% last year, the third straight annual decline.

The lack of affordable first time inventory locks many Millennials into renting, while the steady rise of home values and lack of inventory creates a favorable market for current homeowners who wish to sell in the near future.

How likely are you to consider selling or buying a home this year?

Running for a Cause

run

Having survived an historic snow storm here on the East Coast, there is every reason to breathe a sigh of relief, put down the shovels, and relax. However, now is also the time when race schedules are coming out. Virginia offers an enormous variety of runs and obstacle course to fit any age and skill level. While pushing your endurance and taking in amazing scenery (or at least seeing it in the photos afterward), you have the opportunity to raise both money and awareness for the causes near and dear to you.

Central Virginia is home to many local runs benefiting organizations doing amazing work right here in our own backyard. There are so many, in fact, that runners who complete at least 26.2 miles in select non-profit races receive an official C-VILLE-athon running shirt.  Find one that moves you and get moving to help these worthy causes.

Below is a (very) partial list of upcoming events in the Central Virginia Area.

St. Jude Walk/Run to End Childhood Cancer

http://fundraising.stjude.org/site/PageServer?pagename=walk_home

5K for Foster Care

http://www.raceit.com/search/event.aspx?id=35303

The Haven ‘Run for Home’

http://www.thehaven.org/8k

Run for Autism 5K

https://runforautism5k.org/campaigns/140

Mimi’s Run 5K benefiting cardiovascular research

http://www.mimisrun5k.com/

4 The Wounded 5K to support Wounded Warriors Project

http://www.4thewounded5k.com/about.html

Run for Shelter 5K to support Shelter for Help in Emergency

https://www.shelterforhelpinemergency.org/about-us/

Run and Remember 5K to benefit Hospice of Piedmont

http://www.hopva.org/donate-now/5k/

Summer Extravaganza Run benefiting the MaDee Project that provides support to pediatric cancer patients and their families in the Staunton, Waynesboro, and Augusta County areas.

http://www.runthevalley.com/summer-extravaganza/

Did we miss a great race? Please feel free to add to the list of events benefiting organizations doing great work and making a difference.

 

 

 

The Cold Reality of Homelessness

Homeless

Two recent surveys report that 62% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair. Over 20% don’t even have a savings account.

For this majority of Americans who live on the financial edge, one modest emergency, or one missed paycheck, can be the beginning of a catastrophic downward spiral. The desperate people flooding homeless shelters? They are people just like you and me – our brothers, sisters, mothers, daughters, and sons – fellow Americans who have hit the financial bottom that is terrifyingly close for so many.

The problem is daunting; the victims are real.

Volunteer your time

Organizations providing services for the homeless need help – not just during the holidays. You can find a partial listing of service providers on NCH’s Directory of Local Homeless Service Organizations.

In the Valley, there are two local shelters supported by Win Win for a Cause donations – PACEM (People and Churches Engaged in Ministry) and WARM (Waynesboro Area Refuge Ministry). WARM provides an emergency thermal shelter from November to March of each year. During these winter months they provide shelter, transportation, community referrals, linens, and some personal care and basic need items to homeless adults at no cost.

Here are some ways you might help:

  • Volunteer at a shelter. There are so many ways you can help. Take an evening or overnight shift. Help with clerical work such as answering phones, typing, filing, or sorting mail. Serve food, wash dishes, or sort and distribute clothes.
  • Help build or fix up houses or shelters. Check with your local public housing authority or shelter to find out how to put your skills to use. You can also find the nearest chapter of Habitat for Humanity by calling (800) 422-4828 or visiting http://www.habitat.org.
  • Skills training – teach what you know. Workforce re-entry programs may be able to use your knowledge of skills, including secretarial, catering, plumbing, accounting, management, carpentry, public relations, fundraising, legal, writing, child care, construction, tutoring, or mentoring.
  • Share hobbies. Teach your hobbies to people staying at a homeless shelter. The interaction itself may be more important than you could even imagine.
  • Invite people to a community event.  Homelessness is isolating and the homeless often feel invisible. Invite people who are experiencing homelessness to a worship service, public concert or picnic, city council meeting, etc.
  • Work with children. Ask if there are children who could benefit from tutors or mentors. A field trip, a workshop, a book reading – there are so many ways to bring some joy and hope to the children staying in homeless shelters.

Encourage others to help! Ask your classmates, co-workers, friends, family, church/synagogue members, or civic club to join or support your efforts.

Acknowledgement of the homeless and their individual plights is the first step to making impactful change. Smile and really see the person and not just their situation. Then, go out and do some good.

Please share your experience, insight, and hope.

Don’t Let the Cold Weather Slow You Down

 

 

winter run 1Cold, snowy days and warm, inviting homes can make it difficult to get outside and exercise during the winter months. However, with a few tweaks to your usual routine, you can stay in shape despite the cold temperatures. 

Added bonus? Regular moderate exercise will boost immunity by improving lymphatic and cardiovascular circulation. This gives you a fighting chance to stave off the germs running rampant through your office or your children’s schools.

Climb the stairs

This may come as a surprise, but climbing stairs provides a full body workout. Preventive Medicine found that climbing just six flights of stairs per day could reduce heart rate and increase levels of healthy HDL cholesterol among women who were previously sedentary. 

Snowed in? Get a full workout and increase your calorie burn by challenging yourself to climb up and down the stairs in your home or at work 10 times in a row. Do three sets of this workout in the same day to really challenge yourself!

Get a dog

Dogs are our best friends for so many reasons, including built-in exercise. It may not be fun to trample through the snow, but having a dog will likely require you to head outside for a daily walk, even if the weather is unpleasant. 

Check the local animal shelter or rescue group of your choice for a dog waiting for its forever home.

winter dog

Invest in a pair of dumb bells

You can complete a full workout with a set of dumb bells.  Do bicep curls, triceps extensions, squats, and military presses. Complete three sets with 10-12 repetitions of each exercise per set.  Select a weight that is heavy enough that the last few repetitions are difficult to perform. Aiming for more gain? Increase the weight and decrease the reps.

Join a gym or fitness center

Join a gym or fitness center close to home, and you can run on the track or use the pool, even when the ground is covered in snow. Many gyms offer discounted rates during the slower season (winter).

winter run 3

Jump rope

Jumping rope burns serious calories. Jumping rope with a weighted rope increases your calorie burn even further, and it also strengthens and tones your arms. Jump rope before work while watching the morning news or in the evening to unwind after your day in the office. You can find a weighted jump rope at big box stores like Walmart or Target for under $20.

Hit the slopes

Downhill skiing can burn a lot of calories. In fact, a 130 pound woman will burn about 500 calories during an hour of downhill skiing. In the Shenandoah Valley we are close to several wonderful ski resorts – take advantage! When you are bundled up and having a blast, you won’t have time notice the temperature.

Stay warm

You can beat the cold temperatures with spandex/compression pants and warm, perspiration-wicking running jackets.  It may still be freezing outside, but you will be more comfortable with the proper attire. Treat yourself to a few winter running outfits, and then head outdoors for some exercise.

It will be easier (and safer) to warm up inside first. Take five to ten minutes and do some low level aerobic exercising to get the blood pumping and body temperature up. This way, when you step out the door, you will already be warm.

Attend a group exercise class

Many gyms and fitness centers will allow non-members to attend group exercise classes on a drop-in basis for a small fee. If you can spare $20 or so every month, you can attend one group exercise class per week without locking in a full gym membership.  You can attend indoor classes such as yoga or Body Pump and stay warm even when it is snowing outside.

With a little planning and some dedication, you can meet your fitness goals, as well as fight infection and depression, despite the freezing temperatures.

What are some of your favorite ways to stay active during the winter?

 

Home Repairs that Cannot Wait

 Arepair

In keeping with the spirit of resolving to proactively protect ourselves and our investments, I have put together a list of repairs that you should not put off until ‘later.’ Procrastination is certainly tempting with the cold weather (finally) settling in, but in order to protect your investment, the following home maintenance issues should be addressed now before they become more serious.

Leaky water heater

It is easy enough to assume that if the hot water flows, all is well with your water heater. Inspect the unit regularly for water (even just drops) beneath the tank and/or corrosion around the bottom – these can be signs of much more serious problems. Water leaks from the safety valve can be a sign of water pressure build up inside the tank, which could lead to an explosion; leaks from the bottom of the tank usually indicate that the tank itself is compromised. Make sure to have it inspected regularly by a professional, and call a plumber immediately if anything seems amiss.

Clogged gutters

Save a costly foundation repair job by cleaning out the gutters. Some experts recommend an annual clean, but with the increased precipitation in the spring and the winter, twice a year is wise. When gutters are clogged, the water runs down the side of your house, directly toward your foundation which can cause it to crack. In the winter, clogged gutters can create ice dams that damage both the gutters themselves and the roof.

Agutter

Leaks

An occasional small leak can be easy to overlook, but the damage can be extensive if not corrected quickly. That little drip can allow mold and mildew to accumulate, potentially compromising carpeting and entire sections of drywall. A damp patch on the ceiling caused by broken or missing shingles or a crack in sealing could be the first visible sign of waterlogged and rotting rafters in the attic. Spare a much larger expense down the road and call a roofer.

Faulty wiring

I have mentioned this before, but it bears repeating. Ignoring the signs of potential problems with your electrical system can cost you your life and your home. Electrical issues account for over 47,000 house fires each year. Knob and tube wiring system, which was popular until the 1940s, features insulation that is prone to cracking, leaving you with bare wires and the risk of a short circuit. Another common problem in older homes is an electrical system that is not build to handle the demands of modern appliances and gadgets. If the lights in your home flicker every time you turn on an appliance, you might be at risk. The cost of updating wiring in an old home can be expensive, but it is well worth the preventative cost. Hire a licensed electrician for this job.

aelec

Natural gas leaks

If a rotten egg smell permeates your home, call 911.

It could be something as small as a pilot light that’s out or a gas burner on the stove that’s not completely off, or something as big as a broken gas main leading to your house or running through your backyard. Worst case scenario – an explosion and fire.

Don’t hesitate on this one. If a quick check of the stove doesn’t reveal the source of the gas, get out of the house. You can open windows on your way but don’t turn on anything electrical. 911 will dispatch gas company technicians to find the source of the leak.

Please add to the list of home repairs you feel cannot be put off.

 

Resolve to Clean Your Credit

credit

Paying close attention your credit is crucial to securing a home loan and a manageable mortgage rate. Though it can seem daunting, I encourage you to get a head start now by going over your credit report thoroughly. This will give you the time to correct any issues and then check up periodically to ensure the best possible score BEFORE you are ready for your big purchase.

What ‘cleaning your credit’ means

Cleaning up your credit report means getting rid of inaccurate or outdated information, and fixing anything that is not correct. It does not mean getting rid of delinquent accounts that are, in fact, delinquent. Or getting rid of anything else that has a legitimate right to be on your report. Many companies will claim to repair your credit quickly for a fee – be wary. You can resolve most inaccurate and old information yourself. 

Get copies of your credit reports

You are entitled to one free copy from the three major credit reporting agencies – Equifax, TransUnion, and Experian – every 12 months. If you live in Colorado, Maine, Maryland, Massachusetts, New Jersey, Vermont or Georgia, you’re entitled to a second copy of each report annually.

You should order your report from all three, as they often contain different information. You can stagger the timing to keep a close eye on any changes.

credit good

 

 

Review your reports

Next, do a careful review of each of your reports – look for anything that is inaccurate or incomplete.

One common credit report error is the inclusion of old negative information that should have come off a consumer’s record. Most negative information stays on for seven years, and Chapter 7 bankruptcies remain for 10.  A lot of times the information on your report doesn’t automatically fall off at that seven-year mark.

Make a List

Make a detailed list of everything that is wrong, inaccurate, outdated, or even information that is missing. Then, gather supporting documents. For example, if you closed an account that is still reported as open, see if you can obtain a letter or other document showing you closed the account.

Send a dispute letter to the CRA, detailing what is wrong and why, and including supporting document. You’ll have to send the letter directly to the CRA.  Use the particular address the CRA sets forth for these dispute letters. You can find the contact information for the CRAs below.

Experian: www.experian.com: 1-888-397-3742

TransUnion: www.transunion.com: 1-800-916-8800

Equifaxwww.equifax.com: 1-800-685-1111

Start rebuilding

Once you deal with any errors on your credit report, there are only three simple things to do to repair your credit:

  1. Pay all of your bills on time
  2. Pay down debt (especially credit card debt)
  3. Avoid applying for credit 

Pay on time

On-time payments are the single most important factor to your credit score, and your credit won’t improve until you can consistently pay every bill on time.

If you’re behind on one or more monthly bills or you need help living within your means, you can turn to a credit counseling or debt management agency, or you may be able to find free counseling at your local library or another non-profit organization.

Pay down credit card balances

Take charge of your charge cards. If you have any outstanding balances, pay down these debts bit by bit, every month until they are at zero balance.

Know your credit limits and make every effort to stay well under the maximum when charging items. Debt is analyzed by ratios. If you charge $500 on a card which has a $1,500 limit, you’ve used 33%, which is better for your credit score than charging the same amount on a card which has a $1,000 limit (50%), both of which are better than being maxed out (100%). Pay these credit cards down and keep them open. The total amount of available credit affects your score, even if there is no balanccredit carde.

Don’t apply for new credit

Each time you apply for credit is listed on your credit report as a hard inquiry and if you have too many within two years, your credit score will suffer.

Once you’ve fixed errors on your credit report, begun budgeting and paying off debts, be patient. It will take months or even a couple of years for your credit score to improve, but if you plan on buying a new home, it’s well worth the effort.

What are your financial resolutions for the new year?