October 2019 sales were not quite as strong as October sales in 2018. With low inventory levels, we are still in a sellers market. Is this a blimp in a year of strong sales? Or, are we starting to slow down for the winter?
At this point, we do not have enough data to indicate a slow down the market. If you are thinking of buying or selling in the near future, reach out to me so we can discuss strategies to achieve your goals in today's market.
It’s fall and right now there’s starting to be more leaves on the ground then there are in the trees. It’s time for Harrisonburg’s annual leaf collection. Read on for details on getting your leaves collected in Harrisonburg.
The following information comes from harrisonburgva.gov.
Leaf collection begins Monday, November 18, 2019. The City is separated into the east and west sections with leaf trucks assigned to each section on alternating weeks. In the heavily forested areas a specific truck is assigned for leaf collection.
The City of Harrisonburg Public Works Department will be starting the annual curbside leaf collection on November 18, 2019.
Leaves are vacuumed up Monday – Friday for four weeks excluding Thanksgiving and the day after Thanksgiving. Leaf collection continues for four weeks with the following schedule, weather permitting:
West Side of Main St. & Forest Hills
East Side of Main St. & Fairway Drive
November 18 - November 22
December 2 - December 6
November 25-27 (excluding holidays)
December 9 - December 13
*During the above dates, streets will be done only once per week.
Guidelines for collection:
Before and after these dates, place your leaves in a biodegradable bag or 35 gallon container with no liner for assigned Wednesday pickup. (See Yard Debris and Bulk collection.) Once the annual collection is complete, there will be no limit on contained leaves that are set out for Wednesday pickup through December 30, 2019. Leaves not properly placed for pickup will be subject to a violation fee. Citizens can also bring bagged leaves to the Recycling Convenience Center during operating hours.
If you have any questions, you can call Public Works at 540-434-5928.
Last week the Federal reserve lowered interest rates. This has an impact on homeowners and homebuyers alike. What do lower interest rates mean for you? Read on to learn more!
Recently the Fed lowered interest rates by a quarter of a point. This is the third time in a year that the Fed has made such a move, which is meant to boost the economy. There is a potential upside and a potential downside to this move for homeowners and homebuyers. The upside is that lower rates often result in cheaper loans. The downside is that in the event that the economy actually weakens, lenders will be more conservative with loans in that they will be less likely to offer a loan and may charge more for it to try to make up for their risk. This is according to Richard Barrington of MoneyRates.com.
There is a complex relationship between the Fed and mortgage rates. Several factors affect long-term fixed mortgage rates, including the economy, the Fed’s decisions, and inflation. “Fed rate cuts have very little direct correlation to long-term fixed mortgage rates. We have seen mortgage rates moving in the other direction of the rate cut or not moving at all in the past,” says Shashank Shekhar, CEO of Arcus Lending in San Jose, California
However, according to Tendayi Kapfidze of LendingTree, mortgage rates have been steadily going down for nearly a year. Bankrate states that the average 30-year fixed rate mortgage is now under 4%.
The deputy chief economist of CoreLogic, Ralph McLaughlin, said, “Mortgage rates this low at the end of an economic cycle is nearly unprecedented, and may be very well keeping the housing market — and U.S. economy — afloat,”
For homeowners, this makes it a good time to refinance their homes at a lower rate. Greg McBride, chief financial analyst at Bankrate, states that the average homeowner could save about $150 a month.
ARMs and HELOCs
On the other hand, there’s a clearer correlation between interest rate cuts and adjustable rate mortgages and home equity lines of credit. These financial instruments drop in price when the Fed lowers interest rates.
Homeowners with adjustable rate mortgages could expect to benefit by their rates dropping, although they may not see this right away because ARMs are only adjusted once a year.
Another benefit of the Fed’s recent rate cut for homeowners is that it will be less expensive for them to borrow money from a home equity line of credit or make payments on an existing HELOC. Since HELOCs can be adjusted within 60 days, borrowers will see more immediate benefits.
In short, homeowners and homebuyers are likely to both benefit from the recent drop in interest rates by the Fed in this market, but overall the Fed’s movements of interest rates affects different financial instruments differently.
In my last post on buying and selling a home at the same time, we looked at some scenarios in which it’s best to sell your existing home first and then buy your new home. But there are also scenarios in which it’s advantageous to buy first and then sell.
Let’s look at two examples of scenarios in which it can be better to buy first, and some steps to take to help you plan it all out.
If you have the funds available to buy a new home before selling your old home, you should take advantage of this fortuitous situation. There are several reasons why it’s a good idea to buy first in the event that you can manage it. Buying first can be the least stressful way to move for a few reasons:
Steps to Follow
Identify and liquidate your assets to be able to make a good offer, also have documentation that you have the funds available
Moving From a Hot Market To a Slow Market
In this scenario it makes sense to buy first because it will be easy to get an offer accepted in the slow market and easy to sell quickly in the hot market. This can happen in Harrisonburg/Rockingham when moving from houses at the median sales price to more expensive neighborhoods. Statistically, there are less people competing the further away you get from the median sales price.
People can shy away from this option because you will be hold two mortgages for a period of time. Some clients are more comfortable with this than others. If you are considering this as an option I would be happy to meet and discuss timing this move. Each situation is unique. Depending on your desire to move slowly, clean, and stage we can get the property marketed quickly. Since I do my own marketing, I can typically be flexible to get the house on the market in a timely manner after it is ready.
Pricing plays a larger role in how quickly the property will sell once it hits the market. However, in a hot market, good marketing and correct pricing can result in a quick contract. The contract can then likely be negotiated for a 30 day settlement. So, it is possible for you to only hold the two mortgages for two months. We of course would want to be prepared for unexpected circumstances and be okay with it potentially taking a little longer.
For homeowners who don’t want to worry about having two mortgages at the same time, there’s another option, which is making a contingency offer. This can be a nice safety net if you really do not want to hold two mortgages for any given amount of time. Some sellers may not be willing to enter into this type of contract but it is not completely uncommon in a sellers market.
Steps to Follow
Pros and Cons
Although it can require more cash on hand, for many homeowners there are still some situations in which it’s better to buy first and then sell later. Here is a look at some pros and cons of buying before selling.
Pros to Buying First
Cons to Buying First
Feeling pressure to sell quickly may cause you to take a lower offer than you would otherwise
Now you have the case for buying before selling, as well as the case for selling first, which we laid out in our previous post. There’s no one right decision, as it depends on your unique situation. So weigh the pros and cons, and go with your gut instinct.
In our last post we introduced some strategies for buying and selling a house at the same time.
But the question still remains, which should you do first, buy or sell? Whether it’s best to buy or sell first will depend on the particular situation you’re in, with variables such as the timeline in which you need to move, the market you’re buying in and the market you’re selling in. In this post we’ll explore why it can be best to sell first, looking at specific scenarios and tips for selling first.
Here are two sample scenarios in which it would be better to sell your home first, and some steps to follow for making it all work out.
In this scenario it may take up to a year to find a new home. Rather than stressing over getting the timing of buying and selling just right, sell first and plan to rent until you find your perfect home. That way you have no particular deadline for buying and can wait until you find just the right place to buy. In a hot market selling first is important because making an offer contingent on selling your current house can put you at a disadvantage to other buyers.
Steps to Follow
This is actually a very common scenario, and most people in this situation need the money from the sale of their current home to be able to buy in a new city.
It may be best to rent for a few months in the new location to help you get familiar with the new area. It can also help to have a local agent help guide you. If you are planning such a move, I'd be happy to connect you with a qualified agent in your destination city across the country. Shoot me an email.
Steps to Follow
Pros and Cons
However you choose to go about selling your current home and moving into a new one, there are some pros and cons to consider for selling first and buying later. Here are a few of them.
Pros to Selling First
Cons to Selling First
Here you have a case for selling first, but there are scenarios in which it may be better to buy first. We'll explore buying first in our next post!
Buying and selling a home at the same time is a complicated process. Here are some practical tips that will help things go more smoothly.
Find an experienced agent
Given the complexity of buying and selling at the same time, you will want the help of an experienced real estate agent. An experienced agent will be able to help you price your home optimally, and will be an expert at timing the sale of your home, negotiating the price, and strategies for buying and selling at the same time. Choosing the listing price is one of the most important functions of a listing agent, and you’ll want someone who really knows the local market.
If you think you are ready to discuss the best strategy for your situation, I'd love to meet up with you. If you want more information about my experience, see here.
Determine if you’re in a buyer’s market or a seller’s market
The steps that you take in selling and buying a home will differ depending on the local market. If you’re moving to a different town, you will be selling your home in a different market than the one you’re buying in. In a buyer’s market, there are more homes up for sale then there are people looking to buy. You may find a new home before you sell your own home. In a seller’s market, there are more people looking to buy then there are homes for sale. You will likely sell your old home before finding a new home.
There is not a one size fits all solution for everyone. You have to determine what works best for you and your situation. Here would be some examples of strategies give the market conditions.
If you’re in a…
Make an offer with a kickout clause (in this case the purchase of the new home is contingent on the sale of the old home).
Request an extended closing. This will help give you time to sell your current house.
Make an offer with an extended closing and trust your house will sell. This may feel risky but depending on your house and financial situation, it can work out very well. Pricing your old house will be very important in this option.
Sell your house first and negotiate a rent back agreement. This will give you sometime to shop for a new house without having to move into a temporary rental.
Know your financial situation
The next step in the process is to take stock of your financial situation. You will want to talk to your mortgage company and your accountant or financial advisor to find out the following information. You’ll want to know how much liquid cash you have on hand, how much equity you have in your home, and what types of loans you qualify for. Ask me for recommendations.
A key part of your financial situation is the value of your home. You will want to find out how much your home is likely to sell for. As part of determining the value of your home, you may want to get a pre-inspection to find out how much work will need to be done in order to sell your home. This is also an ingredient in determining how much equity you have in your home. Equity is the amount of money left over after you take the market value of your home and deduct the amount that’s left to pay on your mortgage. In other words, it’s the amount you’ve already paid toward the current value of your home.
Buy First or Sell First?
Now you have some tips to help you in the process of buying and selling at the same time. But which should you do first, buy your new home or sell your old home? We’ll look at some different scenarios for selling and buying your home in our next posts!
In our last post we discussed how to figure out how much home you can afford. The next question to answer is, what will your money buy you? That all depends on the market that you’re in. The same amount of money may buy you a mansion in a rural area and a small apartment in an urban center.
Buyer’s Market vs. Seller’s Market
In addition to the location you’re looking in, the state of the market at the time you’re buying will also help to determine how far your money will go. Whether you’re in a buyer’s market, a seller’s market, or a neutral market will affect how far each dollar stretches. In a buyer’s market, there’s more inventory on the market than there are people looking to buy homes, pushing prices down. Your money will go further and you’ll have more options to choose from. In a seller’s market, there’s less inventory on the market than there are people who want to buy homes and the homes on the market can demand a higher price, squeezing your budget. In a seller’s market you may have to make a few different offers on homes before you can find the right fit. A buyer’s market is an easier deal.
The Local Harrisonburg and Rockingham Market
Take a look here to find detailed analysis of the local market, and enter your email below to subscribe to monthly market reports.
No matter the market conditions, there are always opportunities. Sometimes opportunities require the house to be renovated. There are loans to help with those costs. This can require a significant down payment but not always.
There are also areas where your dollar can stretch a little further. It just depends on what you are looking for. Some of these areas include Broadway/Timberville, Grottoes, Weyers Cave (Augusta), Massanutten, and Elkton.
A home is, for most of us, the biggest expenditure we will ever make. How do you figure out how much home you can afford?
New websites for homebuyers make it easy to make these calculations, once you know the key numbers to plug in. The biggest number is your gross annual income. Once you have that figured out, you will need to figure your monthly debt. Be sure to include all forms of debt like credit cards, car payments, school loans, etc. The third number you will need is the amount you can make on a down payment. If you have these three numbers, you can just plug them into a calculator, like this one from Zillow. There are quite a few such calculators available on the web. For a slightly more complex formula that includes your credit score and the zip code you’re interested in, go to Nerd Wallet.
Debt To Income Ratio
The main thing that you want to find out from these calculators is your DTI, or debt to income ratio. If you used Zillow’s calculator to figure out how much you can afford to spend on a home, you can then go to their DTI calculator and figure your overall debt to income ratio. A good DTI is considered to be 36% or lower. According to the 36% Rule, you should never let your DTI exceed 36%. In order to be considered for a Qualified Mortgage, 43% is the highest DTI that you can have. It’s important to have a Qualified Mortgage because they have better protections for borrowers, such as a limit on fees.
Another nifty tool you can play with on the Zillow site, Nerd Wallet, or other sites is a mortgage calculator. This tool can show you different interest rates for different time periods, like a 15 year mortgage versus a 30 year mortgage. Playing around with different numbers will give you a sense of how you would need to budget and what the overall cost would be for different mortgages.
Once you have a sense of how much you can spend on a home, then you will need to consider what the housing market is like in the area you want to buy. More on that to come . . .
Sources: https://www.zillow.com/home-buying-guide/can-i-afford-a-house/, https://smartasset.com/credit-cards/what-is-a-good-debt-to-income-ratio
In our last post we explored some of the pros of buying new construction. In this post we’ll look at the downside of buying new construction, and the pros of buying existing construction.
Buying new construction usually limits you in terms of location. New construction typically takes the form of sprawling suburban neighborhoods or urban high-rises. Suburban neighborhoods may be spacious, but they’re also typically farther from a town center, adding to a daily commute.
Existing construction often has better landscaping surrounding the home, including large trees that provide shade in the summer, block the winter wind, and also muffle the sounds of traffic. It’s possible to transplant trees onto a new lot, but it takes years for the landscaping to mature.
New constructions often have cookie-cutter exteriors in order to appeal to the largest number of people possible. Expect to pay extra to customize a new construction to stand out on the block.
This isn’t an issue if you are purchasing a pre-existing new construction, but if you’re building a new home, the wait time is significant. On average, building a new home takes five or six months.
Construction costs can be high and depending on your selections, you may pay more to build a new house as opposed to buying a house on the market.
One of the decisions you will need to make in choosing a new home is whether you want to look at pre-owned homes or new construction, either custom-built or pre-existing new construction.
It’s a matter of personal taste. Some people prefer a shiny new home that hasn’t been lived in before, while others prefer a home touched by the patina of time. There are pros and cons to purchasing a newly constructed home. Let’s explore some of the pros.
Modern Floor Plan
If you opt for custom construction, you can build your dream home with the floor plan tailored to your wants and needs. Even if you buy a pre-made new construction, you will benefit from a modern floor plan. Most new constructions feature kitchens that open up to a living room so you can cook and still be part of the action happening elsewhere in the house. In addition, new constructions typically have larger rooms and more sunlight than older houses.
Even if the house isn’t custom built, there can still be an opportunity to add custom finishes. You will just need to be in communication with the builder prior to the completion of the house. This will add on to the cost of the house, but can also be a good compromise between the expense of a custom built home and the cookie cutter quality of a non-custom build.
Newer homes feature appliances, insulation, and windows that are more energy efficient. Lower heating and cooling expenses mean a lower utility bill for owners.
New homes include “smart” technology that can allow you to automate different systems and features of the home, including alarm systems, speakers, cable, and internet.
Healthier Indoor Air
New constructions are typically made from materials that are low or zero VOC (volatile organic compound), meaning they output fewer toxic chemicals into the air.
A new home costs less to maintain, and makes monthly payments more predictable because repairs will likely be unnecessary. Warranties can provide protection for your new home for years, eliminating any up front repair costs.
Whether a new construction is an urban condo or a sprawling suburban mansion, many new constructions come with attractive amenities. Urban amenities can include parking, a pool, and security staff, while suburban locations may come with parks, pools, and other community spaces.
Buying new construction can give you more time to work on the move. For a single family home, new construction typically takes about 5 months, while condos take about 6 months. This means you don’t have to rush into buying your new home.
Reach out to me if you would like examples of new construction communities in the area, building lots, and/or builders I recommend.