Real Estate Market Trends:  Part 2

What to Expect for 2018—Home Values

real estate trendsLast month, our blog included a review of  the state and the Montgomery area residential real estate markets.  (If you missed it, you can take a look at the previous blog, “Real Estate Market Trends:  Part 1”).   We learned that by the end of 2017 the supply of residential homes for sale was down compared to the previous December and that the number of home sales and home prices were on the upswing.  Although the Montgomery market is overall not as robust as the state, trends are showing significant positive improvements.

As we head into spring and the beginning of our most active real estate season in Central Alabama, a common question we hear is, “What’s the outlook for area real estate for 2018?”

What most people are interested in are the price and value of homes and most importantly what that means for their home and for them personally. 

In fact, this local market information is extremely important for those considering buying or selling as well as homeowners interested in their equity position for possible refinance or eventual sale. 

Nationally and statewide, we expect continued real estate growth in 2018, including continued price increases.  But what about our local area?

WILL HOME VALUES CONTINUE TO RISE?

Nationally, prices are expected to increase in 2018 with predictions of 3 percent growth rate.  1   We anticipate a similar trend for 2018 in our local area based on the rising trend in home prices in the Montgomery region over the past several years, including 2017.  Data from the University of Alabama show the historical median selling price in Montgomery has steadily risen since 2014, from $130,000 to $147,750 in 2016.  Montgomery area Multiple Listing Service (MLS) data from 2017 show the overall average sales price in 2017 was $167,792, up approximately 5% from 2016 levels. 2

ARE THERE MARKET DIFFERENCES BY COUNTY?

The short answer to this is a resounding YES!   Let’s look at some data and check out the details!

In general, in 2017 the average price of homes  sold (including resale and new construction) were highest in Autauga County and Lowest in Montgomery and Elmore.  The average home sold price in the Montgomery Area MLS in 2017 of $158,368 was just slightly lower than the average sold price of $165,019 for Montgomery County.  Elmore County residential sold property averaged $172,645.  Autauga County topped the ranking of the three counties for price, coming in at an average sale price of $193,087.  (The overall Montgomery Area MLS data includes other areas not included in the three counties mentioned here, which accounts for the differences in average price.)  You can take a look at the chart to see the ovrall pattern between counties and new construction homes by county.

AVERAGE MONTGOMERY AREA HOME SALE PRICES (Overall, New Construction and Selected Counties) :

2017 Central Alabama Home Sale Prices

Average price of  all area homes (ALL) and new construction (NC) and breakdown by selected county for Montgomery (MGM), Autauga (AUT) and Elmore (ELM). Data from the Montgomery Area Multiple Listing Service (MLS) for the period January 2017 through December 2017).

WHAT IS THE IMPACT OF NEW CONSTRUCTION ?

You can see in the chart above that the overall average home price is influenced by the much higher home prices commanded by new construction across the area and in the three counties shown.   New construction in the Central Alabama region is clearly contributing to home sales in our market and to the average price of homes.  New construction residential homes across the Montgomery MLS sold at an average price of $263,294 in 2017.  Montgomery County led the average sold price in new construction homes at $293,283.  Autauga County followed with an average new construction home sold price of $246,035.  Elmore county new construction sold at an average price of $214,568.  

New construction is especially important in keeping up with the dwindling inventory of available homes to meet the needs of buyers.   Growth in home sales nationally will be driven largely by new home sales, which is expected to continue to increase with single-family construction according to economists at Freddie Mac.3     Volume of new construction sold in the Montgomery region is also up markedly over the past few years, with an increase of 25 percent in 2017 over 2014 levels.  (691 new construction units sold in 2017 compared with 553 new construction units sold in 2014). 

WHAT DOES THIS MEAN FOR YOU?

Home prices in Central Alabama are on the rise and demand is increasing.  

If you’re looking to get into the market either to buy or sell, now could be the time you’ve been waiting for.  If you’ve been thinking of selling and possibly purchasing another home, prices and market competition are on your side to transition you to a new home.  If you’re thinking about buying, there are many great options for financing available so that you can start your road to home ownership and build equity.  But if you’re concerned about rising prices and home affordability in our area, keep in mind the the nationwide median price based on residential sales is $335,000! 4

WHERE CAN YOU GET HELP?

While national, state and regional real estate numbers and predictions can provide a “big-picture” outlook, real estate is neighborhood and home specific.  As a local market expert, I can guide you through the specifics of our market and  help you understand the factors that are likely to drive home values in your particular neighborhood.   As a Certified Pricing Strategy Advisor by the National Association of Realtors, I can help ensure you have comprehensive information concerning the value of your home—whether you are buying or selling.  If you have specific questions, or would like more information about area real estate, please give me a call!  Id love to discuss the market and help you sort through your plans to buy or a sell a home this year or in the future. 

Sources:

1. National Association of Realtors 2018 Housing Forecast: https://www.realtor.com/research/2018-national-housing-forecast/

2.     The University of Alabama, Culverhouse College of Commerce, Montgomery Residential Report:  http://d1ambw9zjiu0uw.cloudfront.net/market_monthly/38.pdf?1517347328

3. Freddie Mac:  http://www.freddiemac.com/research/outlook/20170921_looking_ahead_to_2018.html

3. Housing and Urban Development/HUD:  https://www.hud.gov/press/press_releases_media_advisories/HUD_No_18_007

Home not selling? Now what?

Home not selling-

When things don’t go as planned in the sale of a home, it can be easy for a seller to give up on the excitement to move that they once had. You may even be sitting there reading this thinking that it’s best to throw the towel in and give up on the dream of selling, or to wait for an extended period “when the market is better,” or to question whether or not to even work with a real estate agent.

Gone are the days when an agent could just input a listing in the Multiple Listing Service (MLS), put a sign in the yard, and sit back and wait for another agent to sell the house for them. If all it took to sell a house was simply a sign and putting it in the MLS, wouldn’t everyone be selling their homes themselves? By now, don’t you owe yourself more than the status quo?

 

It’s time for a new approach: It’s time for a new agent, new marketing, new buyers, and most of all… new possibilities.

  •  Staging – Did you know that staging a home to sell is different than making your home look beautiful for your everyday living? Feedback buyers often give of homes that don’t sell is that they couldn’t envision themselves living in it given the current owner’s choice of furnishings, let alone if there is clutter or imperfections. The National Association of REALTORS® states that the average staging investment is between 1 and 3% of the home’s asking price and generates a return of 8 to 10%. In our particular market, when price and general location are equal, the home that shows the best generates the most interest and will benefit from the exposure to potential buyers. I am professionally trained in home staging, and I will provide you with suggestions, guidance, and honest feedback to help you properly stage your home to get it sold.

  •  High Quality Photography – Over 90% of buyers begin their home searches online, so first impressions matter. This is why I take my time to take high quality professional photographs using high quality digital equipment, off camera lighting, and post processing software to ensure we show your property in the best light from the very beginning.

  •  Online Placement and Social Media Promotion – You may have heard of real estate syndicate websites like realtor.com, zillow.com, trulia.com and others. You are probably also familiar with Facebook, Twitter, Instagram, YouTube, and LinkedIn. I am certified in real estate digital marketing (e-Pro®). In addition to more traditional marketing strategies, I will be using the appropriate online tools and platforms to ensure optimum exposure of your property to potential buyers.

  •  Responsiveness – The statistics are clear– the modern internet consumer moves fast and expects us to do the same. According to a study done by MIT, even a 30 minute delay in responding to customer inquiries significantly reduces the likelihood of ever making contact. Is there any wonder why the average real estate agent misses so many opportunities to identify buyers for their sellers? Also, when other agents are planning showings for their buyers, they may overlook a listing if the selling agent has not responded to them. I am dedicated to prompt responses to all my calls, texts and e-mails, whether from you or from your potential buyer!

    INTERESTED IN MORE DETAILS?
    Please call/text or e-mail me. It’s my pleasure to help you. You may reach me by phone or text at 334-201-5034, or through e-mail at: Sheila@4WallzRE.com.

    For more about me please browse my website find me on Facebook at https://www.facebook.com/SheilaMeuseRealtor/

Ultimately, my goals are your goals–to sell your property for the most money possible, to close on time with no hassles, and in the process re-connect you with the excitement and optimism you originally felt upon first listing.

Please contact me to find out more about the many services included in my comprehensive Property Marketing Plan that will be customized for you to get your home SOLD and not just listed.

Are you still interested in selling your home if you could get the right offer?

If so, we should talk.

Military Relocation

Military relocation involves a special set of circumstances and stresses as well as benefits.  Not all agents are the same when it comes to helping current and former military members find a new home and to make the experience as simple and enjoyable as possible.

Whether you are buying or selling locally or moving a long distance, it will help to have an agent who understands the needs and options available to current and former military.

Military Relocation

What is a Military Relocation Professional?

When military members and their families relocate, the services of a real estate professional who understands their needs and timetables can make the transfer easier, faster and less stressful.  The National Association of REALTORS® (NAR) awards the Military Relocation Professional (MRP) certification to REALTORS® who help military personnel, Veterans and their families sell their homes and to find housing enabling them make the best use of their benefits and serving the unique needs of military life.  REALTORS® who earn the MRP certification know to work with active duty military buyers and sellers, as well as Veterans.  If you are a current or former military member looking to buy or sell your home, consider the MRP certification when you select your real estate agent.

What are the benefits of using a MRP certified REALTOR?

The MRP certification provides resources that enable your agent to accommodate current and former military service members at any stage of their military career.  “Service members may only have a couple of days to view properties and make an offer, and others might be deployed at the time and need someone who can represent them while they’re away. Working with a REALTOR® who understands the singular complications that arise with military service can help make the home buying process simpler, faster and less stressful,” said National Association of REALTORS® President Tom Salomone,  broker-owner of Real Estate II Inc. in Coral Springs, Florida. “The MRP certification lets home buyers and sellers know that their REALTOR® knows the ins and outs of military housing benefits, such as zero-down payment loans, and the specific needs service members and veterans have when searching for their new home.” 

I am happy to announce that in 2017 I was awarded the nationally recognized Military Relocation Professional Certification.  This coupled with my own professional work in support of Veterans and my personal experience in relocations as a federal executive make me especially qualified to help you with your relocation.  

Where to get more information?

Feel free to Contact Me for more information.  Also, click the link below for the NAR brochure with more details about MRP Certification and how it can help you!

About Millitary Relocation Professional Certification

Prattville Real Estate Market Watch–Update

A strengthening market in Prattville

by Sheila Meuse

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Our local Central Alabama area real estate markets vary widely.  In some areas there is a solid buyer’s market and the ample supply of homes gives buyers an advantage in negotiating the best deal.   Prattville seems to be leading the way toward a better balance in home supply with a continued trend toward a seller’s market.    Compared with the available homes for sale, the trend from August has continued into September with fewer listings and steady home sales.  This emerging trend is showing a continued strengthening of the Prattville real estate market, especially when compared with the same time period last year.

Stable demand, fewer competing listings, higher median prices

Overall in the Prattville real estate market, conditions are continuing to reflect improvements in the market.  Out of 104 Prattville single family residential active listings in September 2016, there were 26 homes sold.  During the same period a year ago , there were 25 sales, however there were 146 listings for buyers to choose from.  There are only 87 currently active single family residential listings in Prattville as of today.  

Median prices are up too!  Based on statistics from the Montgomery Area Association of Realtors, Multiple Listing Service (MLS), in September 2016, Prattville of the 26 single family residential homes sold, the average (median) unit cost was $ 176,150.  Although home sales for September 2015 were at a similar pace (25 sales) they were at a significant lower average (median) price per sold unit of $160,000 a year ago.  

Selling faster!

Homes that sold are selling faster!  Average days on the market for Prattville homes that have sold is going down significantly.  That’s good news especially for sellers!  In September 2016, homes that sold were on the market an median average of only 34 days.  This compares with more than double that time, 78 days, for homes that sold back in September 2015 in Prattville.  Overall in the River Region, homes that sold averaged 63 median days on the market. Prattville seems to be leading the way.  Our area and Alabama in general, however, are lagging behind the nation in days to sell.  Many states had median days to sell at fewer than 31 days.  Only Alabama and Wyoming had a median of over 90 days from listing to home sale according to an article published recently by the National Association of Realtors: http://economistsoutlook.

Inventory trending downward

Our local MLS data continue to show a decrease in the number of single family residential listings available in  Prattville.  Based on the rate of sales, the inventory of available single family residential homes is only about a 3-4 month supply.  A six month housing supply is considered a balanced market, with a supply less than six months favoring sellers.   If you’re thinking of selling, now could be a good time to get your home on the market!  If you’re thinking of buying, don’t hesitate–between overall low home prices compared with the rest of the nation and historically low interest rates–this could be a great opportunity for you!

I provide expert real estate services to residential buyers and sellers in the Central Alabama area, including Prattville and the surrounding communities. Contact me today for more information on area real estate and for professional assistance navigating this complex home market.  Contact me for a complimentary buyer or seller consultation.

The Home Equity Playbook

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What is Home Equity?

Home equity seems to be a very simple calculation — the total amount of mortgages owed subtracted from the current market value of a home. Here is a simple example:

Current Home Market Value               $325,000
Existing Mortgage                                    $225,000
Homeowner Equity                                  $100,000

One side of the equation is well defined, and it is found on the monthly mortgage statement, the loan balance. The other side is less obvious — the current market value of the property.

As a homeowner, your down payment purchases your initial equity, and your monthly (or additional) principal payments increase your equity. In strong real estate markets and in-demand locations, equity can increase quite rapidly as the property value increases, but the inverse can also happen — too much available inventory and market down-cycles can lead to falling home values and a reduction in homeowner equity.

It can be difficult to put an accurate value on something that you have emotional and monetary vesting in. It is safe to say that most people think their home is worth more than then it is.

Homeowners can make savvy assessments about their home’s current market value by following the sales of similar properties in the neighborhood, but should be very cautions of websites such as Zillow and Trulia, which provide inaccurate and outdated estimates. The most accurate measurement requires a comparative market analysis from a real estate professional or having the home professionally appraised. But, the bottom line — your home is worth as much as someone is willing to pay for it.

Creating Value is in Your Hands

Maintaining the condition of a home is vitally important to retaining and increasing value. Homes are judged against their peers: how they compare to similar homes in the neighborhood. Another way to retain value is to not over upgrade, since it is rare to ever recoup the money spent if you exceed neighborhood value. Keep up the landscaping and do the little things to add curb appeal.

Putting Home Equity to Work

Home equity represents the largest single asset of millions of people, and because it represents so much of an individual’s net worth, it must be treated with respect. Home equity is not a liquid asset until a property is sold or it is borrowed against.
There are two types of loans that tap into homeowner equity as collateral:

Home Equity Loans
Many home equity plans set a fixed period during which the person can borrow money, such as 10 years. At the end of this “draw period,” the person may be allowed to renew the credit line. If the plan does not allow renewals, the homeowner will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period, for example, of 10 years. A home equity loan, sometimes called a second mortgage, usually has a fixed rate and a set time to pay it back, generally with equal monthly payments.

Home Equity Line of Credit
A home equity line of credit is similar to a credit card. The lender sets a maximum amount you can borrow, and you can draw money as you need it, though many home equity lines of credit require an initial draw. The interest rate varies daily, and is usually prime plus a set number, but the required payment is usually interest only. Once the loan has been paid down, the payment is reduced, and it can be paid off and initiated as many times as a homeowner requires.

How Much Equity can be Accessed?

Since the financial institution is lending money and using a home as collateral, they will not typically lend 100% of the home’s equity. The bank does not want to take the risk that if the house price drops, they would be carrying a loan for more than its market value. Therefore, most banks will allow a qualified homeowner to borrow approximately 80% of their equity.

It’s Important to Use Your Home Equity Wisely

Because it is likely the biggest asset most people have, losing your home equity is hard to overcome. It must be used in prudent ways, and the payments against the loan must be affordable. Using equity money to make the loan payment is only acceptable for a short-term solution.

There are number of good reasons to use money from a home equity loan… and some really bad ones.

First, let’s cover smart uses:

1. Invest in Your Home

The best way to use the money is create more equity in the home. Among the very best returns on your investment (ROI) include kitchen and bathroom remodels, adding square footage or an extra bath, enhancing curb appeal and repairing/keeping the existing structure sound. Making prudent investments in your home is a wonderful win-win: you enjoy the upgrades and the repairs can add value to the home.

2. Invest in your Children’s Education

Using your home equity to finance a child’s higher education may be the greatest payoff of all. Not only is the rate much lower than a student loan, it is an investment in the child’s future.

3. Supplement Retirement Needs

Older homeowners spent their working lives paying down their mortgage. At retirement, when monthly income is reduced, a home equity loan could pay for a dream vacation or an unexpected major expense.

4. Augment the Impending Sale of a Home

If you’re planning to sell soon, a home equity line of credit may be the best way to finance improvements, and you can pay it off entirely when you sell. Investing wisely on upgrades and repairs may even reap a profit on your investment.

Here are some examples of some not very wise choices:

Adding luxury amenities like a swimming pool, a hot spa, lavish landscaping, expensive appliances and exotic countertops and flooring rarely pay off.

Purchasing a car or boat or most any personal luxury items is a poor use of the funds, since these items quickly depreciate in value.

Also stay away from using money on risk-heavy investments. Financing stock purchases, start-up businesses and paying routine bills is not financially smart. If you cannot afford to purchase those items with available funds, using equity from your home means they should not be in your budget.

You should treat a home equity loan as an investment and not as extra cash when making financial decisions. If your intended use of the money doesn’t pay you back in some way, it’s not likely to be the best use of your valuable equity.

I am Happy to Assist You

If you would like an assessment of the market value of your home and the current equity you may be able to access, contact me for a comparative market analysis.