Archive for October 2013

Call it the summer of the cash sale.

All-cash home purchases skyrocketed during the summer months of 2013, with their share of total sales growing by more than 40 percent from the beginning of June to the end of August, amid sustained appetite from investors, a recent spike in interest rates and tight inventory.

Cash purchases accounted for 45 percent of sales in August, up from the 2013 trough of 32 percent seen in April and May, according to RealtyTrac data provided exclusively to Inman News.

That indicates that the market share of cash sales has increased 41 percent in just the last three months.

The recent meteoric rise in cash sales’ market share hit its fastest clip yet in August, with cash purchases’ share of total sales jumping 6 percentage points month over month to 45 percent.

That’s the highest level that RealtyTrac has recorded since March 2012, right around when home prices hit their post-meltdown low. Looking back a year, cash sales’ market share was up a whopping 50 percent in August, RealtyTrac said.

What could possibly have driven such a drastic strengthening of cash sales’ hold on the market?

The jump in the cash sales’ share of the market “appears to be closely tied to the recent rise in interest rates,” RealtyTrac Vice President Daren Blomquist said. “From April to August there has been a 41 percent increase in the percentage of cash sales, and during that same time period there has been a 29 percent increase in the average 30-year fixed-rate mortgage.”

Blomquist noted that institutional investors are an increasing share of the market, up from 9 percent in July to 10 percent in August.

There’s also been “a sharp rise in purchases at the foreclosure auction from a year ago, and these are by definition all-cash purchases,” he said.

Indeed, some housing experts attribute the growing proportion of cash sales to a rapid rise in interest rates spurred by statements from the Fed that it might begin to wind down its bond-buying program. Rates on 30-year fixed-rate mortgages began climbing in May, after hovering around record lows, thanks largely to the Fed’s stimulus program.

The jump in rates may have chipped away at demand from buyers who require mortgages, clearing the way for all-cash buyers to seize a larger share of home purchase.

Sustained demand from investors, 10 percent of whom RealtyTrac said were institutional, has swelled the ranks of these all-cash buyers, pumping a steady, strong flow of cash offers into the market.

Though there are signs that home supply is beginning to pick up, a still-sharp inventory shortage may also be helping along cash sales. When sellers receive several offers, which is common when there is scarce supply, they often opt for all-cash offers since such deals are easier to close.

Other recent data have also pointed to cash sales’ strong grip on the market. A Goldman Sachs Group report found that cash sales accounted for slightly more than 55 percent of total sales in July, up from just above 50 percent a year before, while the National Association of Realtors reported that their share of the market had grown from 27 percent to 31 percent during the same period. 

See more here! 

There are many things you must consider before buying a home. When you’re buying a home, it’s easy to let emotions get in the way of reality.  Realtor.com recently came up with a list to help make sure your dream home isn’t a mirage…

1. Visit at various times of day.
The windows that let in so much light during the day may be a peeping Tom’s dream at night. That seemingly quiet residential street may be a noisy, highway-feeder street during morning or evening rush hour. The adjacent school may seem like a nice perk if you’re buying in the summer, but during the school year, daily playground noise and extra traffic may be more than you bargained for.

2. Research recent local news.
You need to look at more than the house: Examine the factors you can’t see. For example, perhaps the municipal water well has high levels of contaminants, or a perhaps a high-voltage power line may soon be coming through your back yard. You can also check with the city or county to see if there are any proposed projects.

3. Talk to neighbors.
How many people in the neighborhood own their homes? What do neighbors say are the pros and cons of the area?

4. Ask if the neighborhood has an association.
“Is there a newsletter for it? How often does the neighborhood get together? Do they have a block party every year?” Levine asks. “The fact that they’re having a gathering says they care about their community, that they want to get to know each other, that they’re willing to socialize that way. People who behave that way are building a community. They’re going to look out for your kids; they’re going to look out for your house.”

5. Quiz the sellers about house problems.
What past problems are the sellers aware of? Even if the issues have been fixed, it’s good to know that the house may be prone to, say, ice dams or water leaks so that you can take preventive measures rather than find out the hard way. If you know that the basement flooding was solved by building up the landscaping in a particular area, you won’t level the ground there.

6. Get a home inspection.
Virtually all houses have defects. Some are obvious, and most are curable. But knowing what needs repair can help you negotiate a lower price — or at least prepare you for costs you’ll soon incur. Strongly consider getting inspections for lead paint, radon and wood-eating pests, too.

7. Get detailed records on past improvements.
This isn’t always possible. But if you’re told the house’s exterior was painted two years ago — and then see a receipt noting the whole project cost just $1,000 — then you’re forewarned that cheaper materials were used and that you may be looking at repainting sooner than you thought.

8. Don’t assume remodeling will be easy.
If you voice your ideas to the sellers, you may glean valuable insights. For instance, perhaps that shower is in an odd location because, when the previous owners remodeled 10 years ago, they discovered a costly structural impediment to putting a shower where it would seem more appropriate.

9. Consider the view.
“So many neighborhoods now have teardowns,” Levine notes. “So look at the two houses on either side of you.” Do the adjacent houses look like they might be candidates for a teardown? Is the next lot empty? Does the neighborhood or town have restrictions about what your prospective neighbors can build there? “They may build some behemoth structure that affects your light or the way your house looks or your view,” Levine says.

10. Ask for utility bills. 
You may adore the Cape Cod architectural style or the high ceilings and glass walls in a modern home, but those winter heating and summer cooling bills may not fit your monthly budget. Ditto for the water bills that come with maintaining a pristine landscape.

11. Pay close attention to taxes.
Don’t just ask about the seller’s most recent tax bill; ask the amounts for several recent tax bills. In some areas, houses are re-appraised — and taxed at higher rates — frequently. That great deal and good investment may not seem quite so grand if the property taxes skyrocket year after year. Look at local news and talk to your Realtor about how taxes are used in this area. In some cities, schools are substantially funded through property taxes, which means you can count on yours increasing regularly.

12. Check with city hall.
Look into the property’s and the neighborhood’s zoning, as well as any potential easements, liens or other restrictions relating to your property. The seller should disclose these facts, but it’s better to be proactive. If you’re using a buyer’s agent, they should be able to help.

13. Reconsider the bells and whistles.
Are you sure you can live with a one-car garage, or a detached garage, or on-street parking? The pool may be a nice bonus, but can you afford the upkeep?

14. Explore the surrounding area.
If you’re new to the area, you may not know that only three blocks away, this pretty neighborhood backs up to a dumpy commercial zone or a less-than-savory part of town. If the home is near an airport, fire station, police station, hospital or railroad track, expect to hear trains, planes or ambulances throughout the day and night. Make sure you’re not too close to an agricultural area that may generate odors or kick up dust or other airborne problems.

For more information, check out the original article here.