Prepping Your Home for Sale? Why You Should Hire a Handyman – Redfin

December 1, 2020 December 7, 2020 by Emily Huddleston

Updated on December 7th, 2020

As you get ready to sell your home, you may discover the need to make a few (or even many) repairs and updates – from touching up paint on walls and replacing hardware to fixing your mailbox or repairing drywall. Sure, there will be home repair projects you can easily complete yourself, but what if you don’t have the time with everything else going on or a repair project is over your head? That’s where hiring a handyman comes in.

two story grey home

two story grey home

Why should I hire a handyman?

Buyers want a house that looks new – no nicks or scuffs on the walls, fresh paint, a fence in good condition, and doors and windows that are free of drafts and leaks. Over time, you may not realize that some of the small damages in your house can add up to an overall impression of neglect. Keeping up with general maintenance and care of your home, such as cleaning the gutters, freshening the paint, and fixing overall wear and tear can help you maintain, if not increase your home value each year. By contrast, not fixing things around the home can reduce your home’s sale value by about 10%.

Here’s where a handyman can help. A handyman is a jack of all trades, capable of many different kinds of home repairs. Some may have plumbing and electrical licenses and certifications, while others are specialists in home carpentry, tile replacement, or laying carpet. Many handyman services offer a wide variety of skills and can complete a multitude of different projects around the house.

A handyman can also find items in the home that you may not realize need repair – anything from faulty or leaking ductwork in your HVAC system to a crack in the foundation.

Also, many homebuyers will conduct their own home inspection before closing on the house, and often, if there are things that need to be fixed, the buyer may ask for concessions or reduce their offer to offset the costs of fixing these things themselves. When you hire a handyman to complete any home improvement project before you sell your home, you can reduce the chances of having concessions or missing out on a potential deal. 

bright bathroom with patterned tile

bright bathroom with patterned tile

Projects your handyman can complete

Your handyman service can complete many different types of projects. Some common ones include:

  • Fixing a broken garbage disposal
  • Repairing or calibrating an HVAC thermostat
  • Replacing a mailbox
  • Anchoring or installing shelves
  • Painting walls
  • Applying wallpaper
  • Removing wallpaper
  • Adding locks to the interior or exterior doors
  • Repairing drywall
  • Replacing tile or carpet
  • Cleaning gutters
  • Power washing brick or siding
  • Fixing cracks in stucco exteriors
  • Installing an exterior walkway
  • And so much more

Some handymen may also be capable of unclogging pipes and drains, installing lighting or ceiling fans, and replacing kitchen sinks or toilets. However, depending on where you live, the handyman may need to have a certification for plumbing services, be a licensed electrician, or have undergone formal masonry training, both for foundation work and other types of training. In order to ensure that the repairs are all compliant with local residential building codes, you’ll want to make sure to speak with an expert.

Another thing to consider when determining what kind of repairs your handyman service will complete is whether your home poses a safety risk. Things like broken window panes and loose handrails may jeopardize certain types of home loans, which can limit your buyer pool. For example, The U.S. Department of Housing and Urban Development has certain requirements for a home’s condition before they’ll approve an FHA or VA home loan. The last thing many home sellers wish to have is a deal that falls apart right before closing, so be sure to address any safety issues with your handyman before listing your home.

bright white kitchen with bar stools

bright white kitchen with bar stools

Should I hire a handyman or a contractor?

You may not always need a residential contractor to complete many of the projects on your home repair list. Oftentimes a handyman can get the job done and they tend to be less expensive than a contractor. They charge by the hour and have their own tools, so while you’ll be responsible for providing the materials for each job, you’ll only have to pay the handyman’s hourly rate.

However, if you need extensive repairs done, or if a home inspector wishes to see receipts or invoices from the job, it’s better to hire a contractor. General contractors often do home renovations and remodeling, while a subcontractor is a professional that specializes in a certain area, such as roofing, plumbing, or electrical work. A contractor will also have a warranty for their work, which you, as a seller, should provide to potential buyers. Contractors also are well-versed in local building codes and will ensure that your repairs are compliant.

Choosing the right handyman to hire

Not all handyman services are created equal, and some have a more comprehensive list of services that they can provide than others. Finding the right handyman can start with getting recommendations from friends or neighbors, or even asking your real estate agent about reliable, talented handyman services in your area. In fact, your real estate agent may be the best source for a reliable handyman, as realtors often have a greater understanding of what it takes for homes to receive top-dollar offers.

Don’t be afraid to interview potential handymen or ask for references and photos of their past projects. You should also ask what kinds of certifications they hold and about their experience. Remember, this is an individual you’ll likely be working closely with, so this must be someone you can work well with.

With all the stress that goes into preparing a house to sell, hiring a handyman can be extremely helpful and save you a ton of time, money, and worry. Better yet, you may even find the perfect handyman and want to hire them again for any future repairs with your new home. 

Source: redfin.com

Biden to provide $25 billion in rental assistance

U.S. President-elect Joe Biden last week announced a stimulus plan worth $1.9 trillion that included several housing-related proposals aimed at helping people to stave off the economic impact of the coronavirus pandemic.

The proposals would extend the moratorium on evictions and foreclosures until Sept. 30, provide an additional $25 billion in rental assistance to help landlords, plus $5 billion for homelessness protection.

“While the $25 billion allocated by Congress was an important down payment on the back rent accrued during the crisis, it is insufficient to meet the scale of the need,” Biden’s team said in a statement regarding the stimulus package.

The proposal was warmly welcomed by the National Association of Realtors, which has been advocating for increased rental assistance since the first round of pandemic relief, called the CARES Act, was passed in March 2020. The NAR has said that extending moratoriums on evictions without rental assistance would hurt landlords that can’t cover their own costs.

“NAR looks forward to reviewing this proposal in more depth, but we are pleased to initially note President-elect Biden’s intentions to expand unemployment assistance, provide hundreds of billions in funding for state and local governments and authorize significant resources for homelessness assistance,” said NAR President Charlie Oppler. “Perhaps most notably for our members and for America’s real estate industry, we applaud the inclusion of an additional $25 billion in rental assistance for housing providers and rental families.”

Biden said Thursday during a press conference that the stimulus is needed to prevent a wave of evictions and foreclosures as there are thousands of Americans who have lost jobs and income due to the pandemic. A stimulus package approved by Congress in December extended moratoriums until Jan 31., but about 19% of all renters in the country remained behind on their payments as of that month, CNBC reported.

Biden’s plan also calls for funds to be set aside to provide legal assistance to households that might face foreclosure or eviction, as well as $5 billion in emergency assistance for those who are, or are at risk of, becoming homeless.

The President-elect has also called on housing agencies to allow forbearance applications on federally backed mortgages until Sept. 30, to give those who’re struggling to pay their mortgages more time to request a delay in making payments.

Biden’s plan also calls for individual stimulus checks of $1,400 per person.

Source: realtybiznews.com

Homebuyers and sellers: Look to this brokerage if you’re worried about coronavirus 

Brokerage takes stand against coronavirus

The coronavirus has continued spreading across the country, impacting travel, local economies and, of course, real estate markets. But if worries of COVID-19 have you shying away from buying that dream house (or selling your current property), then one brokerage has you covered.

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Forget in-person tours, use this brokerage’s virtual tours instead

Tech-enabled brokerage Redfin has announced a new strategy to keep homebuyers, sellers, and even its agents out of harm’s way as the coronavirus sweeps the country.

According to a recent announcement, the company will now offer on-demand, virtual tours for all Redfin listings.

“We’ve long had a push-button tool for requesting a private, in-person tour of homes for sale,” said Glenn Kelman, Redfin’s CEO. “Starting today, we’re letting homebuyers use that tool to ask the agent to conduct the tour virtually via video chat.”

The company is also enabling fully virtual closings where possible to stave off potential infection even more.

“Our customers can also complete every part of a contract virtually,” Kelman said. “In the states where the law allows it, customers who use our mortgage and title service can close electronically. If you’d rather not meet others except where necessary, we can let you see a home, bid on it, and close on it, all virtually.”

Making an offer on a home without seeing it first

Keeping things clean

Redfin is also taking steps to keep its agents safe — as well as keep them from passing on any viruses to their clients. 

“Out of an abundance of caution, we’re taking other measures to protect buyers and sellers,” Kelman said. “We’ve advised our agents not to shake hands with customers who would rather not have to worry about contact with new people. Please don’t take it personally.”

Here’s how many Americans plan to buy a home next year

The brokerage is also asking sellers to have cleaning sprays and wipes on hand, so potential buyers and their agents can sanitize after concluding a tour. It is also providing agents with their own stores of wipes and cleaning materials.

Verify your new rate (Jan 17th, 2021)

Get today’s mortgage rates

Are you planning to use virtual tours to find your dream home amidst the coronavirus scare? Then use our tools to shop digitally for your mortgage, too.

Verify your new rate (Jan 17th, 2021)

Source: themortgagereports.com

Existing-Home Sales Soar Despite Record-Low Inventory

The numbers: Existing-home sales rose for the fifth consecutive month in October, as the housing market finally made up for the pandemic-related downturn in sales this spring.

Total existing-home sales increased 4.3% from September to a seasonally-adjusted annual rate of 6.85 million, the National Association of Realtors reported Thursday. Compared with a year ago, home sales were up roughly 27%. It was the highest level of home sales in 15 years.

“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” Lawrence Yun, the trade group’s chief economist, said in the report. “The surge in sales in recent months has now offset the spring market losses.”

Economists polled by MarketWatch had projected existing-home sales to rise to a median rate of 6.5 million.

What happened: Home sales grew in every region across the country, led by an 8.6% increase in the Midwest, the National Association of Realtors reported.

But the supply of homes on the market is a growing concern. By month’s end the total inventory of homes for sale dropped to a 2.5 months’ supply, the lowest on record. A six-month supply of homes is considered to be indicative of a balanced market.

As in September, 7 in 10 homes sold in less than a month. The fast pace of sales drove prices higher, with the median existing-home price was $313,000, up 15.5% from October 2019.

The big picture: A number of recent trends are supportive of growing home sales. Mortgage rates remain at all-time lows — dropping to the lowest level on record for the 13th time this week. Not only do low rates ease affordability constraints caused by the low supply of homes on the market, but they also serve as a catalyst spurring people to enter the market to lock in the cheap financing before it goes away.

Additionally, Americans are busy improving their homes. Both Home Depot and Lowe’s reported increasing sales in the third quarter as Americans spent money renovating their properties. Some of this was undoubtedly caused by people spending more time at home amid the pandemic — and therefore finding more flaws to fix. As economist Christophe Barraud notes, “home-improvement activity is closely correlated with existing home sales.” Sellers want to put their best foot forward, and that means doing things like touching up paint or fixing broken fixtures.

What they’re saying: “So far, the housing market appears immune to the virus due to record-low borrowing costs and teleworkers seeking roomier and cheaper properties outside of major cities,” Sal Guatieri, senior economist at BMO Capital Markets, said in a research note.

“While rising prices may be a drag on home sales, mortgage rates are contributing to affordability,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note. “While demand for mortgages is likely to stay strong — despite job and income losses — tightening lending standards may be a constraint going forward.”

“With the recent good news on vaccines, it is likely many buyers and sellers are going to reevaluate their preferences as they imagine a world getting back to pre-pandemic conditions in the near future,” said chief economist at Keller Williams.

Market reaction: The Dow Jones Industrial Average and the S&P 500 were both down in Thursday morning trading.

Source: realtor.com

Pre-Wedding Bashes Can Put a Dent in Saving for a Home Down Payment

A sobering report finds that millennials who take nine destination bachelor trips will spend up to 35% of the down payment on the median-priced home.

Destination bachelor and bachelorette parties are becoming the norm, especially among millennials who prize experiences and grew up watching “The Hangover.” While flying off to exotic locales for pre-wedding bashes can be a trip of a lifetime, big-ticket adventures can add up fast.

A new Zillow report finds that people who attend just nine of these bashes will have spent up to $13,788, or 35 percent of a down payment on a median-price home.

Owning a home is important to millennials, yet many of them struggle to save enough money for a down payment. To help first-time buyers, Zillow calculated how much cash is needed for a 20 percent down payment on a home, and how much of it may instead be going toward bachelor or bachelorette parties.

Party on

A destination bachelor party costs on average $1,532 ($1,106 for a bachelorette), according to wedding website, The Knot. If the average person attends nine destination parties in a lifetime, they will have spent up to 34 percent of the cash needed for a down payment on the median-priced home.

In some metro areas, like Cleveland and Pittsburgh, millennials can spend up to half (51 and 50 percent, respectively) of their future home’s down payment on bachelor parties and well over a third of a down payment on bachelorette parties. However, in hot and expensive markets like San Jose or San Francisco, nine destination bachelor parties equates to only 5 or 6 percent, respectively, of the down payment on the median-priced home.

The wedding party

Bachelor and bachelorette parties are not the only expense associated with attending a wedding. On average, bridesmaids and groomsmen spend an additional $1,154 for things like wedding day attire, a gift for the bride and groom, as well as travel and accommodations for the wedding day. Guests not in the bridal party still spend $888, on average, to attend each wedding.

Help with budgeting

Buyers can use Zillow’s affordability calculator to see how much they can actually afford to spend on a home, based on their income, debts and savings. Zillow’s mortgage calculator can also provide custom down payment estimates based on home price and interest rates.

Curious where bachelor and bachelorette party expenses make up the largest portion of a down payment on a home? Check out the full report here.

Source: zillow.com

Buying a Home With Well Water? Here’s 5 Ways to Maintain It

November 23, 2020 December 1, 2020 by Julia Weaver

Updated on December 1st, 2020

If you’re moving out of the bustling city to a more peaceful and quiet countryside home, chances are you’re buying a home that has a well water system. Most homes in cities access their water via traditional municipal sewer systems. However, millions of homes in rural areas across the US housing market rely on well water to keep faucets flowing – over 15 million, according to the Center for Disease Control and Prevention. While using well water may be new for you, there are many upsides to a well water system, including:

  • Safety: well water, when properly maintained, is perfectly safe to drink and use.
  • Availability: well water is available anywhere, even in rural areas that don’t have access to a municipal water supply.
  • Affordability: well water can be cheaper than paying sewer fees. You’re not hooked up to the local water supply, which means no monthly bill.

If you’re buying a home with well water, it’s ultimately up to you to maintain it. So it’s important to have a thorough understanding of how the well water system works and the preventative care necessary to keep your well and your water at an ideal level of quality. Some homeowners don’t know that their water well systems require service and routine maintenance until it’s too late. Add these five tasks to your home maintenance to ensure your water stays safe and usable.

Blue, two-story home with a water well system

Blue, two-story home with a water well system

1) Test your well water annually

The quality of well water is always changing. While the government doesn’t require annual testing, it’s important to have your well water tested annually to protect those in your household.

The very nature of well water makes it far more susceptible to contamination. It’s important to make sure your well water is safe to drink and use in cooking, cleaning, and bathing. The testing process looks for things like bacteria, nitrates, iron, water hardness, manganese, and sulfides. If levels are too high or too low, depending on the substance in question, maintenance can be essential to prevent potential health hazards. If you do notice a change in the color, taste, or smell of your water, make sure to get it tested immediately – even if it hasn’t been a year since the last test. And, if you live in an area affected by flooding, you should have your water tested after every major flood in addition to an annual inspection.

The good news is testing water is both easy and affordable. DIY kits are available at most hardware stores. These products allow homeowners to take a water sample and send it to a third-party lab to be analyzed. Once analyzed, the testing company will provide results and, if necessary, guidance on next steps. 

Or, you can choose to hire a professional. They’ll collect samples from the well, send them to a lab, and provide you with reports on water quality. This can give peace of mind in knowing your water was tested in a state-certified lab. You’ll also have the opportunity to review the results with an expert who will provide next steps.

2) Get your well water system inspected each year

In addition to testing the quality of the water, you’ll also want the well itself professionally inspected once a year if you’re buying a home with a well. Your well water system plays a key role in keeping water clean and usable. If it’s not operating up to standard, it’s easy for problems to arise.

A professional can determine whether your well and your well pump are working properly and diagnose any problems if present. They’ll look for damage or irregularities – such as signs of cracking or settling – which could allow contaminants into your water. An inspector can assess the damage and help you make the necessary adjustments to keep your well working as it should.

Ignoring issues with your well can result in costly problems down the road, like full system replacements. An annual inspection is relatively affordable and can guarantee peace of mind while helping you save on repair costs.

3) Evaluate your water softener

Water hardness refers to the mineral levels in the water. Hard water has high mineral content, while soft water has low mineral content. Due to the nature of a well, well water tends to be hard. Drinking or using hard water in day-to-day cleaning isn’t dangerous. However, there are still side effects to watch out for, such as:

  • Build up around faucets and in tubs, sinks, and toilets
  • Leaving skin dry and itchy
  • Spots and stains on dishes
  • Dingy laundry
  • Slow-draining sinks and tubs
  • Corroded plumbing
  • Reduced appliance lifespan, like washers and dishwashers

Most homes with well water likely require a water softener to avoid the challenges of hard water. This equipment uses salt to neutralize the impact of heavy mineral content. However, maintaining a water softener can require regular replacement of a brine tank. Be sure to check salt levels regularly and replace the tank whenever necessary.

Washing dishes with soap and water

Washing dishes with soap and water

4) Prevent hard water stains

If your new home has hard water, you’ve probably noticed the rusty orange stains in your porcelain sink, tubs, toilets, and residue on your laundry and dishes. This is from the high iron content Hard water stains are caused by the high iron content found in well water. And although iron is typically not a safety concern, hard water stains can be a challenge to remove if not addressed immediately. 

For those who do not have a water softener, it’s best to prevent hard water stains at the source. After each use, wipe down the surfaces of your tub and shower. Regularly clean sinks and toilets to prevent buildup. If hard water is damaging your clothing, let laundry sit in a vinegar solution prior to washing. Place a cup of vinegar in your dishwasher prior to starting a cycle to avoid hard water stains on your clean dishes. Vinegar and baking soda can work wonders on existing hard water stains, as can numerous hard water-specific cleaning products.

Consider incorporating a water softening system into your home to significantly reduce stains, and perhaps eliminate them altogether.

5) Keep your well water tasting and smelling fresh

Most of the time, wells don’t result in dangerous drinking water, unless bacteria is present, but water can smell or taste different.

A filtration system can eliminate minor impurities, including hydrogen sulfide – a harmless substance with no flavor but can smell like rotten eggs. However, if filtration isn’t keeping water clear and odor-free, there may be larger issues involved with your water well system that a professional will need to address.

If you’re buying a home with well water, be sure to do some research about the water in your area, and any regulations for the area where you’re buying.

Source: redfin.com

Nearly Half of Americans Are Considering a Move During the Pandemic, but Why?>

With the coronavirus pandemic likely to stretch into next year, many people are spending more time than ever before in their homes—but some are ready to find a new place altogether. Cue the U-Haul trucks.

Nearly half of Americans, 46%, are considering moving within the next year, according to a recent LendingTree survey. The online financial services marketplace based the report on a survey of more than 2,000 participants in September. But certain groups of people are much more likely to consider relocating than others—and they have some pretty compelling reasons for doing so.

“A lot of the reasons people are thinking about moving are related to the pandemic and the recession,” says LendingTree Chief Economist Tendayi Kapfidze. “A lot of people are concerned about their living expenses. We have a lot of people who are behind on their rent and behind on their mortgage.

“A lot of people are looking for ways to reduce their housing payments, which for a lot of people is their largest expense,” says Kapfidze. “They’re thinking of moving somewhere where it costs less to live.”

Many of those hoping for a change of scenery want to move to cut costs. That was the top reason for about 44% of survey respondents. Other reasons included needing more space, 27%; wanting a home with different features, 27%; wanting to live in a different part of town, 12%; and renters who weren’t fans of their landlords, 11%.

Those looking for new homes are overwhelmingly looking for amenities and features they might not have prioritized before the emergence of COVID-19. They’re seeking out bigger yards, larger kitchens, and a dedicated office space to work remotely or where the kids can do their online schooling.

“People are working from home more, so you need different things to be comfortable,” says Kapfidze. “Perhaps you need extra space, perhaps you need a separate room dedicated for working. People are valuing some outside space a lot more than they used to because you’re stuck at home.”

Who’s the most likely to want to move?

Remote workers were much more likely to contemplate picking up and leaving than those who need to report to their jobs in person. That’s because it’s a lot easier for these lucky folks to move just about anywhere with a good internet connection. Heck, why not go to a beach in Bali or a house by the lake?

Almost two-thirds of those able to work from home, about 64%, were thinking of moving compared with nearly a third, 31%, of commuters.

“If you’re now working remotely, you may not need to be in an expensive city, or maybe you’re somewhere that’s really far away from your family,” says Kapfidze. “[You] can move because there’s more flexibility with work arrangements.”

Meanwhile, renters were likelier to dream of moving than homeowners, at about 56% compared with 39% of homeowners. That’s probably because they’re a lot more mobile, as they’re only tied to a property for as long as their lease. Homeowners, meanwhile, have to get their abodes into tiptop shape to put them on the market and secure a buyer before they can pick up and go.

Of those considering a move, more than a quarter, 27%, don’t plan to go far. They would like to stay in the same area.

With the economy still struggling to rebound and millions out of work, many are hoping to save money by moving in with family and friends, 14%, or having those family and friends move in with them, 10%. This enables folks to cut down on rent, utilities, and other living expenses.

“There are still a lot of people who are out of work and receiving some sort of government support,” says Kapfidze. “If you’re sharing fixed living expenses with other people that [means] your proportion is smaller and that can save you some money.”

Source: realtor.com

New analysis: Spring homebuying season may be the last affordable one for some time

Homebuyers, act now

If you’re looking to buy a home this year, then you might want to pull the trigger — and soon. As one expert says: “This spring homebuying season may be the last affordable one in a while.”

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Let the homebuying commence

A new analysis from Realtor.com makes the claim that spring 2020 will likely be the most affordable homebuying market we’ll see for some time. 

According to the findings, overall housing affordability increased 6% in 2019, and 87 of the top 100 metros saw improved affordability during that time. The jumps in affordability are largely thanks to increased incomes, lower mortgage rates, and decreasing listing prices.

Cost gap shrinks between buying a house and renting one

It might not last for long, though. According to Sabrina Speianu, Realtor.com’s senior economic research analyst, we’d need a significant drop in interest rates to bump affordability up any further.

“As interest rates stabilize, this spring’s homebuying season might be the last opportunity to take advantage of increases to home affordability,” Speianu says. “With stabilizing interest rates, only income growth or increased construction of affordable homes can provide continued increases to home affordability.”

Affordable housing: These cities take the smallest salaries to buy a house

Homebuying affordability jumped the most in these states

In the meantime, homebuyers in Des Moines, Iowa have reason to rejoice. The city saw the biggest jump in affordability in the entire nation over the last year. Incomes were up 5.6% and listing prices dropped 9.5%. 

Other cities where homebuying got more affordable were Minneapolis; Spokane, Wash.; Omaha, Neb.; and Raleigh, N.C. 

On the other end of the spectrum is Tulsa, Okla., which saw the biggest drop in affordability over the year. Other cities that experienced decreases include Thousand Oaks, Calif.; Winston-Salem, N.C.; Bakersfield, Calif.; and Philadelphia.

Verify your new rate (Jan 17th, 2021)

Get today’s mortgage rates

Want to take advantage of the affordable spring homebuying season? Then shop around and see what mortgage rates you qualify for today.

Verify your new rate (Jan 17th, 2021)

Source: themortgagereports.com

Home Builder Confidence Surges to New Record High as Sales Volume Grows

The numbers: The construction industry’s outlook improved again in November, according to research from a trade group released Monday.

The National Association of Home Builders’ monthly confidence index rose five points to a reading of 90 in November, a record high, the trade group said Tuesday. It is the fourth consecutive month that the index has hit a new record high.

Index readings over 50 are a sign of improving confidence. Back in April and May, the index dropped below 50 as pandemic concerns mounted.

What happened: The index that measures sentiment regarding current sales conditions increased six points to 96, while the index of expectations for future sales over the next six months rose one point to 89. The gauge regarding prospective buyers increased three points to 77.

At a regional level, though, confidence varied. The indexes for the Midwest, South and West all increased, led by a nine-point gain in the Midwest. But in the Northeast the index dropped fives point to 82.

“In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building,” Robert Dietz, chief economist at the National Association of Home Builders, said in the report.

The report was based on survey responses, most of which were collected before the presidential election was called for former Vice President Joe Biden on Nov. 7. December’s report will more fully capture the reactions of the home-building sector to the election.

The big picture: Builders’ optimism is an indication of the continued strength of the housing sector. While recent data, including mortgage application figures from the Mortgage Bankers Association, suggest that buyers are pumping the brakes on making deals, that’s not a cause for concern for builders. Rather, it’s a sign that seasonality is kicking in after a delayed spring and summer home-buying season continued into the early fall.

The conditions that make buying a newly-built home right now appealing are still present — and should be for some time. Even if mortgage rates increase because of a coronavirus vaccine, economists expect them to remain low by historical standards. And while Americans’ interest in the suburbs has grown, the supply of existing homes for sale has not. That leaves an opening for home builders.

“The strength in the housing market likely has legs, as it will take quarters and likely years for builders to catch up with the one-time spike in demand for single-family homes,” Stephen Stanley, chief economist at Amherst Pierpont, said in a research note last week after D.R. Horton released its quarterly earnings.

What they’re saying: “The October retail sales and industrial production reports, together with the November homebuilder survey, capture activity in the three strongest parts of the economy. But they have nothing to say about the deteriorating picture in the discretionary services sector, which is being hammered by the third COVID wave,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note.

“The signal from the weekly mortgage purchase applications index is also one of some slowing in momentum,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note.

Market reaction: The Dow Jones Industrial Average and the S&P 500 index were down Tuesday morning following the disappointing retail sales report.

Source: realtor.com

The Case for Renting: Homeownership Isn’t for Everyone

Although owning is nearly twice as affordable as renting, monthly payments alone don’t tell the full story.

Shirleen Holt’s relief at returning to renting is typical of many former homeowners.

No more fixing leaky faucets; no more time-consuming projects.

A marketing consultant who recently moved to Ashland, OR, Holt expects to own again, but for now she is thoroughly enjoying the renter’s life.

“When something goes wrong, I just call the landlord,” she says. “That right there is worth an extra $100 a month.”

It’s a practical reflection of the added bother and expenses that accompany owning a home.

Although owning is nearly twice as affordable as renting when it comes to monthly payments, those figures don’t tell the whole story. Some people say they’ve made more money – and even become millionaires – because they switched from owning to renting. They invested down payments and other money that went toward mortgages, taxes, insurance and maintenance, and they came out ahead.

The American Dream?

It’s a point of view not often heard in the United States. Although the U.S. homeownership rate has been about 65 percent for the past three decades, lower than in many other countries, our culture continues to value homeownership as a component of the American Dream and a way to reach financial stability.

That’s worth reconsidering, Zillow CEO Spencer Rascoff and Chief Economist Stan Humphries argue in their book, “Zillow Talk: The New Rules of Real Estate.” An entire chapter is devoted to the idea that homeownership should be uncoupled from the American Dream.

“Buying a home is a gamble,” they write. “It’s a gamble that we will want to keep living in one place – and keep making the mortgage payments that come with it – for years and even decades into the future.”

For low-income people, in particular, homeownership can pose too much risk. Rascoff and Humphries say that’s why subsidies for low-income families to buy homes in low-income neighborhoods, where housing values can be more volatile, often hurt the people they say they’re helping.

The risk also doesn’t make sense for people in other situations – for example, those who lose a job and are more likely to move to take another position than to get by on savings until they find work where they live, and those who do not have the savings to sustain a financial hit without downsizing, Rascoff and Humphries explain.

Money matters

Staying put long enough to gain equity is the key to making homeownership a good financial choice – something Zillow lays out in its breakeven analysis, and which strongly influences savvy renters.

“Because mortgages these days are very heavily front-loaded with interest, many homeowners are throwing money away just like they say renters are,” says Kelly Phillips Erb, a tax attorney who rents an old farmhouse outside Philadelphia.

It’s true that homeowners can deduct interest and property taxes, but only if they are itemizing their deductions. That tends to be most beneficial in the early years of homeownership, when the interest portion of mortgage payments is more likely to exceed the standard deduction. That’s also when people are gaining the least amount of equity.

Additionally, home improvement costs are not recouped as frequently as some people think via capital gains breaks after a home is sold, Phillips Erb explains.

A difference in perspective

Owning a home made sense for earlier generations in part because they took out 30-year mortgages and actually lived in their homes for 30 years, gaining enough equity to make the purchase worthwhile, says Phillips Erb, who writes a column for Forbes.com.

That plan can still work – but people do not stay put the way they used to. They move, they restart the 30-year clock by refinancing and they spend their home-sale gains on new cars and vacations rather reinvesting them into another home.

Brian Stoffel, a writer for The Motley Fool who preaches the pro-rent word, rents in Wisconsin and Costa Rica, but says he and his wife might yet buy a home. They believe their down payment would fare better in the stock market (something “Zillow Talk” refutes), but they want a stronger sense of community.

“When we think about why we put money in the stock market anyway – to provide what we want or need in our life – it seems silly to not own a home just so we can have more money,” Stoffel says.

Phillips Erb, the happily renting tax attorney, thinks renters could save money by shopping around and even negotiating with landlords.

“People will search two years for a house but one month for an apartment,” she notes. “I don’t think the market is so inelastic at this point – depending on where you are – that you can’t research where you want to be and figure out what you’re willing to pay.”

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Source: zillow.com