How to Decide Your Offer Price in a Strong Seller’s Market

As a buyer in this intense seller’s market, you may have experienced this unfortunate scenario: You find the perfect house, make what you believe is a strong offer, wait on pins and needles to see if it was accepted, only to find that you haven’t won this round of bidding wars. It begs the question: how do you choose your offer price so you know it’s competitive right out of the gate?

What the Current Market is Demanding of Buyers

As cash offers have risen sharply and multiple offer situations have become the norm, buyers are having to bring more to the table, employ strategic tactics, and work with an experienced, full-time real estate agent. But one of the biggest questions buyers are navigating these days isn’t merely how much they’re willing to offer; they’re having to decide how much they’re willing to offer over list price. And while there isn’t a perfect formula to help a buyer decide, there are several things to consider when creating a purchase offer that could help it stand a chance of winning a bidding war.

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How Much To Offer On A Home

The median existing home price is up over 17% from March 2020, and what this means for buyers is that they will need to pay substantially more than they probably want to pay and more than they would’ve paid just one year ago.

In some markets, offering a few thousand dollars over list price might be all it takes to win a bidding war. But in other markets, offering $50,000 over still won’t get the job done. Since real estate is a local endeavor, it’s critical to work with an experienced buyer’s agent that has a pulse on the current trends of your market.

Tips when deciding on the offer price:

  • Have your buyer’s agent pull the localized data on recent home sales to determine what percentage of the list price the previous sales received.
  • Determine if the local comps support a higher purchase price than the current list price.
  • Evaluate how much liquid cash you have to pay over appraisal value if need be.
  • Before you agree to an escalation clause, make sure your agent fully explains how they work.
  • In most cases, you don’t get to know what others are bidding on the home. You are blindly bidding against someone else, so in this market, offer your best right out of the gate, keeping in mind that the highest isn’t always the best if it means you’ll wind up “house poor.”

Other Ways To Strengthen Your Offer

There’s a reason real estate contracts are several pages long, and price is only one small section in the offer. While presenting a strong purchase price is critical, there are other factors that make up a home purchase contract — which means there are other ways to strengthen an offer in this seller’s market!

Remove Contingencies

One of the biggest ways buyers weaken their offer is by including contingencies. The most common contingency is the home sale contingency—the purchase is contingent upon the sale of their home. While needing to sell in order to buy is common and reasonable, in this market, sellers are just not wanting to entertain these offers if they can avoid it.

Buyers should consult their lender to see if they can safely purchase without having to sell. In addition, work with your real estate agent to determine a reasonable list price and sale price to get your home sold quickly. And while it’s not ideal, buyers should consider selling first and living in temporary or month-to-month housing while they search for a home to avoid having a contingency offer. If a home sale contingency is necessary, buyers can strengthen their offer by adding a kick-out clause.

Remove Requests

If you’re considering asking the seller to pay for your closing costs, you should rethink it depending on your local market. A strong offer these days means that it’s “clean” and over list price, so sellers won’t be likely to consider requests for concessions, personal property, or any others. Before buyers begin their home search, they should educate themselves on the upfront costs of purchasing a home, and become familiar with loan programs available to buyers that assist with some of those upfront costs.

Forego Repairs Or Offer A Repair Threshold

In this market, sellers are doing less and getting more. They’re not wanting to spend thousands on repairs, especially when there’s plenty of buyers who would purchase it “as is.” That said, offers that forego inspection and repairs or offer a repair threshold stand out among the crowd.

While waiving an inspection altogether can be highly risky (and is often not recommended), it is happening in many markets. But, if you still wish to have the comfort and protection of a professional home inspection without sabotaging your offer, consider an offer that specifies there will be no requests for repairs, or that you will request repairs only if they meet a certain financial threshold. This tactic gives buyers the protection of an inspection discovery while also reassuring the seller that they won’t be nickel-and-dimed on repairs.

Include An Appraisal Gap

In years past, the appraisal price was the dominant factor in the transaction and one of the biggest protection for buyers. Now, however, buyers are readily agreeing to pay well over appraisal. By including an appraisal gap in a purchase offer, buyers can substantially strengthen their offer. An appraisal gap is when a buyer agrees to pay all or some of the shortage between the offer price and the appraisal value. It’s important to remember that banks will only lend on the appraised value, so any appraisal gap is the out-of-pocket responsibility of the buyer.

What NOT To Do In A Seller’s Market

The best way to get your offer accepted? Submit an excellent offer and keep it ethical. Submitting a subpar offer but including a buyer love letter is no longer the way to win a bidding war. Not only is it risky, but it can also potentially violate federal law. So forego the love letter and instead submit your strongest, cleanest offer for the best chance to stand out from the crowd. It might not be the most convenient scenario, but if you’re really wanting to buy, it could mean all the difference between getting that coveted house or staying in the search pool!


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

What You Need to Know Before You Move to Massachusetts

When it comes to the New England region, Massachusetts is the most populous state. Home to prestigious schools, many historic sites, and booming businesses, this coastal state has become the sixth-most popular destination for foreign travelers. The Bay State is bordered by the Atlantic Ocean, and the states of Connecticut, Rhode Island, New Hampshire, Vermont, and New York. Great for urbanites and nature lovers alike, Massachusetts has a variety of different communities and regions.

Boston SkylineBoston Skyline

Housing Trends in Massachusetts

Since Massachusetts is a popular state, you’ll want to get on board with home scouting quickly. One of the most prominent housing trends in Massachusetts is the lack of supply. This shortage has created a surge on home prices according to a recent statement by the Eric Berman, director at the Massachusetts Association of Realtors. In fact, there were fewer than 10,000 single-family homes for sale in December and January in Massachusetts, compared to 38,000 in September 2006.

A Seller’s Market

Yes, it’s a seller’s market in Massachusetts. Here’s the lowdown. Although single-family home sales in January were slightly down — 1.2 percent — compared with the same period last year, the median price jumped 4 percent to $369,000, per the Massachusetts Association of Realtors. For condominiums, the median price increased more than 6 percent to $355,000 for the month of January, though sales fell by about 7 percent.

Why the price hikes? It’s due in part to the lack of available land for new construction. Also, in some of the more affluent areas, people seem to be staying put in favor of remodeling or adding extra space. Together, these decisions may limit housing supply – at least in some areas – for first-time buyers and moderate budgets.

Renting in and Around Massachusetts

Should you rent instead? If the idea of buying appeals to you but you just can’t pull it off, renting may be an option. The average rent for an apartment in Boston is $3,001, a 3% increase compared to $2,925 in 2017. For this price, you may get – on average – 815 to 986 square feet.

But other cities may be more reasonable. As of May 2018, the average rent for an apartment in Springfield was $1,061 which is a 0.94% increase from last year when the average rent was $1051, and a 1.23% increase from April 2018 when the average rent was $1048. Naturally, you need to factor in your location needs and maximum tolerance for commuting.

Primary Housing Styles in Massachusetts

With a history of settlement since the Pilgrims in 1620, New England boasts a spectrum of architectural styles that are older and more varied than in any other part of the country. One of these, not surprisingly, is the Cape Cod. It is one of America’s oldest home styles and has a very cozy feel. Other popular styles include an easy-living ranch and a country-style with a wrap-around porch.

Harvard SquareHarvard Square

Multi-Faceted Massachusetts

Massachusetts has something to offer whether you prefer the beach or big city bustle. Here are a few places to keep in mind when you are ready to put down some roots. What is your neighborhood style?

  • The Quainter Side of MA: To experience the quainter side of Massachusetts, you may want to head about an hour’s drive north of Boston to the seaside town of Rockport for, yes, rocky beaches, seagulls, and probably a lobster roll. Marblehead, a town of about 20,000 people, is less than an hour north of Boston and is often called the birthplace of the American Navy. Its known for its yachting, sailing, kayaking, etc.
  • Mountain Hip: Great Barrington has a Railroad Street, the Guthrie Center, eateries and folk music with some skiing close by if you like winter sports.
  • Outdoor Adventure: 90 miles of the Appalachian Trail runs through Massachusetts, so get your hiking boots and head out for a long-distance or day hike. Or walk the Freedom Trail, a 2.5-mile, brick-lined route that leads you to 16 historically significant sites in Boston.
  • Way Cool: Three of Boston’s neighborhoods get high marks for cool and are cited by the Boston Globe: (1) Jamaica Plain as “edgy cool,” (2) Allston – Brighton as well-educated and “up-and-coming,” and (3) Davis Square for trendy, walkable, and “prime hipness.”
  • Charmed I’m Sure: Massachusetts really turns up the charm in Cambridge. A classic university town, here you can find cobblestone streets, musicians busking, street vendor artists and small cafes. Harvard Square in the center is always action filled and great for people watching.
  • Great Day for a Swim: Woods Hole in southern Cape Cod could make for a perfect day at the beach. This area shows off a great bike path along the coast leading to Falmouth, golden beaches, aquariums devoted to marine biology, shops, and the ferry to Martha’s Vineyard. Provincetown, aka P-town, is another Cape Cod city that attracts events like the International Film Festival, a strong LGBTQ community, art galleries, and craft stores.
  • High Crime: North Adams, Fall River, and Brockton are areas to watch for. You can also check current FBI stats to help you determine whether to pass through or put down roots.
  • Tech-Savvy: Cambridge is home to MIT – Massachusetts Institute of Technology so there’s potential recruiter heaven. According to Built in Boston, there are 50 start-ups to watch over the next year, as Boston’s tech sector flourishes and venture capital firms pour money into edtech, fintech, and healthtech.

It seems that modern Massachusetts is also somewhat of a global leader in biotech, engineering, higher education, finance, and maritime trade. Perhaps this is why Forbes ranks Boston #30 in its list of Best Places for Business and Careers and #77 in job growth.

Find Your Perfect Home in Massachusetts

We can help you find your perfect home in Massachusetts. Whether it is to rent or buy, start your search on Homes.com today!


Rana Waxman parlays years of work experience in several fields into web content creation aligned with client needs. Rana’s versatile voice is supported by a zest for research, a passion for photography, and desire to provide clients with a purposeful presence online. In her non-writing hours, Rana is a happy yogini, constant walker, avid reader, and sometimes swimmer.

Source: homes.com

10 Tips for Fall Homebuyers Using the New Homes.com Site

If you are a home buyer who hasn’t found what you are looking for, don’t miss the fall sales season. Traditionally, it’s the best time of the year to find bargains. Homes.com’s new website, which uses artificial intelligence to locate listings you might miss, is a great tool to find homes you might have missed and new listings that meet your criteria as soon as they come on the market.

Homes.com Homes for saleHomes.com Homes for sale

Shop for Bargains in the Fall

Before real estate listings became available on the Internet, the home sales season ended at Labor Day. Only homeowners who were desperate to sell or were moving listed their homes in the fall. Access to millions of listings on the Internet has made it easier for buyers to house hunt year around.

Nowadays, the fall season is a more active market for sellers and buyers, but it’s still a smaller market than the spring and summer. There are fewer buyers and fewer properties to buy. Many families with school-age children like to get moved and settled before school begins. Also, buyers have only about six weeks to shop if they want to close before the holiday season kicks in. Waiting can make it harder to line up appraisers, home inspectors, title insurance and settlement attorneys.

This fall may see more properties in your market than normal. Sellers are more motivated than this fall than last. Many who list their homes after Labor Day fear that conditions for them will be worse next year as inventories continue to improve and prices flatten, as predicted by leading economists. More than three out of four Americans think the third quarter of this year is a good time to sell, according to the latest survey by the National Association of Realtors.

Because they have a limited window of time to sell if they want to close before the end of the year, sellers will be more willing to negotiate. Many will reduce their asking price to generate interest. Fall can be a great time for buyers looking for a good deal.

Use Homes.com to Stay on Top of Your Market

This fall will be the first for buyers to use the tools in Homes.com’s new site. Its intuitive features help identify what you are looking for and match you with existing listings and new listings that you might miss. The new Homes.com provides buyers the critical information they need to stay on top of their local markets in the fall when the timing is so important.

Here are ten tips to help buyers take advantage of Homes.com’s new features:

  1. Review your settings

    Since fewer homes will be listed after Labor Day, buyers should make sure they are seeing every listing that might interest them. Review your settings in Homes.com Match. Make sure your filters for price, size, and other features are accurate.

  2. Adjust filters to increase your options

    Your market will probably have fewer listings in the fall than the summer. To increase the number of your “favorite” listings that you track, consider changing some of your filters from “must have” to “like to have,” or even deselect some filters altogether. Loosening up on your filters will help Homes.com identify listings you might otherwise miss.

  3. Search a larger area

    You can also increase your prospects by increasing your geographic reach. Search adjoining neighborhoods and expand your search by searching by zip codes. You can scan sales trends across your entire metro by click on entire states and scrolling down for a list of towns within each state. Filter your town by price and zip codes to locate areas that you may not have considered.

  4. Save searches, lists, and favorites

    Save your listings you want to track by clicking on the “save” button at the top of the screen to add them to your “favorites” list. You can create lists of favorites by price, location and other features that you use to search. You can save each search, list and the favorites that you select to review regularly. They will be saved on the “My Homes” page.

  5. Do a search at the next highest price bracket

    There might be a perfect home that you’ve never seen because it’s priced just a little higher than the price bracket that you have been tracking. In the fall, sellers whose asking prices are a little above your budget are more likely to consider a lower offer than they were in the summer. Find these prospects by search at the next highest bracket and save the results as a different list on your My Homes page. When negotiating with sellers, be careful not to go higher than your budget allows.

  6. Identify price reductions

    In a search on Homes.com, you can find all the homes whose prices have been reduced. Look for the words “sort by closest match.” Click on the little downward pointing arrow and you will see a drop-down menu. Click on “price reduced” to see all the homes in your search that have reduced their prices. Each home with a reduced price will have the new price in a yellow box on the upper left of the house photo. Scroll down to the bottom of the listing and under “Price history” you can see when the price was reduced, by how much it was reduced and new and old prices.

  7. Identify stale listings

    Near the bottom of each listing on Homes.com is the price history of each home. Look for homes that have been on the market for two months or longer and homes that have been reduced in price. You can sort for stale listings by looking for “newer” homes using the drop-down menu that appears by clicking on “sort by closest match” as discussed above. Then scroll down to the bottom of the listings and click on the last number in the page counter. Sellers with stale listings are going to be more motivated than those who have just listed their homes.

  8. Identify bargains

    You can get a sense of whether a home is overpriced or is a good bargain by using Homes.com’s valuation tool. At the top of each page of listings, click on “Home Values” and enter the address. You will see a map of the neighborhood and the price and location of the home. The value is an estimation based on thebest available local pricing data, but it still may vary from an appraised value. By comparing the estimate to the list price of a property, you can compare the value with the asking price.

  9. Be ready to close quickly

    Get pre-approved and line up your settlement attorney, title company and home inspector in advance so that you won’t be unpleasantly surprised should they not be available during the holiday period. Review your lists and try different searches several times a week.

  10. Reduce contingency clauses

    Consider reducing contingencies in your offer to speed up the process (be sure to keep contingencies providing for financing and inspection.) If you plan to itemize your tax deductions on your 2018 taxes, be sure that you close before December 31.

Successful house hunting in the fall takes persistence and discipline. Buyers must take advantage of the best available technology to improve their chances of finding the right home. Using other search engines, it is difficult to find homes that meet both your “must haves” and your budget. Homes.com intuitively identifies prospects that meet your criteria and notifies you by email of prospects as soon as they come on the market. You will have more choices and more opportunities to find the right home with Homes.com.


Steve Cook is the editor of the Down Payment Report. He is a member of the board of the National Association of Real Estate Editors and writes for several leading Web sites, including Inman News. From 1999 to 2007 he was vice president for public affairs at the National Association of Realtors.

Source: homes.com

Fall Housing Market Outlook: Change Is Underway

As we enter the fall sales season, fundamental changes are underway in many housing markets. According to the most recent existing home sales reports from the National Association of Realtors, after three years of shrinking supplies of homes for sale and rapidly rising home prices, the inventory crisis is waning and prices are leveling off.

One reason for the change in direction is lagging demand. Existing home sales fell below last year’s levels in April, May, June, and July―the heart of the home-buying season. Price hikes generated by shortages of inventory have outpaced incomes and put buying a home beyond the reach of hundreds of thousands of potential first-time buyers and move-up buyers.

Lower Sales, Moderating Prices and Improving Inventories

Higher prices have had at least one good outcome. They are encouraging more buyers to list their homes. For the first time in three years, inventories of existing homes did not decline over the summer months. NAR Chief Economist Lawrence Yun says several consecutive years of strong home price growth are enticing homeowners to consider selling. “Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end. Therefore, more are indicating that it is a good time to sell, which is a healthy shift in the market.”

Unaffordability varies greatly by locale. The national statistics mask substantial variation across different parts of the U.S. Almost all Southern and Midwestern households live in affordable neighborhoods, while large shares of Northeastern and western neighborhoods have price-income ratios that would stretch middle-income family budgets. Though prices are moderating in some regions, mortgage rates affect buyers nationwide. With rates now approaching 5 percent on a thirty-year fixed rate mortgage, the highest level since 2001, the Federal Reserve is expected to raise rates one more time before the year ends.

Traditionally both demand and supply decline this time of year. With fewer buyers in the market, many sellers may pull their listings and wait until next spring. Many of those who keep their homes on the market through the fall reached or exceeded the 90-day listing period. Aging listings can scare away buyers who wonder what’s wrong with houses that haven’t sold in today’s active marketplaces and owners with stale listings.

Buyers Are Not yet Reacting to Changing Market Conditions

Fannie Mae’s authoritative Home Purchase Sentiment Index (HPSI) a monthly consumer survey (August results) and NAR’s quarterly HOME Survey (third quarter 2018) report that consumers have not yet picked up on the slowdown of price increases and improvement of inventories over the summer has improved. In the NAR survey, a record high 77 percent of Americans believe that now is a good time to sell a house, while those that think now is a good time to buy continues to decline.

Fannie Mae’s Index improved slightly due to improving consumer income rather than better market conditions for buyers. In the third quarter of 2018, the HOME survey found that the percentage of people who believe that now is a good time to buy a home (is the lowest recorded since the survey started in 2015. (You might click on the link above for Fannie Mae’s current monthly survey results.)

Source: Fannie Mae

The jury is out on whether the current lull in sales, the stabilizing of inventories and a slight decline in the rate that prices are rising will continue through the balance of the year. Economists at Fannie Mae and Freddie Mac expect year-over-year sales to stabilize over the balance of the year and prices to continue to soften. Sellers who stick it out through the fall will be stuck with 90-day plus listings have their eyes on the calendar and are super-motivated to make a deal as the holidays approach. Conditions probably won’t improve enough to encourage many first-time buyers to return to the marketplace, but it could be a good time for bargain-hunting buyers who really do their homework on local market trends and have their financing in order.

Fall Season Tips for Buyers

  • Prices will either moderate or decline slightly in most markets. Sales may drop from last season’s levels.
  • Meet with your agent to review recent local and hyper-local market trends.
  • The competition will improve due to the seasonal decline of buyers in the fall and perceptions that conditions for buyers are not improving.
  • Shop carefully and pay attention to how long properties have been listed. Research aged listings to look for suitable properties that sellers might be motivated to sell.
  • Look for price reductions.
  • Have your financing in order so that you can move quickly before the holidays arrive, which is not a good time to find a settlement agent, appraiser or home inspector.
  • If you plan to deduct the mortgage interest on your 2018 taxes, you must close on a new home before the new year, Remember, the new tax law will be in effect, and you will need more than $24,000 in deductions on a joint return to make it worth your while to itemize.
  • Move-up buyers will have to plan carefully. While this fall may be a better time to get a good deal on a larger home. Be sure you can sell your existing one this year or be prepared to wait for the spring sales season. Smaller, starter homes will still be in demand.

Fall Season Tips for Sellers

  • Review conditions in your local market conditions for buyers. If prices are still rising and inventories still near record lows, buyers may not be motivated.
  • If your home has been listed for two months or more, review your sales strategy with your agent. Review the latest comps in your neighborhood. If you need to sell this year, consider a price reduction to attract buyers.
  • Refresh your listing with new photos or video. Show off your curb appeal after the leaves have fallen and show off your fireplace with a cozy fire.
  • Should prospects for sale be dim by December, consider de-listing your home and focusing on the spring sales season. You will need to take it off your MLS for at least one month before the “clock” that tracks your home’s time on the MLS resets to zero. Take advantage of the time to review what you have learned and work with your agent to address issues that made it hard to sell your home in 2018.


Steve Cook is the editor of the Down Payment Report. He is a member of the board of the National Association of Real Estate Editors and writes for several leading Web sites, including Inman News. From 1999 to 2007 he was vice president for public affairs at the National Association of Realtors.

Source: homes.com

Contract Contingencies Worth Keeping

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Even in a Tight Housing Market, You Need to Protect Yourself

Practically every home sales transaction includes a negotiation phase where the seller and the buyer negotiate the contract. Part of this process involves the buyer making certain demands that need to be met before they will agree to buy the home. These demands are called contingencies.

In every negotiation procedure, some contingencies are kept, and some are forfeited. Rarely does a buyer get to have all their contingencies met. A negotiation is, after all, a give-and-take process. That said, there are some contingencies that you don’t want to give up because if you do, you will be exposed to certain risks. Here are some contingencies worth walking away from the table over.

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1. Home Inspection Contingency

Some sellers will reduce their asking price if the buyer agrees to bypass the home inspection. Accepting this contingency is a big mistake.

A home inspection should be performed by a licensed home inspector within seven days after you sign the purchase agreement. Once you have a copy of the inspection, you can then request the seller to make any repairs you deem necessary for you to purchase the home.

The seller will either have the repairs made or come back with another offer, but if an agreement isn’t reached, you can still back out of the deal and withdraw the earnest money that was previously deposited.

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Appraisal Contingency

Having an appraisal contingency is one of the most important things you can do to protect yourself when buying a home. If you don’t have an appraisal contingency and the seller already accepted your offer, then you could stand to lose a lot of money should the lender’s appraisal of the home’s worth be much lower than the amount you’re paying.

The appraisal contingency requires that the appraisal be within 5% to 10% (more or less) of the asking price. If the home is worth more than 10% below its asking price, then you can walk away from the table or continue negotiating with the seller to drive the price down.

Financing Contingency

Ideally, you should get pre-approved for a mortgage before you buy, but in the event that you didn’t, then having a financing contingency is a must. With this contingency in place, you can still reclaim your earnest money deposit if you can’t get approved for financing by your lender. It also provides you with 14 additional days to secure financing.

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House-Sale Contingency

If you need the equity from your current home to purchase your next home, then you will want a house-sale contingency included in your contract. This contingency will protect you if the sale of your current home falls through because it requires for your home to be sold by a certain date before you can close on the new home.

If your sale falls through, then you can withdraw your offer. Just keep in mind that although this contingency does protect you, it can also make some sellers trepidatious to accept your offer because there’s a risk that you might back out if your home doesn’t sell first.

Forfeiting any of the above four contingencies can wind up costing you thousands of dollars, so before you accept a contract, you should fight for these to be included. Any other contingencies you might win are just icing on the cake.


Carson is a real estate agent based out of Phoenix, Arizona. Carson loves data and market research, and how readily available it is in today’s world. He is passionate about interpreting these insights to help his clients find and buy their perfect home. Carson got into the real estate industry because he loves the feeling of handing over the keys to a new home to happy clients. In his free time, he works on his backyard bonsai garden and spends time with his wife, Julia.

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Source: homes.com

Why Newly Built Homes Are a Better Deal Than You Might Think

Most first-time buyers don’t bother to look at new home listings in their home searches because they expect them to outside their budget. However, the same market forces that are making existing homes more expensive today are making new homes attractive, or at least worth a look for buyers who have saved hard and waited a long time to buy.

Newly built homes have customarily cost 15 to 25 percent more than comparable existing ones, based on national median price data that date back to the 1960s. But in recent homes, that difference has been shrinking as existing homes have been appreciating at a record pace, and newly built homes haven’t.

New home under construction with wood trusses and supplies against blue sky.New home under construction with wood trusses and supplies against blue sky.

The average new home in the U.S. went for $324,467 in June, 28 percent more than the $254,200 price for existing homes, according to data from John Burns Real Estate Consulting LLC, cited recently by Prashant Gopal of Bloomberg. That’s down from a 37 percent gap in 2015 and is the smallest difference since the end of 2010.

The price difference is forecast to continue to shrink as leading economists expect prices for existing homes to continue to rise in 2019 than this year, though at a slower pace. For three years, the inventory drought has driven existing home prices to record peaks, but the drought is slowly ending. Existing home price growth is up 48 percent from 2011 to 2017 and is likely to rise an additional three percent by the end of 2018.

With the housing recovery, home builders cranked up production and increasingly focus on building homes for new moderate-income buyers. The National Association of Home Builders reports that inventory of new homes for sale rose to 336,000 in October, but the median sales price fell 3.6 percent to $309,700, as the market for new construction shifts to less expensive townhouses and other lower-cost houses. Affordability is hurting home builders nearly as much as existing home sellers. Just as existing home sales fell for six months in the second and third quarters this year, new home sales are at a two and a half year low. First-time and move-up buyers, still looking for homes they can afford, rarely explore new construction in their markets.

Short inventories have been less of a problem for home builders, who sell as many of their homes as they can before they are built. In October 2018, there was a 7.4 months supply of new homes for sale in the nation compared to only a 4.3 months supply for new homes. A six months supply is considered normal.

The real payoff with a new home is what you get for the money.

Here are some of the “extras:”

  • The opportunity to personalize the house by choosing finishes, fixtures, decor, and even location.
  • A “honeymoon” period when everything is new, and repairmen aren’t needed.
  • With a new-construction home, many developers build repair costs into the price premium and include a builder’s warranty and manufacturers’ warranties.
  • Cutting-edge architecture and design, including kitchens and bathrooms.
  • The latest home automation, including energy-efficient heating, ventilation and cooling, and energy-efficient home appliances. New homes come wired for cable and internet.
  • Age and condition are important factors in appraising home values. Newer homes generally do better in this categories than older homes.

Adding these “extras” to an existing home could add 50 percent or more to its price.

Websites like Homes.com are helping buyers find new construction in their markets by including new listings among within their site for affordable homes. Or, home hunters can just search for new homes listed in a community search by price and location. Most new home listings are for homes that have yet to be built and were labeled “ready to build.” Buyers can reach out builders directly to answer questions and show the properties. Often, buyers can pick their location and provide input as the house is being built.

New home with an old country feel.New home with an old country feel.

Housing economists of all stripes realize that new homes are the only way to relieve the inventory shortage. Housing markets won’t fully recover until the housing stock can handle the demand of both millennials and their younger brothers and sisters of Generation Z, who are projected to be even larger than the Millennial Generation.

“To increase home ownership, more home construction is needed, which could be boosted by delivering regulatory relief to community banks, removing the lumber tariff, re-examining stringent zoning laws and training more workers for the construction industry,” says Lawrence Yun, chief economist at the National Association of Realtors.

A newly built home will always be more expensive than a comparable existing one, but it still may not be the best buy for you. If you’re at DIY whiz and don’t mind living in someone else’s house until you have the time and money to personalize it, you’ll probably be happiest with an existing home in need of a little love. If circular saws and plaster trowels aren’t your things, you’ll easily spend more on remodeling than a new home would cost — and you’d still own an older, aging house. Today millions of prospective first-time buyers are saving for a down payment, improving their credit, and waiting until existing home prices come back down to earth. Many move-up buyers desperate for more space feel as though the kids will be in college before they have rooms of their own. Meanwhile, mortgage rates, rents, and home values continue to rise.

As the price gap between new homes and existing homes continues to shrink, next year might be a good time for you to widen your horizons and see what new homes can offer.


Steve Cook is the editor of the Down Payment Report. He is a member of the board of the National Association of Real Estate Editors and writes for several leading Web sites, including Inman News. From 1999 to 2007 he was vice president for public affairs at the National Association of Realtors.

Source: homes.com

What The 2020 Real Estate Market Could Look Like

Key 2020 Takeaways: 
  • Homeowners that are contemplating selling in the new year can realistically expect a stable market
  • We can expect to see more home buyers capitalize on the relatively low rates in 2020
  • As more homeowners opt to refinance rather than sell, this will play a contributing factor in the inventory shortage
  • Buyers that may have been out of touch with the market for several years, should prepare themselves to experience rejected offers, bidding wars, and longer than anticipated home search times

It’s no secret that the real estate market frequently sees pivots, changes, and even crashes. After surviving the recent recession, many homeowners and investors are paying close attention to the market and its changes. As trends and the economy changes, so does the real estate market, so what can we expect to see in the 2020 real estate market? Freddie Mac, a government-owned entity that backs mortgages, recently released their 2020 market predictions.

Home Sales Will Increase

As with each year post-recession, home sales will continue to increase according to Freddie Mac. Both new construction and existing sales will see an overall rise. In fact, Freddie Mac predicts that home sales will rise from 6 million (2019) to 6.1 million in 2020. Increased home sales are an indicator of a strong real estate market, and homeowners that are contemplating selling in the new year can realistically expect a stable market.

There Will Still Be A Lack Of Inventory

A common real estate theme post-recession is a lack of inventory, and 2020 will be no different. According to Forbes, part of this is fueled by homeowners attempting to recover lost equity from the recession, and another factor is longer homeownership tenures–including Baby Boomers. Of course, the lack of inventory pays a big factor in real estate prices and the fierce buying competition seen in parts of the country.

Home Prices Will Increase

Although many argue home prices are already outside the affordable range, Freddie Mac predicts an increase of 2.8% in home prices. While this may be unwelcome news for home buyers, this increase is less than Freddie Mac’s prediction for 2019 of 3.3%. As the inventory of available homes remains tight, the prices will tend to increase. In summary, the common factor of supply and demand will affect pricing in 2020.

Interest Rates Will Increase…But Slightly

The real estate market is already experiencing low-interest rates which has helped to spur activity in the market. And while Freddie Mac predicts interest rates will slightly increase to around 3.8%, this still remains within the realm of appealing interest rates. The increase is still a far cry from the days of 19% in the early 1980s, and it’s almost less than half of the highest interest rate pre-recession in 2006. Having lived through the recession, most home buyers are more cognizant of the power of a good interest rate, so we can expect to see more home buyers capitalize on the relatively low rates in 2020.

More Homeowners Will Refinance

According to Freddie Mac, approximately $789 billion refinance originations occurred in 2019. As interest rates remained low, homeowners, especially those experiencing high-interest rates from the pre-recession era, opted to refinance their current mortgages and stay in place. This will remain true for 2020; however, there will be slightly less in totally refinances originations for a total of $785 billion. Of course, as more homeowners opt to refinance rather than sell, this will play a contributing factor in the inventory shortage. If you or someone you know is looking to refinance in 2020, check out the Homes.com Mortgage Hub which has information on prequalifying or applying for a mortgage as well as a mortgage calculator. 

It’s Still All About The Millennials

Just about every industry is reiterating the power of millennials, and real estate is no exception. In fact, more than 25% of millennials, the nation’s largest generation, stated they want to purchase a home in 2020. As more millennials drive the market, the demand may be greater than the supply, therefore, increasing prices and competition. Sellers in 2020 would be wise to cater to the home buying demands of this generation as they’ve proven they’re willing to pay up for certain amenities and features in a home.

What This Means For Sellers

While low-interest rates, increasing demand, and limited inventory may all sound like great news for sellers, it’s important to remember one thing: you buy into the market you sell into. While a homeowner may be able to sell over list price due to increased demand and competition, they may also experience the same thing as a buyer. Buyers that may have been out of touch with the market for several years, should prepare themselves to experience rejected offers, bidding wars, and longer than anticipated home search times. Utilizing a licensed Realtor or real estate agent, however, can greatly ease this burden and make the process seamless. Madeline Smallwood, Realtor at Keller Williams Market Pro Realty in Bentonville, Arkansas advises buyers that, “I think a shortage is going to continue into 2020 with prices rising. Buyers will need to come into the market planning to make solid and clean offers…That shouldn’t scare them away from buying in 2020 as long as they have an experienced agent on their side who can help them make an informed decision.” Find your perfect agent on Homes.com with our Find an Agent tab. 


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

Six Communities for Generation Z

Homes.com’s recent survey of Generation Z, also known as America’s youngest homebuyers with young adults from ages 18 to 24, provides new information on where this new wave of buyers would like to buy and why. Even more massive than the millennial generation, Generation Z promises to shape homebuying trends for years to come.

Our Homes.com survey provided new insights into Generation Z buyers’ priorities. We found that these new buyers prefer communities that offer:

  • Diversity. Prefer neighborhoods and communities that are racially and ethnically diverse;
  • Accessibility. Want a location that is accessible to work as well as to friends and family;
  • Safety. When Gen Z-ers look for new communities, safety is always a top priority.
  • Affordability. Generation Z is very aware of rising home prices that have kept millions of millennials from becoming homeowners,

The survey found that Generation Z-ers want to be homeowners for the same reason that older generations did: to have a place to call home. Being sure that their first home is a good investment and is also pet-friendly ranked high in their list of “wants.”

By combining these insights, we created a matrix to identify six prospective communities for Gen Zers. We are using data from the Bureau of Labor Statistics, diversity rankings from Wallethub, demographics from NeighborhoodScoutaffordability indices from the National Association of Home Builders, and market data from Homes.com.

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Gaithersburg, Maryland

Located in Montgomery County, Maryland, Gaithersburg is an outlying suburb of Washington D.C. and the fourth largest city in the state, located in the center of Maryland’s high tech and biomedical corridor. It is accessible to downtown D.C. by train, Metro, and auto. With a population of 59,933, it has an unemployment rate of 3.0%, lower than the national average. Professional services and health care account for 30% of its jobs and more than half of its residents have college degrees.

In WalletHub’s diversity ratings, Gaithersburg ranks number one among all small cities in the nation in 2019 and the second among all cities for its ethnic, linguistic, and birthplace diversity. One out of five of its residents are foreign-born, and only 35% of its population is white.

The median home price is high at $350,932, but so are area incomes. Gaithersburg’s median household income was $85,773 in May, much higher than the national median of $57,652. More than half of its residents own their own homes. Gaithersburg is safer than 49 percent of cities, and a resident of Gaithersburg has only one chance in 790 of becoming a victim of a violent crime.

In the high-priced Washington DC market, Gaithersburg is an affordable alternative for Generation Z-ers looking for good values accessible to both the city and the Appalachian countryside.

Aurora, Illinois

Aurora is an outer suburb of Chicago with 200,100 residents. It is the second-most populous city in Illinois. With a long history of manufacturing, Caterpillar is still its largest employer. Between 2016 and 201, its median household income grew from $63,967 to $66,848, a 4.5% increase. Aurora’s unemployment rate is 4.2%, slightly above the U.S. average is 3.9%, and its median household income is $63,569 a year. At 16 crimes per 1000 residents annually, Aurora is safer than 43% of U.S. cities

Aurora’s population is very diverse, with 56% White residents, 42% Hispanic, and 10% African American. In May, SmartAsset ranked Aurora first in the nation for “Living the American Dream.” It ranked high in each of the award’s five metrics: homeownership rate, diversity rate, upward mobility rate, median home value, and unemployment rate. Aurora also ranks fifth on WalletHub’s list of most diverse medium-sized cities.

Aurora’s median home price in May was $230,000, far below the national median of $277,700. Houses are selling in 75 to 80 days, and market conditions are moving from neutral to favoring buyers.

For Midwestern Generation Z-ers looking for the right mix of accessibility and affordability, Aurora could fill the bill.

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Clifton, New Jersey

Clifton is located in Passaic County in northern New Jersey, within commuting distance to New York City. With a population of 86,607 people, Clifton is the eighth largest community in the state.

Clifton is a city of sales and office workers, professionals, and service providers. Ranked sixth in the nation among small cities in Wallethub’s national diversity ratings, Clifton is home to a variety of racial and ethnic groups, according to the New York Times. The greatest number of Clifton residents are White, then followed by Asian, but it also has a sizable Hispanic population, accounting for 37% of the city’s residents. Clifton is a youthful city; the average age is only 38.

Clifton’s median home price is $395,880, about 4% higher than the state average. At $71,830, the median household income in Clifton is 30% higher than the national average. At 3.6%, its unemployment rate equals the national average. Clifton’s crime rate is lower than the state average and it is safer than 37% of U.S. cities.

For Generation Z buyers looking for a suitable location within commuting distance to New York, Clifton is a great option.

Houston, Texas

With a population of more than two million, Houston is the largest community in Texas and the fourth largest in the nation. Its economy is thriving, adding 86,200 new jobs over the past 12 months, trailing only the Greater New York City market and Dallas in job growth. In March 2019, Houston’s unemployment was 3.7%, the lowest level in a decade.

Houston is an ethnically diverse city. Latinos account for 35.3% of the population; Whites account for 24.9%, African Americans are 16.8%, and Asians 6%. Eldridge/West Oaks, Willowbrook, Westchase, and Briar Forest are four of its most diversified neighborhoods.

Houston’s metro crime rate is high, at 4%, but not in safer neighborhoods like Dogwood Acres/Walden Woods, Westheimer Pky/S Ferry Rd, Clodine, and Sandtown Cir/Sandtown Ln.

Houston has one of the nation’s healthiest housing markets though sales are slowing down in 2019. June single-family home sales were down 3.4% in dollar volume, and Houston’s metro median price of $252,000 was 2% lower than a year ago. However, listings are up 11%, creating a stronger market for buyers.

With jobs and inventory on the rise, Houston’s suburban and residential neighborhoods are good bets for Generation Zers.

Danbury, Connecticut

Situated on the western border with New York State, Danbury is a diverse, safe, and affordable place to buy a home. Western Connecticut home sales have been softening in 2019, inventories are improving, and prices are rising at an annual rate of only 1.5%.

With a median home value of $281,878, Danbury is one of the better housing markets for first-time buyers in New England and is ranked eleventh in WalletHub’s list of most diverse cities in the nation. It’s about 50% white and 30% Hispanic, while African Americans and Asians account for about 6% each. One out of three residents is foreign-born and Danbury is home to a sizable population of Portuguese and Brazilian heritage.

At 3.2% in May, Danbury’s unemployment rate is lower than the national average and the lowest unemployment rate in the state. Danbury’s diverse industry base, ability to maintain manufacturing jobs, and proximity to New York City have contributed to job growth. However, Danbury is a 70-minute commute to the city by train. In 2015, more than 7,200 people in the Danbury region traveled more than 50 miles each way to work, compared to just 4,600 in 2002.

Madison, Wisconsin

According to U.S. Census Bureau data, nearly 7 million American households were housing cost-burdened in 2016, meaning they spent over 50% of their income on housing costs. Only 6.03% of Madison, Wisconsin’s homeowners are severely housing cost-burdened, according to a report from SmartAsset.

That’s a remarkable statistic in light of Madison’s current market conditions. For the past four years, Madison has been in a strong seller’s market. From shrinking inventories and strong demand, the Madison real estate market saw median prices rise to a new high of $313,123 in February. About one out of three transactions became competitive, and homes that sold in 46 days are now spending only 26 days on the market, according to the South Central Wisconsin MLS. The Madison single-family home market has had less than two months of supply since December 2015. Cash offers now account for 15% of all single-family sales.

Signs of change, such as rising inventories and slackening sales, suggest conditions for buyers will improve. Low-interest rates will keep demand secure for the near term, but the days of Madison’s long-lived seller’s market may be numbered.

With an unemployment rate only of only 2.1%, a rate of job growth faster than the national average, a per capita income of $138,960 for a family of four, and a healthy housing market, Madison’s Generation Z members should be able to find first homes they can afford.


Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

Source: homes.com

Frigid February Cools Off Monthly Home Sales

During harsh winter weather in February, nationwide sales of single-family homes fell to their lowest in nine months. So reports Reuters.

Home Sales to Vets Increase

New home sales tumbled 18.2% to a seasonally adjusted annual rate of 775,000 units in the month, according to the Commerce Department.

Experts said a record jump in lumber costs and rising mortgage rates could slow housing sales in 2021.

Read the full article from Reuters. 

Source: themortgageleader.com

Track Your Home’s Value Using This State-of-the-Art Tool

When you buy or sell a used car, you can get a good idea of its value and the price it will sell for by surfing several widely advertised web sites. When buying or selling a house, you can do the same thing by using Homes.com’s Home Value Calculator which uses automated valuation models, or “AVMs”, to give you an estimate of a home’s value.

Homes.com’s state-of-the-art valuation tool is sufficiently sophisticated that you can use it to understand and track changing home values in your local neighborhood. Hyper-local valuation trends are much more useful and more important to buyers and sellers than the national or regional trends reported in the news media.

Using Homes.com’s AVM When Buying, Selling, or Financing

Having an accurate estimate of a property’s value will help you make selling, refinancing, or buying decisions. Homeowners can get an excellent idea of how much equity they have in their homes without incurring the cost of an appraisal– equity is the difference between the value of your home and the amount you still owe on your mortgage, if any. Owners considering refinancing or selling can use the calculator to help them decide when is the best time to do so. Buyers can use the calculator to compare a seller’s asking price with the AVM’s estimate before they make an offer. The calculator’s valuation estimate will also help buyers avoid low appraisal problems when they are deciding how much to put down.

Here’s how to use the calculator:

  1. Go to Homes.com’s valuation calculator and enter the address of the property.
  2. You will see a satellite map of the neighborhood with the home’s current estimated valuation in blue. On the right-hand side of the screen, you will see a form you can fill out titled “ask about this home.” If you fill it out, you will receive calls from local real estate agents who can tell you more about the home’s value. 
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  3. Scroll down, and in the center you’ll see an Estimated Home Value in large type in the center of the screen. This is the maximum value the property might be worth in current market conditions. To the right of the estimate, you will see a range that ends with the maximum value.
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  4. Scroll down further and you will come to a table that lists the current median value for the zip code, street, neighborhood, city/town, state and the entire nation. Click on each option and you will see a line graph that compares the value of the property with the median value over time. This will give you a good idea of how the home’s value compared with neighboring properties.
  5. Continue to scroll down until you come to “price history.” Here you can find the actual prices paid for the home in past sales. You can find the same historical price information on listings of homes for sale and also find out how long a property has been listed on Homes.com.
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How Automated Valuation Models Work

Using data on recent, nearby home sales and market trends, AVMs can provide an estimate that will be very helpful when you are exploring a new community, making a budget to buy a home, saving for a down payment, preparing an offer or, if you already are an owner, deciding whether or not to refinance. These calculators use algorithms designed with the help of economists and use mathematical modeling to convert the most recent local sales data into an estimate on a property. Like appraisers, AVMs find several homes that are the same size, same age, and are located as close as possible to the property being valued.

AVM estimates can vary as much as 10% from the actual value, primarily because AVMs can’t inspect the property to see if the house might need expensive repairs to fix, such as a wet basement, leaky roof, mold infestation, outdated circuit breaker, or termite damage. It doesn’t know the age or condition of a home’s appliances and its systems― electrical, plumbing, heating, and air conditioning. Big ticket repairs like aging roofs and windows, damaged foundations, or landscaping may be so old that new owners will have to spend serious money soon after they move in.

Until very recently, all mortgage lenders have required an appraisal of a property by a licensed appraiser before they will approve a mortgage. Lenders use the appraisal to determine how much they will lend the borrower. If the appraisal of the home values the property less than the amount the borrower needs to finance the purchase (the sales price minus the borrower’s down payment), either the borrower will have to increase the down payment or the seller must lower his price.  Such low appraisals are a major reason that sales fall through. About 10% of home sales encounter appraisal-related problems.

The variety of and quality of information on home prices and values you can find on Homes.com will give you a good idea of how a home stacks up in your current “hyperlocal” market. Market conditions in your zip code, neighborhood and even on a specific street will be more valuable to you than metro-wide, state or national trends.

Surf through local listings of homes for sale to find nearby properties that are roughly the same size and age as the home you are researching. You can also identify comparable homes that have recently sold to give you a sense of local market trends. You might also conduct valuations once a month to see if values have changed in response to market conditions.  If you are buying or selling, ask your real estate agent for “competitive market analysis” of a property or a neighborhood in which you are interested will include information from recent local sales and professional opinion of the property’s future prospects based on local market trends.


Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

Source: homes.com