Home prices rise in May on persistent shortage of listings

​Home prices surged higher in May across South Florida as buyers face the familiar problem of limited listings.

The median price for existing, single-family homes last month was $335,000 for both Broward and Palm Beach counties, according to local Realtor board figures released Wednesday. In each case, the median rose about 8 percent from May 2016.

Miami-Dade County’s median price increased 11 percent to $325,000.

This is the highest median in Broward since late 2007 and the highest in Palm Beach County since early 2008.

Meanwhile, the National Association of Realtors said May’s median price for all housing types set a new peak at $252,800.

“Home prices keep chugging along at a pace that is not sustainable in the long run,” Lawrence Yun, chief economist for NAR, said in a statement. “Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”

Robust demand for low- and mid-priced homes has powered the housing recovery for the past five years, and it continues to raise prices across South Florida, real estate observers said.

Milly Taylor, an agent for Keyes Co. in Palm Beach County, said homes priced under $400,000 in Wellington and Lake Worth draw immediate interest after hitting the market.

“Sometimes it’s three and four showings in a day, one right after another,” Taylor said.

“We need more good, sellable inventory,” said Terry Story, a real estate agent with Coldwell Banker in Palm Beach and Broward. “That’s the bottom line.”

Broward has a four-month supply of single-family homes, meaning that’s how long it would take to sell all the properties if no more were listed for sale.

A six-month supply is considered the ideal balance between buyers and sellers.

Palm Beach County has a 4.9-month supply of homes.

Limited new construction and a shift in the housing stock toward more single-family rentals are among the reasons why listings remain low in many markets across the country, according to the Zillow real estate website.

In some cases, owners aren’t putting their homes on the market because they wouldn’t be able to find another place fast enough.

Single-family home sales in Palm Beach County rose 4 percent in May from a year ago. In Miami-Dade, sales increased 10 percent.

Broward sales dropped 9 percent, likely the result of the county’s unusually low number of properties for sale, agents say.

“I don’t think it has anything to do with demand,” said Jim Heidisch, broker at Campbell & Rosemurgy in Pompano Beach. “It’s more supply-side. Buyers are out there, but a lot of them aren’t settling. They know what they want, and they’ll wait.”

Sales and prices were up in the existing condominium market in May. Broward’s median price jumped 12 percent to $159,000, while Palm Beach County’s rose 9 percent to $179,500.

The median means half the properties sold for more and half for less.

Statewide, the median price for single-family homes last month was $239,000, 8 percent higher than a year earlier, according to Florida Realtors.

The trade group said statewide sales of 27,850 single-family homes and 11,538 condos were the most recorded in a single month.

Zillow Chief Economist Svenja Gudell said in a statement that the housing market appears likely to benefit sellers for the foreseeable future.

“As long as the economy continues to chug along as it has, I see no reason for this widespread demand to fall off — nor for the pendulum to meaningfully swing back in favor of buyers — any time soon,” she said.

Paul Owers, Contact Reporter

Copyright © 2017, Sun Sentinel

7 Ways to Choose the Best Neighborhood for You

If you’re starting a family, you might want to consider a neighborhood known for its good schools. Or if your children have graduated, you might want to move to a "hipper" neighborhood. Perhaps your company has moved, and you want to be closer to work. Any of your priorities may have changed over the years. Here are seven ways to evaluate a possible move.

#1: Time the Commute to Your Job

Perhaps you have been spending hours stuck in traffic to and from work and are looking for a much shorter commute. Just because one neighborhood is closer does not mean that you will get there faster. Time the commute from the different neighborhoods you are considering.

#2: Meet the Neighbors

You want to get a feel for the neighborhood? Talk to the neighbors. Just by walking around the neighborhood, you’ll get a vibe to let you know if it’s right for you. Are the people a little standoffish? Are they hesitant to make eye contact with you?

Are people friendly and neighborly? Maybe a little too friendly and neighborly…? Take a walk around and strike up a conversation with your potential future neighbors to get a good feel for the community.

#3: Go for a Walk Around the Neighborhood

One of the best ways to pick the best neighborhood is to look around it. Go for a walk and drive through the neighborhood on the weekend and on weekdays. Do the same thing at different times of day. Note where there are areas that look a little unsafe or dilapidated. How will that affect your quality of life there?

#4: Attend a Local Festival or Event

Kill several birds with one stone by attending a local event or festival. You’ll meet people in the neighborhood and get a sense of the type of community that it is; is it tight-knit? Young? Too old? A little too country? Local events can tell you a lot about the spirit of the neighborhood.

#5: Go Out to Eat at a Local Hot Spot

While you’re checking out houses, go to a popular eatery in the neighborhood. Check out the vibe and take note of people’s moods. Do they look at you suspiciously? Is the customer service lousy? Is it great and are the people great? You can glean a lot about a neighborhood by simply people-watching at a diner.

#6: See a Play or a Game at a Local School

If you have kids, the quality of the local schools in your neighborhood may be priority No. 1. Before you buy a house and enroll the kids, visit the school. Go to a school play or watch one of the local school’s sports teams to get a feel for the level of community support for the school and athletics.

#7: Read About the Local Job Market/Main Industries

Having a job today does not guarantee that you’ll have one tomorrow. And even if you do, it’s important to know if you are moving into a neighborhood that is growing and thriving or one that is crumbling. Get a local paper and read about the main industries in the area and the state of the local job market.

Top 9 Reasons Appraisals Come in Low

Unfortunately, it happens: A low appraisal can complicate an already bumpy home-buying process. Suddenly, you find yourself in a conundrum: Your bank will fund a loan only up to the appraised value. So do you walk away from the sale? Do you fork over more money to cover the difference? Do you crawl into the corner of the apartment you fear you’ll rent forever and cry your little eyes out?

We know you have home-buying agita—and we’re here to help. There are ways to deal with a low appraisal —but only if you know why it happened.

Beholdthe 9 most common reasons for a low appraisal, according to our expert sources.

1. The appraiser doesn’t do a neighborhood deep-dive

To appraise the value of a property, appraisers rely heavily on comps, which are prices paid for similar homes sold recently. But the appraiser could select comps of homes that sold for mysteriously low prices.

Appraisers don’t normally officially inspect the comps, says Peter Grabel, managing director of Luxury Mortgage in Stamford, CT. They wouldn’t know if there was a mold issue, asbestos, or a nasty divorce that led to a quick below-market sale of a comparable home, skewing the analysis.

2. The appraiser has to go outside the hood

Sometimes there isn’t enough data on sales of similar homes in the area, forcing the appraiser to use comps from a nearby—and possibly less desirable—community, Grabel says. Ideal comps should be similar in style, size, location, and view.

3. The importance of the view

Does your home have a knockout view—or, at least, one that’s better than the comp down the street that overlooks unsightly power lines? If so, make sure your appraiser knows it, too. If the difference in view is not obvious, your home could appraise for lower than expected.

4. A gorgeous basement

The house has a large, beautiful finished basement with a bedroom and a bathroom. You’ve doubled your square footage. Score! Unfortunately, appraisers are required to use much lower value per square foot for space below ground.

5. The extras that totally sold you aren’t selling the appraiser

Surprisingly, a pool, tennis court, and high-end landscaping are attractive features, but they frequently don’t lead to significantly higher valuation on appraisals. Here’s why: When an appraiser compares two otherwise identical homes, one with the amenities and one without, the difference in their selling price is typically not nearly as much as the cost of adding these features—especially when the amenities are of better quality than is standard for the area.

For example, if you spend $200,000 to install a pool, but other homes in neighborhood have $50,000 pools, the difference in quality is not likely to appraise well. So be prepared for a lower value than expected if the property has one or more of these types of features.

6. The condo is the best in the building

Upgrades and finishes might not always boost the value of your home. This is particularly true of co-ops and condos, where the square footage plays a major role in value.

“Let’s say you are buying Unit 15A, which has a brand-new, top-of-the-line kitchen, much nicer than is customary in this type of building,” Grabel explains. “Units 15B and 15C recently sold for less. They are exactly the same size and have new kitchens but were not done to the same quality. An appraiser can make adjustments, but it will be a challenge for your unit to get the valuation that you might think it is worth.”

7. The market is too hot to keep up with

Home prices in the area might be increasing so quickly that the comps that sold six months ago don’t yet reflect this improvement.

“In Brooklyn and in Harlem, for example, prices are soaring, properties are selling for a record price per foot,” Grabel says.

“If six months ago the top price was $1,000 per foot but you are paying $1,100 per foot, there are no recorded comps at that price for an appraiser to use.”

Appraisals, by their nature, are backward-looking. You can ask the appraiser to make a “market adjustment,” but they don’t have to do it.

8. You intentionally overpaid

There are many reasons you might overpay for a home: You might just fall in love with the place and want to make sure you get it—at any cost.

“During prime selling season, bidding wars erupt left and right,” Grabel says. “And the downside to winning one is the reality of getting financed on that final price.”

Remember, the bank is going to lend only the appraised fair market value, and not the higher price you might think it’s worth. So you’ll be left paying the difference yourself.

It’s an emotional choice, and we’re not here to judge. But your appraiser will, and just beware: What the appraiser says (usually) goes.

9. The appraiser is inexperienced—or just bad

Sometimes, it really does come down to a job not well done. The appraiser could be unfamiliar with the nuances of the local market or might simply rush through the job. Unfortunately, a home buyer obtaining a mortgage has no control over the appraisal selection process—your lender is the one who orders the appraisal, either directly from an appraiser or through an appraisal management company.

“We actually choose to pay for appraisals so that we can limit our pool to only the top appraisers,” Grabel says. “This is not a guarantee that the value will come in where we need it to, but it typically ensures a good quality report from an experienced appraiser.”

Worried about getting a dud? You can ask your lender how it selects appraisers or if there’s a particular company it uses—then do your homework.

Maureen Dempsey, Realtor.com

4 Signs a Property Is Worth Buying and Renting Out

Do you have fantasies of becoming a landlord? That is, do you dream that one day, you’ll purchase a promising piece of property, move in some reliable tenants, then kick back and collect rent well into retirement?

If you’ve got the cash and ambition to follow through, there are plenty of condos, homes, and buildings you could buy and rent out—but pinpointing the right one is tough. Don’t give up the dream! Insiders insist there are a few ways to separate the cash cows from the turkeys. Here are some signs a rental property is primed to gush big bucks.

It makes money for you immediately

While many mistakenly size up an investment property by the amount of money it could eventually make them later—once they’ve made a ton of renovations—that’s exactly the wrong approach. As the saying goes in real estate, you should “Make your profit when you buy." That means: Your income (in the form of rent checks) should cover your costs upfront.

Financial planner and real estate investor Jim Ludwick at MainStreet Financial Planning recommends looking for properties that will generate enough rent in 10 months to cover all costs, including mortgage payments, taxes, and insurance. Another popular rule of thumb is the “2% rule," which holds that your monthly rent should be at least 2% of the total purchase price of a property. Look at comparable rental listings online to get a sense of what you could reasonably charge for rent. Then, try punching in your numbers, from your rent to mortgage to maintenance costs, into an online investment calculator like this one from CalcXML, to see if you end up in the black.

A dwindling DOM

DOM stands for days on market—how long a property has been for sale. And if the DOM is plummeting across the board in a neighborhood, that’s a key harbinger that this particular housing market is heating up. And since this typically precedes price hikes, that means you can still score a deal on a property that could make you beaucoup bucks in rent (and if you resell down the road).

Another set of listings to check? Rentals in the area. If landlords are offering concessions to tenants, such as a free month of rent or a lower security deposit, those are signs that they’re having a hard time filling apartments, so you may want to steer clear.

Gourmet groceries nearby

Scouts for Whole Foods, Starbucks, and other high-end chains get paid a lot of money to research the up-and-coming neighborhoods with residents (aka your future tenants) who have the disposable income to support their stores. So, if you can buy heirloom tomatoes and a pour-over coffee in a five-block stretch, things are looking good. The presence of Trader Joe’s, Whole Foods, and Starbucks, in particular, bode well for real estate desirability.

“You can’t just look at the numbers,” ways Justin Cohen, chief marketing officer of Pangea Properties, a Chicago-based real estate investment and management company. “You’ve got to really look at the neighborhood and understand what’s happening there.” Get a sense of what type of tenant the neighborhood and property would attract. A property in a college town, for example, might have a high turnover, while one near a desirable elementary school (get stats at GreatSchools.org) might tend to draw families that want to put down roots for years.

And since many millennials favor “walkable" neighborhoods, areas near public transportation are bound to be a good bet. And we’re not just talking about buses and subways in urban jungles; transportation matters in the suburbs and small towns too, although in a different way: Look for towns near (but not right next to) major turnpikes or highways.

A squeaky-clean tenant

If you’re inheriting tenants with the property you’re considering, don’t just trust that current landlord’s word that they “always pay on time." Run a background check and a credit check (it’s worth paying for a service such as TransUnion SmartMove to do one for you) on any current or potential tenants to see if there are credit issues or a history of evictions, and ask to see pay stubs or a 1099 to show the tenant has the enough income to cover the cost of living there.

And if the tenant has a less than stellar payment history? There actually is a way to turn this into an opportunity to negotiate a lower price for the property, factoring in the cost (and hassle) of a potential eviction. “Whether you keep the tenant or not, by buying someone else’s problem, you’ve gained some equity," says Jorge Newbery, a real estate investor and the founder and CEO of American Homeowner Preservation.

By Beth Braverman, Realtor.com

4 Tips for Effectively Making an Offer

So, you’ve been searching for that perfect house to call a ‘home,’ and you finally found one! The price is right, and in such a competitive market, you want to make sure that you make a good offer so that you can guarantee that your dream of making this house yours comes true!

Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”

This ‘tip’ or ‘step’ should really take place before you start your home search process.

As we’ve mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”

According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 3.7-month supply; this is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”

Talk with your agent to find out if there are any ways that you can make your offer stand out in this competitive market!

4. Be Prepared to Negotiate

“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.

Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home." If the inspector uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made with the seller, or cancel the contract.

Bottom Line

Whether you’re buying your first home or your fifth, having a local professional on your side who is an expert in their market is your best bet in making sure the process goes smoothly. Happy House Hunting!

KCM May 2017

Buying a Home? Do You Know the Lingo

Buying a Home? Do You Know the Lingo? | Keeping Current Matters

Buying a home can be intimidating if you are not familiar with the terms used during the process. To start you on your path with confidence, we have compiled a list of some of the most common terms used when buying a home.

Freddie Mac has compiled a more exhaustive glossary of terms in their “My Home” section of their website.

Annual Percentage Rate (APR) – This is a broader measure of your cost for borrowing money. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay. Because these costs are rolled in, the APR is usually higher than your interest rate.

Appraisal – A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties. This is a necessary step in getting your financing secured as it validates the home’s worth to you and your lender.

Closing Costs – The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.

Credit Score – A number ranging from 300-850, that is based on an analysis of your credit history. Your credit score plays a significant role when securing a mortgage as it helps lenders determine the likelihood that you’ll repay future debts. The higher your score, the better, but many buyers believe they need at least a 780 score to qualify when, in actuality, over 55% of approved loans had a score below 750.

Discount Points – A point equals 1% of your loan (1 point on a $200,000 loan = $2,000). You can pay points to buy down your mortgage interest rate. It’s essentially an upfront interest payment to lock in a lower rate for your mortgage.

Down Payment – This is a portion of the cost of your home that you pay upfront to secure the purchase of the property. Down payments are typically 3 to 20% of the purchase price of the home. There are zero-down programs available through VA loans for Veterans, as well as USDA loans for rural areas of the country. Eighty percent of first-time buyers put less than 20% down last month.

Escrow – The holding of money or documents by a neutral third party before closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.

Fixed-Rate Mortgages – A mortgage with an interest rate that does not change for the entire term of the loan. Fixed-rate mortgages are typically 15 or 30 years.

Home Inspection – A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.

Mortgage Rate – The interest rate you pay to borrow money to buy your house. The lower the rate, the better. Interest rates for a 30-year fixed rate mortgage have hovered between 4 and 4.25% for most of 2017.

Pre-Approval Letter – A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer. Having a pre-approval letter in hand while shopping for homes can help you move faster, and with greater confidence, in competitive markets.

Primary Mortgage Insurance (PMI) – If you make a down payment lower than 20% on your conventional loan, your lender will require PMI, typically at a rate of .51%. PMI serves as an added insurance policy that protects the lender if you are unable to pay your mortgage and can be cancelled from your payment once you reach 20% equity in your home. For more information on how PMI can impact your monthly housing cost, click here.

Real Estate Professional – An individual who provides services in buying and selling homes. Real estate professionals are there to help you through the confusing paperwork, to help you find your dream home, to negotiate any of the details that come up, and to help make sure that you know exactly what’s going on in the housing market. Real estate professionals can refer you to local lenders or mortgage brokers along with other specialists that you will need throughout the home-buying process.

The best way to ensure that your home-buying process is a confident one is to find a real estate professional who will guide you through every aspect of the transaction with ‘the heart of a teacher,’ and who puts your family’s needs first.

The KCM Crew on May 3, 2017

The Biggest Regrets of Real-Life Home Sellers

Even homeowners who’ve successfully sold their place can be plagued by the shoulda-coulda-wouldas—meaning that, looking back, they wish they’d done certain things differently. Sometimes very differently. Regret can be a beast. One with teeth.

The silver lining? We got these remorseful souls to tell us their stories so that you, future home seller, can learn from their mistakes! Read this rueful list of home sellers’ biggest regrets—and take note when the time arises for you to put your own place on the market.

Regret No. 1: Not fully preparing the place

Serious about selling your home? Spiff it up, stat! Recent seller Kim Maggio admits that she didn’t focus on making cosmetic changes before putting her Haverhill, MA, house on the market and wishes that she had.

Even homeowners who’ve successfully sold their place can be plagued by the shoulda-coulda-wouldas—meaning that, looking back, they wish they’d done certain things differently. Sometimes very differently. Regret can be a beast. One with teeth.

The silver lining? We got these remorseful souls to tell us their stories so that you, future home seller, can learn from their mistakes! Read this rueful list of home sellers’ biggest regrets—and take note when the time arises for you to put your own place on the market.

Regret No. 2: Making the property too perfect

On the other hand don’t go overboard, either. When Jen Mason and her husband sold their Denver condo in order to buy their neighbor’s bigger apartment across the courtyard, she put extra energy into leaving the property in pristine condition.

“But why did we care about patching every nail hole, making the place look flawless, and leaving behind our beloved custom window coverings?” she gripes. “Our buyer was an older single woman who really just wanted to live in our neighborhood. All of our efforts had all been a waste.”

Regret No. 3: Staying in contact after the sale

Always do your best to keep things “just business,” Mason advises sellers. She didn’t, and is still kicking herself for it.

“Since we only moved across the street, we availed ourselves to the buyer for questions,” the Denver homeowner explains. “And she called us for at least a year on a regular basis whenever she couldn’t figure out how something worked: the house alarm, air filter, fire alarm, window screens, and on and on. It was as though my husband became her personal handyman!”

Despite their best efforts to remain friendly in the tight-knit community, she admits, “we eventually tired of her calls and stalled on our response time until she finally stopped reaching out.”

Regret No. 4: Trying to sell without an agent

“We tried to sell our home without using an agent and soon realized that in our market, and it didn’t quite work out,” says Boston-area homeowner Rebecca Addison. The approach “wasn’t really accepted by the buyer’s Realtors®, who often questioned our price point, which made things difficult.”

So she ditched the for-sale-by-owner approach and wound up enlisting a Realtor after all. “I wish we had just done it right away, because instead it set us back at least a month if not more,” she says. “And in that time people moved on and the market changed. I think we might have missed out on a better sale.”

Regret No. 5: Caving to a buyer’s whims

Addison also learned the hard way that it doesn’t pay to bend over backward, sideways, and into intriguing pretzel shapes for a demanding buyer.

“Our buyer was really difficult and wanted us to give on so many items,” she says. “We also agreed to give the buyer money toward updating the roof so we were very frustrated on the day of closing when he wanted even more.”

Addison stood firm, and after a few hitches the sale continued thanks to an agreement between the Realtors to appease the buyer by reducing their commission.

“I found myself resentful that the buyer got away with that and got the house,” she says. “Especially when I can see for myself that he hasn’t completed any roof work in the past five years.”

Regret No. 6: Skipping the staging

“I really regret not paying the money to stage my apartment right off the bat,” confesses Chicago homeowner Rachel Bertsche. Hoping to save on expenses since she’d already bought and moved into a different home with her family, Bertsche skipped that step until it was too late.

“The money that it cost us owning the apartment longer was far more than the price it eventually cost to stage it.” That jibes with the stats on staging, in fact. Professionally staged properties spend 73% less time on the market.

Regret No. 7: Jumping at the first offer

Antsy to exit her Washington, DC, condo, Aimee Agresti and her husband acted with their hearts rather than their heads. More than a year later, she regrets it.

“We were so anxious to move, we accepted the first offer for our apartment before it even went on the market,” she confesses. “We went for it because we thought it was quick and easy, but I can’t but help think it would have been able to get much more if we’d just taken a breath.”

Regret No. 8: Picking a buyer based only on money

Valerie Blanchard dreamed of finding a buyer who’d love her bucolic Nashua, NH, property as much as she did.

“Our goal was to sell that house to a family who’d maintain it well, since it was big and in a beautiful neighborhood,” says Blanchard, who downsized to a more urban area. But she took the best deal on the table. Later, “when I drove by, I saw that their promise to care for it didn’t actually happen. It’s so disappointing and disheartening, looking back at all the work we did, the labor, the love, the hours contemplating grass seed and bushes gone to pot!”

She advises others to follow their instincts when it comes to choosing a buyer.

“It was a seller’s market when we listed the house, and we had multiple offers, so I should have held out when my gut said that these buyers won’t love the house like we do,” she says. “But I didn’t. And now when we drive by the old house, I cringe every single time.”

Jennifer O’Neill, Realtor.com