Green Escrow Services, Inc

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Selling to Millennials

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Millennials represent one of the largest real estate markets today and it pays to understand how they choose a home.

  • Online, online, online: Millennials typically do their research and their research is extensively online before they begin to inspect properties in person. Plenty of quality photos, virtual tours, and floor plans are a must.
  • Tech and quality appliances: Technology has always been a part of millennials’ lives and many look for smart-home accessories such as lights, locks, thermostats etc.
  • Older, historic homes: Some millennials have a deep appreciation of older architectural styles that display real character and charm. If the home you’re selling has historical details, make sure that is pointed out in your listing.
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Mortgage applications increasing

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Given the current real estate situation during the pandemic – 30-year mortgage rates in the low 3% range and 15-year mortgages below 3% – it’s not surprising that refinancing represents 71.6 percent of all applications (218 percent higher than 2019). What is surprising is that homebuyer applications increased by 12 percent in April (although 20 percent less than last year).

Moreover, listing websites and real estate brokers are reporting somewhat higher buyer activity in the recent weeks indicating that buyer confidence may be increasing.

Of course, the situation remains very much in flux. Unemployment continues to rise – some say it could go as high as 32 percent – while some lenders are limiting mortgage products as the mortgage bailout program unfolds.

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2020 – reasons to be active

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Obviously, no one predicted this for 2020. It looked to a very good year for real estate as the economy was doing well and mortgage approvals were on the rise, indicating more people were ready to purchase a home. While the pandemic has certainly affected the economy (US and the world), it’s not clear what the long-term effects will be n the real estate market.

Obviously, it’s not currently possible to buy or sell in the traditional way. However, if you’re determined and know where to look, it’s possible to get a good deal on a home right now.

Likewise, investment companies will buy your home and remove the uncertainty of how the market might unfold in the months and years ahead.

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Moving to suburbia?

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The COVID-19 pandemic could result in more Americans moving to the suburbs or even more remote areas according to several recent reports. A Harris Poll states nearly 33 percent of Americans are considering a move to “less densely populated areas.”

CNBC reports that many of New York City’s wealthiest residents are looking to move to areas with more distance from neighbors and crowds. Many are considering a second home in the suburbs with a home office.

Some analysts believe this will be a temporary move such as exodus following the 9/11 attacks. Only time will tell.

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Contract signings down 16% in March

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As mentioned last week, the pandemic is having a strong negative effect on the real estate market. The National Association of Realtors reports that contract signings fell 16.3 percent this year as compared with March 2019.

Of course, social distancing means that in-person home showings are currently not practical and virtual tours are now the norm. Moreover, 43 percent of buyers are suing e-closings.

Currently, home prices remain stable and some analysts predict a modest 1.3 percent increase when 2020 is said and done. Many also believe that the high-end market will see a reduction in home prices.

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Impact of pandemic on new-home sales

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Not surprisingly, March saw a steep decline in new-home sales, although the first quarter of 2020 was actually 6.7 percent higher than the same period in 2019. This is giving some analysts hope that eventually real estate will be an important factor in the economic recovery.

For once, new home inventory increased to a 6.4 month supply in March with the median sales price increasing from $310,600 to $321,400.

The drop in sales was concentrated primarily in the Northeast and West, the areas hit hardest by the pandemic last month.

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Selling your home for cash

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Certainly selling your home for cash has its attractions: quick sale, cash offer. On the downside, you’ll be making less than if sold on the market. Here are some alternatives for selling your home for cash:

  • iBuyer: You sell your home to an iBuyer for cash who then turns around and markets the home at a higher price. You will pay 7-9% commission to the iBuyer but you will bypass the home inspection, waiting for financing etc. Most iBuyers are not buying homes during the current pandemic crisis.
  • House Flippers: You are able to sell no matter what shape your home is in; you avoid a real estate commission; you close very quickly and receive cash. However, you will be selling your property for significantly less than what it’s worth.
  • Cash Real Estate Investor: Buyers who hold onto the property, often renting it out as the value appreciates over time.
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Home buying during a pandemic

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With more and more potential home buyers concerned about health risks during the current pandemic, many are turning to technology to avoid in-person meetings.

  • Live video tours: An alternative to in-person showings can provide opportunities to ask questions during a walkthrough. Agents can also point out a home’s strengths and weaknesses.
  • Applying for a loan online: Credit checks, asset verification and automated underwriting tools means an applicant no longer needs to apply for a loan in person.
  • Appraisers and inspectors: Desktop appraisals are now available and inspectors are now versed in taking all the necessary precautions while being onsite.
  • Digital and drive-up closings: Digital closings, electronic notarizations, and electronic filing of deeds are all possbile in many areas.
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Stimulus not as helpful for Bay Area homeowners, renters

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The recent stimulus checks were less helpful to Bay Area homeowners and renters than anywhere in the country because housing costs remain so high. At $1,200 for individuals and $2,400 for couples, these checks count for less than half of mortgage and utility payments for more than 90 percent of Bay Area residents. Even less than one-third of renters (20 percent in San Jose) would see the majority of their housing costs covered by the stimulus checks.

Fortunately, out-of-work Californians will get an extra $600 weekly supplement to their unemployment benefits, which should certainly help.

Meanwhile, home prices remain stable as demand drops by close to percent 26 percent but inventory decreased by 44 percent during the first week of April.

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Is it wise to purchase a home during a pandemic?

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Would-be home buyers are confused as to whether it’s wise to even consider purchasing a home during a pandemic. Some points to consider:

  • Interest rates are low: With interest rates below 3 percent, this is certainly something to consider. Many analysts say that homebuyers should consider a 15-year fixed mortgage for even lower rates.
  • Competition has dwindled: Many real estate agents cite a decrease in buyer interest. On the other hand, some sellers are taking their homes off the market.
  • Heading to a recession? With the economy struggling, homebuyers need to be sure that they will be able to handle mortgage payments.
  • A longer process: While most states consider real estate professionals as “essential,” much of the process it’ll be done remotely and while certainly take longer to complete
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