BROADCASTS.com

b"With Terry Story, 28-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
Housing Market 2017 Cross Currents
This week's conversation with Coldwell Banker real estate agent Terry Story touches on a variety of cross-currents affecting the housing market, including rising prices, confusion among first-time buyers over minimum down payments, low inventory, and the possibility of stronger single family home building and the dynamics that stem from pricing homes above or at market levels.
While home sales grew and prices continued to rise last year, there are signs that demand might be topping out.\\xa0 By the end of 2016, only 55% of non-home owners believed that now was a good time to buy a home, down from 63% at the beginning of the year.\\xa0 With mortgage rates inching up, the perception of the market as too expensive may be gaining legs.\\xa0 This view contrasts indirectly with the fact that 90% of homeowners last year were confident that owning a home was a key part of the American dream.\\xa0 To what degree this confidence is rooted in the strong price appreciation accompanying this housing market recovery is up for speculation.
Housing Inventory\\xa0
Delving further into this story, Terry reports that home prices and rents are up over 40% during the past 5 years, rapidly outpacing wage growth.\\xa0 The combination of high prices, high student loan debt, and limited supply of entry level houses on the market are conspiring to put a damper on first-time homebuyers.\\xa0 These dynamics, as well as the faster growth of rent prices, has steered builders towards apartments rather than standalone homes in recent months.\\xa0 Nevertheless, Story is optimistic that low inventories and the fact that rents and mortgages are nearing parity will start to galvanize new home building.\\xa0 An expanded supply of new homes should help correct the affordability problem to some degree and would be welcome for that reason.\\xa0 An interesting metric that Terry shares is that a greater than six-month supply of homes for sale indicates a buyer's market, while a less than six-month supply signals a seller's market.\\xa0 Terry's South Florida market is currently running at about a four-month supply, which is favorable to sellers.
One area of confusion among new homebuyers is the question of down payments.\\xa0 Many believe that they have to come up with 10% or 20% of the home's value and despair over being able to save enough to meet that number.\\xa0 Terry reminds those new home buyers that they may be able to purchase a home with as little as 3% down.\\xa0 With a lower down payment comes PMI (private mortgage insurance) and that adds to the total cost (but not the closing cost) of the mortgage.
How to Price a Home
Steve and Terry wrap up their conversation by looking at the effect that a home seller's asking price has on potential buyers and their bidding.\\xa0 Terry offers a simple hypothetical example of a homeowner with a home that they hope to sell in the $300-325K range.\\xa0 If they list the house for $300K\\u2014a price Terry describes as \\u201cright at where the market is\\u201d\\u2014they are likely to get a surge of interest from potential buyers and oftentimes a competitive bidding situation will arise, pushing the price up towards $325K or more.\\xa0 On the other hand, if the house is listed at $325,000\\u2014which is more aligned with where the market is heading\\u2014interested buyers should still show up, but there will be fewer offers and, in all likelihood, they will not bid the price up beyond its listing price.\\xa0 Having multiple offers is always a better situation for sellers as it affords them some leverage to ask for a bigger down payment or other concessions.\\xa0 Steve wonders whether there are pros and cons to listing a house at, say, $299,900 instead of $300K, and Terry replies that it absolutely does matter for one main reason: the way people search real estate websites,"