Real Estate Prices Are Higher Because Of Millennials Buying Homes

Published: April 5, 2017, 9:29 p.m.

b"With Terry Story, 28-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
Consumer Confidence In Housing Market\\xa0
Terry and Steve cover a slew of topics on today's show including consumer confidence in the housing market, millennials buying first homes in greater numbers, and possible parallels between the housing and stock markets. Consumer confidence in the housing market hit an all-time high in February 2017, and Terry breaks down what that means for home prices and buyers and sellers.\\xa0
Millennials Buying Homes\\xa0
One of the main effects of this consumer exuberance is that people are more apt to make bigger purchases like buying a home. There are other trends playing into that confidence and pushing home prices higher including an expectation of rising interest rates and a surge in millennials buying their first homes. Millennials are moving out of their parents' homes in record numbers, creating a wave of new household formations. Terry remarks that rising interest rates should cool down home price appreciation, preventing a replay of the early 2000s housing bubble. Steve cautions that there may be some parallels between the current stock market and the housing market, namely that prices are very high. Buying stocks or a home near a market peak entails a risk that prices could drop modestly or even significantly below peak levels
Return Of The Flippers\\xa0
Another sign of a healthy or, at least, an energetic housing market is the fact that house flipping has been getting more popular in recent years, albeit still below levels seen in the mid-2000s. Terry notes that today's flippers no longer reap the same upside that access to foreclosures and short sales\\u2014so ubiquitous in the late 2000s/early 2010s\\u2014provided. Terry mentions that she hasn't had a single foreclosure or short sale in the past two years. Nevertheless, quite a few flippers are still doing well even in a picked-over market, with home prices at a median of $192K and gross profits near $62K. Other flippers have fallen victim to underestimating the costs of buying and selling and making repairs to the property while overestimating the price it might sell for.
Buying A Flipped Home: What To Watch Out For\\xa0
Terry has some advice for homebuyers considering purchasing a home owned by a flipper. Before making an offer, you need to first come to terms with the possibility that the owner has taken shortcuts in the remodeling/repair process. Because flippers focus on cleaning up and enhancing the cosmetic things that buyers notice first, it may not be obvious right away that other, more important and expensive items have been neglected. Terry recommends looking behind doors and opening up drawers to find out what condition the cabinetry and other hardware are really in. Of course, the inspection process is supposed to flag these and other bigger ticket problems like roofs and electrical panels. The inspection results will provide ammunition for negotiating on the home price, but sometimes it helps to go straight to the permits which were pulled by the owner for repairs. Your inspector might provide these, but you can also go yourself to City Hall and check the permits to see if they were properly handled."