Lee Morof's Real Estate Blog

It’s not uncommon today to move several times during adulthood, whether across town or across the country. Seasoned home buyers have been through the real estate process, often more than once. However, even if the home purchase has become routine, there are mistakes that can be avoided.

Stuck In The Past

The real estate market doesn’t stand still. It cycles and shifts, which is why it’s often recommended to rely on a real estate professional for an understanding of the current market. Home buyers with property purchased ten years ago, likely won’t have the same experience buying today. Don’t get stuck in the past, thinking the process will play out the same. It may, but it’s important to be ready for changes.

Skipping Homework

Whether upgrading to a larger home to accommodate a growing family or downsizing as the nest empties, it’s essential to do the homework before placing the current home on the market and committing to a new one. Certain homework needs to be done before beginning the buying process, especially if the purchase is reliant on the sale of the current home.

• Determine if buying with cash or need to sell current home.
• If need to sell current home first, will seller of new home offer contingency?
• Is a flexible timeline needed for closing on current home/buying new?

Working out these types of critical details, even for seasoned home buyers, can be daunting, which is why it can be helpful to have a trusted real estate agent.

Allowing Emotions To Lead

Maybe the current house wasn’t the “forever” home. Seasoned home buyers, just like first-timers, can find themselves lost in emotions when searching for the perfect house. It’s a pitfall every home buyer should work to avoid. The home may have some of the exact features desired or be in the ideal location, but if it doesn’t fit the budget or has other issues, it’s not the right one.

Overextending Resources

Home buying is an exciting experience and it can be easy to become caught up in the process. However, overextending resources can make life after the purchase difficult. To help protect against overextension of resources later, always factor in the following when buying a home:

• Budget
• Time
• DIY Abilities

Overextending on budget can directly affect the ability to make any needed repairs and if schedules are hectic, there might not be enough time for projects. In addition, it’s important to honestly take stock of DIY ability, and it’s okay to acknowledge that some jobs/repairs will require professionals or some level of assistance. 

The key for seasoned home buyers, as well as first-timers, is to never be afraid to ask questions, make lists, and rely on professional help from your trusted real estate professional.  

The Federal Open Market Committee of the Federal Reserve announced that it raised the target federal funds rate to a range of 2.00 percent to 2.25 percent. This was the third consecutive increase in the Fed’s key interest rate and was the eighth time the Fed raised its key interest rate since 2015.

In its customary post-meeting statement, Committee members cited strong economic conditions and continued labor market growth coupled with historically low unemployment rates as a basis for raising the federal funds interest rate.

Fed Cites Steady Inflation, Healthy Household And Business Spending

Further economic conditions cited in the FOMC statement were steady inflation, which has held close to the Fed’s objective of two percent for a year. Projections on long-term inflation were “little changed” according to the statement.

FOMC’s statement explained how committee members make decisions about the target range for the federal funds rate. The Federal Reserve must make decisions based on its legislative mandate of achieving and maintaining maximum employment and an inflation rate at or near two percent.

The FOMC also considers measures of economic and labor conditions, pressures on inflation and projections on inflation. Committee members keep up-to-date on domestic and global economic developments.

After the FOMC statement was released, Fed Chair Jerome Powell gave a press conference.

Fed Chair: Economy Strengthening Without Need Of Fed Accommodation

Federal Reserve Chair Jerome Powell expressed confidence in current economic conditions and said that future rate hikes would help maintain the Fed’s goals and promote healthy economic growth. Mr. Powell said that future meetings of the Federal Open Market Committee would be guided by asking and answering the question of whether current monetary policy is set to achieve FOMC goals. Analysts interpreted Chair Powell’s comments as indicating that current economic conditions are as good as could be expected and that the Fed’s monetary policy decisions are working as planned.

Homeowners looking to maximize their return on investment often want to know what season best achieves that goal. Getting near or full asking price can be influenced by a wide range of factors, including market trends, inventory and interest rates to name a few.

It will come as good news to know there are strong indicators that this fall has unique listing advantages. That means listing a home this fall could help sellers get the price they want.

1: Inventory Remains Very Tight

The rules of supply and demand apply equally to the housing market and there are not enough homes to go around.

The single-family housing shortage has been driven by multiple factors. A large population of Millennials have entered the real estate market at a time when new home construction had been stifled for years. Simply put, the supply of new homes has significantly fallen behind the demand.

Although builders are starting to ramp up construction, the economic boom continues to position first-time buyers more quickly than the lagging supply. The real estate wild card may be how quickly construction outfits put more homes in play.

Should the building sector pivot to take advantage of higher prices, inventory could loosen in 2019. That makes this fall a prime time to maximize profitability and avoid the risk of improving supply.

2: Fall Looks Like A Seller’s Market

Although summer was once again a popular time to sell, it appears home sales did not satisfy the high demand. With fewer listings available and plenty of active buyers jumping on properties, listing this fall could put sellers in the driver’s seat.

One interesting caveat is a recent study that says buying a home is currently less expensive than renting in 35 percent of American counties. Talk about motivated buyers. By listing a property now, the odds are on the seller’s side that the home will close at a desirable price.

3: Homes Move Quickly

Market data shows that homes are selling at a fast clip across the country. According to a report by realtor.com, the median days on the market rate continues to decline.

From 2012 to 2017, the number of days a home spent on the market declined by nearly one-third in some comparable months. This year, homes are selling at a staggering rate in traditionally high-priced metropolitan markets. According to research, homes in San Jose, California, were only on the market an average of 28.6 days. In Seattle, Washington, homes sold at an average rate of 34.1 days and Nashville, Tennessee, saw a short 40.6 window. While these areas may be considered hot, they show that homes are moving quickly even in high-end areas.

Sellers may find the elixir they are looking for by listing this fall. Economic and market indicators point to a vibrant seller’s market flush with motivated buyers.

Whether you are ready to sell your current home or look for a new property, be sure to contact your trusted real estate professional.

The average homeowner feels secure knowing they have insurance in the event of a severe weather calamity. Most people believe that no matter what happens, they have paid for protection against disaster.

Unfortunately, not every homeowners insurance policy provides full reimbursement from severe weather losses. Hurricanes, tornados, earthquakes and other rare catastrophes may not be covered under your current policy. Consider the impact of these extreme events and whether you are fully insured for the subsequent losses.

1: Hurricane Damage May Not Be Fully Covered

The recent national mobilization to deal with the fallout from Hurricane Florence highlights just how catastrophic severe weather can be to people and property. That being said, homeowners generally anticipate calling their insurance carrier to file a claim after returning home and assessing the damage.

It may come as a surprise, but many policies limit reimbursement to damage attributed to high winds. For example, a tree falls on a garage or vehicle and the insurance outfit writes a check.

But damage attributed to water can be tricky. Many policies do not cover flood insurance. That could mean that water backed up in the street or a stream, lake or pond overflowing into your home might not be covered. That’s why homeowners are advised to clarify water-related coverage.

2: Floods May Not Be Covered

People living near bodies of water may be required to carry flood insurance when applying for a mortgage. Flooding represents a high risk that can result in a total loss. Lenders are often apprehensive about approving mortgages for properties in so-called “floodplains.”

FEMA offers coverage through the National Flood Insurance Program. Homeowners living just outside a flood zone may not be required to buy additional coverage. However, you are taking a significant risk.

If your policy does not cover flooding, you could be on the hook for the full cost of the home’s repair or replacement. Considering the average flood insurance policy runs about $700, it may be worth the expense to protect your investment.

3: Tornado Insurance Coverage Can Be Murky

Although most policies cover damage from tornados, premiums can run higher in regions prone to these severe weather storms. But, like hurricanes, tornados that additionally bring about flooding can pose a problem for homeowners who make a claim. A carrier may conclude that the high wind and impact damage enjoys coverage. Water, however, can be a very gray area. 

4: Earthquakes Often Not Covered

Like people who live in flood plains, earthquake riders may be required in certain areas of the country. Without additional coverage, the destruction caused by these catastrophic events may not be reimbursed. It’s imperative that people living in or around regions prone to earthquakes carry specific coverage. Imagine losing your home and still owing a monthly mortgage payment.

The important thing to glean from this overview about severe weather claims is that homeowners are wise to dig deep into their policies and have a clear, concise understanding about coverage. Keep in mind that water damage from flooding, rain and even sewer back-ups pose a significant threat to your home. For a few dollars more, enhanced severe weather insurance may be worth every penny.

Your trusted real estate professional is knowledgable about high and low risk properties. Be sure to utilize this valuable resource if you are in the market for a new property.

Last week’s economic releases included readings on the NAHB Housing Market Index, sales of pre-owned homes, and housing starts. Weekly readings on mortgage rates and first-time jobless claims were also released.

NAHB: Home Builder Confidence in Market Conditions Holds Steady

The National Association of Home Builders reported an index reading of 67 for September, which matched August’s reading. Growing concerns over impacts of tariffs on building material costs have slowed builders’ confidence in current and future market conditions.

Components of the NAHB Housing Market Index include readings on current conditions, which gained one point to 74; builder confidence in market conditions over the next six months gained two points to a reading of 74. The HMI reading for buyer traffic in new housing developments was unchanged with a reading of 49. Readings for buyer traffic are typically below the benchmark index reading of 50. Readings over 50 indicate that most home builders are confident about housing market conditions.

Builder confidence is considered an indication of future housing supplies as builders may adjust their construction plans on market conditions and building costs. The Commerce Department reported higher housing starts in August with a seasonally-adjusted annual rate of 1,282 million starts. Analysts predicated a rate of 1.249 million starts based on July’s reading of 1.168 million starts.

Sales of Previously-Owned Homes Unchanged

The National Association of Realtors® reported sales of previously-owned homes held steady in August, with homes sold at a seasonally-adjusted annual rate of 5.34 million sales. Analysts expected a reading of 5.37 million sales. Home sales have faced headwinds in recent years with high demand and low inventories of available homes driving up home prices faster than inflation and wage growth. Recently rising mortgage rates also impacted affordability and sidelined would-be buyers with moderate incomes.

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher rates for fixed-rate mortgages with the average rate for a 30-year fixed rate mortgage rose five basis points to 4.65 percent. The average rate for 15-year mortgages also rose by five basis points to 4.11 percent. Rates for 5/1 adjustable rate mortgages dipped by one basis point to 3.92 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell to 201,000 claims filed as compared to expectations of 208,000 new claims filed and the prior week’s reading of 204,000 new claims filed. This was a 49-year low; analysts cited Hurricane Florence and overall economic expansion.

What‘s Ahead

This week’s scheduled economic news includes readings on home prices from Case-Shiller, new and pending home sales and inflation. Weekly reports on mortgage rates and new jobless claims will also be released.

Robert Frost once wrote that “Good fences make good neighbors.” The poet was not referring to people bonding over the task of mending fences. Rather, defined boundaries are an important facet of neighborly relationships.

Without clearly defined property lines and rights, otherwise good people too often become embroiled in land disputes. That’s why a basic knowledge about easements and right of ways can help property owners maintain a working friendship with people whose land abuts yours.

These are four of the important elements about easements and right of ways you should know.

1: Types of Easements

An easement allows another person the right to access a property for a specific purpose. There are two basic types. Negative easements prevent an owner from using their property in a certain fashion. This might preclude building another floor on a home that would block a water view. A positive easement might allow someone access to land for the purpose of clearing timber or driving over it. The right to passage over a property remains the most common.

2: How Right Of Ways Differ

A right of way is, in fact, a type of easement. The general difference is that it is often accompanied by a defined road or pathway that one party uses to cross over. Hunters often establish right of ways with property owners and landlocked homes generally have driveways running over another person’s land.

3: How Easements Are Created

There are several ways an easement may be legally created. The first is generally called a “permissive easement.” This basically means you give permission to another party to use your land in a specific fashion. Again, driving over it to reach their property is the most common.

A key element of a permissive easement is that, in most states, it cannot become permanent without the property owner’s express authorization. In other words, allowing someone to drive over your land does not give them the right to continue forever. You can decide at any time to revoke permission.

Another way that easements are formed is by adverse possession. This tends to lead to hostilities between neighbors because one party asks the courts for a legal right to use your land based on prior usage. The lawsuit generally offers little or no compensation. It’s basically a land grab.

The more amicable way to create an easement is by granting an abutter the right to use your land. This generally entails creating a land-use agreement in which the property owner receives reasonable compensation.

4: Easements May Have Time Limits

An easement does not necessarily last forever. Some are granted with a defined expiration date. Others are recorded with the deed and are passed on from owner to owner. When buying a home, a title search should be performed that provides detail about existing easements and right of ways. This is an important part of purchasing a property because land disputes can be financially and emotionally taxing.

If you have concerns about any type of easement on a potential property, be sure to discuss it with your trusted real estate professional.

Home builder confidence in housing market conditions stayed flat in September. The National Association of Home Builders Housing Market Index reported an index reading of 67, which matched expectations and NAHB’s housing market reading for August. Analysts cited recent tariffs on building materials as a significant cause of easing builder confidence.

While NAHB called September’s reading “solid” at 67, the reading was one full point lower than the average reading for 2017 and equaled the lowest builder confidence reading in 2018 to date. Readings over 50 in the Housing Market Index indicate that more builders than fewer are confident in housing market conditions.  

Components of the Housing Market Index were mixed as builder confidence in current market conditions rose one point to 74. Builder confidence in market conditions for the next six months rose two points to a reading of 74. Builder confidence in buyer traffic in new housing developments was unchanged with a reading of 49.

Buyer traffic readings frequently fall below the benchmark reading of 50, so a reading of 49 indicates builders aren’t concerned about buyer interest in new homes.

Home Building Viewed As Cure For Housing Shortages, But Buyers Face Challenges

Housing industry leaders, real estate pros and mortgage lenders continued to look to builders for a solution to severe housing shortages in some areas. Rapidly rising home prices driven by high demand, few choices for buyers and aren’t likely to ease until inventories of available homes increase. Recently rising mortgage rates added to pressures on first-time and moderate-income home buyers.

NAHB Chief Economist Rob Dietz said that trade skirmishes and “burdensome regulations” also contributed to rising home prices. Real estate pros said that local market conditions affected market areas affected by natural disasters including severe red tide algae blooms in Florida and wildfires in Oregon and California. Home sales typically slow in August, but the combination of low inventories of homes coupled with rising prices and natural disasters resulted in lower than expected home sales in August.

Buyer fatigue was cited as a driving factor in slowing home sales as rapidly rising prices and few available homes took a toll on buyer interest. As the school year approached buyers were backing off instead of continuing to compete with cash buyers and bidding wars.

It is commonplace for markets to shift and for trends to change. Your best bet for success in buying a new home or selling your current home to rely on your trusted real estate professional.

Temperate fall weather means it’s time to put summer vacations behind you and start planning for winter weather.

Switching coveted leisure time to home chores can be a difficult challenge. More than a few homeowners want to keep kicking back on weekends. But autumn winds mean all hands on deck. Homeowners who procrastinate could find their properties vulnerable to seasonal changes. These are some things to keep in mind about winterizing your home.

Fill The Cost Gaps

Arguably the single biggest waste of money is allowing heating and cooling loss. The small gaps where doors, windows and other material meet can be a conduit for migrating air. Drafts cause utility bills to increase with homeowners reaping zero benefit. Consider addressing these areas.

• Windows: It’s important to remember that window caulking has a limited life span. As it cracks, shrinks and expands, its efficiency diminishes. Check it annually and don’t hesitate to replace it.

• Weather Stripping: If you live in a frigid region, weather stripping can save a boatload of cash. Most home stores carry products that act like tape and fill the seams around doors. It’s an easy DIY project that can more than pay for itself.

• Door Guards: Similar to weather stripping, door guards are designed to eliminate drafts under the doors. There are permanent and temporary products that can address this issue.

• Flues Need Support: Many chimneys allow mass amounts of air to flow freely into homes. You don’t need to call a mason and rework the hardware to fix this draft. Try inflating a balloon inside it to cut off air circulation. Just remember to remove it before lighting a fire.

Gutter Avoid Disaster

A common problem homeowners overlook is the gutters. When these become clogged with leaves, twigs and other material, water can back up and impact the outer walls of a home.

Water penetrations remain the single greatest danger to homes and homeowners. Moisture behind walls and under floor boards can spur dangerous mold growths. Certain molds can cause critical health conditions, particularly among our valued elders and young children.

If you live in an area that frequently suffers freezing temperatures, gutters can fill, freeze and break. Better to clean them out now than buy new ones in the spring.

Insulation Matters

When people think about insulation, the pink stuff in the attic usually comes to mind. While that remains an excellent product to mitigate energy loss, let’s talk about another type.

Water lines can be negatively impacted by cold weather. Frozen pipes can crack, burst and cause a flood. Check for areas that are exposed. It only takes one sharp cold snap to damage water lines and a home’s interior. The time and cost of wrapping exposed pipes could prove far less expensive than hiring a plumber and remediation contractor.

When preparing a home for winter, think in terms of air and water. Those are the culprits that will cost you money and jeopardize your family. 

Maintanence is a wise way to protect one of your largest investments. If you are looking to add to your portfolio or put your current home on the market, be sure to contact your trusted real estate professional.

Fall is the time to get back into a comfortable routine, but it’s also a great time to incorporate social events into weekend work parties, and gather friends to offer neighbors a helping hand — or just moral support — to spruce up their property.

While building a new sense of community may be a side effect, it can’t be denied that giving homes in need of minor repairs a little TLC is good for the dollar value of the neighborhood as well as for the soul. REALTORS agree that the overall appeal of a neighborhood adds value to individual homes.

Police departments and security companies also note that cohesive communities are less prone to crime than neighborhoods where residents don’t really know one another.

A Community Work Day

While it’s not uncommon for some subdivisions to sponsor periodic get-togethers, or hold multi-family garage sales and social events, the idea of a day to share work and expertise to tidy up individual homes is less common. But it represents an ideal solution for residents who could use a helping hand to accomplish minor upkeep and repair projects.

Especially if you live in a neighborhood with some older residents, planning a coordinated “home improvement day” can be a unique and wonderful way to bring different generations together. Community work days are a great way to complete seasonal maintenance projects before the weather turns bad. It’s also a way to make light work out of required tasks and to have some fun as well.

Here are some ideas on how to do it right — the results can be greater than expected.

• Talk the idea up with your neighbors: Set a tentative date and divide up the planning tasks.

• Start a checklist of neighborhood skills. Chances are you’ll find engineers, carpenters, painters, and neighbors with plumbing and electrical skills among the residents. And there are also apt to be artists and craftspeople, master gardeners and children who love to rake leaves or pull weeds!

• Plan block party, potluck dinner or homemade ice cream social for the culmination of the workday or weekend, and get as many people as possible involved.

A weekend work project is reminiscent of old-fashioned barn raisings. It’s also a way to build a new sense of community, as well as to add neighborhood appeal and value. The food and the fellowship are bonuses!

There are, however, some cautions: Help should be freely offered, and readily accepted. But leave costly or complicated repairs to professionals. This kind of event should be strictly for easy DIY labor needs.

Done right, this kind of ongoing community effort can become a lasting and honored tradition. It’s worth a try, right? In the end, the entire neighborhood wins.

If a sense of neighborhood community is a priority to you when looking for a new home, be sure to tell your trusted real estate professional.

Last week’s economic news included readings on consumer credit, inflation and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.

Fed Reports Consumer Credit Jumps in July

The Federal Reserve reported that consumer credit rose from $9 billion in June to $17 billion in July. Analysts said a majority of consumer credit was issued for education loans and auto loans. June’s reading was revised downward to $8.50 billion from the original reading of $10.2 billion.

Credit card debt increased by 1.50 percent in July after declining by – 1.40 percent in June. Non-revolving consumer debt rose by 6.40 percent in July after growing 4.0 percent in June. July’s reading was the largest increase in eight months. The Fed’s Consumer Credit report does not include mortgage loans.

Inflation increased by 0.20 percent in August, which fell short of analyst expectations of 0.30 percent growth. Core inflation, which excludes volatile food and fuel sectors, rose by -0.10 percent and was lower than the expected reading of 0.20 percent growth. July readings for inflation and core inflation were 0.20 percent.

Mortgage Rates and Consumer Sentiment Rise as New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates for the third consecutive week. Rates for a 30-year fixed rate mortgage rose six basis points to an average of 4.60 percent; rates for 15-year fixed rate mortgages averaged seven basis points higher at 4.06 percent and mortgage rates for 5/1 adjustable rate mortgages averaged 3.93 percent and were unchanged from the prior week. Discount rates were reported at 0.50 percent for fixed-rate loans and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week to 204,000 claims filed against expectations of 210,000 new claims filed and the prior week’s reading of 205,000 first-time jobless claims filed.

Consumer sentiment rose in September. The University of Michigan reported an index reading of 100.8, which surpassed the expected index reading of 97.0 and the August reading of 96.2.

What‘s Ahead

This week’s scheduled releases include readings from the National Association of Home Builders, The National Association of Realtors® on sales of pre-owned homes and Commerce Department readings on housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims will also be released.