Pending Home Sales Break Trend, Rising After Two Months of Declines

By RISMedia Staff

Pending home sales increased in March after posting two consecutive months of declines, according to the National Association of REALTORS® (NAR). Regionally, all areas except one experienced month-over-month gains in March; however, each area saw year-over-year growth.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, increased 1.9% to 111.3 in March. Since last year, contract signings increased 23.3%. An index of 100 is equal to the level of contract activity in 2001.

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Regional Breakdown:

Northeast 
+6.1% MoM — 97.9 PHSI
+16.7% YoY

Midwest
-3.7% MoM — 98.6 PHSI
+14.1% YoY

South
+2.9% MoM — 137.2 PHSI
+27.9% YoY

West
+2.9% MoM — 94.5 PHSI
+29.8% YoY

What the Industry Is Saying:

“The increase in pending sales transactions for the month of March is indicative of high housing demand. With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.

“Low inventory has been a consistent problem, but more inventory will show up as new home construction intensifies in the coming months, as well as from a steady wind-down of the mortgage forbearance program. Although these moves won’t immediately replenish low supply, they will be a step forward.” — Lawrence Yun, Chief Economist, National Association of REALTORS®

For more information, please visit www.nar.realtor.

CoreLogic® recently released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for February 2021.

Home prices continued to increase in February, reaching the highest annual gain since April 2006, as demand continues to clash with historically low supply. These factors have created increased affordability challenges, especially as mortgage rates also begin to rise.

M&R Realty Best Realtor in Lexington SC West Columbia 2 20DecBack
M&R Realty Best Realtor in Lexington SC West Columbia 2 20DecBack

CoreLogic analysis also shows homebuyers have steadily moved away from densely populated, high-cost coastal areas in favor of more affordable suburban locales. The number of homebuyers in the top 10 metros with the largest net out-migration—including West Coast metros like Los Angeles, San Francisco and San Jose—who chose to move to another metro increased by 3 percentage points in 2020 to 21% from 2019. This sentiment is reflected in CoreLogic’s recent consumer survey, which found that 57% of current non-homeowners on the West Coast feel the home options in their area are not at all affordable.

“Homebuyers are experiencing the most competitive housing market we’ve seen since the Great Recession,” said Frank Martell, president and CEO of CoreLogic. “Rising mortgage rates and severe supply constraints are pushing already-overheated home prices out of reach for some prospective buyers, especially in more expensive metro areas. As affordability challenges persist, we may see more potential homebuyers priced out of the market and a possible slowing of price growth on the horizon.”

Top Takeaways:

– Nationally, home prices increased 10.4% in February 2021, compared with February 2020. On a month-over-month basis, home prices increased by 1.2% compared to January 2021.

– Home prices are projected to increase 3.2% by February 2022. Increased inventory as the pandemic wanes, coupled with affordability concerns that may discourage potential homebuyers, could lead to a slowdown in home price growth by the end of 2021.

– Metro areas where affordability constraints are prevalent continue to persist as prices rise. For instance, in February, home prices increased 16.2% year-over-year in Phoenix, 12.5% in Seattle and 8.2% in Los Angeles.

– At the state level, Idaho, Montana and South Dakota had the strongest price growth in February, up 22.6%, 19.5% and 17.1%, respectively.

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“The run-up in home prices is good news for current homeowners but sobering for prospective buyers,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Those looking to buy need to save for a down payment, closing costs and cash reserves, all of which are much higher as home prices go up. Add to that a rise in mortgage rates and the affordability challenge for first-time buyers becomes even greater.”

Source: CoreLogic

Home-Price Surge Reflects Nationwide Housing Competition

The U.S. housing market is experiencing a historic boom as heated competition for a declining supply of homes continues to raise price tags at a record pace.

“In many areas of the country, there are half as many available homes for sale than a year ago—and in some markets, that number increases to less than one-third,” said Danielle Hale, realtor.com® chief economist in a recently released report.

The report showed that buyers have more than 50% fewer homes to choose from amid rising interest rates and prices rising faster than they have in more than a decade.

“For a buyer, that means if they had 10 homes in their price range to choose from last year, they have less than five, perhaps as few as three, available to them today,” Hale continued. “As a result, home prices have skyrocketed, shattering previous records.”

Since the start of 2021, home prices have been on the rise, based on January data from the most recent S&P CoreLogic/Case-Shiller Indices. The trend hasn’t let up, according to the report from realtor.com®,  which showed that the median national home listing price grew to $370,000 in March, up 15.6% over last year and a new all-time high.

There is an assortment of factors contributing to price surges, but experts and agents nationwide have spotlighted inventory shortages as the root cause.

“It’s all about supply, and consequently due to the lack of supply, home prices are in no danger of declining,” says Lawrence Yun, chief economist for the National Association of REALTORS®.

According to agents, supply shortages continue to be a burden nationwide, but in some markets, it appears to be driving buyers out.

“We’ve never seen inventory this low in 20 years, yet we have 2 million more people here today than we had 20 years ago,” says Jennifer Wehner, CEO of The Wehner Group and an agent who services clients in the coveted Phoenix housing market.

The market saw a 17.8% increase in median house price in March, along with a 25.5% decrease in new listings from the same period the year prior.

Wehner says she has seen a dip in demand in recent weeks amid bidding wars and intense competition discouraging some buyers as prices surge—particularly first-time buyers. Despite the decrease, the affordability in the Phoenix market continues to attract buyers from across the country.

“In 2006, [affordability] was like 26% before prices went down. That only meant that a bit over 20% of the population could afford a median-priced home, which, at the time, was about $360,000,” she says, noting that the market’s affordability rate sits at 61% now despite the surge.

The same could be said for other coveted markets like Denver, ColoradoWhile the Denver market saw less than a 1% decrease in home prices in March, the Mile High City experienced a 10% YoY increase at the start of 2021.

“It is just unbelievably competitive,” says Tim Aberle, real estate advisor at Denver-based Thrive Real Estate, adding that demand remains white-hot for single-family homes, which have been reflected in the closing prices.

“A half-a-million-dollar house is now $600,000, and the competitive nature that we have is just beyond precedent,” Aberle continues. “I’ve seen scenarios where a well-priced house has seven to 10 offers on it normally.”

According to Aberle, the number of offers on homes only rises depending on the asking price and the area. He says he has heard of homes getting nearly 40 offers in two days of the property being listed.

That’s been the case in the Northeast, which saw the most significant YoY surge in median home price last month—up 14%—according to reports.

“Everything gets listed on a Wednesday for the weekend’s open houses and, basically, they are going to be under contract by Monday or Tuesday,” says Zack Harwood, an agent at Berkshire Hathaway HomeServices Warren Residential in Boston.

“I put in an offer for someone this week, and this weekend they got eight offers, and the one they accepted was like $100,000 over asking price, with no inspections and no blowback from the sellers on appraisals.”

Overall, Boston’s market saw a 10.3% YoY increase in median listing price in March and a 2.8% decline in homes for sale YoY, according to reports.

As prices continue to climb amid a consistent decline in homes, some may question how long this boom will last and whether the bubble will burst as it did in 2005.

Thus far, experts and agents agree that a market crash is unlikely in the current conditions, but Yun notes that there is still a “worst-case scenario.”

“What I would not like to see is somehow supply keeps getting constrained, and if the supply cannot be boosted, it just means the home prices will continue to fly high, and that will lead to a divided society,” he says. “One could look at the San Francisco market. Essentially, homeowners in San Francisco are very wealthy, while the renters in San Francisco simply cannot buy.”

As it stands, Yun predicts that mortgage rates, which are still really low, will rise toward the end of the year amid inflation and accompanying job growth. To tame prices and balance out the market, Yun says housing supply would need to increase.

That additional supply will have to come from new construction, which has been stunted for a little more than a year due to sky-high lumber prices.

“It’s clear that builders want to build more, but it’s just that they are running into challenges of lumber prices and material costs and some of the zoning and regulations,” Yun says. “The desire is there, which means sooner or later they will find a way to bring more supply, and some more supply will tame the price growth.”

Jordan Grice is RISMedia’s associate content editor. Email him your real estate news ideas to jgrice@rismedia.com

What to Expect From a Home Inspection

Do you know what to expect from a buyer’s home inspection? When your property is on the market, expect a home inspection to take place. This is positive, as it means someone is willing to pay to have it checked over, and then move forward with the purchase.

No house, especially an old house, is perfect—and the potential buyer is just taking good advice. If they find anything seriously wrong, they may ask you to fix it, or alternatively, they may decide not to proceed. Remember, the purchaser is looking to identify major defects, and as far as you know, there aren’t any.

Understanding what’s going to take place at a home inspection can make you better prepared for any potential outcome. Having a home inspection checklist whether you are a buyer or seller can be extremely helpful. Here’s what to expect at a home inspection:

When Does the Home Inspection Take Place

There are two types of home inspections. The buyer’s inspection takes place once an offer has been accepted on the home, usually within 10 days of the contract being signed. This will become part of the due diligence period.

The buyer will also have an opportunity to inspect the house once again before closing. This is what’s referred to as the “final walk-through.”

The home inspection entails hiring a professional home inspector who will typically spend two to four hours looking over the home depending on its size.

Home sellers may also choose to have their home inspected prior to putting it up for sale. Doing so is what’s called a pre-listing home inspection. By doing so, sellers can discover if there are any significant issues that could cause the sale to fall through.

A seller can make necessary improvements, avoiding any problems down the line. It also gives the owner peace of mind to move toward the process knowing all is in order.

Home inspections can be crucial for both buyers and sellers. It is essential to note that home inspections are not the same thing as a bank inspection. The lender granting the mortgage to the borrower will send out an appraiser who will look at both the interior and exterior of the property.

The lender will be looking at various features of the home to determine market value. While an appraiser could note a defect in a property in their appraisal report, their major function is not to report on property condition.

What Happens During the Inspection

A home inspection can take around three hours to complete for a house of average size. Following the inspection, the report will be written up over the next day or two.

While the inspector is there, he/she goes over the house inside and outside, recording major defects and hazards both in and around the house. Any major safety issues like faulty electrical boxes, significant foundation cracking, water penetration and a whole host of other issues will be identified.

A home inspector can and does inspect all types of properties including condos, townhouses, mobile homes, modular houses and traditional housing.

Who Is Present During the Home Inspection

The typical attendees at a home inspection include the buyers, the buyer’s agent and possibly the listing agent. It is rare for a seller to be present at a home inspection.

If you are purchasing the house, it will be advantageous to see first-hand what the inspector finds. It is helpful for agents to attend to represent their respective parties. They are there to understand any potential issues, not to be active participants or disagree with the inspector’s findings.

Many REALTORS® have seen it all before and will be useful in normalizing the experience for the buyer who may be a bit nervous about it all. If you are the buyer, try to attend, as it is going to help to answer your questions about the structure and hazards. The inspection can be a really educational process.

Main Things a Home Inspector Focuses On

  • Roof condition and any potential existing damage
  • Issues like major cracks could show the sinking of the house
  • Any water lying around and poor exterior drainage
  • Any water damage internally
  • Any damage to the electrical system or things that are not up to code
  • Poor plumbing, low water pressure and any leaking
  • Structural damage caused by termites or pests
  • HVAC issues

What the Inspector Is Not Looking For

A home inspector does not look for cosmetic items such as stains on the carpet. Simple cosmetic work is the reason why the house is not more expensive, so the purchaser needs to see the difference between structural flaws and minor work that a weekend with a paintbrush or Resolve can fix.

How to Prepare for a Home Inspection

When you know you will be having an inspection, there are a few things to prepare for the inspector:

  • Have receipts of any updates to major components you have done. For example, you may have a new roof, and having the receipt available is helpful.
  • Get rid of clutter from the attic so that the inspector can see the roof space. You can hire a junk removal company if necessary.
  • Make sure any outbuilding is unlocked so it can be inspected
  • Keep the dog tied up. You don’t want him to bite the inspector
  • Check to see that there are no light bulbs “out”
  • Replace air filters on your HVAC system
  • Make sure foundations are visible
  • Windows must open easily with no cracks or broken sashes
  • Get trees that overhang the house trimmed back, in addition to shrubbery that’s against the house

Should I Get a Pre-Listing Home Inspection?

Having a pre-listing home inspection is an excellent idea, as it will prepare you for what the buyer will be doing anyway. You might be able to identify problems beforehand that might cause trepidation with a buyer. Making the improvements could mean the difference in your sale not falling through.

Once you have your pre-inspection, give the agent a copy so that they can show it to prospective buyers. This is really important for those with an older house.

Are There Reasons Not to Have a Pre-Inspection?

There is little reason not to have a pre-listing home inspection unless you are located in a state where a seller must disclose all problems with a home. If you don’t intend to repair the issues you find, it wouldn’t make sense to go through a pre-sale inspection.

Some states are non-disclosure, meaning it is “buyer beware,” and a seller does not have to disclose known problems.

Be Prepared to Explain If the Buyer Walks Away

Following a home inspection when the buyer walks away, it will be important to be honest about why this happened. If there is some kind of problem in the home, you’ll need to disclose it when someone asks.

Homes coming back on the market after a home inspection always raise red flags. You will be prepared to have an honest explanation of why.

The Buyer May Have Home Inspection Requests

In real estate markets that favor buyers, be prepared to make concessions after the inspection takes place if there are problems found. A buyer may request some kind of credit or ask you to lower the price so they can make the repairs themselves.

Sometimes a seller will also disagree with a home inspector and ask for their own expert to come in for a look. It is possible the problems could be overstated. Home inspectors are human and do make mistakes just like the rest of us.

The Home Inspection Is Not for Making a Punchlist

The purpose of your home inspection is to find any glaring defects to structural, mechanical or safety elements. The home inspection should not be used to present the seller with a punchlist to make their home perfect.

Having a checklist as a seller can be helpful. If you have done a pre-listing inspection, go through it and knock off as many items as you can handle. The better condition your home is in, the greater chance for more money in your pocket and fewer surprises.

A home inspection is one of the most substantial hurdles in a real estate transaction. Whether you’re a buyer or seller, it makes sense to prepare for the outcome whether it be good or bad. Hopefully you have found the home inspection guidance here to be useful.

Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 33 years. He has been one of the top RE/MAX REALTORS® in New England for the past decade. Gassett works for RE/MAX Executive Realty in Hopkinton, Massachusetts. In 2018, he was the No. 1 RE/MAX real estate agent in Massachusetts.

Sky-High Lumber Cost Stings New Inventory Production in Market

As the lumber industry tries to meet the overwhelming demand for building materials, experts say the supply of homes has continued to dwindle under lagging new construction and rising price tags.

“We’re still amid major shortages across the country, where the lead time for people to get their lumber can be months instead of weeks,” says David Logan, director of Tax & Trade Policy Analysis at the National Association of Home Builders (NAHB).

Sales of newly built, single-family homes dropped by 18.2% in February, according to data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. While winter storms served as a contributing factor, they were merely exacerbating the ongoing challenge builders face with surging costs for building materials.

According to NAHB, softwood lumber prices have reportedly tripled since last spring, resulting in increasing price tags for newly built homes. The organization reported the rise in lumber prices is adding about $24,000 to the construction cost of a new single-family home, creating a negative effect on affordability in the market and straining builders.

The shortage continues, and part of that is due to the fact that housing demand is extremely strong due to demographic tailwinds and, in large part, to historically low mortgage rates,” Logan says.

Unforeseen Factors

It should come as no surprise that pandemic-induced business closures and lockdowns last spring are largely to blame for lumber shortages, according to Logan.

“There was kind of this confluence of terribly timed factors,” Logan says.

A large one was that lumber mills across the country overestimated the decline in housing demand during the pandemic’s early days. According to Logan, mills shut down for a period while others that kept producing curtailed capacity.

As a result, the unexpected surge in demand for building materials amid the 2020 remodeling boom and pandemic relief-induced wealth blindsided mills, according to Bryan Smalley, president of the Southeastern Lumber Manufacturers Association (SLMA).

“Most people have never seen this,” Smalley says. “It was one of those instances where you had two different industries—remodeling and home building—needing the same product at the same time.”

SLMA’s membership consists mainly of family-owned sawmills that produce Southern Yellow Pine used in hardwood flooring.

While their membership managed to produce more materials in 2020 than the year prior, Smalley says it wasn’t enough to match the demand.

To do that, Logan says mills are going to have to churn out more lumber.

That would also require mills to increase their labor force, according to Renee Hornsby, marketing and communications director for the National Hardwood Lumber Association.

“Loggers have to get back out there, but then you have wet periods and frozen periods and the normal slowdown of the industry, which is kind of what we all have just gone through,” she says, adding that some mills have struggled to increase their workforce because of COVID-19 restrictions.

The wood product manufacturing sector shed roughly 8,400 jobs from December 2019 to December 2020, according to U.S. labor statistics.

Hornsby also pointed out that boosted unemployment benefits that rival pre-pandemic wages have also added to the challenge of bringing back furloughed or laid-off mill workers.

“That’s a struggle there too for people in our industry,” she says. “Some people have gone on and decided to take other jobs and get out of the industry altogether because if you are unemployed for six months, you’ve got to find something to do.”

According to Logan, there was a sizable uptick in lumber production at the tail end of 2020 as companies claimed to ramp up operations as best as possible. However, it doesn’t appear to be enough to curtail price increases.

“There is plenty of supply of logs across the country, and really NAHB is full-throated in doing what it can to help the mills increase production as much as humanly possible,” he says.

Agents and Buyers Feel the Sting

High lumber prices and their effects on builders have trickled down to end consumers, according to real estate agents who say prospective buyers are feeling the strain of slower construction and growing competition.

“Right now, we have a crazy low inventory, so people are looking further outside of the city,” says Tim Aberle, real estate advisor at Denver-based Thrive Real Estate. “Oftentimes, new construction is a silver bullet where it’s a good combination of quality materials, no maintenance issues and [fair] price.”

Though it hasn’t slowed demand or absorption in his market, Aberle says there has been a shift in activity as builders’ prices have gone up substantially.

In some markets, agents say construction projects from last year have been delayed or canceled due to increased lumber costs.

“New construction is taking a very long time to build out right now,” says Nina Hollander, broker at Coldwell Banker Realty in Charlotte, North Carolina.

According to Hollander, several of her clients were driven to list their homes sooner than expected last year as prices for new builds started to surge. In other cases, she says projects that were already in the works had been delayed or postponed for similar reasons.

“Builders are building in a pretty extensive timeline from the get-go to ensure that what they need to complete the house is there in their hands to do it,” Hollander says. “It’s a different market than it was [before the pandemic]. I remember when houses were in new construction, and they were going up in four to five months. Right now, you have to plan seven to eight months.”

The number of homes on the market decreased by 52% in March compared to the same period last year—534,000 fewer homes—according to a recent realtor.com® report.

Austin, Texas, topped the list of inventory declines, shedding 72.7% of the number of homes the market had last year.

According to Austin-based Agent Cederick Harris, competition for limited lots is comparable to bidding wars for existing-home sales.

“We see that builders are basically in multiple-offer situations,” he says, adding that some in his market have begun waiting lists for projects.

“But after you’re on the waiting list there is still no guarantee because there is no price disclosure,” he says. “I’ve seen prices go up at least $100,000 in the last year. I’ve [also] seen in the last two months at least a $40,000 increase.”

“Housing starts are not enough to meet the demand for housing based on household formation and replacement for houses lost to demolition, damage or conversions,” says Gay Cororaton, senior economist and director of Housing and Commercial Research at the National Association of REALTORS® (NAR).

Housing starts dropped by 10.3% in February to a seasonally adjusted annual rate of 1.42 million after hitting 1.7 million in December, according to recent Commerce Department reports.

Despite the decline, Cororaton says the outlook for higher supply in the future is positive, citing the Biden administration’s push to build up the country’s infrastructure as a factor.

“NAR expects housing construction to continue to improve steadily, though not by leaps and bounds in the coming months as the constraints to housing production cannot be solved overnight—such as increasing construction labor and addressing zoning regulations to increase the available land for residential construction, including manufactured housing,” Cororaton says.

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

Home Improvement Surge Straining Inventory Shortage

Razor-thin inventory may be straining the housing market, but experts say the ongoing boom in home remodeling may be exacerbating the issue.

“When the pandemic hit in mid-March, and the lockdown began, people were forced to use their homes differently and include a lot of functions that they hadn’t historically been doing out of their homes,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) of Harvard University.

As a result, spending on home improvement and repairs grew more than 3%, to nearly $420 billion in 2020, as households modified their living spaces for work, school and leisure, according to a recent JCHS report.

The research center also anticipates the spending on remodeling projects to continue this year, across all of the nation’s largest metropolitan areas.

According to agents struggling to find available homes for clients amid the ongoing lull in available homes that may pose some unintended consequences in the housing market.

“It definitely is crippling our inventory because once that pendulum has started and [homeowners] are doing a project that may take six months to a year, that’s one less home that is going to be available because they decided to stay there,” says Austin-based agent Kent Redding of Berkshire Hathaway HomeServices Texas Realty.

“It’s a vicious cycle,” says Nina Hollander of Coldwell Banker Realty in Charlotte, North Carolina. “If homeowners are not selling, there is not enough supply for the buyer’s demand. So, if homeowners sit on their houses, they also can’t move up or down to the next house.”

From COVID-influenced regulation to longer wait times to find existing homes, Hollander and Redding agree that homeowners have stayed in place rather than entering the market or listing their homes. According to Hollander, another factor could be that many have taken advantage of record-low mortgage rates and refinanced.

“All of this plays a role in why there isn’t any inventory and why people are looking to improve what they already have based on what they’ve discovered they needed last year,” she says.

People Staying Put 

Remodeling activity has generally been associated with home sales, but industry observers say various pandemic-induced factors have contributed to the already-strained housing supply.

“This past year in home sales and home construction and home remodeling has been counterintuitive to what anyone could have predicted during a pandemic,” says David Pekel, CEO of the National Association of the Remodeling Industry (NARI).

Part of that had to do with an increase in consumer confidence, Pekel adds. Record-low mortgage rates coupled with additional “personal wealth” from COVID-19 relief packages and unemployment benefits contributed to overwhelming demand in the housing market, he says.

“All of a sudden, millennials who were having a tough time scraping up the down payment found themselves in a perfect storm in a positive sense,” he says. Now they had more cash, conventional interest rates had been at historic lows for quite some time, and now, all of a sudden, the prospect of being able to buy a house became very real—and they did.”

An ongoing wave of 65-and-up homeowners “aging in place” is also factoring in, he adds.

“There is a shortage of 3 million homes based upon historical averages,” Pekel says. “People in their retirement years, who traditionally left their residences to downsize or move to an assisted living community, are staying put. This adds to the strain for available housing units.”

As a result, many prospective buyers found themselves at a crossroads in the market that pushed them to re-evaluate their current homes and how they can remodel them to fit their everyday needs.

“Part of that boom has fed the profits of Home Depot and Lowes because people have had the time to do it,” Pekel says.

Both home improvement companies saw sizable increases in sales last year, according to a CNBC report. Home Depot and Lowe’s saw net sales increase by 25% and 28%, respectively, outpacing expectations.

“As people started to make these improvements to their homes, they kind of fell back in love with their house, but there were other mitigating circumstances that caused that too,” Pekel says. “We may find when we look at this in the rearview mirror that these were just temporary.”

DIY Wave

Many professional remodeling projects came to a halt when the pandemic hit while do-it-yourself (DIY) renovations surged.

“I think it was just sort of a natural instinct for homeowners to dive into the things that need to be done,” Baker says, adding that many DIYers have taken up simpler projects, like converting a bedroom into a home office or learning space.

The type of projects homeowners are taking on may help them skirt potential hang-ups when they decide to sell their homes, so long as they aren’t running into any permitting issues.

Zoning and permitting rules vary nationwide, but some homeowners may be required to get a pre-sale building inspection before putting their home on the market,” according to Pekel.

“Anything that was not done properly with the permit has to be brought up to code, or the house can’t be listed,” Pekel says. “If they chose to fly under the radar, it could eventually catch up to them.”

Not all work needs a permit, according to Pekel. He says projects that don’t affect anything structurally within a home might be acceptable.

“It can get very nuanced not only from state to state but also from county to county and city to city,” he says. “When we talk to DIYers, our guidance is always to check with your local building officials about restrictions first.”

While he predicted the DIY and remodeling activity surge to continue through a good chunk of 2021, Baker says spending will stabilize as things return “back to normal.”

Long-Term Benefit

The long-term benefits to the housing market may outweigh the short-term pitfalls, according to Baker.

“Keeping the existing housing stock in shape and structurally sound offers some opportunity for affordable homes to stay in the market rather than drop out as we’ve seen in the past,” he says. “Fixing up and maintaining older, affordable homes seems to be an important trend to keep the housing market as strong as we can.”

While they may not hit the market immediately, the surge in remodeling activity could also be a sign that some homeowners may be preparing for sales down the line, according to Dr. Jessica Lautz, NAR VP of Demographics and Behavioral Insights.

As people have lived in their homes longer than before, Lautz says that many sellers find that they need to upgrade their houses before placing them on the market.

“Buyers’ expectations have increased as they expect homes to look like what they see on TV shows now,” she says. “We have consistently seen from homebuyers that they really do want homes to look nice when they walk into them. If you remodel a home, it’s going to attract consumers and help it get sold faster down the line.”

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

Zillow Group Population Science Homeowner Survey: Q1 2021

By Edward Berchick on Apr. 6, 2021

Zillow Group Population Science’s first quarterly survey of homeowners probed their intentions to sell their home and move, their reasons for moving or not moving and the resources they expect to use (if moving within the next few years). Homeowners were also asked about the influence of the COVID-19 pandemic on their moving intentions.

Highlights from the Q1 2021 Survey:

  • About 14% of homeowners say they are considering selling their home within the next three years. 
  • Younger homeowners are more likely to be considering selling soon than their older peers.
  • Homeowners are confident they can sell on their timeline and for a profit in this market.
  • The pandemic is influencing many decisions to both move and not move — especially considerations around dedicated work-from-home space — but so are more traditional drivers like changing family sizes.

Moving intentions

About 14% of homeowners say they are considering selling their home within the next three years. Of this group:

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A higher share of young adults aged 40 or younger (22%) are considering selling and moving within the next three years than older adults (12%). Of younger adults considering a move:

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Reasons for moving/not moving

A desire for an upgraded space and/or dedicated home office space, the prospect of financial gains, commute considerations and changing family structures were among the main reasons homeowners considered moving. Of those homeowners considering selling within the next 3 years:

  • 50% said their desire for an upgraded home with nicer features influenced their decision. 
  • 26% cited a need/desire for home office space as a reason for considering a move
  • 19% said that their commute is a reason (Note: People considering their commute likely include both those who anticipate working from home and will no longer prioritize proximity to an office, and people who are currently or anticipate soon working from an office and want to reduce their commute time).
  • 39% said they are doing so because they expect to get more money for their home now than in the future.
  • 26% said a growing family influenced their decision to sell and move; 40% said their family getting smaller did the same (families may grow through marriage, childbirth, adoption and/or having a parent or child move in; families may get smaller through divorce, widowhood and/or older children moving out).

A quarter  (26%) of homeowners NOT considering selling their home within the next three years cited concerns around their ability to find and/or afford a new home.

  • A similar share (24%) cited current life uncertainty as a reason to not consider moving within the next three years.

Next homes and locations

Movers are likely to stay close to their prior home, many expect to spend more on their new place than they earn from the sale of their prior home, and large majorities of would-be buyers will use a real estate website/app, tech tools and/or an agent. Of those homeowners considering selling within the next 3 years:

  • Most homeowners stay within 50 miles of their prior home (77% in 2018-2019), according to a Zillow analysis of U.S. Census data, but:
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  • About 43% of homeowners considering selling anticipate spending more on their next home than they expect to make from selling their current home.
  • 80% of homeowners who plan to sell and move to a new home within the next 3 years are likely to use a real estate website or app. Almost all (93%) are likely to use a real estate agent.
    • Most are open to using virtual home tours and virtual closing services: only 25% and 36% say that they are not at all likely or not very likely to use them, respectively. 

Market confidence

Large majorities of current homeowners are confident in both their ability to sell within their preferred time frame and sell for a profit.

  • 88% of homeowners said they are somewhat, quite, very, or almost completely confident they could sell their home within their preferred time frame if they listed it for sale
  • 90% said they are somewhat, quite, very, or almost completely confident they could sell their home for a profit if they listed it for sale.

The COVID Effect

Roughly 1-in-8 homeowners said COVID-19 impacted their decision to move, with about twice as many saying it made them more likely to move as less likely. Widespread vaccine distribution will increase the comfort level of a meaningful share of homeowners considering moving. And remote work is influencing many decisions.

  • A small majority (52%) of homeowners say they are comfortable moving to a new home now, and roughly two-thirds (64%) say they will be comfortable moving after widespread vaccine distribution.
  • 14% of homeowners say that COVID-19 impacted their decision to move. Of this group:
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  • According to the Census Bureau, 39% of adults live in a household where at least one person has started full- or part-time remote work as a result of the pandemic. Among homeowners that work remotely at least 1 day a week:
https://wp-tid.zillowstatic.com/3/Covid_2-c9eb59.png

Methodology

These analyses use data from a new, quarterly ZG Population Science survey of homeowners using a repeated cross-sectional design. Homeowners who did not move within the last 12 months were eligible for participation. The Q1 2021 survey was fielded during the first two weeks of March 2021 and included 1,827 homeowner respondents.

To achieve national representativeness, quotas for age, education, sex, region, race, and marital status limited oversampling of any given demographic group. In addition to using quotas for respondent sampling, ZG Population Science weighted the sample to the overall U.S. population using the U.S. Census Bureau 2019 American Community Survey using these same characteristics.

How to Decide on the Ideal Home Size for Your Family

Making the choice to purchase a new home is a major decision for anyone. Once you’ve settled on the idea that you do want to buy a home, there are many more options you’ll have to face; one of the most important is the ideal size of a home to best fit your family and lifestyle. Here are some tips so that you can choose the right size home to meet your needs:

Realize That Bigger Isn’t Always Better

You may initially start your home search thinking that size doesn’t really matter. As long as it seems big enough to live in, you don’t care how large it actually ends up being. The truth is that bigger isn’t always better. A large home requires more money—and time—to maintain. Unless you’re using the space, you could just end up wasting your money on maintaining a big house for no reason.

Know Your Maintenance Budget

A crucial aspect of your home purchase decision is to determine what your budget is going to be for home maintenance. A bigger home requires more time and money to take care of, particularly if you’re looking at homes with substantial front and backyards. As for the interior, there are cleaning, repair and energy costs for heating and cooling. Discuss your budget with your partner and your real estate agent to decide the square footage you can realistically handle.

Identify the Number of Rooms You’ll Need

If you really don’t know what amount of space is ideal for your family, then you need to start simple. This means counting the number of rooms that you’ll need. Consider your main rooms like your kitchen and living room, and then move on to counting the number of bedrooms and bathrooms that you need. This will give you a good starting point to identifying how much space your family will require. Keep in mind if you plan on expanding your family, if you frequently have guests visit and if you may need to have a family member, like an aging parent, live with you in the future.

Tour Different Homes in Varying Sizes

Once you get an idea of the size range that will fit your needs, it’s time to take some tours. Search for homes that are in the appropriate size range that you determined. This isn’t so much about evaluating potential purchases as it is about determining if that size range will fit what you have in mind. Home tours will give you a better idea of what you want the square footage of your home to be and how you want those square feet distributed throughout the bedrooms, common areas and exterior.

Determining the right size home for your family may be challenging at first. Start by breaking down your budget versus what you think you’ll need and begin looking at sample homes from there. After all the work, you’ll be able to choose the perfect home size for you and your family!

Anica Oaks is a freelance writer who hails from San Francisco. When she’s not writing, she’s enjoying her time outside with her dogs. Oaks recommends working with an agent, like those at Sold with TJ and other businesses. Keep up with her on Twitter @anicaoaks.

Animals and Other Pests That Can Quickly Ruin Your Roof

Your roof is what protects your family from the elements and other dangers outside your home. However, your roof is susceptible to damage, especially from different critters. Here are some of the animals and other pests that can quickly ruin your roof:

Birds

It can be nice to hear birds singing out in your yard, but you don’t want to hear them singing on your roof. Though birds aren’t very heavy, they do have some talons that can tear up the roof, and some will peck at the roof looking for insects to eat. Their droppings are also acidic, which can cause corrosion. The issues can get even worse if the birds decide to build a nest on your roof. Most likely, the nest will be in your gutters. These nests, however, can block the gutters and create pools of water that can leak through the roof or into your home’s foundation.

Rodents

Mice and rats like to live in the walls of homes for warmth, and they’ll often reach the roof if the infestation isn’t discovered and eradicated. Once in or on your roof, they may eat the building material or insulation in the walls or attic. Additionally, rodents that aren’t exterminated will likely have babies that will also live in your walls and roof. If you notice a biting sound in the walls or ceilings of your home, you likely have rodents. Another sign to look for is bitten or gnawed on walls, wires or other materials around your home.

Termites

Although your roof may not have wood shingles, it likely has wood underneath, so it’s important to get protection from these wood-eating pests regularly. If you have termites, the wood in the infested area will start to get thinner and thinner until holes start to appear. It will be harder to control the temperature and your home won’t be protected from the rain and water damage. While termites prefer wood, they’ll also snack on other materials too, like paper, cardboard, cotton and anything else that contains cellulose. Termites will even chew through plastic to get to their meal of choice.

Bees

It’s important to protect bees, but that doesn’t mean we want them living in or on our roofs. If bees do decide to build a hive on your roof, they’ll eat at it to provide room. Bees will also add a lot of weight to your roof, potentially weighing it down to the point of structural damage. That isn’t to mention the possibility of getting stung if you open an upstairs window.

If you’ve noticed damage to your roof caused by any of these creatures, you’ll need to get your roof inspected after having the pests cleared out. A residential roofing contractor can tell you whether the damage is serious enough to require a whole roof replacement or if you just need some repairs.

These pests aren’t necessarily a nuisance in the wild, however, they will be in your home. There are a number of natural ways to prevent creatures from getting too comfortable on your property. If those tactics don’t work, call pest control!

Anita Ginsburg is a freelance writer from Denver, Colorado. She studied at Colorado State University and now enjoys writing about health, business, and family. A mother of two wonderful children, she loves traveling with her family whenever she isn’t writing. If you have roof damage from pests, she recommends contacting a residential roofing company. You can find her on Twitter @anitaginsburg.

What Appraisers Look for During a Real Estate Appraisal

The home appraisal process can be a stressful time, whether you’re buying or selling a property. It’s the job of the appraiser to find the fair market value of the home. If their findings don’t match the buyer’s offer, there can be delays in the transaction. But if you know what appraisers look for, you might be able to prevent your house sale from running into problems.

Related: 4 Ways to Polish Up Your Home Exterior Before Getting an Appraisal

The appraisal will be one of the bigger hurdles to clear in your sale so it will be important to have an understanding of how they work. Pricing your home accurately from the start will lead to the best results. In order for your home appraisal to get the results needed for the sale to close, it’s important to know what appraisers look for:

Appraisers Look at External Factors Around Your Home

The appraiser that visits your home will have been certified to operate in the state. They’ll probably be using the Uniform Residential Appraisal Report as the basis for their evaluation. This means that the appraiser will be checking for certain things both inside and outside your home, as well as factors related to its location.

The appraiser will be looking at the type of neighborhood your house is situated in. The zoning of the area is important, as are the types of homes in the neighborhood.

They also check on things more closely related to your home. This will include the lot’s size, the connected utilities, the driveway and the garage. Things like garage space add more value to a home, with a two-car garage worth more than a single-vehicle garage.

If your property has something extra above what’s found in other homes in your neighborhood, it could add value. While the appraiser might notice this anyway, it doesn’t hurt to make sure they know. Here are other things an appraiser will look at on the exterior:

  • The condition of the siding and trim—is there wood rot? Does the siding need painting?
  • Are structures on the property sound? Are any decks, patios or porches in need of repair?
  • Are there any other exterior structures that add value, such as a storage shed?
  • Is there a pool, tennis court or other exterior feature that warrants added value?
  • Are there underground sprinklers?

The Appraiser Will Look at Internal Factors 

A big part of what appraisers look for is inside the home. They’ll work out the square footage, note the number of bedrooms and bathrooms and check the condition of the structure. They’ll also look at how the home was constructed and what materials were used in the walls and floors.

Appraisers will check if kitchens and bathrooms have been updated, and measure the sizes of attics and basements. They’ll also look for any signs of pest infestations in the home.

Safety features can sometimes be important too. Does every staircase have a handrail? Have smoke detectors been fitted throughout the home?

What appraisers look at can sometimes be some less obvious though. There can sometimes be local factors that make certain features in a home more valuable than others. In Northern states, where natural light is at more of a premium, larger windows will be more valuable. In Southern states, shaded areas and better air conditioning might increase the value instead.

Here are several other internal features an appraiser will take note of:

  • Does the home have a security system?
  • Does the house have a central vacuum system?
  • Is there a home theatre or a sound system?
  • Are there other amenities that could add value to the property?

The Condition of the Home is Paramount

The appraiser is going to make careful note of the condition of the property. They’ll be looking at the foundations, walls, roof, as well as the heating and cooling systems. Any basic maintenance issues with the home, like peeling paint, will negatively impact the valuation too.

Upgrades and Improvements Influence the Appraisal

While the appraiser will mention upgrades to your home in their report, it won’t necessarily reflect the full value that you have paid for the improvement. If you’ve spent $60,000 on modeling your kitchen, it doesn’t necessarily follow that your home will be worth $60,000 more in the appraisal.

It’s difficult for the appraiser to tell the difference in the quality of every upgrade you have made to your home. If you have receipts and other documentation ready to show them, this can help.

How to Get Ready for a Home Appraisal

Since it’s in your best interest to have the home appraiser value the home higher, you should try to make sure your home is looking its best. Treat a visit from the appraiser the same way you did when your home was being shown to potential buyers. Ensure it’s tidy, fix any minor maintenance issues and have any paperwork that might be relevant laid out ready.

This way, you might save yourself from having to negotiate with the buyer over the price if the valuation comes in lower than expected. It is possible to challenge the appraisal value but not very likely to be successful. Most of the time, you’ll only be able to get an appraisal value changed unless the appraiser has made a mistake. For example, if your home’s size is presented incorrectly, this would be a valid reason for a challenge.

Going through another appraisal is also an option, though the result may still not go how you and your buyer want it to. Pricing accurately is paramount even with foreclosure homes, as lenders will not grant a mortgage on properties that do not appraise.

One of the essential steps in the process of buying or selling a home is the appraisal. Both buyers and sellers should have at least a rudimentary understanding of how a home appraisal works. Hopefully, you now have a better understanding of what to expect from the process. Best of luck with your next home appraisal!

Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 33 years. He has been one of the top RE/MAX REALTORS® in New England for the past decade. Gassett works for RE/MAX Executive Realty in Hopkinton, Mass. In 2018, he was the No. 1 RE/MAX real estate agent in Massachusetts.