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New Home Sales Slow Despite Lower Prices

There’s a national housing crisis going on right under your nose, and this is pushing home prices downward quite quickly. Despite these low prices, home sales are slower than expected for a few reasons. Experts and economists agree – things may be moving toward a new trend.

A Slow but Steady Decline

A report provided by the US Department of Housing and Urban Development in conjunction with the US Census Bureau shows just how slow home sales have become. In April 2007, buyers purchased 569,000 new homes across the country. That’s an 11% decline from the month before. This number also accounts for an increase of just half a percent over April 2016’s numbers. There are several reasons for this, and economists seem to think a combination of factors led to the sharp decline in new home sales.

new home salesNew Home Sales and the Average Budget

Just as sales were down in April, so were overall home prices. The national average fell in April by about 3%, making the average home price $309,200 during that month and by nearly 4% from April of last year. Despite this, new homes simply aren’t fitting Americans’ budgets – especially if they’re first-time buyers. In fact, the average price of an existing home was just $237,800, which is 30% less than the cost of a new build. There just aren’t enough homes under the $200,000 price range available to moderate-income families.

The Impact on the Denver Area

The Western part of the country is seeing the biggest impact from significantly slower new home sales. Per the same survey, sales dipped just over 23% from March to April 2017, and they were down 13.7% over April 2016 numbers. This is much slower than other parts of the country during that same timeframe.

  • Northeast – Sales in the Northeast were down 7.5% from March to April, but were down only 5% from the previous year.
  • South – Sales in the south were up 4% annually, but down just 4% from the previous month.
  • Midwest – Month-to-month sales dropped 13% from March to April but were up overall from the previous year by 19.7%. This marked the most significant annual increase in new home sales in the country.

Will There be More Affordable Homes?

Builders seem to be constructing more luxury homes and higher-end homes in the $200,000 to $299,000 range because those are the homes that sell. What’s more, increasing labor, land, and material costs make it difficult for builders to create homes spacious enough for the average American family for less than $200,000. It’s far cheaper for Americans with low to moderate incomes to purchase existing homes, and that’s the route many people are taking. Builders aren’t likely to focus on building new homes for these budgets except for in places like the Midwest, where it seems that more people are moving toward the new home trend.

While there’s no shortage of homes for people who are considered upper-middle class and have above average incomes, the number of new builds being constructed for low to middle class incomes has slowed significantly. New home sales are on the decline everywhere for several reasons, and according to the economists, this may be the trend for many years to come.

Higher Credit Scores are Coming: Are You One of the Lucky Ones?

Although credit requirements for obtaining a mortgage are quite lax now compared to a decade ago, there are still plenty of potential buyers struggling to raise their credit scores enough for a traditional low-interest mortgage. A recent statement from the CDIA, or Consumer Data Industry Association, which is responsible for representing all three credit bureaus, shows higher credit scores for millions of Americans coming soon.

higher credit scoresWhat’s Changing on Your Credit Report?

The CDIA oversees and represents Experian, Equifax, and Transunion. These are the three credit bureaus responsible for gathering and processing information about your credit history, income, and overall creditworthiness. The group recently stated that all three bureaus were revising the standards via which information is collected and processed The result? Higher credit scores are coming to millions of people across the country, and there’s no action needed on their part.

Why is this Happening?

Recent reports issued by the Consumer Financial Protection Bureau, or CFPB, noted an enforcement action against two of the three major credit bureaus – Equifax and Transunion. Consumers can view their credit scores for free once each year, but they must pay for their scores if they want to check them more often. Per the CFPB, the companies deceived many consumers with the value of the scores they purchased. As a result, the companies will pay a combined total of $17.6 million to consumers who purchased credit reports. They will also pay another $5.5 million in fines to the American government.

What Can You Expect?

Because the credit bureaus are now under increased pressure to report credit information more accurately, they’ve adopted new processes for generating FICO scores. Many civil debts and tax liens, which can bring scores down tremendously, will be completely removed from the calculation. This means that about 12 million people across the country will see their credit scores climb some 40 points, and even more will see increases of roughly 20 points. This may be just enough of an edge to get more families into mortgages, which could potentially boost the housing market, which is still recovering from the slump.

Will Credit Requirements for Loans be Adjusted?

Although 12 million people will see a tremendous increase in their credit scores, it’s unlikely that mortgage brokers and other lenders will increase their credit requirements. Remember that these changes are coming as the result of improper reporting and unfairness in the credit reporting industry. It’s not a falsified or fraudulent credit score increase. This is great news for many consumers who are trying to buy homes, purchase cars, take out personal loans, rent homes, or even get certain jobs with less-than-perfect credit.

For now, things seem to be improving for many Americans with these new higher credit scores, especially if their credit is held back by civil lawsuits or tax liens. For things to continue to improve, the CFPB needs to retain its supervisory powers over the credit bureaus and continue to hold them accountable for accurate reporting.

The Housing Market Slump Still Exists in Some Locations

During 2016, home values climbed in 96 out of the 100 biggest metro areas across the country. This is great news for the US economy, but there are a few places where the housing market slump still exists. Even as home prices continue to soar to near-record highs, sellers in other parts of the country are struggling to find buyers.

housing market slumpPrices are Rising

While home prices continue to rise due in part to the national housing shortage, they still haven’t returned to the same values that existed prior to the housing market slump. For example, Harvard University publishes an annual report called the State of the Nation Housing Report. In it, statistics showed that home prices did climb 5.6% through 2016. This is great news, but when you consider inflation, which continues to climb thanks to economic success, the outlook is a bit different. Home prices were right at 15% lower than they were before the crash, even after climbing 5.6% through 2016.

Where is Recovery Slower?

In 97 out of 100 of the largest metros in the country, home values climbed. Of these, though, only 41 reached new highs. Values in 32 locales actually decreased 15% when figuring for inflation, and while homes in metros along the East and West Coasts saw the biggest increases (more than 20% since the turn of the millennium), the Midwestern markets failed to meet expectation. While coastal metros seem to get more publicity than their inland counterparts, it’s areas just like the Midwest that make up the crux of the housing market – and those areas are still slowly recovering from the housing market slump.

Poorer Neighborhoods Recovering at a Crawl

Some of the poorer neighborhoods in the country are faring the worst at the start of summer 2017. On average, these areas were nearly 18% under where they were before the housing market slump compared to just over 3% for wealthier areas. Another reason why poorer areas are still suffering has to do with supply and demand. Because there’s not as much wealth in these locations, home tend to sit on the market far longer, which inevitably drives down their prices. What’s more, based on their locations, home values themselves are lower than in other parts of the country.

New Construction is Slow, Too

In the southern part of the country, new construction is booming – it went up 84% in just five years. However, in some parts of the country, which include the Northeast, and especially along the coast, construction has slowed down because of the cost of materials and land. Out West, in places like California, Phoenix, Las Vegas, and even Denver to an extent, new builds are anywhere from 40% to 80% below the peak prior to the housing market slump. Things are improving, albeit slowly.

While most of the country has seen the worst of the housing market slump and is well on the road to recovery, poorer communities, especially in the Midwest, are struggling to gain solid ground. There are improvements, however small, and new opportunities along with less stringent credit requirements may just help people in these locations become homeowners after all.

Fewer New Builds – Why the Sudden Slowdown?

New constructions have always played an important role in the real estate market. When the number of new builds is high, people have more homes from which to choose. When building slows down, however, prices tend to climb due to the standard rules of supply and demand. Recently, new construction rates have started to slide, and some (including experts) are concerned that home prices may be on the rise as a result. Here’s what you need to know.

Reason #1 – A Mild Winter

The winter of 2016-2017 was quite mild in comparison to recent years, and because of this, builders could accomplish much more than anticipated earlier on in the year. Now, in the beginning of summer and early July, there’s simply less for builders to do. Scheduled projects have been completed ahead of time, which means many construction companies are lucky enough to take breaks and do “inside” tasks during the hottest parts of the year. This is an indication that new construction rates haven’t truly fallen as much as it would seem; they’re just being finished more quickly than normal.

new buildReason #2 – Workers are in Shorter Supply

Unemployment numbers are falling in many parts of the company, but despite this, construction companies report a lack of contractors – including carpenters, electricians, and plumbers – whose skills are needed to complete a quality build. This is especially hurting the rate at which single-family homes are being built; the frustrations continue to grow, and in many areas, it’s having a significant effect on wait times. Homeowners who have received funding for their new builds are sometimes waiting several months before construction can begin.

Reason #3 – Growing Materials Costs

Single-family homes require a variety of materials, and the most important of these is quality treated lumber. Unfortunately, the cost of lumber continues to rise globally, which puts a strain on construction companies trying to keep prices affordable while paying their workers a fair wage. Of course, the cost of other materials is also on the rise; everything from drywall to vinyl siding costs more now than it did only a few years ago. These increased costs may also be having an impact on homeowners as they choose whether to build a home or purchase an existing one.

Will the Slump Last?

Although it seems that new builds are slowing down with every passing week, experts agree that this isn’t likely to last. After all, mortgages are still quite affordable, and they’re even more accessible than they were just a few years ago. Potential homeowners with credit challenges may be able to buy homes sooner rather than later thanks to less stringent requirements. Another consideration is the fact that homeowners aren’t willing to sell their homes as readily as they were, which means the demand for new builds is likely to continue to grow in the future.

It might not seem like there are as many new homes going up this summer than last, and while this is causing some alarm, there’s really no need for concern. The mild winter and growing materials costs are the two key players in the slump, but the fact that new builds are growing in popularity will continue to push the construction industry forward.

Do Walk-In Closets Improve Home Values?

When home buyers discuss the features they look for most in homes, several things usually top the list. They want nice, spacious kitchens, relaxing bathrooms, large bedrooms, and walk-in closets. If you’re thinking of selling your Denver-area home, it may be worth your while to create walk-in closets – especially in the master bedroom or suite.

walk-in closetsWhat Are Walk-In Closets?

With a traditional closet, you simply open the door and peer inside at your clothing, shoes, accessories, and other stored items. A walk-in closet is more like a small room. You open the door, walk inside, turn on the light, and look at items all around you. Walk-in closets make it easier to store and find items, and that’s why they’re so appealing to home buyers. Such a closet is very important in the master suite, but it’s even better if there’s one in every bedroom.

Is It Possible to Create Them in an Existing Home?

Most of the time, walk-in closets are accounted for during the home design process. Architects and planners will decide where the closets will be, and contractors (including electricians and plumbers) do their jobs according to that placement. This means that adding walk-in closets to existing homes can be a bit challenging, but it’s certainly not impossible. In this case, you’ll likely want to build a wall-to-wall closet, and you’ll need to sacrifice some of the actual floor space to do so. That’s why this process works best in larger bedrooms.

How Much Do They Increase Home Values?

There are a few home renovations that provide a positive return on your investment, which means you’ll make more than you spend should you choose to sell your home. Walk-in closets are one of these renovations. The exact return varies based on many factors, but the most important factor to consider is demand. Buyers want to see big closets during showings and open houses, and if you can provide that to them, it makes your home more desirable, and therefore more valuable. If a potential buyer sees two homes that are the same save for closet size, they’ll almost always be willing to pay a little more for the bigger closets.

Hiring a Professional

Although walk-in closets are great for improving home value and desirability, they’re not projects you should take on yourself. You should always hire a professional to perform renovations like this, especially when you consider that your new closet will need lighting – and therefore wiring. It’s vital that a licensed electrician analyzes your project and plans accordingly. Depending on the location of your new closet, you may also need to plan for water lines and existing wiring, too.

Walk-in closets are investments that will pay off in the end. If you choose to sell your home, the closets make it more desirable to potential buyers. If you choose to stay in your home, your closets will provide you with more storage space, and this keeps clutter at a minimum.

5 Cool Things to Do with Your Attic Space

Whether you have a modest home or a massive one, there’s a good chance your attic space is either empty or used solely for storage. With all of today’s design ideas and technologies, though, you can turn your attic into just about anything you can imagine. Here are five cool things you can do with your attic space.

attic space#1 – Make It a Family Room

Some families use their main living rooms as their gathering spaces; others reserve their living rooms for entertaining and rarely use them otherwise. If you fall into the latter category, you certainly aren’t alone. These days, more and more homeowners are converting their unused attic spaces into second living rooms to use as a central hub for their families. Some skylights, hardwood flooring, drywall, and a clever spiral staircase can do wonders, and it will allow you to keep your living room on the main floor in pristine condition.

#2 – Create a Game Room

Homeowners often wish they had space for a rec room – a place where families can gather to play video games, watch movies, shoot pool, or just sit down for a friendly game of cards. Your attic provides the perfect opportunity if you choose to utilize it. In this case, all you’d need is a rough finish and ample HVAC for comfort before you start moving in your dartboard, foosball table, and other sources of fun and games.

#3 – Build a Massive Walk-In Closet

Depending on the age and style of your home, you might find that your closet space isn’t sufficient for your clothes, shoes, and accessories. Fortunately, your attic can be converted into a wardrobe of massive proportions. In fact, with some planning, you can divide your attic into separate spaces to give each member of the family his or her own walk-in closet. The attic space should be enough to keep seasonal clothing on display while keeping out-of-season items safely tucked inside chests or tubs.

#4 – Build a Man Cave or She Shack

Man caves and their feminine counterparts, often dubbed “she shacks”, are essentially retreats from the rest of the home. Men often set up bars, video games, and mini movie theaters, while women may create crafting tables or even a spa-like atmosphere. The attic is a great place for this as it’s out of the way, and if you soundproof the floor, it’ll almost be like your home away from home, too.

#5 – Create an Office or Studio

If you work from home, or if you’re into arts and crafts, then you’re aware of just how much space these things require. Offices require space for files, computers, printers, comfortable seating, and more. Studios are often filled with equipment and supplies, and they require sufficient space for working, too. The attic space is a great place for offices and studios because they allow you to escape the hustle and bustle of the main floors to work in peace. They also provide more space for storage, which can go a long way toward reducing downstairs clutter.

Your attic space can become anything you want – a family room, rec room, closet, man cave, or even art studio isn’t out of reach. Finishing an attic can extend your living space, reduce downstairs clutter, and provide an escape from the daily goings-on all at the same time.

5 Home Renovations to Do This Summer

Whether you’re considering selling your Denver-area luxury home or you want to give your current home more appeal, summer is a great time to think about home improvements. Here are five home renovations you’ll want to consider this summer.

#1 – Remodeling Your Kitchen

A kitchen remodel is a big undertaking. Not only do you need to choose new appliances, fixtures, and even cabinetry, but you’ll also need to find ways to prepare food while construction is underway. Kitchen home renovations are for improving overall value, too. Summer is the absolute best time to start your kitchen remodel for one main reason – the weather. After all, you can’t entertain guests in a kitchen under construction, but you certainly can entertain them outdoors. It’s a great time to put some food on the grill and enjoy a meal al fresco.

#2 – Redoing Your Bathroom

When buyers look at homes, they pay the most attention to the kitchen, but the bathroom comes in a close second. If you have one or more bathrooms with outdated designs or fixtures, summer is a good time to get those renovations underway. Think about replacing fixtures, tiles, shower controls, vanities and sinks, and even wallpaper, if present. These things can completely change the way your bathroom looks and feels, which can add value to your home.

home renovations#3 – Adding Rooms or Extensions

If you’ve thought about adding an extension to your home in the past, the summer months afford the perfect opportunity. These home renovations are costly – up to $45,000 for a single bedroom, in fact – but they will pay off in the long run. The most common home addition is a bedroom, though it’s possible to add a bathroom, extended kitchen, or even a full upper level. Again, these additions can add significant value to your home by increasing the available living space.

#4 – Replacing Your Windows

If your windows are decades old, there’s a good chance they need to be replaced. In the last 20 years, technology has improved to the point that the windows you can buy today are far more efficient than the ones you bought only 10 years ago. Window tint, triple-paned glass, and even special gases trapped between the panes of glass can improve your home’s energy efficiency. Of course, new windows also make your home look better, which makes it more appealing to you – and to potential buyers should you choose to sell. This is one of the most important home renovations of them all.

#5 – Finishing Your Basement

If your home has an unfinished basement, this area represents underutilized living space. Most unfinished basements are used for laundry and storage, and they usually house major appliances like HVAC systems, water heaters, and even water filtration systems. Finishing your basement won’t always net you a massive return on your investment, so it may not improve the value of your home by more than what you spend. However, in the long run, the extra living space will make your home feel larger, and it may improve the rate at which it sells.

Home renovations like these can make your home feel more like a home, both to you and to potential buyers. Kitchens and bathrooms are very important, and replacement windows can reduce energy bills by quite a bit, too. Room additions and basement renovations aren’t quite as profitable, but they can make your home more attractive to buyers or give you more living space.

Why Summer Home Sales are So Slow in Denver

While there’s certainly no magical day of the year that guarantees your home will sell, there are a few climate-based factors that come into play. According to recent statistics, summer home sales in Denver plummet, and homes spend far more time on the market in July, August, and September than any other time of the year.

summer home salesWhat the Statistics Say

There’s plenty of data available to show sales rates throughout the year based on individual time zones. When it comes to Mountain time, summer home sales take a nosedive in August and don’t really pick up again until December. Some statistics taken from 2015 MLS data prove this. In the months of July and August, homes are 50% and 55% less likely to sell when compared to average, respectively. Hundreds of real estate agents in the Mountain time zone agreed that these months are the worst months to put a home on the market.

Why Do Summer Home Sales Drop?

Per the research, there are a few different factors that lead to plummeting summer home sales. These include the following:

  • High temperatures. In July and August, it’s not uncommon for temperatures to soar past 100 degrees. What’s more, the heat lingers throughout September, and sometimes even into early October. When it’s this hot outside, people are less interested in attending showings and open houses, and they aren’t interested in moving.
  • Prices are higher. If you really take the time to study the numbers, homes tend to sell for significantly less during the winter months. This is true for not only Denver, but also for the rest of the country. People tend to avoid summer home sales because holding out until winter can save them tens of thousands of dollars and lessen their monthly mortgage rates.
  • There are more homes on the market. Summer home sales also plummet in Denver because there are simply more homes from which buyers can choose. Most sellers will perform some exterior renovations before listing, and this requires warm temperatures and nice weather. These sellers will wait until the work is complete to list, and that’s why you’ll find very few homes on the market in the winter when compared to summer. Because buyers have a larger selection, homes tend to stay on the market far longer.

The Perfect Time to List Your Home

According to statistics gathered over several years by the MLS, the best time to list a home in the Denver, Colorado area is early May. This will allow you to get your home listed early – before many other sellers – and at the precise time when shoppers start looking for their new homes. It’ll ensure you receive plenty of offers before July and August to avoid the summer home sales drop, and it’ll also help you get more out of your home since homes tend to sell for far less in December through late March.

Summer home sales in Denver are certainly slow. The temperature, the number of listings, and even the average prices all play a role in this. By listing your Denver-area home in early May, you’ll find the perfect balance – you can sell your home more quickly, and for a better price.

Why You Need to Know the Neighborhood Before You Buy a Home

You’ve been searching for your perfect dream home, and you’ve found one that fits all your criteria. It has the right number of bedrooms in just the right sizes, the full bath you’ve always dreamed of, and even a finished basement. However, location really is important, and if you don’t know the neighborhood, you may end up regretting your decision. Here are five questions to ask yourself before you make an offer.

What’s the Crime Rate?

Just because a neighborhood might seem nice on the outside, this doesn’t mean that crime isn’t growing. After all, many once upscale neighborhoods across the country are now riddled with crime. Make use of online crime maps, contact the city’s police department, and ask some of the people in the area. Store clerks can even be very helpful in this regard as they spend several hours per day interacting with the locals.

know the neighborhoodHow Are the Schools?

Once you’ve determined the crime rate, the next big question comes down to the school systems. Some areas will allow you to choose from a number of different schools within a particular zone; other areas may require you to send your child to a particular elementary, middle, or high school based solely on your address. Learn more about the school system in your district, and if you aren’t pleased, find out about tuition for sending your child to another public school, or perhaps even a private school, instead.

Is There Public Transportation?

While public transportation may not be all that important to you right now, there may come a time when you depend on it to help you get around, even for a few days at a time. Find out whether you will have access to a bus, shuttle, train, or other public transportation system that can get you to your most important destinations. Work, shopping, and even doctors’ appointments should all be important considerations.

Are There Kids in the Area?

If you have kids, then you’ll likely want to live in an area where there are other families with kids, too. This makes it easier for friends to spend time with one another without having to depend on mom, dad, or another caregiver to drive them to and from. With a little research, you can find out if there are other families in the area who have kids the same ages as yours. It’s just part of getting to know the neighborhood.

What’s the Demographic?

Finally, while it’s not important to everyone, you can’t really get to know the neighborhood unless you understand the overall demographic. Will you be the wealthy family on the block, or will you feel like you’re struggling to keep up with those around you? Are most of the other families elderly couples, couples with young children, or even young singles? These things can help you better understand your area.
Getting to know the neighborhood is an important step in your homebuying journey. A home may seem perfect inside and out, but things like crime, schools, and even the demographic are also very influential. Do your research before you buy, and your new house will truly feel like a home.

Selling Homes Quickly: What to Do When Your Home Just Won’t Sell

You’ve finally put your home up on the market, and you’re excited for the offers to start rolling in. You’ve done a great job remodeling and staging, your home looks amazing, and your real estate agent is confident. However, weeks go by, and you’ve only gotten a handful of offers that aren’t really what you expected. What went wrong? Here are some tips for selling homes quickly, especially if they’ve been on the market a while.

Consider More Improvements

Selling homes quickly is simpler in some markets than in others. In fact, homes in one Denver neighborhood may sell in just a couple weeks while those in other neighborhoods sit on the market for months. If you find that your home just isn’t selling – or maybe you’re just getting lowball offers – consider making a few more simple improvements here and there. For example, a different color paint in the kitchen, different fixtures in the bathroom, and perhaps even more modern window treatments can make a world of difference. You may not need an all-out remodel, but a few slight improvements may go a very long way.

Cut the Price

If it’s been a few months since you put your home on the market and you continue to get low offers, you may need to cut your price. This is especially true if you have interested buyers who just can’t seem to get financed by a variety of different lenders. Consider your appraisal, tax assessment, and other factors, then look at the offers you’ve received. Try to come up with a lower price that’s fair to the buyer, but one that isn’t going to cause you to practically give your home away. A good real estate agent can help you adjust your asking price.

Consider Renting Temporarily

There are times when, no matter how nice your home might be, and no matter where it’s located, it might just take some time to sell. For this reason, many Denver-area homeowners have rented their homes temporarily while waiting for a buyer. This can be tough, especially if you’ll be showing the home while a renter is present. Market your rental to individuals or families who will only be in the area a short time, or to those who may be in a situation opposite yours – they’ve sold their own homes, but haven’t found the right one to purchase.

Focus on the Best Parts of “Defective” Homes

If your home is located in a difficult area – near an airport runway, downstream from a farm, etc. – it’s going to be a difficult home to sell. When it comes to selling homes quickly, it’s best to target people who may not mind these “defects”. For example, you may choose to bring a potential buyer’s attention to the soundproof windows, which can help dull the sound of passing aircraft. You might mention that your home has been sealed by professionals to block odors from nearby farms during the warmer months, as well.

Selling homes quickly isn’t about drastically cutting the price and limping away from the deal. Rather, it’s about focusing on the home’s best features, making improvements where necessary, and ensuring that you’re asking a fair price. If all else fails, you may consider renting while you wait for the perfect buyer to come along, too.