Boomerang Buyers

It's estimated that 10% of the homes sold in 2013 will be to buyers who lost a home in the past five years.  Approximately 500,000 buyers who may have thought they wouldn't own a home anytime in the near future will be homeowners again.


It's estimated that several million of these previous homeowners will purchase again in the next eight years.  This kind of activity will contribute significantly to the housing recovery.

Some people thought that the housing crisis would cause a shift in values placed on owning a home but the boomerang buyers definitely don't support that theory.  Having a home of your own, where you can raise your family, share with your friends and feel safe and secure is still part of the American Dream.

The rising rents, increasing prices and low, low mortgage rates are also influencing buyers into the market.  In many cases, it is cheaper to own that to rent.

All new buyers, including those who have experienced foreclosures or bankruptcies, must have good credit history and the ability to repay the loan.  It just may not take as long to reestablish the credit as some would-be buyers might have thought.

Read more about Bidding Wars This Spring, Spring's Wild Card and Boomerang Buyers.

When to Sell the Temporary Rental

 Some homeowners, who were not able to sell during the recession, chose to rent their homes instead. In some cases, they didn't need to sell their home at the depressed prices and opted to rent it until the market recovered.

It's a valid strategy but there are time restrictions that could have serious tax implications for some homeowners.

The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale. This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available.

The sale of a home with a $200,000 gain that qualifies as a principal residence would result in no tax being paid by the owner. Comparably, a rental property with the same gain could have a $30,000 or higher tax liability depending on the length of ownership and tax brackets of the investor.

The housing market has dramatically improved in the last year. If you have a gain in a home that has been your principal residence and it has been rented less than three years, you might want to consider selling it while you qualify for the exclusion.

If you are considering a sale on your principal residence that has been rented, consult with your tax professional for advice on your specific situation. For additional information, see IRS Publication 523.

Low Inventories Indicate a Trend

Low inventory is a relative term depending on how you're comparing it. Would the comparison be to total number of homes on the market last year, homes in a certain price range or homes in a certain area? In some situations, it's a combination of all of those things.
In any given market, inventories will fluctuate based on area and price range. The National Association of REALTORS® considers a balanced market to be six months' supply of homes. If it takes longer than six months to sell, it is thought to be a buyer's market and less than six months, a seller's market. Most buyers and sellers probably feel inventory equilibrium is more like three month's supply of homes.
Inventory has a direct impact on price. During the housing bubble, demand decreased, supply ballooned to four million houses and prices dropped dramatically. Increased inventories due to foreclosures, bank' revised lending practices and builder's lack of new housing starts each contributed to the dramatically lower prices.
As the market has recovered, economic conditions have improved, banks have loosened their requirements, interest rates have remained low, foreclosures have slowed and gradually, the inventory has been reduced to approximately two million houses. When demand is constant but inventory is reduced, price tends to increase because the same number of people are trying to buy a smaller than normal number of homes.
Based on the low mortgage rates that have been inching up each week in 2013 and an improving consumer confidence level, most markets are experiencing some increase in demand. With inventory decreasing, buyers in the marketplace can see that prices are increasing.
Just as signs of spring can be seen to be just around the corner, it should be recognized what direction prices will be moving. Hindsight is 20/20 but we can't purchase or sell in the past. We need to make decisions today on what we think will happen in the future.
If you're curious to know what inventory conditions are for your specific market, send me an email with the price range and area and I'll send you a report. 3737500@gmail.com

Don’t wait for spring! 10 Reasons why selling your home in the winter, can be a better option, than waiting for a highly competitive spring.

1. There is only about a 5 to 10 percent difference between the actual number of homes sold during the months of Spring & Summer vs. Fall and Winter.

2. November, December and January buyers are typically more serious and highly motivated, think about it, who wants to drag around in cold wintery weather, unless they have too.

3. There are still a good percentage of buyers who do not have kids in school, so waiting for school to let out in summer is not a motivation.

4. Homes tend to show better and are warm and more inviting when decorated for the holidays.  Buyers will usually stay longer in a warm house as opposed to a cool house in summer months. Plus there is nothing like the smell of fresh baked cookies, pies and warm apple cider.

5. More employers tend to time job transfers around the holidays or winter months.

6. Real estate investors usually want to close contracts by year-end for tax purposes.

7. Lenders tend to be less busy during these months as opposed to the spring and summer months and can process loans faster.

8. There are usually less showings, which makes life a little easier for Sellers to schedule.

9. Traditionally many more homes will come up for sale in the spring and summer, than fall and winter, even in our current inventory saturated market.

10.  Current low interest rates are some of the best rates we have ever had, there is no guarantee that rates will stay where they are or rise before Spring/Summer. The rates we have right now make your home more affordable than ever to buyers.

It's Not A House Business...It's a People Business

We can throw all the technology,  emailing, texting and social media at our friends, relatives and potential clients all day long, but the business will always be about the people.

I am writing mainly about residential real estate. I was talking with another agent a few days ago about a transaction between two people, a buyer and a seller. She said everything is so wound up in emotion that the transaction was almost ready to implode. In an effort to keep the emotions to a minimum and prevent a lawsuit, she insisted on keeping future communications to email and would not accept phone calls from the other agent regarding the transaction...could this be a very good idea?

Can you remember, or should I say can you ever forget being stuck in some companies circle of "nonhuman hell" when you hear " Please listen to the complete message, because some of the options may have changed" canned script. When you press "1" you get transferred to another voice recording that gives you 6 or 7 more options to press. Or better yet you get the recording that tells you to speak or say your account number so we can better serve you when an actual live person answers the call. Can you ever forget waiting forever just to talk to someone.

When we pull ourselves away from "the people", how can things get better? Yes, sometimes it is not a pleasant conversation...sometimes we get yelled at for things we haven't been responsible for...Yes sometimes things get blown out of proportion. But, do you really think telling anyone to put it in an email will make them calm down? Do you really think the "Non Verbal Venue" that shows no voice inflection or empathy will make things better?

Sometimes, people need to vent and sometimes we just need to let them vent, because if we don't they will explode and that my friend is not a very good conversation. My experience has shown me that the more personally involved we can get in difficult situations, the better we serve the situation and the people that are still the most important part of the business. They will not remember your email or text, but they will remember YOU, being there when they needed you.

Don't get me wrong, email, texting and social media are important and can really help you communicate with others, but nothing replaces YOU. Face to face or voice to voice will more often than not save the transaction and more so save the relationship. The personal relaionship that will earn you more business over a lifetime than any current platform or future technology. It's not about the money...it's about the people!