4 Rock-Solid Reasons to Remodel Your Home in 2018

iStock; realtor.com

As 2018 dawns, there’s no question the real estate market is, well, a little crazy. Home values are surging, money is relatively cheap, and inventory is tighter than tight.

That’s all downright welcome news for owners who’ve been considering remodeling.

“Remodeling remains a very attractive option to increase your home’s value,” says Javier Vivas, director of economic research for realtor.com®. And that can be a smart move whether you’re prepping your place for sale, or giving it a refresh for the long haul.

“The big variable here is location,” says Vivas. “If you’re happy with your neighborhood and your place has some value, there’s an advantage over trying to move—because there may not be somewhere else for you to move to in your price range, or you may have to make a bigger cost jump than you would if you were simply remodeling.”

Still wondering whether to grab a sledgehammer and get swinging? Here’s the thing: The longer you wait, the more expensive renovating or remodeling gets. If you’ve been on the fence, this may be the year to get off it. Better yet, rebuild it! Here’s why you should get moving now.

1. You (likely) have more cash

Consumer confidence is high, unemployment is low, and incomes are growing—which means you likely have more money in your pocket. Plus, if you’re a homeowner, chances are good that your home equity has increased along with skyrocketing home prices over the past few years.

So when it comes to spending cash on all those get-to-it-later home projects, you’re probably in good standing.

In fact, the remodeling market is expected to grow 7% this year, saysRobert Dietz, chief economist with the National Association of Home Builders.

“This market should be sustained by the fact that homeowners are remaining in their homes longer,” Dietz says.

2. Interest rates for building loans are low

Interest rates for home equity lines of credit—which offer a flexible way of obtaining funds to pay for things such as home improvements—are still historically low. And even though interest paid on HELOCs is no longer deductible under the new tax reform legislation, experts say the building loans remain a good deal.

“Interest rates are still quite friendly but will likely go up this year—and lenders are competing for loan business,” says Tom Miller, president of the National Association of the Remodeling Industry, who also owns a remodeling company in the Pacific Northwest.

Simply put: Take advantage of those low rates now before more increases hit.

3. It could be cheaper than buying a new home

If you live in a high-cost metro area and already have a foothold in the real estate market, remodeling your existing place could be cheaper than buying a new one. Maybe a lot cheaper (unless, of course, you were planning on downsizing).

There are a lot of factors to consider, however: How much equity you have in your place, what your current mortgage rate is, and whether major renovations are even feasible. But experts agree that, in many cases, the current seller’s market makes renovating a more palatable option than buying.

“We think remodeling will be a major trend in 2018, because we’ve seen prices grow so much that a lot of potential buyers are being priced out of their own markets,” Vivas says. “And that’s where you see a turn toward giving up on trading up and buying again and considering other options like renovating.”

This is especially true in expensive markets such as New York and California. Plus, these high-cost areas are expected to feel the heaviest burden of the tax reform provisions that limit mortgage interest deductions and eliminate the deduction for state and local property taxes.

“Some of the tax benefits linked with purchasing will be sidelined or diluted,” Dietz says.

4. Costs will go up the longer you wait

The construction industry is facing a major shortage of skilled laborers and rising materials costs, and there’s little indication this trend will reverse anytime in the future. This higher demand translates into higher pay scales for available, qualified workers—and those costs ultimately get passed along to you, the consumer. The situation is expected to get worse over time.

“Labor costs will continue to escalate as remodelers pay up to get and keep construction trades on the jobs,” says Fred Ulreich, chief executive officer of the NARI.

Furthermore, the multibillion-dollar cleanups of Hurricanes Harvey and Irma drove materials prices even higher—and the effects are expected to last into 2018. The NARI predicts materials costs will rise about 5% this year, especially for supplies such as lumber, drywall, and concrete.

What’s more? Labor shortages will not be resolved overnight, Miller says. For the would-be remodeler, that means your costs will likely go up the longer you wait.

“There are no signs that remodeling demand or costs will taper off over the next several years, but will continue to rise,” Miller says. “Holding off on a project—if you can find a reputable remodeler available now— will only cost you more next year.”

 

Posted by Holly Amaya on realtor.com

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The Impact Staging Your Home Has on Sales Price [INFOGRAPHIC]

Some Highlights:

  • The National Association of Realtors surveyed their members & released the findings of their Annual Profile of Home Staging.
  • 50% of staged homes saw a 1-10% increase in dollar value offers from buyers.
  • 77% of buyer’s agents said staging made it easier for buyers to visualize the home as their own.
  • The top rooms to stage in order to attract more buyers are the living room, master bedroom, kitchen, and dining room.

 

Posted by The KCM Crew

712,000 Homes in the US Regained Equity in the Past 12 Months!

CoreLogic’s latest Equity Report revealed that “over the past 12 months, 712,000 borrowers moved into positive equity.” This is great news, as the share of homeowners with negative equity (those who owe more than their home is worth), has dropped more than 20% since the peak in Q4 of 2009 (26%) to 4.9% today.

The report also revealed:

  • The average homeowner gained approximately $14,900 in equity during the past year.
  • Compared to Q3 2016, negative equity decreased 22% from 3.2 million homes, or 6.3% of all mortgaged properties.
  • U.S. homeowners with mortgages (roughly 63% of all homeownershave seen their equity increase by a total of $870.6 billion since Q3 2016, an increase of 11.8%, year-over-year.

The map below shows the percentage of homes by state with a mortgage and positive equity. (The states in gray have insufficient data to report.)

Significant Equity Is on The Rise

Frank Nothaft, Chief Economist at CoreLogic, believes this is great news for the “housing market.” He went on to say:

“Homeowner equity increased by almost $871 billion over the last 12 months, the largest increase in more than three years. This increase is primarily a reflection of rising home prices, which drives up home values, leading to an increase in home equity positions and supporting consumer spending.”

Of the 95.1% of homeowners with positive equity in the U.S., 82.9% have significant equity (defined as more than 20%). This means that more than three out of four homeowners with a mortgage could use the equity in their current home to purchase a new home now.

The map below shows the percentage of homes by state with a mortgage and significant equity.

Bottom Line

If you are one of the many homeowners who are unsure of how much equity you have in your home and are curious about your ability to move, let’s meet up to evaluate your situation.

 

Posted by The KCM Crew

Do you know how much your home is worth? Click HERE to find out!

Top 4 Home Renovations for Maximum ROI [INFOGRAPHIC]

Some Highlights:

  • Whether you are selling your home, just purchased your first home, or are a homeowner planning to stay put for a while, there is value in knowing which home improvement projects will net you the most “Return On Investment” (ROI).
  • While big projects like adding a bathroom or a complete remodel of a kitchen are popular ways to increase a home’s value, something as simple as updating landscaping and curb appeal can have a quick impact on a home’s value.

 

Posted by The KCM Crew

Wondering how much your home is worth? Click HERE to find out!

Low Inventory Causes Home Prices to Maintain Fast Growth

The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price Report last week. The report revealed that severely lacking inventory across the country drained sales growth and kept home prices rising at a steady clip in nearly all metro areas. Home prices rose 5.3% over the last quarter across all metros.

Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

“Unfortunately, the pace of new listings were unable to replace what was quickly sold. Home shoppers had little to choose from, and many had to outbid others in order to close on a home. The end result was a slowdown in sales from earlier in the year, steadfast price growth and weakening affordability conditions.”

What this means to sellers

Rising prices are a homeowner’s best friend. As reported by the Washington Post in a recent article post:

“The rise in median sales prices has made current homeowners much more willing to sell their home, and that willingness is one of the main drivers behind the inventory that does make it on to the market. While it hasn’t been enough to meet demand, it has made the situation much better, compared with even three or four years ago.”

What this means to buyers

In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year or next year. However, as Construction Dive reported, the amount of cash needed to purchase that home will also increase.

“These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.”

Bottom Line 

If you’re thinking of selling and moving down, waiting might make sense. If you are a first-time buyer or a seller thinking of moving up, waiting probably doesn’t make sense.

 

Posted by The KCM Crew

The #1 Reason to List Your House, NOW!

The National Association of Realtors (NAR) released the results of their latest Existing Home Sales Reportwhich revealed that sales rose 0.7% month-over-month, but remain 1.5% lower than they were a year ago. Some may look at these numbers and think that now is not a good time to sell their house, but in fact, the opposite is true.

The national slowdown in sales is directly tied to a lack of inventory available for the buyers who are out in the market looking for their dream homes! The inventory of homes for sale has fallen year-over-year for the last 28 months and has had an upward impact on home prices.

NAR’s Chief Economist Lawrence Yun had this to say,

“Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country.

Realtors® this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings – especially at the lower end of the market – and fast-rising prices that are straining the budgets of prospective buyers.” (emphasis added)

The houses that are on the market are selling fast, too! According to NAR’s Realtors Confidence Index, the median number of days it took for a house to go from listed to under contract over the past three months was 34.

Bottom Line

If you are one of the many homeowners who is debating listing your house for sale this year, the time is now! Let’s get together to discuss the specifics of our market!

Posted by The KCM Crew

How Do I Find a Home Sale Price in My Neighborhood?

 

If you’ve seen some “for sale” signs in your neighborhood slapped with “sold” banners, you may wonder just how much money your own house is worth. Perhaps you’ve been considering selling, or could be convinced to sell if the price was right. But how do you know at which price they were sold?

For starters, you can go to realtor.com®, select the “Just Sold” tab and plug in your ZIP code. A list of homes that recently sold will pop up, along with the prices for which they sold. That’s a start, but it doesn’t give you the big picture you need to know exactly what your home might be worth. That’s where your real estate agent comes in.

“Agents can discuss pricing of other sales or pending sales in our area with other agents to help you estimate home values,” says Michele Lerner, author of “HomebuyingTough Times, First Time, Any Time.” “A [real estate agent] can also provide you with a free comparable market analysis to help you decide if you want to sell your home. And while it’s a great idea to find out about recent home sales in your community, you also should recognize your home may not sell for a similar price.”

Lerner says there are a variety of factors that may make your home sell for a significantly different price than those surrounding it. For example, your home could be in better or worse condition than other homes recently sold, or there may be other factors that influence desirability, such as lot location or even the direction rooms in the house face.

In general, the real estate market changes rapidly, and timing is a large factor in a sale price. Many of the factors of the larger market are out of your hands—mortgage rates, the local economy, the national economy, consumer confidence and the availability of homes for sale all influence a final price.

Rick Snow, a Realtor® with Exit West Realty in El Paso, TX, says when determining comp prices, you have to compare apples to apples.

“I try to find properties within 150 square feet either side of the subject property with similar features,” Snow says. “The number of bedrooms doesn’t really matter because they are all figured into the square footage, but baths, 1/2, 3/4 or full give more value. For example a three-bedroom, two-bath home that is 1,800 square feet would come out the same as a four-bedroom, two-bath home that’s 1,800 square feet, but a three-bedroom, 2 1/2 bath would be worth more.”

Will home improvements help?

If you look through the listings and feel like your house isn’t up to snuff, you may think about remodeling. Before you do, though, you should determine if the cost of remodeling will be worth the amount a renovation will add to your property.  For example, if you remodel your bathroom, it will cost you anywhere from $10,000 to $30,000, and you’ll gain back an average of 66% of the money you spent. Beyond that, however, will the shiny new bathroom be the tipping point for a buyer to select your home over another? You can’t know for sure.

Snow says home improvements can be challenging.

“Homeowners often believe they can recapture money that is spent on improvements dollar for dollar, and that just isn’t the case. Many improvements add marketability but not additional value. Even projects that add value typically don’t bring back a dollar-for-dollar return on investment. The other ‘drawback’ to improvements is personal taste. The things you like and are willing to spend money on to make your home more pleasing to you, I might not like. Then when I am looking at the house, in my mind I’m thinking how much it will cost me to get rid of this or that. Many buyers then base their offer on value minus what it’s going to cost me to make it the way I want it.”

If you are going to make some improvements with the hopes of increasing your home’s value, just be careful not to do too much remodeling.

“Be sure to consider the potential negative consequences of ‘over-improving’ your home for the neighborhood,” Lerner says. “It could be harder to sell your home in the future if it’s much larger or more expensive than the surrounding homes.”

Bottom line: The price houses are going for in your neighborhood definitely provide some insight into how much you might be able to get for yours. Just remember, that there are a lot of factors that go into how much people will pay for a house, and digging deeper will help you get the best picture of what yours may be worth.

Posted by Julie Ryan Evans on realtor.com

Click HERE to find out how much your home is worth!