865 Real Estate

East Tennessee Real Estate & Neighborhood Source

Are Homeowners Renovating to Sell or to Stay?

By

Over the past few years, two trends have emerged in the housing market:

  1. Home renovations have shot up
  2. Inventory of homes available for sale on the market has dropped

A ‘normal’ housing market is defined by having a 6-month supply of homes for sale. According to the latest Existing Home Sales Report from the National Association of Realtors, we are currently at a 4.4-month supply.

This low inventory environment has many current homeowners worried that they would be unable to find a home to buy if they were to list and sell their current houses, which is causing many homeowners to instead renovate their homes in an attempt to fit their needs.

According to Home Advisor, homeowners spent an average of $6,649 on home improvements over the last 12 months. If that number seems high, it also includes homeowners who recently bought fixer-uppers.

A new study from Zillow asked the question,

“Given a choice between spending a fixed amount of money on a down payment for a new home or fixing up their current home, what would you do?”

Seventy-six percent of those surveyed said that they would rather renovate their current homes than move. The results are broken down by generation below.

Are Homeowners Renovating to Sell or to Stay? | Simplifying The Market

More and more studies are coming out about the intention that many Americans have to ‘age in place’ (or retire in the area in which they live). Among retirees, 91% would prefer to renovate than spend their available funds on a down payment on a new home.

If their current house fits their needs as far as space and accessibility are concerned, then a renovation could make sense. But if renovations will end up changing the identity of the home and impacting resale value, then the renovations may end up costing them more in the long run.

With home prices increasing steadily for the last 6.5 years, homeowners have naturally gained equity that they may not even be aware of. Listing your house for sale in this low-competition environment could net you more money than your renovations otherwise would.

Bottom Line

If you are one of the many homeowners who is thinking about remodeling instead of selling, let’s get together to help you make the right decision for you based on the demand for your house in today’s market.

Why Has Housing Supply Increased as Sales Have Slowed Down?

By

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the inventory of homes for sale this year compared to last year has increased for the last four months, all while sales of existing homes have slowed compared to last year’s numbers.

For over three years leading up to this point, the exact opposite was true; Inventory dropped as sales soared.

NAR’s Chief Economist Lawrence Yun shed some light on what could be contributing to this shift,

“This is the lowest existing home sales level since November 2015. A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

Let’s take a deeper look:

Interest Rates

Since January, 30-year fixed mortgage interest rates have increased nearly a full percentage point (from 3.95% to 4.9%). Fannie Mae, Freddie Mac, the National Association of Realtors, and the Mortgage Bankers Association are all in agreement that rates will continue to increase to about 5.2% over the next 12 months.

“The rise in [mortgage] rates paired with this very strong price appreciation absolutely is slowing housing,” said Fannie Mae’s Chief Economist Doug Duncan.

Even though rates are higher than they’ve been in a decade, they still remain below the average for the 1970s, 80s, 90s, and 2000s!

Mismatch of Inventory

Elizabeth Mendenhall, President of NAR, said it best, “Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range.”

Prices of starter and trade-up homes have appreciated faster than their higher-priced counterparts. Over the last 5 years, the lowest-priced homes have appreciated by 47% while the highest-priced homes have appreciated by only 24%.

According to the Institute of Luxury Home Market’s Luxury Market Report, the $1M-and-up price range is now experiencing a buyer’s market. This means that supply (inventory) has finally caught up with demand and buyers are in the driver’s seat when it comes to negotiations. Additionally, many listings in this price range have experienced price cuts in order to entice buyers to put in offers.

Natural Disasters

Although not fully to blame for the national shortage in sales and inventory, natural disasters like Hurricane Florence, Hurricane Michael, and the wildfires on the West Coast have certainly had an impact.

Bottom Line

Additional inventory coming to market could help normalize the housing market and allow incomes to catch up to home prices. For more information about sales and inventory in our area, let’s get together so we can help you make the best decision for you and your family.

2 Myths Holding Back Knoxville Home Buyers

By

Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership: Down Payment, Credit, and Affordability,” which revealed that,

“Consumers often think they need to put more money down to purchase a home than is actually required. In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low–down payment programs.”

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the down payment funds needed to qualify for a home loan. According to the same report:

“Most potential homebuyers are largely unaware that there are low-down payment and no-down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.”  

These numbers do not differ much between non-owners and homeowners. For example, “30% of homeowners and 39% of renters believe that you need more than 20 percent for a down payment.”

While many believe that they need at least 20% down to buy their dream homes, they do not realize that there are programs available which allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with programs that have emerged allowing less cash out of pocket.

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

Similar to the down payment, many either don’t know or are misinformed about what FICO® score is necessary to qualify.

Many Americans believe a ‘good’ credit score is 780 or higher.

To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.

2 Myths Holding Back Home Buyers | Simplifying The Market

As you can see in the chart above, 51.7% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.

Custom Mountain View Home on 6.89 Acres in Hardin Valley

By

This is a RARE FIND indeed. Custom built home on 6.89 private acres in the heart of Hardin Valley. VIEWS FOR DAYS from your 12 foot deep wrap around porch and most rooms in the home! The open floor plan design opens the kitchen directly to the family room and dining area, accentuated with a wall of windows to take in the sprawling mountain views. Extra long granite island could easily seat 6. The custom build’s attention to detail is everywhere with elements like: 2×6 walls with spray foam insulation, poured concrete foundation, triple pane windows & geothermal heat which equals low utility bills! Main level owner’s suite. 2 bedrooms and large bonus room upstairs. Partially finished basement has a 4th bedroom and is plumbed for a bath. Extra large 2 car garage plus a storage building for your boat, tractor, or other toys. Only a 5 minute drive to zoned Hardin Valley schools and shopping. Contact Troy Stavros with Gables & Gates, REALTORS at 865-999-0925 for more details or to schedule your private showing.

2 Bedrooms on Main plus AMAZING PATIO in Hardin Valley

By

Immaculate, 4BR/3BA plus bonus home located at 3234 Beaver Glade Lane, Knoxville, TN 37931 in Hardin Valley’s Pellissippi Village. Mostly main level living with a vaulted master bedroom plus 2nd bedroom on main level. Open floor plan offers a beautiful kitchen with island featuring granite counters, stainless steel appliances (including gas stove, microwave, and dishwasher), pantry with custom glass door, upper and under cabinet lighting plus gorgeous cabinets. The kitchen opens into the dining area and large vaulted family room with fireplace. Just step out of the family room to an amazing oversized custom covered paver patio with stone accents, roll down screens, outdoor TV, and natural gas line for your grill. Upstairs you’ll find two additional bedrooms, the 3rd bath, and a bonus room. Painstakingly cared for with updates like river rock perimeter, irrigation system, and professional landscaping. Convenient to Hardin Valley Road shopping, Oak Ridge, and interstate access. For more information contact Troy Stavros with Gables & Gates, REALTORS at 865-999-0925.

Luxury Homesite For Sale in Prestigious VISTA Subdivision

By

REDUCED TO $150,000! Beautiful building lot located at 12368 Vista Brook Lane (LOT 9), Knoxville, TN 37934 in the prestigious VISTA subdivision in Farragut, Tennessee. Mountain views and suitable for a luxury home on a basement or crawl space. Come build your dream home. Surrounded by multi-million dollar homes. One of the last lots left in Vista. Priced below what the owner paid back in 2005. For more information contact Troy Stavros with Gables & Gates, REALTORS at 865-999-0925.