All posts by Dorothy Swearingen

Sapphire Buyers and Sellers Arrive with Differing Mindsets

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Right now, just a few days into spring, we are right at the start of Sapphire’s peak real estate selling season. I’ve always found it odd that you don’t hear much about it—but that also makes it the beginning of the buying season, too!

As a licensed Sapphire Realtor®, throughout the course of the year I am privileged to act as the agent for both buyers and sellers in many different transactions. The details I’m called upon to manage do vary somewhat depending on which side I am representing in any given sale—but there is one very significant goal that I regard as identical, no matter in which capacity I serve (more on that later).

There are some generalizations that usually hold true about the difference in mindset between prospective buyers and sellers. For one thing, sellers automatically have in-depth knowledge about their Sapphire property. Gained through the years, they know the community; they know the most reliable local tradespeople; they know the ins and outs of getting around town. Sellers have a degree of confidence that comes with experience: and when it come to the property at issue, they’re old hands!

Buyers, on the other hand, find themselves to some extent venturing into the unknown. Even if they are already Sapphire residents, the prospective neighborhood may be largely terra incognita. And for sure, they can’t be positive about the details of the property—what are its strong points, and (worrisome, this) its unknown vulnerabilities, if there are any. In short, buyers automatically come armed with less confidence.

Bringing more parity to the two sides is one of the key services that will lead to the result both want. Whether my own client happens to be on the seller side or buyer side, when the buyers gain confidence that they are as close as possible to the sellers’ encyclopedic knowledge of the property, the best result has the best chance of being met.

As a practical matter, that means digging in and working diligently to assemble and relate all possible information that can be gathered. It can also mean sometimes finding out where the buyers feel least confident, and laboring as needed to see that the gap is filled.

Before, I noted that there is one significant way in which my goal as representative for Sapphire’s buyers and sellers is always the same. It’s this: the best result is always achieved when both sides come away fully satisfied that their interests have been well served.

For the seller, importantly, that means that they’ve received fair compensation for their home. For the buyer, likewise—with the added element of emerging with the gut feeling that no matter what the future holds, they know that they have been leveled with. When buyers and sellers each have confidence that the sale has resulted in fair dealing, the positive feeling lasts.

Whether your next Sapphire real estate venture is buying or selling, I hope you’ll give my office a call!

Predicting Home Sales: More Quandary Than Certainty

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Even the least vigilant of Highlands’s market-watchers had their antennae out last week, the traditional time of month when real estate statistics are released from the most authoritative sources. National trends in home sales frequently provide clues to the direction the Highlands market is likely to take—and with the spring selling season already under way, this is the time of year when movements can be more volatile than usual.

Last week’s data was less exciting than has been the case in recent years—and what movement there was seemed to leave opinion-makers perplexed. The Associated Press writers put it this way:

“The housing market enters the traditional spring buying season facing a quandary.”

When you are interested in clues to how home sales are likely to fare, words like “quandary” don’t help. It was in fact glass-half-full/glass-half-empty kind of news. You could see what you wanted to see.

If you were a pessimistic type, your predisposition might have been bolstered by The New York Times Headline, “Existing Home Sales Drop More Than Expected.” There it was! Confirmation of a downturn in activity. Though you could have admitted that the trend might not extend to every corner of the country, the possibility that Highlands home sales might now head south couldn’t be denied. The New York Times said so!

On the other hand, if you were among Highlands’s more numerous optimistic observers, reading the same news left you thinking that the very same headline was actually slightly misleading. It was based on the National Association of Realtors® report that talked about home sales prices continuing to rise. The “home sales drop” was only (as the headline actually read) against what had been “expected.” Sales levels had been sizzling for months, so expectations had been high (not among the pessimists, certainly). But the numbers showed that existing home sales were actually 2.2% higher than a year earlier!

Reading the entire NAR report could explain why The New York Times emerged with a quandary. In it, readers learned that U.S. job growth “continues to hum along at a robust pace” which could explain why “overall demand for buying is still solid entering the busy spring season.” But then they learned that “anxiety about the health of the economy is holding back a segment of would-be buyers.” On one hand, there was the 48th consecutive month of “steadfast price growth;” on the other, “unshakably low supply levels.” The share of first time home buyers fell 30%; yet the share of first time home buyers “is up 29% from a year ago.”

The Times’ quandary was certainly understandable. But although not much light may have been shed on the prognosis for home sales in Highlands, a couple of factors could have been deduced. In the coming months, home sales certainly won’t “be affected by the large East Coast blizzard” that had impacted February numbers.

What is likely to affect sales is the continuation of tantalizingly low 30-year, conventional fixed-rate mortgage rates, “the lowest since April 2015.” If that kind of encouragement has you interested in checking out the current crop of great Highlands home offerings, I hope you’ll forego the quandary altogether—just give me a call!

Sapphire Home Loan Calculations Depend on DTI Diagnosis

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3-23-16-homeloanIt might sound shocking, but Sapphire’s homeowners—present and future—have DTIs!

Although the press has been largely silent, it’s important that the public be fully educated on the subject. But before anyone calls an emergency meeting to see what can be done…

The good news is that, despite how dire it may sound, having DTIs isn’t a health menace (even though it is true that Sapphire homeowners have both front-end and back-end DTIs). In fact, they’re not only not a problem, the truth is that without DTIs, it’s doubtful any of us could qualify for even the simplest Sapphire home loan.

You needn’t bother Googling “DTIs”—they are Debt-To-Income ratios. So everyone with debts and an income has them. They are quite useful when it comes to predicting the maximum home loan amount that can be handled comfortably. Knowing your DTI will clue you in on how much home you can easily afford. It will also tell the bank or other mortgage lender the same thing—once they verify from your credit history that you are an established bill-paying good citizen.

DTI computations are wonderfully simple. In fact, even without formally knowing how they are calculated, most Sapphire residents have a feel for what they measure—it comes with paying the bills every month.

The front-end ratio is easy to arrive at. By taking a home loan payment (all-in: principal, interest, taxes and insurance) and dividing it by the monthly before-tax income, you come up with a percentage. A $2,000 mortgage payment with an $8,000 income yields 2000/8000, or 20%. Most lenders would smile on that number; but a maximum of 28% is considered standard for the front-end ratio (although no debt ratio rule is carved in stone).

The back-end ratio is broader. It’s what’s usually meant when “DTI” is cited. Among the bills included are those for credit card and car loan payments, alimony and/or child support, student loans, personal installment loans and payments for co-signed loans (even if the co-signee is paying them). NOT included are other monthly expenses like utility bills, health insurance payments, cell phone and cable bills.

To finish calculating the back-end ratio, just take those debt payments, add them to the home loan payment, then divide that total by income: the resulting ratio comes out as a percentage. An income of $6,000 with debts of $2,500 would yield a DTI of 41.67%, which is within the federal “qualified mortgage rule.” Forty-three percent is the top number officially allowed.

So, a rule-of-thumb like “no more than 28% of debt should go toward servicing a home loan” actually just restates the front-end DTI guideline. Other factors—like credit history and liquid assets available for a down payment—go into the banks’ decision-making, but as soon as you familiarize yourself with your DTIs, you’re talking the lenders’ language!

Call me when it’s time to buy or sell, and we’ll soon be talking all of the dialects that make up Sapphire’s real estate language!

Highlands Real Estate Benefits from Events…and Non-Events!

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A couple of recent developments made the news recently that promised to impact Highlands’s real estate scene either now or in the future. The one that got most of the attention last Wednesday came from a familiar source: Federal Reserve Chair Janet Yellen. Her news conference’s less-than-stirring pronouncement (“Caution is appropriate”) made headlines nonetheless because of the accompanying action (actually, inaction): no increase in interest rates.

Highlands real estate watchers will remember that when the Fed increased their Fed Funds target rate by a quarter of a point last December, they nudged it upward from zero to .25%. It was the first move in nine years, and was accompanied by a statement that they anticipated making three or four similar small increases throughout 2016. Thus it was expected that another quarter of a percentage point would be announced by now, so the news marked a mildly surprising turn—one that will be welcome to anyone contemplating buying or selling real estate in Highlands. The continuation of a miniscule Fed Funds rate translates into significant savings for everyone, particularly when measured against the historical norm of 2%-5%.

Soooo: as for the first development, ring the bell: good news!

The other development had come earlier. It was one that might turn out to benefit real estate activity—but it could conceivably have the opposite effect. It, too, dealt with government and finance, this time in the realm of real estate taxation: a bill introduced in Congress. H.R. 4494, the Renters Fairness and Equality Act, would amend the IRS Code to give renters a federal tax break. It would put renters on a footing similar to that which allows Highlands homeowners to deduct mortgage interest and property taxes.

As in all things Washingtonian, the proposed details are complicated. The total amount of rent paid would become federally deductible, but only for some (tenants in very expensive areas wouldn’t qualify). The way such proposals become law, the final rules could differ—and in any case, there is faint likelihood of swift enactment. The legislation had been introduced by a lone Democrat, and was now sitting in the Republican-led House Committee on Ways and Means, where it was predicted to evoke continuous and profound inactivity.

But even if that turns out to be its fate, H.R. 4494’s introduction was an interesting development—an idea that might someday catch on. Around here, it raised the question about whether this would be good news for Highlands home values. The federal tax break is a major inducement prompting renters to buy, so a number of prospective buyers might go missing. On the other hand, many renters who have been priced out of the market because they’ve been unable to save for a down payment would get meaningful relief. Additionally, the prospects for Highlands investment real estate could benefit greatly if consumer demand for rental accommodations were to expand—as groups promoting affordable housing projected.

The promise that mortgage rates will continue to provide a welcoming backdrop for this spring’s selling season comes as unambiguously exhilarating news for Town’s real estate market. To investigate further, do give me a call!

Looking into Words That Go with “House for Sale” Advice

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You will find that most advice about preparing your Sapphire house for sale features a couple of indispensable terms: de-clutter, clean, and de-clutter. That’s not a typo: you can’t say ‘de-clutter’ often enough. It has to be emphasized that “clutter” doesn’t necessarily refer to shabby or threadbare items—it means literally everything that doesn’t advance the look and feel of a spacious, ready-to-move-into dwelling.

That’s why this specialized definition of “clutter” might include a good-looking leather ottoman that perfectly matches its recliner (but which leaves too little space for walking from the den into the kitchen) … or the wide-shaded authentic Tiffany standing lamp with the stunning dragonfly motif that doesn’t match anything else in the house…or the chest in the hall that holds all the winter stuff. Even if Sapphire’s winter hadn’t ended last Sunday, that chest and the winter gear ought to find a temporary home in a less obtrusive housing.

In other words, when you have a house for sale in Sapphire, clearing away non-essentials to emphasize spaciousness is a high priority—even if it might mean sacrificing some degree of livability. Yes, you DO have to continue to live in your house, so the de-cluttering has to be within reason. Likewise, the cleaning.

Now; about the cleaning.

There is cleaning—the kind we do all the time—but then there is also “deep cleaning.” Like “de-cluttering,” “deep cleaning” is a real estate watchword invoked by everyone writing about preparing a house for sale. The phrase would seem to be clear, but it needs to be pointed out that professionals usually do a better job of it than we civilians can. They simply see dirt that normal householders don’t (and also somehow manage to get rid of it a lot quicker than we can).

The finer points of deep cleaning include being in possession of an assortment cleaning tools and substances that aren’t found in every closet. But in addition to those, it takes a dirt detective’s eye to recognize the many areas that are easily overlooked:

Light bulbs. Trash cans. Drawer organizers. Bed skirts. Dishwasher and washing machine seals. Undersides of cushions. Ceiling fan blades (all right; you probably knew they were dusty, but keep putting off figuring out how to get the vacuum up a stepladder to do anything about it). Beneath the range, beneath the refrigerator, behind the toilet…etc.

You get the best results when your Sapphire house for sale is presented in a way that invites prospective buyers to easily envision living there. Open spaces that are uncluttered and clean invite them to do just that. I’m here, too, to help with ideas and suggestions that will have proved to make the entire process as easy as possible. Why not give me a call?

Do Highlands House Hunters Prefer New Homes? Yes…and No…

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Several different surveys confirm that if you ask American consumers which they prefer, close to twice as many say they would choose to move into a brand new home rather than an existing one. But—and there are several important ‘buts’—when it comes to today’s typical Highlands house hunter, that answer can be a little misleading.

For one thing, house hunters who don’t even check out Highlands’s pre-owned house listings are few and far between. In actuality, when someone begins to think seriously about buying their next home, it’s highly unlikely they will be able to resist taking at least a cursory look at the Highlands listings. The previously-owned homes that are now for sale aren’t just easy to find—they’re manifestly hovering a single click away on every computer and mobile device. Given the current state of intelligent search engines—which seem to be watching us more closely than we are watching them—at the first inkling that we could be interested in finding a home, alluring Highlands listing pictures start popping up onscreen all by themselves!

That makes a difference because even if the majority of buyers might lean toward buying a new home with brand new construction, as soon as they start seeing the variety of existing homes, most people find at least some that are interesting. And previously owned residences certainly do have some intrinsic advantages, with their established communities, tree-lined older neighborhoods, and frequently, more interesting architectural detail. It’s also true that many new homes in Highlands tend to be built on smaller lots than the older ones—which touches on another central issue: the matter of cost.

Forbes claims that the acknowledged rule of thumb is that brand new homes often cost “up to 20% more than a similar existing home”—that is, one with the same number of rooms, square footage, acreage, etc. That having been said, there are the undeniable advantages that go with Highlands’s new homes. They meet today’s construction standards and design preferences, often with walk-in closets, open floor plans, and expansive master baths. Who wouldn’t favor a new kitchen outfitted with energy-saving built-in appliances, sparkling new bathrooms, brand new flooring and carpeting?

For many, a new home that holds the promise of no visits from the repairman for at least a few years makes for a low-stress situation that’s worth the budget premium. And even that tradeoff can prove less costly than it might seem, given the prospect of reduced maintenance outlays for a number of years.

Like so many other aspects of buying a home, the choice between one acquired from a previous owner or a new home winds up being strictly a matter of personal preference—and it’s also a fact that those can change in surprising ways once you get out and explore today’s offerings in person. Best way to get started: call me!

Springtime in Sapphire Can Prompt Home Décor Decisions

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There is something about spring that gets everybody at least thinking about fixing up the house, and it’s that time of year again. Throughout the length and breadth of Sapphire, home décor decisions are being pondered. Ambitious landscaping and fix-up plans are being laid, budgets drawn, and troops assembled (the troops will be armed with paint brushes and rollers, hedge clippers and rakes).

Perhaps it’s the weather; perhaps the angle of the sun—or maybe even last Sunday’s clock-adjusting exercise—for whatever the reason, this time of year is when we look around the house and decide changes will be made!!

It’s also the time of year when occasional disagreements between Sapphire’s husbands and wives have been known to crop up. The Home Improvement section of the realtor® web site just ran a feature titled “When Couples Disagree About Home Décor,” which promised to tell who the winner is in such arguments. It pointed out that women have different priorities than men (women: “leather makes those embarrassing noises each time you sit or stand” vs. men: “but you’re going to freak out each time someone sits on [the linen cushions] with a drink”). The woman who wrote the article says that she won the argument—but admits that now she freaks out every time someone sits on her sofa with a drink (it’s already freckled with water marks). So maybe the man won in the long run…

If your home décor efforts are getting special attention this season because you plan to add your home to the Sapphire listings, “what’s hot” might suddenly be more of a consideration. But a different home décor impasse can come about when the fashion zeitgeist points in one direction while your personal taste pulls in another. Even worse, you may find that the fashion world is arguing amongst themselves!

The Realty Skinny says, for instance, that gray is about to overtake white in popularity (simultaneously also “pushing out the beige era”). That’s not a problem for The Washington Post, which agrees that “gray makes all your possessions pop out” (except, I have to believe, the gray ones). On the other hand, the Pantone Color Institute, which practically wrote the book on color, couldn’t disagree more. They think that pinkish Rose Quartz (“warm, embracing”) and faintly bluish Serenity (“calm-inducing”) are what’s happening right now. In fact, it/they are its Color[/s] of the Year. That is because “the pairing…brings a feeling of calm and relaxation into the home environment.” That would be welcome—especially when you’re freaked out about the water marks on the sofa.

You don’t have to be selling your home for home décor tweaks and garden renewal to occupy your thoughts, but if you do, I hope you will give me a call. My free, no-obligation consultation will let you in on the latest Sapphire market information. I think you’ll agree that knowing exactly what’s happening has a definite serenity-producing effect!

Highlands Observers See Rise in U.S. House Flipping Activity

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When you think about it, it was to be expected: the pace of house flipping activity in communities all over the country almost had to quicken. The market made it all but inevitable—in places where prices are on the rise while inventories remain tight, the conditions are right.

A “house flip” in Highlands is what you call any Highlands house that’s sold within a year of being purchased. House flipping happens when something unforeseen occurs that prompts a buyer to change residences more quickly than anticipated, or (much more often) when the purchase is made in the first place because the buyer sees an opportunity to make a profit.

House flipping became all the rage for a while during the housing bubble of the mid-2000s, hitting a peak in 2005. Half a dozen TV series were launched that popularized the adventures of itinerant flippers, tracing their footsteps as they acquired, fixed up, then sold properties for enticingly large premiums. The best of them depicted not simply the money to be made, but also the hard work (and occasional disappointment) that accompanied the house flipping phenomenon.

Then came the bursting of the ‘bubble’ and the consequential drop in enthusiasm for house flipping. RealtyTrac, the authority on U.S. housing data, also keeps tabs on the flipping statistics. This month they reported a new trend in action: an increase in the share of homes and condos flipped in 2015: 179,778, which is more than 1 in 20, and “the first annual increase in the share of homes flipped following four consecutive years of decreases.”

That total means that the total number of investors who completed at least one flip in 2015 was at the highest level since 2007. According to RealtyTrac, the homes flipped last year yielded a national average gross profit of $55,000: “the highest for flips nationally since 2005.” Moreover, they found that the return on investment was more than 45% (up from 35% in 2005).

For us locally, the question is what that might signify for Highlands real estate. On the one hand, there are those observers who tend to take the view that whenever house flipping takes off in earnest, it indicates that a real estate market is becoming overheated—that prices are rising too quickly. That is definitely something Highlands could do without. But a slightly more convincing reading was put forward earlier this month by commentator Diana Olick on CNBC. She found that, unlike many of the earlier house flipping participants, “data indicate that flippers in 2015 continued to operate within relatively conservative margins.” That means that they typically bought homes that were not wildly underpriced, then sold them at price points close to their estimated market values. They were also not usually buying with the perilously small financial cushions that typified earlier flippers. That had also been a hallmark in the mid-2000s, when the ready availability of cheap credit encouraged the practice. That’s no longer the case.

All in all, it seems as if the national house flipping trend is not at all reminiscent of previous overheated (and over-hyped) conditions. Instead, Highlands’s real estate market looks to be more welcoming to anyone who recognizes the sustained value of the house they are looking to buy or sell. I take a great deal of pride in helping them make it happen!

Comparing Mortgage Offers Rewards Sapphire Home Buyers

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For Sapphire home shoppers who anticipate taking advantage of today’s low mortgage interest rates, the Consumer Financial Protection Bureau has a few words of interest. The CFPB thinks it has found a way for consumers to get the best home loan deals.

The way they recommend is to shop around.

Now, it may seem as if everybody in Sapphire would know that without needing the Consumer Financial Protection Bureau to clue them in, but the CFPB has evidence to the contrary. The last time they looked, nearly half of mortgage borrowers hadn’t shopped around before they signed up for their loan (47% of them, to be precise). That is rather surprising, since even an eighth of a percentage point difference in the interest rate works out to a lot more than spare change. Why more home buyers don’t compare mortgage deals may be due to a number of factors.

For one thing, anyone who has spent much time on the internet has had the unfortunate experience of being promised that they can “see today’s rate” with no strings attached, only to eventually discover (after entering a lot more information than seems relevant) that they will be contacted (phone number, please) by what is likely to be a high pressure salesman. You get the feeling that you may have shared too much information to web denizens you don’t really know.

Another reason might be concern about qualifying. If you’ve had credit rejections in the past, the good news that comes with receiving any offer might make some folks accept it out of sheer relief.

Yet another reason might be especially true in today’s Sapphire market. Especially if you have earlier familiarity with the much higher rates from previous eras, the first mortgage rate you hear may be so low that you are delighted to accept it. There is also the fact that if you are offered several options with different loan types, terms, and point-rate tradeoffs, the act of choosing between them can satisfy the natural inclination to shop around.

The CFPB would like to encourage more aggressive consumerist behavior. To accomplish that—to make everyone “feel comfortable shopping in the mortgage market”—their web site has various educational tools. Their staff produced a number of charts. The one that shows interest rates from 1990 to 2014 slopes delightfully downward. Less informative is another chart that shows how borrowers who feel “confidence in their knowledge of available interest rates” are almost twice as likely to shop around as those who say they are “unfamiliar with available interest rates.” That doesn’t seem to be much of a revelation—it’s like saying that learning to read price tags increases your ability to comparison shop…

For those who do expend the effort to do mortgage comparisons, there is also agreement that having a professional in your corner leads to the most satisfactory results. It’s another good reason why, on the way to acquiring your Sapphire dream home, giving me a call is an excellent idea!

Highlands Housing Market Shares Some Welcome Trends

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This spring’s Highlands housing market continues to reflect most of the trends that have held sway across much of the nation. There is good news, not-so-good news, and (happy to report) no really bad news at all. In fact, it’s the absence of threatening factors that makes our housing market a welcoming one for those looking to buy or sell in Highlands this spring or summer. Here’s the brief run-down:

Prices: look as if they will continue to trend higher, but more slowly than they have for the past couple of years. The consensus of expert opinion calls national average residential prices to climb 4%+, which is about 1%-2% more slowly than in 2015. Of course, every Highlands property (and neighborhood, for that matter) fares slightly differently, so those generalities are only helpful in the context of the actual Highlands “comps” (the comparables).

Rents: where Highlands rentals sustain the kind of vacancy rates that are being seen just about everywhere in the U.S., rates have nowhere to go but up. Property managers are reporting that they’ve raised rents in 88% of localities, which has had a push-pull effect on housing markets. On one hand, every increase nudges renters to more seriously consider the not-so-abstract monetary advantage home ownership produces. When owning is actually cheaper than renting in monthly cash flow terms (not even counting the long-term investment aspect), every month’s rent check is a new spur to investigate that option. That’s the push. The pull is that those expensive rental dollars spent make it that much harder to save for even a nominal down payment.

Mortgages. No news here: mortgage interest rates just don’t seem to want to rise—no matter how certain the financial experts are that they have to do so. Actual recent history has chastened those forecasts, though, so at this point, most Highlands borrowers probably expect that rates will stay below the 5% mark throughout 2016. Still, with many quotes for last week’s 30-year fixed hovering in the high 3%s, the incentive to take advantage of today’s rates remains a strong point.

Inventories. With few exceptions, the reason why all those incentives to buy have not created an explosion of real estate activity is the shortage of homes on the market—the inventories. That is an additional incentive for Highlands owners to list, since it means limited competition channels more potential buyers to their own property.

As the spring selling season gets going in earnest, we’ll see if Highlands’s housing market behaves the same way the broader national real estate trends indicate. For an immediate micro-update, just give me a call anytime!