Home Buying

Downsizing & Upgrading: Boomers Choosing Urban Life, Amenities

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As people mature, it is common place to “trade up” in various areas of life — from the car you drive to the home you own. It’s a natural progression as salaries increase and investments grow, but it’s a choice many boomers are twisting a bit. Instead of buying that bigger house in the suburbs or country, they are choosing the convenience and efficiency of city living.

In some cases, older owners are selling their suburban homes and buying smaller homes or condos; others choose to keep the equity and decide to rent. In both instances, luxury finishes and ample amenities are often sought — from 24-hour concierge services to on-site pet spas for their four-legged companions. And the potential impact of this trend is undeniable, with the number of people aged 70 and over expected to increase by 90% to 28 million over the next two decades (according to a 2016 report by the Harvard Joint Center for Housing Studies).

Chart: Growth of Over 65 Population

In many cases, boomers are moving closer to family, allowing them to help with grandchildren, but there are other benefits to an urban lifestyle, including:

  • More public transportation options — decreasing or completely replacing reliance on driving;

  • Walkability to stores, doctors and more — increasing daily activity;

  • Opportunities for socializing and cultural activities — improving quality of life;

  • Access to more age-specific resources (such a those offered by the DC Office of Aging);

  • and many more.

Moreover, numerous studies point to the fact that people in urban settings, on average, live longer. So, is urban living right for you (or your parents)? Like everything in real estate (and many other areas of life), the answer for everyone is different. And with a boom in new urban suburban developments (like the Mosaic District in Fairfax, VA and Pike & Rose in North Bethesda, Maryland) it doesn’t have to be downtown or dirt roads.

If you or someone you love is thinking ahead to retirement and where to make the most of their golden years, feel free to contact me (just click/tap the button below)!

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

Fall Market Update: What's In Store for Sellers & Buyers?

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If you’ve worked with a real estate agent to buy or sell a home, you know we are the first to let you know that we are many things but there are some things we are not — lawyers, accountants, tax advisors, inspectors, etc. You also can add psychic to that, meaning we cannot predict what your home will sell for in three years or what interest rates will rise to. That being said, we are in the field every day and are in a better position than most to spot signs of change in the market that could impact your strategy or decision making.

To that end, I wanted to share some statistics that provide food for thought and observations from my experiences and conversations with fellow Realtors® as we head into the fall market. Knowing when is the right time to buy or sell, while it certainly can be impacted by market dynamics, is really mostly about your personal situation. Have you outgrown your current home or are you moving out of the region? Do you have a new job and need a shorter commute? Is what you spend on rent more than what you would spend to buy a comparable or larger home? And those are just a few.

But back to some recent observations:

Housing inventory continues to be tight. When talking about the supply of housing, we look at the months of supply (i.e., if no other properties come on the market, how many months will it be until there are no homes left — assuming the same absorption rate as today). In August 2018 in Washington, DC, there was only 1.76 months of supply (Source: MRIS), which was actually up 9.5% versus last year. To put things in perspective, six months of supply is considered a balanced market. In Arlington, VA, that number increases to a whopping 1.87 (but that’s down nearly 17% from the same time last year). If we look toward Montgomery County, that number jumps to 2.96 in Bethesda but is the lowest of the four cities at 1.74 for Silver Spring. Of course, these numbers vary depending on the specific neighborhood and the housing type (see above) and size (e.g., for townhouses in DC, there is only 1.37 months of supply).

Interest rates are gradually rising. Interest rates have been slowly but surely increasing. In August 2018, the average commitment rate on 30-year fixed-rate mortgages was 4.55% (Source: Freddie Mac). In August 2017, that number was 3.88% with a 2017 average of 3.99%. By contrast, that annual average was as high as 8.05% in 2000. Overall, interest rates are still competitive (nowhere near the 18% rates seen in the fall of 1981) but locking in a rate now can save you meaningful money on your monthly payment and over the life of your mortgage (or until you refinance). It’s important to note that just because the Fed increases interest rates by 0.25%, for example, that doesn’t mean mortgage rates will go up a quarter point (however they usually trend in the same direction).

Average 30-Year Fixed Mortgage Rates (Source: Freddie Mac)

Average 30-Year Fixed Mortgage Rates (Source: Freddie Mac)

It’s still competitive out there…but not as much as before. It was only earlier this year that we were hearing stories of 15+ offers coming in on area properties. Of late, however, there are still many multiple offer situations and short offer deadlines but to lesser extremes. Many agents attribute this to buyer fatigue (yes, it’s wearing on you to make offer upon offer only to lose out…again). While a buyer last year that heard there was a deadline and multiple offers in hand may have put on their battle gear, some buyers now are talking themselves out of the running and not writing.

Pricing matters more than ever. Pricing is always the most important consideration when taking any property to market. Many sellers (and some agents) mistakenly think that because of the limited inventory and high demand, they can command large premiums. The truth is that while there will always be properties that set new records and buyers willing to waive appraisal contingencies, most buyers are closely examining the comps with their agent-advisor and nervous about overpaying (thinking there may be a growing housing bubble). An overpriced property can sit on the market for weeks or months longer than it should (and time is money, if you’re the seller).

So. what does this mean for you as a seller and/or buyer?

  1. If you need to sell your home, now is a great time to do so (provided you price and market it correctly). However, be prepared to possibly face challenges buying your next home if you are staying in the region and talk to your lender and agent as to timing and how to best set yourself up for success.

  2. If you’re ready to buy but not in a hurry, run the numbers. Having flexibility as to when you can or need to buy is a blessing and a curse. Having a little bit of urgency is helpful when making a decision but, with limited inventory, you can avoid being forced to make a less-than-ideal choice. As interest rates rise, your lender can help you model out the impact of future increases so you can take the extra cost into account when considering each property and the opportunity cost of waiting.

  3. Always be prepared. As a buyer, if you’re ready to move swiftly, you may come out ahead. With lighter competition, what it takes to go from offer to contract may be less than you think. Consider working with a lender that can underwrite your file prior to placing an offer and be ready to see properties as soon as they hit the market (or to explore off-market opportunities your agent may bring to you).

  4. Don’t decide what’s best for you by what others are doing and/or saying. This is true in life and real estate, isn’t it? I started off this post by reminding us that there are dozens of factors that can come into play when deciding whether to buy or sell. Information and analysis are key, so make sure you have a partner who will ask the tough questions (often more than once) and arm you with insights that will help you make the best decision for you.

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

What to Know When You Are Selling & Buying: Q&A with Greg Kingsbury

In the Washington, DC area, it's not uncommon for homeowners to climb the property ladder, gaining equity over time and upgrading to a home that better fits their longer-term needs (instead of buying that forever home from the start).

Kingsbury

Kingsbury

Some owners will hold onto their first property as an investment but many will want or need to sell it to move onto their next house. In a less competitive market, having a contingency around the sale of a home is not uncommon but, in this region, it can make getting your offer accepted more challenging. However, there are options...and we tapped into the expertise of local lender Greg Kingsbury, who leads the Kingsbury Mortgage Team at Caliber Home Loans, to answer some of the most common questions when looking to sell and buy in short order:
 
What is the #1 question or concern homeowners come to you with when they are looking to sell their current home and buy a new home?

Of course all situations are different so many prospective borrowers will have different questions based on their individual scenarios. If I had to narrow it down to a single question, it would be how to qualify for a home prior to selling their current home. Most of the time this is based upon wanting to declutter and make minor improvements to their home so it looks best and will command the most value on the sale.

The advice that seems to get thrown around the most is to just go get a bridge loan. I find that most clients are told to go get one, but don’t really know what a bridge loan actually it is.  Many think it is some kind of magical loan that just gives you your equity to allow you to buy something new. The truth I find is that most people won’t qualify for a bridge loan. When getting a bridge loan, you have to qualify carrying your current mortgage, the new mortgage and a payment on the bridge loan. There usually also are substantial costs to the bridge loan, generally in the form of a few points paid on the amount (in addition to closing and recording costs). The other common misconception is that you can get a bridge loan for all of your equity.  Most providers of bridge loans don’t want to exceed 80% of the value of the residence you are departing inclusive of any outstanding debt.  

So, what options are available to sellers who are looking to qualify for and finance their new home purchase? 

There are several options to consider when trying to qualify to move up and buy a new home. There is the bridge loa, but often times, as noted above, that doesn’t work or isn’t cost effective.

There is a lot of misinformation out there, so do yourself a favor and talk to someone that is local and, even better, someone that has been referred.
— Greg Kingbsury of Caliber Home Loans

The second option is doing a lower down payment with the intention of paying down that loan after closing with the proceeds of the sale after the departed residence sells. This is usually accomplished by a principal reduction followed by a loan recast. (A loan recast is when your loan servicer re-amortizes your loan after a large principal payment.) Usually the minimum required for a recast is $5,000. This allows you to get a lower payment without having to refinance your loan and allows you to keep your current interest rate. The recast just takes your new principal balance and adjusts the payments to still keep the original loan maturity date.

A third option is a combo loan. This is where you have a first and second mortgage with the intention of paying off the second mortgage after the sale of the departed residence leaving you with just the single first mortgage. 

Aside from working with a top-notch agent, what recommendations do you have for your clients who are looking to "move up"?

Do your homework upfront and budget accordingly. Make sure you get all the numbers and consider things on a worst-case scenario. You never know if the market is going to turn, and you have to hold onto a property longer than anticipated. Consider backup plans in the event you can’t sell. Find out what the rental market would command for your property. Would you be able to carry both payments if you had to hold onto it and rent? 

Are there any potential pitfalls when selling and buying as it relates to mortgages? If so, how can clients avoid or minimize the chance of these?

The only pitfall I can think of is not having everything reviewed up front to make sure you really qualify for what you are hoping to get into. You may have your credit pulled and someone take a quick look and think everything is ok but, if they aren’t asking questions about the total picture, you could all of a sudden not qualify. If the debt ratios are close and a bank is only looking at a credit report and not asking if there are additional items such as condo fees, taxes not included in the mortgage, child support/alimony, etc., it could look on paper like you’d fully qualify and once all the pieces are put together you end up not qualifying.

This can all be avoided by being upfront about everything and making sure that the lender you speak to has the full picture when they are reviewing your file. 

The DC area real estate market is competitive and buyers often need few or no contingencies to win with sellers. How do you work with a buyer’s agent to strengthen their offer?

We try to get as much information at the beginning to make sure that there are no concerns with their ability to get financing. If there is an option to waive contingencies, this definitely helps win offers. However, waiving contingencies can put borrowers in a difficult spot and prove to be very costly if something were to go wrong. But, with the right questions asked and the appropriate documents supplied and reviewed, these risks can be mitigated to protect the borrower while also allowing them to present the strongest offer possible. We’ve been able to help buyers with financing beat out all cash offers with these strategies. 

What is the best piece of advice you have have for prospective homebuyers today? 

Take some time to set up a call with a trusted loan officer before you go out looking at anything. You should be able to have a conversation about your individual situation and get a real understanding of your options. From there, ask for scenario sheets to show you perspective loan options.

There is a lot of misinformation out there, so do yourself a favor and talk to someone that is local and, even better, someone that has been referred. A random contact from the Internet has no vested interest if they steer you wrong or something goes wrong. They can just move on to the next online lead. A local person lives on the referral. They have a more vested interest to see you succeed as their livelihood depends on satisfying each customer to keep the referrals coming.

Thank you to Greg for sharing his experience and knowledge, and make sure to connect with the Kingsbury Team on Facebook and Twitter for more mortgage insights.

Fall Is the Perfect Time to Start Getting Ready for the Spring Market

As the leaves are just starting to turn, spring may seem ages away...but not when you are considering selling and/or buying a home.

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Whether you are a first-time buyer or a veteran property owner, now is the time to start making your to-do list so you can be prepared when April and May arrive and so you have a head start on the competition.

Below are a some key tasks and tips for both buyers and sellers to get you going, but please reach out if you'd like to discuss your needs in more depth. I am already holding appointments with spring clients, and I'd love to meet with you!

Selling Your Home

  1. Forget spring cleaning, fall is the time! We've all been there when moving day is around the corner and your plans to organize and purge are thrown out the window in favor of dumping a drawer at a time into a box labeled "stuff." Take advantage of the cooler days to sort through everything from books and clothes to those dusty bins under beds and in closets. If you have't used it in the past year, if you have multiples or if it doesn't fit, it's likely time to find it a new home. By paring down your belongings (including furniture), you'll be a step ahead when staging your home (where less is always more) and when it's time to ultimately pack and move.
     
  2. Make those fixes you've been putting off. When you live in a home, you tend to overlook little imperfections -- from a cracked tile or two to a window that sticks. However, it's the little things that often catch the eye of potential buyers and leads them to assume they could be an indicator of bigger problems. Walk through your home with a critical eye and identify the fixes, big and small, that need attention and then tackle one a week.
     
  3. Interview and select your REALTOR®. Most agents, including me, are already looking toward spring and filling their books with clients. Partnering with an agent now allows you to develop a rapport and prepare a detailed marketing plan to maximize the potential return on your sale. 
     
  4. Identify smart upgrades that can help your house stand out with buyers. If you've done #3, this is something your agent will happily do with you, walking your home and identifying updates that will likely yield a faster sale and higher sales price. Upgrades may be painting woodwork white, upgrading a kitchen counter or even replacing light switches that are yellowed and showing their age. Together you can prioritize based on level of effort/expense and potential return.
     
  5. Follow the market! While spring undoubtedly starts the busiest time of year in real estate, there are lots of dynamics at play that can affect a market, such as rising interest rates and changes to consumer confidence. Your real estate agent will be your guide, but you should be engaged as well...especially if you are planning to buy!

Buying Your Home

  1. Check your credit. If you don't do so regularly and have not done so recently, get your free credit report from all three bureaus and make sure all the information is accurate (if not, you have time to try to remove incorrect information). You also can look for ways you can improve your credit score, such as lowering or eliminating credit card balances. 
     
  2. Interview and select your REALTOR®. While there is usually less lead time in getting ready if you are just buying, having an agent take you through the current market dynamics and home buying process (especially if you are a first-time buyer or someone who hasn't bought in many years) is essential.
     
  3. Understand your buying power and define your budget. You may already have a lender but, if you don't, your real estate agent can recommend trusted lenders...and you always should shop around. While you may have used an online calculator or app to approximate what you would be approved for, an experienced lender can give you the best idea of your buying power and what to expect in the coming months. This means you'll go into the spring market with clear expectations of what's attainable and ready for pre-approval.
     
  4. Start to research and explore neighborhoods. While you might have a good idea of where you want to live, now is the time to expand your consideration set (for example, if your budget means your ideal location may not be in reach). Read hyperlocal blogs, like Petworth News or Brookland Bridge, grab drinks or dinner at new-to-you restaurants and talk to friends about their communities. In the end, your new home may be where you least expected!
     
  5. Mind your finances. Even if your credit is stellar and you have a healthy amount in the bank, pay close attention to your spending habits to avoid penny pinching and stress closer to when you buy (and after). Most everyone is aware that there are closing costs associated with purchasing a home, but also remember you may need to hire movers, buy new furniture and more.

To set up a time for your free listing or buyer consultation, contact me today

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

When Perfect Isn't Available or Affordable

Perfection. While we all realize it's in the eye of the beholder and can be overrated, when you are looking for your new home, it's where we start. 

When I am meeting with a buyer, a good portion of our initial discussion involves their must-haves, needs, wants and nice-to-haves. While there are many reasons to hire a real estate agent to help with your home search and purchase, having a partner and consultant to regularly remind you of your motivations and musts is one of the top reasons.

In the DC metro area right now, we still are experiencing limited inventory (aka available houses), which means it is even harder than normal for most to find their perfect home. Given this, it's easy to get discouraged, especially when you find "the one," make an offer and lose out to another. But...that doesn't mean you should lose hope; rather, you should open your eyes to other possibilities.

In the past few days, I've talked to two buyers who have chosen/are looking at two alternative paths that often are ignored:

1. Buy & Renovate with a 203(k) Loan: While most people want to offer, close and move in as swiftly as possible, you can gain the edge and equity if you consider buying a property that needs some work to make it livable, to your taste or both. In today's "need it now" culture, finding that hidden gem means we might be able to negotiate a better purchase price and you'll get exactly what you want in the end. With lots of 203(k) loan options that allow you to access the cash you need to renovate (everything from a kitchen remodel to full gut job), if you can muster some patience, you can land that perfect home. (Check out Lauren Bowling's experience for more insight.)

2. Explore New Construction: If you have even more patience, you might want to consider designing and building your new home. While the DC area is much more densely populated than other areas of the country, there is available land (or land that can be made available by razing a poorly maintained/unsalvageable structure. Most home builders offer a range of plans that can be customized in countless ways to help you get just what you want - from layout to finishes. And, while a builder may tell you otherwise, you should make sure you have buyer representation with your own agent before heading into a sales office. (Learn more about the process from The Balance.)

In either scenario, a REALTOR® can help you consider all the options and direct you to qualified professionals to help you create your own brand of perfect. So, would you consider a rehab or new construction?

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

5 Tips to Land Your Dream Home This Spring

Spring. The time of year when tulips, daffodils and cherry blossoms bloom (even if they are delayed)...and when homebuyers are ready to move! While market activity picks up across the country with the warming weather, it also means more competition - which can be a problem when there are inventory shortages.

U Street

U Street

According to Bright MLS, the Washington market has seen declines in year-over-year inventory for nine months (as of January 2017). This is great news for sellers, but it can lead to greater frustrations for buyers - especially first-time homebuyers who have not yet experienced the process. Of course, this doesn't mean you should throw your hands up in the air and stay put in a less-than-ideal home. Here are five tips to help put you in a better position to land your dream home in the DC area:

1. Enlist the help of a Realtor® now. Finding the perfect home is a stressful process for any buyer, so add a licensed real estate agent to your team. They'll shepherd you through the process, put your interests first and allow you to focus more on all the joys of homebuying and, eventually, homeownership. Even if you're not sure if now is the right time to buy, having an agent on your side can help you make that determination and be ready when your dream home hits the market.

2. Spring clean...your credit! If you haven't already, take a close look at your credit and take steps to bolster your credit score and increase your ability to get approved for a mortgage at the most favorable rates. This may mean reducing existing credit card debt and paying extra close attention to avoid late payments on any bills (more tips from MyFICO.com). 

3. Have your list of must-haves and nice-to-haves, but be open. Most of us have pictured our ideal home for years but they almost always are out of reach. The homebuying process is rooted in trade-offs but talk to your real estate agent about options you may not have considered, such as a fixer upper (and a 203k loan), alternate neighborhoods and properties with income potential (such as a basement unit you can rent out).

4. Be the early bird and catch the worm. In a market with low inventory, preparation and timing is key. In addition to being pre-qualified or pre-approved for a mortgage, take advantage of your Realtor®'s access to information not yet available through the many online real estate search portals. Agents - through relationships and their tools - often know about inventory three weeks or more before it hits the market (allowing you to see properties first and, if it's a fit, make an offer).

5. Choose an agent who knows your target neighborhood(s). DC and its neighborhoods are unique and diverse (part of what makes our region so great), so find an agent who knows (or, better yet, lives in) the neighborhoods you are honing in on. Google and public records can only tell you so much, so tap into the knowledge and expertise of your agent.

Here's wishing you luck on your homebuying journey this spring. If you are looking in DC area - and especially if you are interested in Petworth, Columbia Heights and Brightwood - I'd love to meet you and discuss your needs

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia.