Homebuyers starting to return to the market

Thanks to record low mortgage rates and declining home prices, 55 million families-or half of all U.S. households-can afford today's $200,000 median-priced new home, according to figures released by the National Association of Home Builders (NAHB).

Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance. The number of households that can afford to purchase a home today is 55.4 million, compared with 38.4 million two years ago, according to figures compiled by NAHB.

Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market. Single-family permits were up 11 percent in February, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down.

Birmingham Magazine- April 2009

By Mary Ellen Stancill

With all the national news of ups and downs in U.S. housing markets, we bet you’ve wondered: What’s really happening right here, in our own Birmingham area housing market these days? Whether you’re looking to buy, sell or just want to know what your home is worth, we have answers for you. Three area Realtors® give their expert insight into our markets and offer tips for buying and selling a home this spring.

Selling a home
In 2009, you probably won’t see buyers in bidding wars over your house and a $100,000 profit in two years’ time is just not in the cards, but “People are out there looking,” says LAH Realtor® Susan Billingsley. “Every market is different and the Birmingham market has really held its own.”

When thinking about selling your home, evaluate the price, condition and location of your home—in that order. “Price is the biggest consideration when putting your home on the market,” says LAH Realtor® Blair Moss, “and how you price it from the beginning is important.” With more houses on the market, your house should be priced to sell. “A lot of people want to price [their home] high, just to see what happens, and then it doesn’t sell and sits on the market, and everybody wonders what’s wrong with that property … You want to have the best-priced house on the street and the best value on the street,” Moss says.

To improve the condition of your home, good old fashioned elbow grease and spending a little money (in order to make more money) are in order. While the location of your house can’t change, Moss and Billingsley offer tips for getting your home in tip-top, selling condition. You might have to spend a little time and a few hundred dollars to get your house ready for buyers, but it could mean the difference in making $5,000 to $10,000 more on your home.

• Neutralize your house so other people can visualize their own furniture in the space.
• Paint tired rooms. This is the cheapest, easiest way to make a home look crisp and clean. Use neutral paint. You might like your home to look like a crayon box but most others do not.
• Get a pre-inspection to identify unforeseen issues and reduce the surprises. This allows you to have problems fixed before a potential buyer ever sets foot in the door.
• Service your HVAC unit and keep good records. Know the age of your heater, air conditioner and other appliances.
• Reduce clutter. Buy storage bins for toiletries or laundry room items. Clean out the refrigerator and even move large pieces of furniture to a storage unit to make rooms feel larger, if necessary.
• Make your bed everyday. You never know when a potential buyer will stop by.
• If you have pets, do your best to conceal that you have them. Clean their beds and litter boxes regularly.
• Conceal odors from pets or cooking. The house should smell fresh, not stale. Use scented candles or even place dryer sheets in closets or other hidden places throughout the house. Pour Pine Sol down the sinks and toilets for a cleaner smell.
• Clean gutters, cut grass, trim bushes and keep flower beds neat. Plant flowers in planters and window boxes. Remember, curb appeal and that first impression are of the utmost importance.
• Hire a professional cleaning service to deep clean your home or do it yourself. Remember, potential buyers will look inside drawers, closets and even appliances.
• Get a home warranty during the listing period. That way, if something breaks it’s covered and the warranty can be transferred to the purchaser.

Buying a home
Over the last couple of years, the Birmingham market has shifted from a seller’s market to a buyer’s market. “The interest rate is at an all-time low and the market seems to have leveled out,” says RealtySouth Realtor® Ann Kirkwood. “Furthermore, we may have available the best selection of great homes for sale that we have seen in this area at one time.” There has been a drop in average sales price ($198,367 in 2006, $194,858 in 2007 and $179,771 in 2008) and an increase in inventory with homes staying on the market for longer periods of time. All signs indicate that this is a great time to buy a home.

But before you set out, Kirkwood gives these tips to buyers:

• Meet with a lender and get a preapproval letter before you even begin to look. Many lenders have become more stringent with lending, so credit that would have worked a year ago may no longer be accepted.
• Get a copy of your credit report and make sure there is nothing unexpected or incorrect on the report.
• Find a good agent who can give wise counsel and provide all the data on the home you are considering.
• Do a market analysis on the neighborhood to find out the length of time a house has been on the market, the last price paid for the property, etc. These facts will contribute to the determination of a reasonable offer.
• With good credit scores and good debt to income ratios, you should be able to find around a 5 percent interest rate—an all-time low.
• Do not expect to buy a home for less than its market value. “We are not seeing appreciation of past years, but we are not seeing depreciation on most homes either,” Kirkwood says. “Though there is a lower rate of appreciation, most home values are about the same as they were last year or the year before.”