This week’s Highlights:
- Some notable 2020 real estate data
- Things to consider when you’re a first time home buyer
- David’s secret pro tip for home buyers
Official 2020 real estate reports
It was a rip snorting awesome year in real estate over the course of 2020! According to The National Real Estate Association, it was the best year for existing home sales since 2006. The data they released only counts homes that were sold with help of their organization, so keep in mind there were likely far more homes sold overall.
Some fast facts for 2020:
- There were 5.64 mil homes sold, which is 5.6% more than in 2019
- $310,000 was the median home sale price
- There were 23% fewer homes listed in December
- Available homes only took 1.9 months to sell
For reference, the general guideline for the average time homes are listed is as follows:
- Seller’s market: < 3-month supply
- Balanced market: 3 to 6-month supply
- Buyer’s market: > 6-month supply
Based on our experience, if it’s a seller’s market and it takes someone more than about 4 months to sell a home, there’s probably something wrong with the way it’s listed. It’s likely priced too high or needs some updating before it’s ready to sell.
Learn how to get the best rate for you with Accunet Mortgage and our team of refinance experts—click here to get started.
Census Bureau report
You hear from the Census Bureau every ten years, but did you know that they also keep track of monthly home sales? Once a month they release national home sale data, and 2020 led to some interesting perspectives, most notably: the fact that new home builds are stagnant right now.
What gives? Well, in order for someone to build a new home, we need the “Four Ls”:
The peak of new construction happened in 2006, and slowly dropped since then. Over the past 5 years specifically, we’ve seen a 75% decrease in new home construction. That’s huge! As the population grows, one very important thing happens: there’s simply not as much land to build new homes on.
A decrease in land creates a shortage of supply, and an increase in population creates a bigger demand. The median asking price for a new build in 2020 was $450,000. It’s safe to say that that’s way out of a first-time home buyer’s budget, and there are a lot of first time buyers out there right now. In the southeast Wisconsin area, only 3 new home builds were available for under $300,000.
Top 5 Home Sale Municipalities in SE Wisconsin:
- West Allis
Learn more about the rules of refinance with Accunet’s refi rules of thumb.
First time home buyers: Real Client Experience
We had a client who was a first time home buyer. He had excellent credit and had saved up a decent amount for a down payment on his first home. He had done his research and came to us thinking he knew exactly what he wanted: 3% down with an FHA loan.
Our expert opinion? Not the best option for him.
If you have good credit, you do not want an FHA mortgage loan. These have more costly, upfront mortgage premiums, government mortgage insurance, which is equal to 0.85% EXTRA interest. Not to mention sellers really don’t love FHA loans because FHA inspectors are extra picky, so sellers will be stuck with more updates than they would with a different offer.
Lenders are vetting you for how well you can make the monthly payments more so than the overall loan amount. The more money you provide upfront, the lower your monthly payment will be, and your odds of getting approved will increase.
Should you use the listing agent to buy a home?
NOPE. You absolutely should not. The number one priority for listing agents is to get the highest price possible. The seller is their client, not the buyer. The higher the price they can squeeze out of you, the more successful they will have done their job. It’s in your best interest as a home buyer to get your own agent to help with the sale.
While we’re not real estate agents, we are connected to some talented folks and will be happy to make recommendations for you!
David’s secret tip for first-time buyers
One thing that’s important to note is the fact that this client did a lot of research beforehand. That was definitely clear! However, with the increase in popularity of real estate television shows, a lot of people think it’s easier to buy a home than it sometimes can be. The best course of action for you is going to be different depending on the situation.
David’s advice: Know that there’s a lot going on in the real estate world that you don’t know. The best thing you can do when you’re buying your first (or any!) home is to hire trusted professionals that can crunch the numbers and hidden fees for you so you don’t end up blindsided.
Buying a new home? Start here so you know what to expect from the process!