It should come as no surprise that buying a home in a good
school district is important to homebuyers. According to a report from Realtor.com,
86% of 18-34 year-olds and 84% of those aged 35-54 indicated that their home
search areas were defined by school district boundaries.
What is surprising, however, is that 78% of recent homebuyers
sacrificed features from their “must-have” lists
in order to find homes within their dream school districts.
The top feature sacrificed was a garage at 19%, followed closely
by a large backyard, an updated kitchen, the desired number of bedrooms, and an
outdoor living area. The full results are shown in the graph below.
Buyers are attracted to schools with high test scores,
accelerated academic programs, art and music programs, diversity, and before
and after-school programs.
With a limited number of homes available to buy in today’s real
estate market, competition is fierce for homes in good school districts.
Danielle Hale, Chief
Economist for Realtor.com, explained
“Most buyers understand that they may not be able to find a home
that covers every single item on their wish list, but our survey shows that
school districts are an area where many buyers aren’t willing to compromise.
For many buyers and not just buyers with children, ‘location,
location, location,’ means ‘schools, schools, schools.’” (emphasis
buyers across the country, the quality of their children’s (or future
children’s) education ranks highest on their must-have lists. Before you start
the search for your next home, let’s get together to discuss the market
conditions in our area.
The number of building permits issued for single-family homes is
the best indicator of how many newly built homes will rise over the next few
months. According to the latest
U.S. Census Bureau and U.S.
Department of Housing & Urban Development Residential Sales Report, the number of building permits issued in June was 850,000,
a 0.8% increase from May.
will this impact buyers?
More inventory means more options. Mark
Fleming, First American’s Chief Economist, explained that this is good news for the
housing market – especially for those looking to buy:
“The continued year-over-year growth in
completions means more homes on the market in the short-term, offering some
immediate relief in alleviating housing supply shortages.”
will this impact sellers?
More inventory means more competition. Today,
because of the tremendous lack of inventory, a seller can expect:
A great price on their home as buyers outbid each other for it.
A quick sale as buyers have such little inventory to choose
Fewer hassles as buyers don’t want to “rock the
boat” on the deal.
If you are
considering selling your house, you’ll want to beat this new competition to
market to ensure that you get the most attention on your listing and the best
price for your house.
Some are attempting to compare the current housing market to the market-leading up to the “boom and bust” that we experienced a decade ago. They look at price appreciation and conclude that we are on a similar trajectory, speeding toward another housing crisis.
However, there is a major difference between the two markets.
Last decade, while demand was being artificially created by extremely loose
lending standards, a tremendous amount of inventory was coming to the market to
satisfy that demand. Below is a graph of the inventory of homes available
for sale leading up to the 2008 crash.
A normal market should have approximately 6 months supply of
housing inventory. As we can see, that number jumped to over 11 months supply
leading up to the housing crisis. When questionable mortgage practices ceased,
and demand dried up, there was a glut of inventory on the market which caused
prices to drop as there was too much supply and not enough demand.
is radically different!
There are those who believe that low mortgage rates have created an artificial demand in the current market. They fear that if mortgage rates continue to rise, some of the current demand will dry up (which is a possibility).
However, if we look at supply again, we can see that the current supply of homes is well below the norm of 6 months.
not have a glut of inventory like we did back in 2008 and home values won’t
come tumbling down. Instead, if demand weakens, we will return to a normal
market (approximately a 6-month supply) with historic levels of appreciation
Over the next five years, home prices are expected to
appreciate, on average, by 3.6% per year and to grow by 18.2% cumulatively,
according to Pulsenomics’ most recent Home Price Expectation
what does this mean for homeowners and their equity position?
As an example, let’s assume a young couple purchased and closed
on a $250,000 home this January. If we only look at the projected increase in
the price of that home, how much equity will they earn over the next 5 years?
Since the experts predict that home prices will increase by 5.0%
in 2018, the young homeowners will have gained $12,500 in equity in just one
Over a five-year period, their equity will increase by over
$48,000! This figure does not even take into account their monthly
principal mortgage payments. In many cases, home equity is one of the largest
portions of a family’s overall net worth.
only is homeownership something to be proud of, but it also offers you and your
family the ability to build equity you can borrow against in the future. If you
are ready and willing to buy, find out if you are able to today!