Archive for the ‘Real Estate Market’ Category
According to a recent survey conducted in March of 2014 by The National Association of Realtors®, “vacation home sales have risen strongly, while investment purchases have declined below the elevated levels seen from the previous two years.” Our own analysis of the Grand Strand residential market shows a surge in residential sales as shown here.
“More than eight out of 10 second-home buyers, both for vacation and investment homes, said it was a good time to buy.” The National Association of Realtor’s 2014 Investment and Vacation Home Buyers Survey, covering existing-and new-home transactions in 2013, shows vacation-home sales jumped 29.7 percent to an estimated 717,000 last year from 553,000 in 2012. Investment-home sales fell 8.5 percent to an estimated 1.10 million in 2013 from 1.21 million in 2012. Owner-occupied purchases rose 13.1 percent to 3.70 million last year from 3.27 million in 2012. The sales estimates are based on responses from households and exclude institutional investment activity.
The National Association of Realtors Chief Economist, Lawrence Yun expected an improvement in the vacation home market. Yun said “Growth in the equity markets has greatly benefited high net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,” he said. “However, vacation-home sales are still about one-third below the peak activity seen in 2006.”
Vacation-home sales accounted for 13 percent of all transactions last year, their highest market share since 2006, while the portion of investment sales fell to 20 percent in 2013 from 24 percent in 2012.
Yun said the pullback in investment activity is understandable. “Investment buyers slowed their purchasing in 2013 because prices were rising quickly along with a declining availability of discounted foreclosures over the course of the year,” he said.
“In 2011 and 2012, investment property was a no-brainer because home prices had sharply over corrected during the downturn in many areas, creating great bargains that could be quickly turned into profitable rentals. With a return to more normal market conditions, investors now have to evaluate their purchases more carefully and do their homework,” Yun added.
The median investment-home price was $130,000 in 2013, up 13.0 percent from $115,000 in 2012, while the median vacation-home price was $168,700, up 12.5 percent from $150,000 in 2012.
All-cash purchases remained fairly common in the investment- and vacation-home market: 46 percent of investment buyers paid cash in 2013, as did 38 percent of vacation-home buyers.
Of buyers who financed their purchase with a mortgage, large down payments continued to be the norm in 2013. The median down payment for investment buyers was 26 percent, while vacation-home buyers typically put 30 percent down.
“87 percent want to use the property for vacations or as a family retreat, 31 percent plan to use it as a primary residence in the future, 28 percent wanted to diversify their investments or saw a good investment opportunity, 23 percent plan to rent to others and 22 percent intend it for use by a family member, friend or relative.”Forty-seven percent of investment homes purchased in 2013 were distressed homes, as were 42 percent of vacation homes.
Lifestyle factors remain the primary motivation for vacation-home buyers, while rental income is the main factor in investment purchases.
The typical vacation-home buyer was 43 years old, had a median household income of $85,600 and purchased a property that was a median distance of 180 miles from his or her primary residence; 46 percent of vacation homes were within 100 miles and 34 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 6 years, down from 10 years in 2012.
Five percent of vacation-home buyers had already resold their property, while another 9 percent plan to sell within a year. “This reflects the 28 percent of recreational property buyers who said they purchased to diversify investments or saw a good investment opportunity,” Yun said.
Buyers listed many reasons for purchasing a vacation home: 87 percent want to use the property for vacations or as a family retreat, 31 percent plan to use it as a primary residence in the future, 28 percent wanted to diversify their investments or saw a good investment opportunity, 23 percent plan to rent to others and 22 percent intend it for use by a family member, friend or relative.
Forty-one percent of vacation homes purchased last year were in the South, 28 percent in the West, 18 percent in the Northeast and 14 percent in the Midwest.
Investment-home buyers in 2013 had a median age of 42, earned $111,400 and bought a home that was relatively close to their primary residence – a median distance of 20 miles.
Fifty percent of investment buyers said they purchased for rental income, 34 percent wanted to diversify their investments or saw a good investment opportunity, and 22 percent bought for a family member, friend or relative to use – often to house a son or daughter while attending college.
Seven percent of homes purchased by investment buyers last year have already been resold, and another 10 percent are planned to be sold within a year. Overall, investment buyers plan to hold the property for a median of 5 years, down from 8 years in 2012.
Thirty-eight percent of investment properties purchased last year were in the South, 25 percent in the West, 18 percent in the Northeast and 19 percent in the Midwest.
More than eight out of 10 second-home buyers, both for vacation and investment homes, said it was a good time to buy.
NAR’s 2014 Investment and Vacation Home Buyers Survey, conducted in March 2014, includes answers about 2,203 homes purchased during 2013 from a representative panel of 2,008 U.S. households. The survey controlled for age and income, based on information from the larger 2013 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.
If you would like to take advantage of great mortgage rates and ample inventory in the Myrtle Beach area, contact us and we will be glad to help you realize your opportunities for vacation and investment properties in Myrtle Beach and the Grand Strand area.
The material provided is for informational and educational purposes only and should not be construed as legal, investment and/or real estate advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
The window of opportunity for purchasing a new home or condo in the Myrtle Beach and Grand Strand area is prime. Inventory and sales are steadily rising. If you are considering purchasing in the Grand Strand area there are several things to consider. Following are five considerations a professional real estate agent will help you in evaluating in making the right purchase offer:
1. Understand your financing options and then get your loan conditionally approved.
You must include the type of financing you are securing to the seller in your offer. If the loan to finance your purchase is a VA or FHA loan, you will need to recognize the additional financial and performance obligations this places on the seller because of “non-allowable fees.” These are typical loan fees that are charged by lenders and title companies. They are called “non-allowable” because you as the buyer are “not allowed” to pay them. The result is that the seller must pay them instead of you. Since these are fees they would not have to pay with conventional financing, the type of financing must be included in the offer.
To assist your real estate agent in presenting the best offer on your behalf, you should ask your loan officer to provide you with the amount and itemized list of the lender’s non-allowable fees so that this can be considered when making your offer. If you are already working with a professional real estate agent they should also have an idea of what non-allowable fees will be changed to ensure a good offer is presented.
2. Know the difference and the value of real estate appraisals and property inspections
FHA and VA loans require more stringent guidelines with regards to the appraisal and home inspections. In addition to determining the estimated market value of the property, the appraiser is required to perform certain minimum inspections. These are not as detailed as a professional home inspection, nor are they a substitute.
The value of working with a professional real estate agent is the knowledge that agent brings to helping you have a heads up as much as possible to probable repairs that could be required by the appraiser. A good rule of thumb that an appraiser uses to determine necessary repairs: is it safe, is it sound, and is it sanitary. If it fails that criteria, there will likely be required repairs prior to closing and funding of your loan. This means there is some artful negotiation between the agents representing both buyer and seller as well as a good idea of what possible repairs and cost could arise so that this is handled in your offer.
3. Understand what the seller can contribute to your closing costs (refer to #1)
If you are using conventional financing, the amount of your down payment will determine the amount of contributions you can have the seller contribute to your closing costs and prepaids (hazard insurance and interest for the month). This typically ranges from three (3%) percent to six (6%) percent of the sales price. Your loan officer should be able to provide this to you. If you do ask for the seller to contribute this amount, you will want to be sure you consider this in the seller’s bottom line.
4. Be aware of the proposed closing date and what it means to the seller and your bottom line
Your real estate agent will likely have a good idea of what the seller is looking for in regards to the closing date so that this does not become an obstacle to the closing. If the seller has an FHA or VA loan they definitely will want to close and fund by the end of a month to avoid being charged a full month of interest by their lender. This should be considered in the offer presented to the seller.
5. Help your real estate agent negotiate effectively — Remember loan approval wins over pre-approved
If two identical offers are presented to a seller and one offer shows the buyer approved and the other shows pre-approved, the approved buyer wins. It is a great advantage to provide your real estate agent with an approval letter from your lender. The approval letter should only be conditioned based on an acceptable appraisal, verification of funds to close, verification of employment, and clear and acceptable title of the property.
Your agent will be able to walk you through each step of the home-buying process and discuss what choices you are comfortable making. If you are in the market to purchase a new home, today’s market environment in Myrtle Beach is very promising and offers many opportunities. We would be glad to help you.
The Grand Strand Condo Outlook
The inventory for Grand Strand condos is showing an upward trend as illustrated on the above chart. This is typical for the season but the buzz on the street amongst area real estate professionals is one of continued optimism. Many agents are experiencing multiple offers with properties selling within a couple of weeks.
The majority of condo inventory in the Grand Strand is in the $100,000 or less price range, with 1,237 condos and townhomes on the market, and the $100,001 to $200,000 price range, where there are 1,685 on the market, as of April 4, 2014. Additional price range inventories include 542 in the $200,001 to $300,000 price range, 259 in the $300,001 to $400,000 price range, 100 in the $400,001 to $500,000 range, 65 in the $500,001 to $600,000 price range, 49 in the $600,001 to $700,000 price range, 23 in the $700,001 to $800,000 price range. There are 42 condos/townhomes are on the market that are $800,001 and up.
Condo sales, though a slow start for the year, are beginning to match the results of the last few years as illustrated in the above chart. February sales activity was off by approximately 13 percent while March was just below the figures over the last two years. The decline in February was attributed to a slightly harsher winter than normal, the attrition of distressed condos, and lower sales prices on non-distressed condominiums.
The financial markets are being watched closely. The Unemployment Rate ticked up to 6.7 percent from 6.6 percent, while the more important Labor Force Participation Rate rose to 63.2 percent from 63 percent. Though this is good news to the increase, it is still within the range of 35-year lows. The Labor Force Participation Rate measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a market that is considered in a recovery.
Also closely watched is the Feds purchases of Treasuries and Mortgage Bonds (the type of bonds of which home loan rates are based). Currently the Feds are purchasing $30 billion in treasuries and $25 billion in mortgage bonds. This is quite a bit lower from the $85 billion per month that the Feds had been purchasing. Obviously these decisions by the Feds will impact our economy and home loan rates as we move ahead this year. The question is how much? We will keep you posted here as we closely watch.
The journey of buying a new home starts long before your physical search begins, and it is just as critical. Finances play a key role in your home search, so understanding what your credit score is and where you stand financially is critical, before you even step foot in that condo or residential home.
If you’re looking to boost your credit score or correct errors to your credit report, following are some ways that will improve your score and get you ready to purchase that dream home or condo.
1. Check your credit report. The first step is to get and review your credit reports. Check over your entire reports and look for any mistakes and errors that need to be corrected. There are several ways you can get a copy of your credit report, and under the FACT act you are entitled to a free report from each of the three nationwide credit reporting agencies each year: Equifax, Experian, and TransUnion.
You can take advantage of this free credit report at annualcreditreport.com.
You can also discuss with your real estate agent a qualified lender who they would recommend for getting a credit report with scores related to obtaining a mortgage. This would be the best plan if you are ready to begin purchasing soon. If you are purchasing in the Grand Strand area contact us or call us at (877) 671-5024 and we will be glad to help you connect with some reputable lending sources.
Once you have obtained your free credit reports following are some useful links:
- Reviewing your credit report and reporting incorrect information or problems
- What to look for
- What is a credit report?
- What is a credit score?
- Can I get my credit score for free too?
- How do I get and keep a good credit score?
2. Pay above the minimum on credit cards. When possible, pay more than the minimum payment that is due each month. Above-the-minimum payments are a great sign to anyone reviewing your credit before a big purchase. Even if it’s only a small amount above the minimum, it is a good practice if you’re carrying a balance on a card.
3. Maintain a low balance. A major component of your credit score is the amount of revolving credit you have available versus the total balance you are carrying. It’s best to avoid carrying a balance over 50% of your card’s limit. The optimum is 10 percent of the credit line. Even better is to consider paying off and reducing the number of cards you use. Instead of using several cards and carrying small balances on all of them, it is better to pay off the small balances and choose one or two cards that you use for everything. One thing to note, if you pay cards off, don’t close the account prior to your home purchase.
4. Pay on time. One of the best things you can do to keep your credit score where it should be is to simply make your payments on time, month after month. Late payments not only hurt your credit score but can impact the type of loan you may qualify for.
5. Avoid big purchases. Any big purchase, like a car, boat, or expensive vacation can put a dent in your credit and alter your financial picture. These dents are sudden changes that lenders don’t like to see right before a major home purchase.
6. Leave old debt on your report, especially if it’s good debt. After you have successfully paid off a car or home, it’s a good idea to leave it on your report. Showing a long history of responsible debt is good for your credit and good for your credit score. It shows that you have handled your debt and obligations well in the past and is a good indicator of future repayment of debt.
7. Check your credit report on at least an annual basis. The best way to stay on top of your credit is to order a copy of your report at least once a year, and get any errors corrected or removed as soon as they show up.
If you are currently in the market to purchase a condo or single-family home, we would be glad to help you. You can still take advantage of great rates and excellent properties that are on the market. Feel free to call us at (877) 671-5024.
Whether you’re buying a primary residence in Myrtle Beach or buying a vacation home in the Grand Strand area, there are a few, often overlooked tax breaks for homeowners that could help you save some money when filing your taxes.
A tax code of over 73,000 pages means that sometimes people miss the good stuff, the items that could save them money. A few of these missed tax breaks are related to real estate, and we’ve listed a few below. Be sure to bring them up to your tax preparer for professional advice to see which of these may work for your specific circumstances.
1. Mortgage Interest
The home mortgage interest tax break is a major motivation behind many people purchasing a home. This is an obvious deduction, but even so, it is sometimes overlooked by homeowners. In most cases, you would need to itemize your taxes to take advantage of this deduction. Itemizing your tax deductions can be extra work, but it can be well worth the effort if you can save some tax dollars. Following are a few tools that may be of value to you regarding your home mortgage interest tax deductions:
- Mortgage Tax Deduction Calculator
- Deducting Mortgage Interest FAQs
- IRS: Home Mortgage Interest
- The Tax Benefits of Home Ownership
- Six Important Tax Tips for Homeowners
2. Property Taxes
You can deduct your state and local property taxes as long as they are based on assessed value. If you have an escrow account from which your property taxes are paid, you can claim this deduction once taxes are paid out of the escrow account. Following are a few tools that may assist you:
- Myrtle Beach Property Tax Calculator
- Horry County Tax Assessor’s Site – This site has plenty of information from property tax exemption information, change of address, property tax appeal form, questions and answers, and contact information.
- Georgetown County Tax Assessor’s Site – This site contains a lot of information such as how to appealing property values, change of address, and questions and answers area.
3. CODI Income
The Cancellation of Debt Income, or CODI, is the route through which defaulted mortgage debt from foreclosure, short sale, or settlement, is forgiven through a partial payment, which is actually charged as income. However, thanks to a 2007 act named the Mortgage Debt Forgiveness Act, the IRS temporarily exempted CODI from incurring tax income liability for many home buyers in order to avoid penalizing them for these settlements and resolutions to upside-down home mortgages.
The Mortgage Debt Forgiveness Act expired on December 31, 2013, and while it might be extended into this year, there’s opportunity to claim this if you are one of the many home owners to whom this applies for 2013. If this is you, there is a chance that you might be eligible to claim this when you file your 2013 return by the April deadline.
4. Going Green
The wave of green initiatives across multiple industries over the last few years make this an obvious selection. If you added some energy efficient items to your home last year, such as solar panels, dual-paned windows, added insulation, or low-flow plumbing appliances, these can be eligible for state, county, and perhaps city tax credits or tax breaks. If you made any of these improvements over the last year, it’s time to pull out your receipts and determine if you might be eligible for green tax breaks. Following are a few resources that may assist you:
- Database of State Incentives for Renewables & Efficiency
- Going Green – Myrtle Beach Area Chamber of Commerce
- Solar Estimate – a resource for energy incentives, solar rebates and tax credits
With mortgage rates still low and Myrtle Beach home prices on the rise, now is the time to buy that new home or condo in the Grand Strand. To get started feel free to call us at (877) 671-5024.