Why the Price of ‘Home Bargains’ Seems to be Expanding
You can rightly say that Rehoboth Beach, DE home bargains are still out there—but not without an asterisk. For local house-hunters who’ve been warned about a shortage of homes for sale, that should come as welcome news—but that does neglect to mention that the meaning of ‘bargain’ has stretched appreciably.
No matter how elastic your definition, Rehoboth Beach, DE “bargain” homes in today’s market are certain to cost significantly more than they would have a couple of years ago (or even just last year). Yet— especially compared with historical norms—landing a home at today’s prices may actually turn out to fit the “bargain” definition—that is, ‘a good deal.’ The evidence is borne out by an indisputable measure: the dollars being laid down in the marketplace. If attractive deals weren’t being struck, the U.S. housing market would be experiencing a downturn. Instead, as The Wall Street Journal characterized it last week, today’s market is ‘red-hot.”
Wednesday’s Journal confirmed the latest results: “record-high home prices happening across nearly all markets, big and small.” Even though that’s not the kind of marketplace you’d expect to entice bargain-hunters, the activity is indisputable: by the end of last year, home sales had exceeded the highest levels since 2006. “Red-hot” was no exaggeration—and the figures have extended through this year’s first quarter.
What accounts for such a high level of buyer enthusiasm? Certainly, one major factor is the continuation of rock-bottom mortgage rates. For many, they create bottom lines with readily doable monthly home loan payments. Another factor serves to persuade even more conservative buyers: the confidence consumers have in the sustainability represented by sale prices at today’s levels. Since lenders are maintaining tighter standards, borrowers are more qualified. Per the Journal, that causes economists to believe a mid-2000s-style housing market crash to be less likely.
The surrounding economic environment may also contribute to the relative attractiveness of Rehoboth Beach, DE home offerings. If inflation is on the horizon, many believe real estate represents a solid investment. With Fannie Mae forecasting median existing-home prices to rise 11.5% in 2021, there’s an added incentive to act sooner rather than later—to take advantage of what may turn out to have been a true bargain. In the meantime, I’m standing by to offer expert help and guidance in meeting your own Rehoboth Beach, DE real estate objectives!
- Written by Jimmie Bachand
A “Greatest Hits” List: Top Rehoboth Beach, DE Home Loan Scams
They never fail to surface once real estate activity shifts into high gear: the Rehoboth Beach, DE home loan scam operators. They seem perpetually ready to pounce on unwary would-be home buyers—notably those who are unfamiliar with the standard procedures employed by established mortgage lenders in the normal course of preparing a legitimate Rehoboth Beach, DE home loan or refinancing package.
Falling prey to an unscrupulous mortgage scam can result in anything from inadvertently divulging personal information all the way to significant monetary losses—including home title fraud that takes expensive and time-consuming legal action to correct.
One simple way to protect yourself from some of the common home loan scams is to acquaint yourself with signs that an offer probably isn’t on the up-and-up. If you see any of these bullet-pointed red flags, it’s time to find out more about who you are really dealing with—or simply to hit the exit:
The lender isn’t particularly interested in your ability to pay. A lender who proposes monthly payments that exceed 28% of your gross income fits that category.
If the phrase “bad credit doesn’t matter” appears in an operator’s advertising or communications, get rid of them.
If a lender encourages (or even hints at) “fudging” the numbers on your application, drop them. The simplest “fudge” constitutes mortgage fraud, which is a crime—and legitimate lenders don’t tolerate it.
If the cost of a loan for less than $150,000 exceeds 5%, find out why. Most home loan closing costs range between 2%-5%.
No GFE. Lenders are required to provide a Good Faith Estimate of the loan costs within three business days of receipt of your application. Failure to do so is a red flag.
If the final loan documents show closing costs that differ significantly from the GFE, check the Consumer Financial Protection Bureau’s website to judge whether the changes are legitimate. The CFPB is a government bureau that makes sure you’re being treated fairly.
- Written by Jimmie Bachand
Passage of Mammoth Rescue Plan Act: It's a Lot to Absorb
The passage of the massive American Rescue Plan Act last week gave those who plot the ebb and flow of Rehoboth Beach, DE housing activity much to ponder. Even without the Act, most observers already expected that by the end of spring, the majority of the U.S. economy would be undergoing a healthy recovery due to the escalating rollout of the COVID-19 vaccines. It was predictable that the Act's injection of trillions of dollars (including $20 billion for increased vaccine production) would add strength to the rebound.
But what would be the impact on real estate in general—and Rehoboth Beach, DE housing in particular? For Rehoboth Beach, DE sellers, the outlook couldn't help but be positive. According to website therealdeal.com, in February, U.S. sellers had been chalking up close to 100% of their asking prices (99.6%, to be precise). The pace of sales looked to be heating up as well if the Mortgage Bankers Association report of a 7% increase in weekly home loan applications was a fair indication. The MBA concluded that despite rising rates, homebuyers appeared "ready to 'spring' into action."
At least for the short run, real estate investors also seemed likely to benefit. The direct stimulus checks to individuals were sure to boost retail spending—ultimately flowing to the retailers' landlords. Additionally, consultants at Novogradac identified an Emergency Rental Assistance portion of the Act—a 21,550,000,000-dollar (those are billions!) monetary injection that will come to the aid of renters. Their landlords may be unnamed, but they are definitely part of that picture.
By the week's end, it was the size of the package that continued to draw both praise and criticism—most audibly from those worried that the downstream cost would greatly outweigh the immediate benefit. The focus was also shifting to a discussion of how rapidly the cash could realistically be injected into the economy—and whether it might overheat an already recovering economy.
- Written by Jimmie Bachand
Some Down Payment Misconceptions are Still Common
In a post published last week, a panel examined some common real estate misconceptions. Seven Forbes Real Estate Council members sought to correct misinformation they say they encounter most frequently—especially from first-time homebuyers. The errant assumptions were especially noteworthy because they deal with a pivotal element in Rehoboth Beach, DE real estate transactions: down payments.
Here are five misconceptions the panelists singled out, followed by the panelists’ corrected notions:
· A large down payment is essential. Yesterday’s predominant 20% ‘normal’ has become today’s 6% or less.
· Only the down payment is needed at closing. Other fees are due at closing.
· Down payments are not necessary. In addition to demonstrating financial strength, down payments lower monthly payments and attract better interest rates.
· Cash is always required for a down payment. Not always; other assets can be pledged (such as a stock portfolio).
· You can put down 3%-5%. Yes, but that’s not the whole story. In addition to closing costs, owning your Rehoboth Beach, DE home also involves insurance, utility, and maintenance expenditures.
There were seven misconceptions in all, including these two, whose “corrections” seem to disagree:
· “A lower down payment makes for a poor offer” was corrected with “one should not feel like their profile is less appealing just because they are taking on greater than 80% financing.”
That would be good news were it not for this:
· “There’s no need to put down more than 20%” brought this correction: “…a large down payment reduces the risk to the seller that an offer will fall out of contract due to a property not appraising at the offer value.”
In all cases, it’s good to remember that the down payment amount affects the degree of risk to the lender, not the seller. The only reason the seller might be concerned is if the offer can’t be financed because the mortgage amount (selling price minus down payment) is higher than the property’s appraisal will support.
Putting those last two in the list illustrates how even real estate professionals have different ideas about what factors a seller might use to choose the winner when multiple offers are on the table.
- Written by Jimmie Bachand