For Delaware Homeowners 55 and Up: a Practical Issue
While much attention is directed at the phalanx of youthful first-time homebuyers, the Millennials and GenXers aren’t the only groups who are having a substantial influence on the direction of Delaware’s real estate market. Whether they are tagged “mature,” “aging,” or downright “elderly,” the over 55-crowd comprise an increasingly influential part of the marketplace. They are also facing some challenges when it comes to housing—and where there are challenges, people with solutions stand to profit.
Last month, Freddie Mac—the quasi-governmental entity that studies changing directions in the nation’s real estate market—published an eye-opening look at what’s been going on with our older homeowners. They conducted a survey that queried a representative sample of 4,886 homeowners aged 55 and older.
One finding that everyone in Delaware would probably expect was that the majority (about 2/3) of respondents hope to stay in their current homes. That proportion of the population hasn’t changed much over time. Another finding that no one in Delaware would be awfully surprised to hear was that a similar number—the same two-thirds—admitted that their present residences aren’t accessible to anyone with arthritis or limited mobility (not to mention the wheelchair-bound).
In other words, the wish and the reality are, at least for the moment, not entirely in sync. The real estate solution boils down to the issue of retrofitting. Eighteen percent said they had never given retrofitting a thought, but most of the others who have considered it are weighing how they will finance what can cost thousands of dollars. A third said they will rely on savings to create a home where they will be able to “age in place;” 26% plan to use HELOCs or bank loans; and a smaller percentages will rely on cash-out refi's, reverse mortgages, or family loans.
Freddie Mac didn’t provide a prescriptive commentary on the likely real estate repercussions of this aging in place phenomenon, but it seems as if Delaware contractors and sub-contractors will find themselves with a developing remodel category as the ranks of Delaware’s retirement-aged continue to grow. As far as Delaware’s real estate market is concerned, homes that are easily retrofitted should attract more of the 55+ crowd—as will single-level and ranch-style residences. Styles like multi-story Victorians which are generally associated with Gramma and Grandpop…well, perhaps not so much.
- Written by Russell Stucki
Increasingly Rare Beast: the Delaware 20% Down Payment
It turns out that the run of admirable national and Delaware home sales advances have been pulled off despite a couple of strong countercurrents. At least that’s the theme that emerges from last month’s Aspiring Home Buyers Profile report, which supplied one obvious and one not-so-obvious widespread beliefs among would-be future homeowners.
Delaware home buyers are always a mix of current homeowners (who will usually also be selling) and first-timers. Among the latter group, a major drag on their willingness and ability to invest in their own Delaware home is the student debt phenomenon. Enough has been written about that in recent years that it’s hardly a surprise: 39% of non-owners cited student loan payments as a primary reason they weren’t planning on being able to buy anytime soon.
Much less expected is the proportion of current non-owners whose reasons centered on a piece of widespread misinformation. Apparently, the same percentage—39%—were convinced that they need more than 20% of the price of a home to qualify for a loan. Another 26% believe a purchase is only possible when they can produce a down of 15%-20%—and a majority of the remainder (another 22%) think they need a down payment of at least 10% - 14%.
The chief economist for the realtor.com website summed it up concisely. “Aspiring buyers think it takes twice as much to buy a home” as it actually does in most cases. Although the actual numbers for any Delaware home purchase always depend on the details of the particular situation, the actual national averages will come as a shock to most. According to the latest National Association of Realtors® survey, the average down payment on a purchase mortgage was only 11% in 2016. That’s the average—in many cases, it was much lower. On Friday, CNBC’s Diana Olick quoted Attom Data Solutions’ finding that “down payments are shrinking…to a 6% average.”
That’s a pretty wide gap between common belief and current reality—one with real world implications. After all, if you assume a down payment has to be twice the amount actually required, it probably means you won’t even bother thinking about buying a house until long after you might have been able to get started. That could mean thousands of rent dollars diverted from what could have been spent on retiring a home loan. Long term, the difference would be significant.
- Written by Russell Stucki
5 Real Estate Quiz Questions Present a Challenge
One reason why Delaware real estate commentators like to offer quizzes is to make readers feel good about how much they know. Being that Delaware homeowners probably do more than an average amount of reading about Delaware real estate matters, you would expect that any real estate-themed quiz would succeed in creating that kind of warm, positive experience.
This is not that kind of quiz.
I put it together because it’s a quick way to present some of the more unlikely survey results. They are culled from recent National Association of Realtors® informational articles. The quiz may not foster warm feelings of knowledgeability, but to compensate, it’s shorter than most of those web quizzes (who has time to answer 25 questions?).
Ready? Set! GO!
1) Which of the following features is likely to slow a home’s sale:
A) Swimming Pool B) Big backyard C) Small backyard D) All the above
E) None of the above
2) Which of these is likely to help a home sell more quickly:
A) More than one story B) Superlative renovations C) Small backyard
D) Big backyard E) None of the above
3) Which of these is likely to be worthwhile for a new Delaware homeowner?
A) Extended appliance warranty B) Gardener C) Shopping for insurance
D) Improving the yard E) None of the above
4) Which of these trends are widely predicted for 2017?
A) home prices will remain stable B) home sales will decline C) average days on market will increase D) the Midwest will lead in home sales E) none of the above F) all of the above
5) Which of these is recommended for first time home buyers?
A) Less closet space than you think you need B) More closet space than you think you need C) Dining room D) No dining room E) Add a koi pond E) None of the above
- Written by Russell Stucki
A Delaware Real Estate Investment's Big 4 Advantages
When you see any title here containing the words “Delaware Real Estate Investment,” you won’t be terribly surprised if the gist turns out to be what a good idea! When you’ve had the experience of seeing clients succeed with many real estate investment projects, it’s an unavoidable conclusion. Unfortunately, also pretty yawn-worthy.
That’s why I was pleased to come across Grant Cardone’s piece in Entrepreneur magazine. We all like to see our opinions agreed with—but doubly so when you’re offered specifics that bolster your own conclusions. The article listed reasons why real estate investments are “your smartest investment.” Here are some of them:
- A real estate investment is a hedge on inflation. Inflation hasn’t been hugely important for a while, but serious investors have an eye out for the possibility. When you dig down, you find that real estate investments have “historically shown the highest correlation to inflation” of other major asset classes.
- Real estate investments enable positive cash flow. This was Entrepreneur's number one reason. Having an investment which throws off cash while building equity at the same time is any smart investor’s ideal situation. When a Delaware real estate investment produces an income stream that is significantly higher than the typical stock dividend, what investor wouldn’t be interested?
- Leverage. A typical Delaware real estate investment makes it relatively easy “to place debt on the asset” because of its built-in collateral value. Entrepreneur offered some math to back up the way low-cost debt works to multiply a real estate investor’s power.
- Maximizing tax benefits. Taxes can be the bane of any investor—so real estate provisions that lighten the load can be significant factors influencing your bottom line.
Those are four solid advantages of the eight detailed in Cardone’s article. The last reason was less demonstrable but, IMHO, just as real:
- “Feeling the pride ownership” (no further explanation necessary).
- Written by Russell Stucki