NEGATIVE EQUITY DRIVING LOW INVENTORY

In early 2012, 31.4% or 15.7 million U.S. homeowners, had negative equity - where the value of their home was less than their existing mortgage.  This was the peak level which resulted from the 2008 market collapse.  Approximately, one in three homes had mortgages that exceeded the estimated selling price, clearly making it impossible to sell without financial loss. 

At the close of 2016, that percentage dropped to 10.5%, about a two-thirds drop from 2012 and 2.6% lower than 2015.  This means that today, one in ten home-owners with a mortgage are underwater (they owe more than the value of their home).   The good news is that, “more than 1.2 million American homeowners with a mortgage were freed from negative equity in 2016.  Currently, about 5.1 million homeowners nationwide are underwater, roughly one-third the total number of underwater homeowners at the peak of the negative equity crisis.”*

In Suffolk County, at the close of 2016, the percentage of homes with negative equity was slightly higher than the national average at 11.4% while the percentage of homes with equity of 20% or less (effective negative equity) was 24.6%.  This number is significant for our local market, since it holds back potential sellers for listing their homes, because there may not be enough equity in their existing home to cover a down payment for a new home and closing and moving costs.

If you wish to sell your home or property but feel you are in a negative equity situation, it may be a good time to get an update on the market and a current market analysis for your property.  Call us, 631 765 5333,  or email me at marie@beninatiassociates.com, we will give you a detailed analysis of your property value at our expense.  We have had amazing results these first two months of 2017! the left!  Call us, you’ll get an honest and thoughtful assessment to help you make an informed decision.

* Source: Q4 2016 Negative Equity Report: Improvement Continues, But at a Much Slower Rate, Svenja Gudell, Chief Economist at Zillow,  March 7, 2017.

Consumer Confidence in Housing Hits All-Time High

Americans are more optimistic about buying homes – so much so that the Fannie Mae Home Purchase Sentiment Index (HPSI), created in 2011, hit an all-time high in February, 2017. 

Fannie Mae’s HPS Index was 88.3, a 5.6 percentage point increase in February. The Index was also up 5.6 percentage points compared with February last year.

Some of the highlights of the report:

• ·       The percentage of Americans who say it is a good time to buy a house rose 11 percentage points to 40%, rebounding strongly from last month’s survey low.
• ·        The percentage of those who say it is a good time to sell increased by 7 percentage points to 22%, reaching a new survey high.
• ·        The percentage  of Americans who say that home prices will go up increased by 3 percentage points in February to 45%.
• ·        The percentage  of those who say mortgage rates will go down over the next twelve months remained unchanged for the third consecutive month at a negative 55%.
• ·        The percentage of Americans who say they are not concerned about losing their job rose 9 percentage points to a new survey high of 78%.
• ·        The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 4 percentage points to 19% in February, continuing the increase from January and reaching a new survey high.

The increased post-election confidence in housing is good news all around.  If you are thinking of selling or buying, it’s time to get things in motion. Sellers: it’s time to get your homes on the market. Buyers: it’s time to move on your plans to purchase before prices and  interest rates climb higher. 

At Beninati Associates, we keep an eye on the market, and a ear to the ground.  As a buyer or seller, short of a crystal ball, tracking the economics of the marketplace will help you decide what to do and when to do it.  You can rely on us – we listen, we care and we get results for you!

Source: Fannie Mae News Release, March 7, 2017

HOME RENOVATIONS THAT MAY OR (NOT) PAYBACK

There is a lot written about what home renovations to do or not do and what will generate a good return when you sell and what will not.  But as in most cases with real estate, “location, location, location,” is what makes all the difference.

If you have a summer home in the Hamptons, a swimming pool, media room, and open plan may be essentials not just enhancements, but probably not even desirable in rural Kansas. 

So too for the North Fork,  where so many buyers are second home purchasers with an eye towards a place for extended family to gather and enjoy not just in season but year round, some amenities may make sense, where they did not in the past.

If you intend to renovate for your pleasure, it would be prudent to keep in mind that not everything you do for your own enjoyment , will necessarily add value to a prospective buyer.

Certain improvements always add value, like new mechanicals – updated heat and air conditioning systems,  new appliances,  interior and exterior painting, gardens that add eye and curb appeal, just to name a few.  Other improvements like an in-ground swimming pool will for the majority be considered a plus, but the added expense of a gunite pool  versus a liner, is not likely to translate to a higher dollar-for-dollar return.  This is an esthetic that is very personal.  So too, elaborate bathrooms and fixtures may or may not be appreciated by the next owner.

If you are renovating with an eye towards resale, be prudent, don’t skimp on quality, but don’t over spend on every bell and whistle that’s offered.  Keep things neutral but tasteful.

Whatever improvements you make to your home, should be made with this in mind – recognize that this is for your own enjoyment, knowing that some choices will not necessarily translate to dollar-for-dollar return when you decide to sell. 

If you are considering renovations to your home and would like a “REALTOR’s” perspective, give us a call.  We will gladly meet with you and at no cost to you, review your plans and share ideas.  At Beninati Associates, we listen, we really care...and we get results!

Looking to Buy or Sell your Home? Call us at 631-765-5333, or visit us on our website: beninatiassociates.net.  We listen, we care…….and we get results!