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Archives for August 2022

Housing Market: Should You Buy a Turnkey Property or Fixer-Upper?

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The current housing market means you’ll likely pay top dollar for a home that’s considered turnkey — immediately ready for you to move in. Plus, the competition is steep. Perhaps those two reasons are why 52% of American homebuyers are looking for a starter home or a fixer-upper rather than a forever home, according to TD Bank‘s First-Time Homebuyer Pulse, which polled buyers planning to purchase in 2022. If you’re struggling with whether to keep combing the housing market for a move-in-ready home that fits your budget or to take your chances with a fixer-upper, here’s the expert insight you need.

Pros of Buying a Fixer-Upper

Buying a fixer-upper can provide you with advantages that a turnkey home doesn’t offer. Consider the following.

Cheaper Taxes

“Fixer-uppers can be a great way to get a deal on a property and save money on taxes,” said Jeremy Luebke, founder of WeLoveLand. “In many cases, fixer-uppers are sold for less than the market value because the seller is motivated to move the property quickly. This can be a great opportunity for bargain hunters. Additionally, fixer-uppers often come with significant tax breaks. The government offers tax breaks for people who rehabilitate or redevelop properties, so if you’re planning to do major work on your fixer-upper, you may be eligible for some significant tax deductions.”

Flip Potential

“The big advantage to taking the risk on a fixer-upper is the equity you build while improving the value of the property,” said Doug Greene, owner of Signature Properties. “This is the flip potential that exists, while in a turnkey home you are essentially buying the property at full price (i.e., market value).”

Potential for Creativity

“An advantage of purchasing a fixer-upper is the opportunity to put money into the features of your house that are most important to you,” said John Riedl of Easy Cash Offer Florida. “Do you want a modern kitchen? What about a luxurious soaking tub? If you are purchasing a property that is move-in ready, you can find yourself subject to the taste and interests of the past owner.”

Riedl also pointed out that fixer-uppers give you a lot of control over the renovation process by selecting paint colors, floor materials, contractors, and anything else you desire.

Cons of Buying a Fixer-Upper

Time, money and effort are all required when it comes to getting a fixer-upper where you want it to be. Here’s more on the potential disadvantages of going this route.

Renovation Costs

“The cost of labor and materials is near its highest price ever, and if you are hiring contractors to perform work on your home, unless you have a crew on standby, it could be months before the work is done,” said Tony Grech real estate investor and lending expert with Luxury Mortgage. “Just like there is a shortage of home inventory that has driven prices up, there is a shortage of qualified tradespeople as well as a shortage in raw materials due to supply chain issues that stretch back to the beginning of COVID. So you save $20,000 or $30,000 on the price of the home, but it costs you $60,000 to perform the work that you want.”

Effort

Beyond the costs in labor and materials, renovating a home comes with some other headaches and risks,” said Brian Davis, real estate investor and founder at Spark Rental. “You have to navigate the treacherous waters of permits, which involves not just filing fees and dealing with the permit office, but also hassling with inspectors.”

Ryan Fitzgerald, owner of UpHomes also said that renovating a fixer-upper requires a lot of effort. “Renovations are time-consuming and stressful so make sure you’re up for the challenge if you decide to get a fixer-upper,” he cautioned. “If you don’t want to deal with the construction, managing contractors, and living in a home that isn’t finished, a fixer-upper may not be the best choice for you.”

Live Richer Podcast: First-Time Homebuying During Inflation: Is It Worth It?

Pros of Buying a Turnkey Home

While a home that’s ready to move in will likely cost much more than a fixer-upper, there are some definite advantages that are worth considering.

No Renovation Costs

“When you purchase a turnkey home, the price you see is the price you pay,” said Luebke. “There are no additional costs for things like landscape or certain home upgrades. This can be a big advantage when budgeting for your new home. You know exactly how much money you need to bring to the table, and there are no unpleasant surprises down the road.”

Minimal Effort Required

If you’re looking to move in and start enjoying your new home as soon as possible, turnkey home is a perfect choice. “Turnkey homes require much lower effort because you can move right in and start enjoying the home after you unpack,” said Ryan Fitzgerald, owner of UpHomes.

Cons of Buying a Turnkey Home

However, buying a turnkey home also comes with a few drawbacks. It’s up to you to decide if they are worth it.

More Expensive Taxes Upfront

While you can get a lower property tax rate by buying a cheaper fixer-upper, that’s likely not the case with a turnkey home.

“If you opt for a turnkey home, the municipality will have likely already caught up to the new assessed value by the time you move in,” said Greene. “It’s usually the sale of the property that triggers a property reassessment in the system.”

Flip Potential Is Nonexistent

“Buying turnkey is certainly the way to go if you have no desire to make repairs to a home and want it move-in ready,” said Jeff Shipwash, CEO of Shipwash Properties LLC. “Unfortunately, in today’s market, turnkey properties are at a premium. This means you will more than likely have strong competition and will be paying top dollar for it. This results in buying with little to no equity to spare.”

And without any equity to spare, there is no flip potential.

Limited Opportunities for Creativity or Customization

“The home might not be exactly what you want,” said Luebke. “Since the home has already been built, you may be limited in terms of customizations or changes that you can make. The home might come equipped with most, if not all, of the features and amenities that you desire, but there is always the chance that something will not be quite to your liking. This can be frustrating if you have specific ideas about how you want your new home to look and function.”

>>This article originally appeared on GOBankingRates.com.<<

South Florida Housing Market Forecast 2022 & 2023

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The Florida housing market had more new listings, higher median home prices, and signs of easing supply constraints in June and the second quarter of 2022 compared to June and the second quarter of 2021, according to the latest housing data from Florida Realtors®. However, higher mortgage rates and inflation continue to impact sales.

Last month, closed sales of single-family homes statewide totaled 28,296 units, down 17.2% from June 2021, while existing condo-townhouse sales totaled 11,796 units, down 27% from June 2021, according to data from the Florida Realtors Research Department in collaboration with local Realtor associations. New listings for existing condo-townhouse properties last month rose by 4.7% year-over-year.

In June, the median sales price for single-family homes was $420,000, up over 20% year-over-year but unchanged from May. This is the first time since 2008 that the median sale price of single-family homes has not increased from May to June, indicating that prices are beginning to respond to purchasers' rising access to inventory.

Data from the University of Florida's Shimberg Center for Housing Studies show that prices in Miami-Dade County, home to Miami, Miami Beach, and other municipalities popular with new arrivals to the state, have returned to levels not seen since the mid-2000s housing boom, a period of intense real estate speculation in the region that forced millions into foreclosures in the aftermath of the Great Recession.

While recent inflation, supply chain bottlenecks, and revived interest in the South Florida real estate market have added gasoline to the fire, home affordability has long been a problem for South Floridians. Although the steep increase in rents is a recent trend, the fundamental disparity between incomes and housing prices is not.

South Florida Housing Market Forecast

Rates will continue to rise this year, we believe significantly, and affordability will deteriorate. If you're a seller, take advantage of the market while it's still very excellent, as well as this drop in interest rates. While we believe the South Florida market will remain strong throughout the year and do not anticipate a meltdown, waiting until there is even more inventory and loan rates are much higher would merely prolong the sales process.

And we believe that by the end of the year, the days on market will have increased significantly. It will take far longer to sell a property than people have become accustomed to in the previous two years. This is an excellent opportunity to be both a buyer and a seller. If you've been sitting on the sidelines, now is the moment to act.

The demand for real estate in South Florida is being driven by new residents and corporate relocations from high-tax metropolitan regions such as New York. While rising home prices may be terrible news for many homeowners, it's good news for rental property investors, helping to explain why rental growth and demand in South Florida are so high.

South Florida has around 100 cities and villages, including Miami, Fort Lauderdale, West Palm Beach, Boca Raton, Boynton Beach, and North Miami. South Florida, sometimes known as the Greater Miami Area, is the seventh-largest metropolitan area in the United States and the second-largest in the southeastern United States, trailing only the Washington-Arlington-Alexandria MSA. More than 6.7 million people live in the region, which encompasses more than 6,000 square miles and three counties: Miami-Dade, Broward, and Palm Beach.

Will South Florida Housing Market Crash?

Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Demand for Miami real estate is at all-time highs. Inventory for Miami single-family homes (2.8 months) and condos (2.9 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly.

Long term, the hope is higher rates will lead to more days on the market (give buyers more choices). Higher rates will eventually lead to a moderation of the growth rate of pricing. With the growth rate of pricing cooling, total inventory could grow later. Historically, inventory expands six months after rates rise, but today’s market is unlike any other.

The total economic impact of a typical Florida home sale is $112,500, according to NAR. Miami-Dade County sold 2,891 homes in June 2022 and had a local economic impact of $325.2 million. Miami total dollar volume totaled $2.5 billion in June 2022. Single-family home dollar volume decreased 17.4% year-over-year, from $1.5 billion to $1.2 billion. Condo dollar volume decreased 19.8% year-over-year, from $1.6 billion to $1.3 billion.

Similarly, in Palm Beach County, the single-family home median prices increased 24% year-over-year in June 2022, increasing from $500,000 to $620,000. Existing condo median prices increased 31.6% year-over-year, from $237,500 to $312,500. Demand for Palm Beach real estate is at all-time highs. Inventory for Palm Beach single-family homes (2.3 months) and condos (1.7 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly. Locally, the greater share of Palm Beach luxury sales is also part of the reason for the large year-over-year increase in median prices.

Broward's total home sales decreased 22.9% year-over-year, from 4,121 to 3,178, because of the rapid rise of mortgage rates from an average of 3% to 6% in six months and low inventory. Single-family home sales decreased 20.1%, from 1,803 to 1,440. Broward County single-family home median prices increased 18.4% year-over-year in June 2022, increasing from $498,203 to $590,000. Demand for Broward real estate is at all-time highs. Inventory for Broward single-family homes (1.9 months) and condos (1.7 months) are low. Also, one of the supports for home prices is rents and rents are rising strongly.

Bottom line: We're not seeing any major home price decline or crash in the South Florida housing market just yet. The present supply of homes in South Florida still favors sellers. In the long run, it is hoped that higher interest rates would result in more days on the market (gives buyers more choices). The price rise will ultimately slow as a result of higher interest rates. With the deceleration of price rise, total inventory might expand in the future. Historically, inventory grows six months after interest rates rise, but today’s market is unlike any other.

Sources:

  • https://www.miamirealtors.com/news/south-florida-market-stats/June-2022/
  • https://www.floridarealtors.org/tools-research/reports/florida-market-reports

South Carolina Housing Market Forecast 2022 & 2023

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The South Carolina housing market remains strong in 2022, thanks to a combination of high demand, limited supply, and continuously rising house prices. In June 2022, the typical home in the state of South Carolina was valued at $291,591. That’s a 26.7% increase year-over-year (YoY), and Zillow predicts the market will continue to rise over the next twelve months. The second quarter of 2023 will see higher home prices in South Carolina than the second quarter of the current year.

How is the South Carolina Housing Market in 2022?

From June 2021 to June 2022, new listings were up 18.4%. 8,560 new listings were added in June but still, the average months of supply are 2 months, the same as last year, according to Redfin.

  • In June 2022, home prices in South Carolina were up 18.4% compared to last year, selling for a median price of $372,800.
  • There were 7,523 homes sold in June this year, down from 8,817 homes sold in June last year.
  • The median days on the market were 39 days, down by 10 days year over year.
  • 42.4% of homes in South Carolina sold above list price, up 1.9 points year over year.
  • There were only 21.2% of homes that had price drops, up from 7.0% of homes in June last year.
  • There was a 100.7% sale-to-list price, up 0.2 points year over year.
  • If the ratio is above 100%, the home sold for more than the list price.

Are South Carolina Rent Prices Going Up?

Prospective buyers are not the only ones feeling the heat in this property market; renters have also been scorched. Statewide the average rent price has grown by 84.62% year-over-year in June. The median rent for all bedrooms and all property types in South Carolina is $1,800. The median rent price has increased by $261 compared to the previous year, according to Zillow Rentals Data. Rent in South Carolina is 18% lower than the national median.

  • The median rent price in South Carolina for August 2022 is $1,800 based on 3,637 rentals available in South Carolina.
  • This is $261 more than August 2021 and $10 more than July 2022.
  • The median rent in South Carolina is $400 less than the national median.

Will The South Carolina Housing Market Crash?

We continue to hear rumors of a market crash, but local data does not corroborate this at this time. Even if minor, the monthly figures indicate that the market has begun to cool. In June 2022, home prices in South Carolina rose 18.4% annually. Simultaneously, the number of homes sold decreased by 8.7%, while the number of properties for sale decreased by 8.7%. There aren't enough homes for sale to meet buyer demand.

Bottom line: We're not seeing any major home price decline or crash in the South Carolina housing market just yet. The present supply of homes in South Carolina still favors sellers. In June 2022, the number of properties for sale in the state increased by 63.82% year-over-year. The current number of active listings in South Carolina is 13,912, a rise from 8,492 active listings that were added in June 2021, according to Realtor.com's monthly data.

South Carolina added 12,400 jobs in May 2022 according to the CES survey while the broader CPS employment measure rose by 9,435 CES employment in June 2022 for South Carolina is at a new high of 2,214,300 while CPS employment in South Carolina for June 2022 is at a new high of 2,326,257. The economy of South Carolina was ranked the 25th largest in the United States based on the gross domestic product in 2020. Tourism, centered around Myrtle Beach, Charleston, and Hilton Head Island, is the state's largest industry.
<<Read About Charleston SC Housing Market Trends in 2022>>>

In 2023, South Carolina is predicted to remain a top-ranked state and relocation destination. The flood of new inhabitants will increase competition and limit housing availability, making South Carolina real estate even tighter. South Carolina is a fantastic place to live or retire due to its pleasant temperature and low total cost of living. According to a Retirement Living poll, South Carolina is the fourth best state in which to retire. South Carolina boasts a reduced cost of living and several lovely beaches that are warm almost all year.

South Carolina Housing Supply Graph

South Carolina housing market
Source: FRED

Real Estate Market Statistics in South Carolina

Zillow Home Value Index $291,591
Home Value Change YoY +26.7%
Average Rent Price Change YoY +84.62%
Available Housing Inventory For Sale 13,912
Is South Carolina a Buyer’s or Seller’s Market Seller’s Market
Greenville MSA One Year Home Values Forecast +9.7% by June 2023
Columbia MSA One Year Home Values Forecast +8.4% by June 2023
Charleston MSA One Year Home Values Forecast +9.7% by June 2023
Myrtle Beach MSA One Year Home Values Forecast +10.6% by June 2023%
Spartanburg MSA One Year Home Values Forecast +10.7% by June 2023%

 

Data Sources:

  • https://www.zillow.com/research/data/
  • https://www.zillow.com/sc/home-values/
  • https://www.zillow.com/rental-manager/market-trends/sc/
  • https://fred.stlouisfed.org/series/ACTLISCOUSC#
  • https://www.redfin.com/state/South-Carolina/housing-market
  • https://www.rent.com/research/average-rent-price-report/
  • https://celadonliving.com/pros-cons-living-in-south-carolina/

North Carolina Housing Market Forecast 2022 & 2023

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The North Carolina housing market continues to be robust in 2022 by a combination of high demand, limited supply, and steadily increasing house selling prices. In June 2022, the typical home in the state of North Carolina was valued at $320,291. That’s a whopping 27.4% increase year-over-year (YoY), and Zillow predicts the market will continue to rise over the next twelve months. The second quarter of 2023 will see higher home prices in North Carolina than the second quarter of the current year.

How is the NC Housing Market in 2022?

From June 2021 to June 2022, new listings were up 16.1%. 18,820 new listings were added in June but the still the average months of supply is 2 months, down year over year, according to Redfin.

  • In June 2022, home prices in North Carolina were up 14.5% compared to last year, selling for a median price of $364,900.
  • There were 17,079 homes sold in June this year, up from 15,671 homes sold in June last year.
  • The median days on the market were 22 days, down 14% year over year.
  • 57.3% of homes in North Carolina sold below list price, down 0.2 points year over year.
  • There were only 25.6% of homes that had price drops, up from 9.0% of homes in June last year.
  • There was a 102.3% sale-to-list price, down 0.0013 points year over year.
  • If the ratio is above 100%, the home sold for more than the list price.

Are North Carolina Rent Prices Going Up?

Prospective buyers are not the only ones feeling the heat in this property market; tenants have also been scorched. Statewide the average rent price has grown by 29.55% year-over-year. The median rent for all bedrooms and all property types in North Carolina is $1,915. In the last year, rent has increased by $165 compared to the previous year, according to Zillow Rentals Data. Rent in North Carolina is 13% lower than the national median.

  • The median rent price in North Carolina for August 2022 is $1,915.
  • This is $165 more than August 2021 and $15 more than July 2022.
  • The median rent in North Carolina is $284 less than the national median.
  • There are currently 8,349 rentals available in North Carolina.

Will The North Carolina Housing Market Crash?

We continue to hear rumors of a market crash, but local data does not corroborate this at this time. Even if minor, the monthly figures indicate that the market has begun to cool. In June 2022, home prices in North Carolina rose 14.5% annually. Simultaneously, the number of homes sold increased by 7.7%, while the number of properties for sale decreased by 2.0%.

Bottom line: We're not seeing any major home price decline or crash in the North Carolina housing market just yet. The present supply of homes in North Carolina still favors sellers. In June 2022, the number of properties for sale in the state increased by 24.2% year-over-year. The current number of active listings in North Carolina is 16,726, a rise from 13,463 new listings that were added in June 2021.

North Carolina is home to Charlotte, the second-largest financial industry city in the United States after New York. Charlotte is showing no signs of slowing in its quest to be an even more influential financial hub. Charlotte has had substantial growth from the year 2000, despite reasonable delays in the expansion of financial services owing to the 2008 financial crisis. Since 2000, there has been a 47.7% rise in the number of financial industry positions in Charlotte, compared to just an 11.7% increase in the United States as a whole.

<<Read About Charlotte Housing Market Trends in 2022>>>

In 2023, North Carolina is predicted to remain a top-ranked state and relocation destination. The flood of new inhabitants will increase competition and limit housing availability, making North Carolina real estate even tighter. According to YouGov, the state is the fifth-best place to live. The state ranks second in terms of business climate, seventh in terms of education, and seventh in terms of fiscal stability.

North Carolina Housing Supply Graph

North Carolina housing market
Source: FRED
Zillow Home Value Index $320,291
Home Value Change YoY +27.4%
Average Rent Price Change YoY +29.55%
Available Housing Inventory For Sale 16,726
Is North Carolina a Buyer’s or Seller’s Market Seller’s Market
Charlotte MSA One Year Home Values Forecast +11.2%
Raleigh MSA One Year Home Values Forecast +10.6%
Greensboro MSA One Year Home Values Forecast +9.6%
Durham MSA One Year Home Values Forecast +9.9%
Winston-Salem MSA One Year Home Values Forecast +10.7%
Wilmington MSA One Year Home Values Forecast +9.9%
Asheville MSA One Year Home Values Forecast +9.3%

<<Read About Raleigh Housing Market Trends in 2022>>>

Data Sources:

  • https://www.zillow.com/research/data/
  • https://www.zillow.com/nc/home-values/
  • https://www.zillow.com/rental-manager/market-trends/nc/
  • https://fred.stlouisfed.org/series/ACTLISCOUNC#
  • https://www.redfin.com/state/North-Carolina/housing-market
  • https://www.rent.com/research/average-rent-price-report/
  • https://www.propeterra.com/resource-center/charlotte-north-carolina-banking
  • https://today.yougov.com/topics/travel/articles-reports/2021/04/13/us-states-ranked-best-worst-according-americans

Is It a Buyers’ or Sellers’ Market in 2022?

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Buyers and sellers are bewildered by inconsistent housing market predictions, news, and statistics. Positives include record monthly price rises and never-before-seen low inventories, which bodes well for future values. Existing-home sales, while down from early-year highs is nonetheless solid. Housing metrics are still good. In the minus column, the 40% run-up in prices since the pandemic's inception and a rapid, near-doubling of mortgage rates from last autumn to near 6 percent as of now are increasing worries that house ownership has become so expensive for a big section of America that demand may collapse.

If increasing prices and rates cause purchasers to flee in droves, only a drastic price drop may bring them back. The superhot appreciation we've witnessed through May is expected to cool drastically for the remainder of the year. This move represents a significant departure from a trend of year-over-year growth that grew larger by the month. However, a pause in increases does not imply a reduction in prices. On the contrary, the fundamentals indicate that prices will continue to rise through the end of 2022 and into the next year.

The fundamentals predict values will rise until 2023. As usual, the outlook is uneven. In many metros, appreciation by 2022 will be behind what promises to be stubbornly high inflation, meaning high-priced homeowners will see their first “real” decreases in a decade or more. Ed Pinto, director of the American Enterprise Institute's Housing Center, predicts a shift from a booming to a modest sellers' market. Pinto offers a caveat. A further rise in mortgage rates or a protracted recession that boosts unemployment might lower dollar pricing.

It’s Still a Sellers’ Market in 2022

You may be wondering what this implies for your intentions to sell your property since there is increasing chatter about the real estate market cooling off from its peak frenzy during the pandemic. If you're considering a relocation, you should be aware that the market is still far from typical. Even though the supply of homes for sale has increased this year, there is still a lack of properties on the market. As a result, current market circumstances continue to favor sellers and buyers continue to struggle with rising home prices, mortgage rates, and inflation.

Total housing inventory registered at the end of June was 1,260,000 units, an increase of 9.6% from May and a 2.4% rise from the previous year (1.23 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, up from 2.6 months in May and 2.5 months in June 2021. Months’ supply measures the speed of the market by calculating the number of months it would take for inventory to deplete at the current pace of sales.

Specifically, it is calculated as the ratio of active residential listings relative to the number of sales. The ratio is adjusted seasonally to remove variability during the year so markets can be tracked every month. A balanced market typically equates to 6-7 months of supply; while a buyer’s market equates to 7 months of supply and above, and a seller’s market equates to 6 months of supply and under.

It is a seller's market because the amount of available inventory of houses does not meet the current buyer demand. In a seller's market, real estate prices increase. The median existing-home price for all housing types in June was $416,000, up 13.4% from June 2021 ($366,900), as prices increased in all regions. This marks 124 consecutive months of year-over-year increases, the longest-running streak on record.

A buyer's market would exist only when there are more properties for sale than there are buyers in the market. When this occurs, buyers have the upper hand in negotiations since sellers are more eager to negotiate to sell their homes. That is not the market situation in 2022.

In a seller's market, the reverse is true. Too few properties are available relative to the number of buyers on the market, giving the seller all of the leverage. In this circumstance, purchasers will do everything possible to compete for the restricted quantity of available properties.
A market is neutral or balanced when the supply and demand are in equilibrium and there are sufficient properties to fulfill buyer demand at the present sales rate.

For the past two years, we’ve been in a red-hot sellers’ market because inventory has been near record lows. The blue section of this graph highlights just how far below a neutral market inventory still is today.

It is a Sellers Market in 2022
Credits: Keeping Current Matters

According to the above inventory graph, it is still a seller's market in 2022. The US housing market has only transitioned from a very hot sellers' market to a moderate sellers' market. Even if the market is cooling, the situation is still favorable to property sellers. While buyer demand is decreasing owing to increasing mortgage rates, houses priced correctly continue to sell quickly. For sellers, this indicates that the window of opportunity to list their home for sale has not closed. In conclusion, the current housing market continues to benefit sellers.

Is It a Buyers or Sellers Market 2022?

References

  • https://www.nar.realtor/research-and-statistics/housing-statistics
  • https://www.realtor.com/research/tag/months-supply/
  • https://www.keepingcurrentmatters.com/2022/08/04/why-its-still-a-sellers-market/
  • https://www.noradarealestate.com/blog/housing-market-predictions/

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